BILL ANALYSIS �
-----------------------------------------------------------------
| |
| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2013-2014 Regular Session |
| |
-----------------------------------------------------------------
BILL NO: SB 1250 HEARING DATE: May 13, 2014
AUTHOR: Hueso URGENCY: Yes
VERSION: May 7, 2014 CONSULTANT: Dennis O'Connor
REFERRALS: Environmental Quality & FISCAL: Yes
Governance and Finance
SUBJECT: Safe, Clean, and Reliable Drinking Water Supply Act of
2014.
BACKGROUND AND EXISTING LAW
In November 2009, the legislature passed and the governor signed
SBX7 2 (Cogdill). Also known as the Safe, Clean, and Reliable
Drinking Water Supply Act of 2010, that law placed on the
November 2010 ballot an $11.14 B general obligation bond before
the voters to fund various water resources programs and
projects.
The legislature has amended the bond proposal three times,
including twice delaying the placement of the bond before the
voters. After initially being delayed to the November 2012
ballot, the bond was subsequently delayed to the November 2014
ballot, where it remains now.
Over the course of the last year or two, there has been much
discussion on whether the public would support the current
November 2014 bond proposal. Moreover, if the voters would not
support that bond proposal, what, if anything, should take its
place on the ballot?
To help answer those questions, this Committee held a joint
hearing in February with the Senate Governance and Finance
Committee titled "Overview of California's Debt Condition:
Priming the Pump for a Water Bond." That hearing explored
California's overall debt condition, the fund balances for
various bond funded programs, and the implications for the
November 2014 water bond.
1
This was followed two weeks later by a second hearing which
asked the question "What's Changed Since the Legislature Passed
the Safe, Clean, and Reliable Drinking Water Supply Act of
2010?" That hearing highlighted some of the unanticipated
developments that occurred since the drafting of the bond, and
posed the policy question "What changes, if any, should be made
to the bond in light of recent developments?"
Later, on September 24, 2013, the Senate Environmental Quality
and the Natural Resources and Water Committees held a joint
hearing titled "Setting the Stage for a 2014 Water Bond: Where
Are We and Where Do We Need To Go?" That hearing focused on
where the various legislative bond discussions stood, identified
issues that may need additional attention, and, where
appropriate, suggested alternative approaches for consideration
of the members.
2
PROPOSED LAW
This bill would replace the $11.14 B water bond that is
currently on the November 2014 ballot with a new $10.15 B
general obligation bond titled "The Safe, Clean, and Reliable
Drinking Water Supply Act of 2014."
The proposed bond measure is organized as follows:
Chapter 1. Short Title
Chapter 2 Findings and Declarations
Chapter 3. Definitions
Chapter 4. General Provisions
$900 M Chapter 5.Clean, Safe, and Reliable
Drinking Water
1,350 Chapter 6.Water Supply Reliability and
Drought Preparedness
2,250 Chapter 7.Delta Sustainability
3,000 Chapter 8.Statewide Water System
Operational Improvement for Drought
Preparedness
1,300 Chapter 9.Protecting Rivers, Lakes,
Streams, Coastal Waters, and Watersheds
500 Chapter 10.Groundwater Sustainability
500 Chapter 11.Water Recycling Program
250 Chapter 12.Water Conservation
100 Chapter 13.Local and Regional Storage Projects
_________ Chapter 14.Fiscal Provisions
$10,150 M
Chapter 5. Clean, Safe, and Reliable Drinking Water. This
chapter would authorize $900 M, upon appropriation by the
Legislature to the State Water Resources Control Board (state
board), for the following purposes:
Reduce contaminants in drinking water supplies regardless of
the source of the water or the contamination.
Address the critical and immediate needs of disadvantaged,
rural, or small communities that suffer from contaminated
drinking water supplies.
Leverage other private, federal, state, and local drinking
water quality and wastewater treatment funds.
Reduce contaminants in discharges to, and improve the quality
of, surface water streams.
Implement stormwater quality projects, including multibenefit
stormwater quality projects.
Prevent further contamination of drinking water supplies.
Provide disadvantaged communities with public drinking water
infrastructure that provides clean and safe drinking water
3
supplies that the community can sustain over the long term.
Ensure access to clean, safe, and affordable drinking water
for California's communities.
This chapter would further require:
Projects to be selected by a competitive grant or loan process
with added consideration for those projects that leverage
private, federal, or local funding. This would not apply to
projects that address a public health priority for which no
other source of funding can be identified.
The state board to assess the capacity of a community to pay
for the operation and maintenance of the facility to be
funded.
Projects receiving funding authorized by this chapter could be
implemented by any public water system or other public water
agency.
Funds provided by this chapter would be available as follows:
$400 Mfor deposit in the State Water Pollution Control
Revolving Fund Small Community Grant Fund for grants
for wastewater treatment projects. Priority would be
given to projects that serve disadvantaged communities
and severely disadvantaged communities, and to projects
that address public health hazards.
100 M for deposit in the Emergency Clean Water Grant
Fund for grants and direct expenditures to finance
public health emergencies and urgent actions to ensure
that safe drinking water supplies are available to all
Californians. Eligible projects include, but are not
limited to, the following:
Providing interim water supplies, including
bottled water.
Projects that improve or replace existing
water systems, provide other sources of safe drinking
water, including replacement wells, and prevent
contamination.
Establishing connections to an adjacent
water system.
The design, purchase, installation, and
initial operating costs for interim water treatment
equipment and systems.
The state board may expend up to $10 M for grants and
4
loans to address the water quality needs of private
well owners that have no other source of funding and
serve members of a disadvantaged community.
400 M for grants and loans for public water system
infrastructure improvements and related actions to meet
safe drinking water standards, ensure affordable
drinking water, or both.
Priority would be given to projects for
small community water systems or state small water
systems in disadvantaged communities whose drinking
water source is impaired by chemical and nitrate
contaminants and other health hazards identified by
the implementing agency.
The implementing agency could make grants to
finance feasibility studies and to meet the
eligibility requirements for a construction grant.
Eligible expenses could include initial
operation and maintenance costs for systems serving
disadvantaged communities.
Special consideration would be given to
projects that provide shared solutions for multiple
communities served by a small community water system,
state small water system, or a private well.
Construction grants would be limited to $5 M
per project, except that the implementing agency may
set a limit of not more than $20 M for projects that
provide regional benefits or are shared among
multiple entities.
Not more than 25 percent of a grant could be
awarded in advance of actual expenditures.
The administering entity could expend up to
$25 M of the funds for technical assistance to
eligible communities.
Chapter 6. Water Supply Reliability and Drought Preparedness.
This chapter would authorize $1,350 M, upon appropriation by the
Legislature, for integrated regional water management projects
as follows:
$1,000 Mto DWR and in collaboration with the state board,
for grants to eligible projects that implement an
adopted integrated regional water management plan.
The funds would be distributed among 12
regions for competitive grants within each region.
The regional distribution was a fixed amount per
region with the balance distributed by population.
5
Projects would be required to have not less
than a 50% local cost share. DWR could waive or
reduce the cost-sharing requirement for projects that
directly benefit a disadvantaged community or an
economically distressed area.
Not less than 10 % of the funds would be
allocated to disadvantaged communities.
350 Mto DWR for grants and expenditures for the planning,
design, and construction of local and regional
conveyance projects that support regional and
interregional connectivity and water management.
Projects would be required to be consistent
with an adopted integrated regional water management
plan and provide one or more of the following
benefits:
" Improved regional or interregional
water supply and water supply reliability.
" Mitigation of conditions of
groundwater overdraft, saline water intrusion,
water quality degradation, or subsidence.
" Adaptation to the impacts of
hydrologic changes.
" Improved water security from drought,
natural disasters, or other events that could
interrupt imported water supplies.
" Provision of safe drinking water for
disadvantaged communities and economically
distressed areas.
Projects would be required to have not less
than a 50% local cost share. DWR could waive or
reduce the cost-sharing requirement for projects that
directly benefit a disadvantaged community or an
economically distressed area.
Chapter 7. Delta Sustainability. This chapter would authorize
$2,250 M, upon appropriation by the legislature, for grants and
direct expenditures. Funds to improve and maintain Delta levees
or other flood management facilities would be available for
appropriation to DWR. All other funds would be available for
appropriation to the Delta Conservancy. Funds would be made
available as follows:
$750 Mfor projects that support Delta sustainability
options. Of that amount, $250 M is to provide
assistance to local governments and the local
agricultural economy due to loss of productive
6
agricultural lands for habitat and ecosystem
restoration within the Delta.
Projects that receive funding from this category would
be eligible for funding through other provisions of
this bond to the extent that the combined state funding
from this division did not exceed 50 percent of the
total project costs.
1,500 Mfor projects to protect and enhance the
sustainability of the Delta ecosystem, including
projects that protect, restore and enhance the Delta
ecosystem and other projects to protect and restore
native fish and wildlife dependent on the Delta
ecosystem.
Chapter 8. Statewide Water System Operational Improvement for
Drought Preparedness. This chapter would continuously
appropriate $3,000 M to the California Water Commission (CWC)
for public benefits associated with water storage projects.
Eligible projects consist of only the following:
Surface storage projects identified in the CalFed Bay-Delta
Program Record of Decision, dated August 28, 2000, (CalFed
ROD) not including projects prohibited under the California
Wild and Scenic Rivers Act. That is, Sites Reservoir,
Temperance Flat Reservoir, the Delta Wetlands Project, and Los
Vaqueros Reservoirs are eligible projects.
Groundwater storage projects and groundwater contamination
prevention or remediation projects that provide water storage
benefits.
Conjunctive use and reservoir reoperation projects.
Local and regional surface storage projects that improve the
operation of water systems in the state and provide public
benefits.
Projects must provide measurable improvements to the Delta
ecosystem or to the tributaries to the Delta.
Projects are to be selected by the CWC through a competitive
public process that ranks potential projects based on the
expected return for public investment as measured by the
magnitude of the public benefits provided.
Public benefits to be considered are limited to the following:
Ecosystem improvements.
Water quality improvements in the Delta, or in other river
7
systems, that provide significant public trust resources, or
that clean up and restore groundwater resources.
Flood control benefits.
Emergency response, including, but not limited to, securing
emergency water supplies and flows for dilution and salinity
repulsion following a natural disaster or act of terrorism.
Recreational purposes, including, but not limited to, those
recreational pursuits generally associated with the outdoors.
The CWC, in consultation with the Department of Fish and
Wildlife, the State Water Resources Control Board, and DWR,
would be required to develop and adopt, by regulation, methods
for quantification and management of public benefits by December
15, 2016.
No funds may be allocated for a project before all of the
following have occurred: December 15, 2016, and until the CWC
determines that all of the following have occurred:
The CWC has adopted the regulations regarding public benefits
and has quantified and made public the cost of the public
benefits associated with the project.
The project applicant has entered into a contract with each
party that will derive benefits, other than public benefits,
from the project that ensures the party will pay its share of
the total costs of the project. The benefits available to a
party shall be consistent with that party's share of total
project costs.
The project applicant has entered into a contract with each
public that administers the public benefits to ensure that the
public contribution achieves the public benefits identified
for the project.
The CWC has held a public hearing to provide an opportunity
for the public to review and comment on the information
required to be prepared pursuant to this subdivision.
Feasibility studies have been completed.
The CWC has found and determined that the project is
feasible, is consistent with all applicable laws and
regulations, and will advance the long-term objectives of
restoring ecological health and improving water management
for beneficial uses of the Delta.
All environmental documentation associated with the project
has been completed, and all other federal, state, and local
approvals, certifications, and agreements required to be
completed have been obtained.
The public benefit cost share could not exceed 50 percent of the
total costs of a project. This limit would not apply to
8
conjunctive use and reservoir reoperation projects.
At least 50% of total public benefits of the project would be
required to be ecosystem improvements.
A project would not be eligible for funding unless, by January
1, 2022, all of the following are met:
All feasibility studies are complete and the draft
environmental documents are available for public review.
The CWC finds that the project is feasible, and will advance
the long-term objectives of restoring ecological health and
improving water management for beneficial uses of the Delta.
The project applicant receives commitments for not less than
75 percent of the nonpublic benefit cost share of the project.
The January 1, 2022 date would be tolled in the event meeting
that deadline was delayed by litigation or failure to promulgate
regulations.
Funds for CALFED projects may be provided to local joint powers
authorities (JPAs) formed by irrigation districts and other
local water districts and local governments within the
applicable hydrologic region to design, acquire, and construct
those projects.
The JPA may include governmental partners not located within
the hydrologic regions. The JPA could not include in its
membership any for-profit corporation, or any mutual water
company whose shareholders and members include a for-profit
corporation or any other private entity. DWR would be required
to be an ex officio member of each such JPA, but DWR could not
control the governance, management, or operation of the
surface water storage projects.
The JPA would own, govern, manage, and operate a surface water
storage project, subject to the requirement that the
ownership, governance, management, and operation of the
surface water storage project shall advance the purposes set
forth in this chapter.
The CWC would be required to make $25 M available to DWR to
study the feasibility of additional surface storage projects,
excluding any storage project identified in the CalFed ROD.
Any amendment of the provisions of this chapter by the
Legislature would require a two-thirds vote in each house of the
Legislature and voter approval.
Chapter 9. Protecting Rivers, Lakes, Streams, Coastal Waters,
9
and Watersheds. This chapter would provide, upon appropriation
by the Legislature, $1,300 M in funding for expenditures and
grants for multibenefit ecosystem and watershed protection and
restoration projects that protect and improve California
watersheds, wetlands, forests, and floodplains.
Funds would be made available as follows:
$550 Mto specific conservancies, the Wildlife Conservation
Board, and the California Coastal Protection Council
according to a specific schedule.
500 Mto fulfill the obligations of the State of California in
complying with the terms of any of the following:
The February 18, 2010, Klamath Basin
Restoration Agreement or Klamath Hydroelectric
Settlement Agreement.
The Quantification Settlement Agreement.
The San Joaquin River Restoration
Settlement.
Refuge water supply acquisition pursuant to
the Central Valley Project Improvement Act.
The Tahoe Regional Planning Compact.
Expenditures funded by this subdivision would be
required to fund capital assets.
250 Mto the state board for projects that develop, implement,
or improve a stormwater capture and use plan and that
capture and put to beneficial use stormwater or dry
weather runoff. Eligible projects would include:
Projects that capture, convey, treat, or put
to beneficial use stormwater or dry weather runoff.
The development of stormwater capture and
reuse plans.
Decision support tools, data acquisition,
and data analysis to identify and evaluate the
benefits and costs of potential stormwater capture
and reuse projects.
Projects that, in addition to capturing and
reusing stormwater or dry weather runoff, improve
water quality, provide public benefits, such as
augmentation of water supply, flood control, open
space and recreation, and projects designed to mimic
or restore natural watershed functions.
10
Projects would require a 50 percent local cost share,
but may suspend or reduce the matching requirements for
projects that capture or reuse stormwater or dry
weather runoff in disadvantaged communities.
The state board would be required to adopt a policy
establishing criteria for projects funded by this bond
program to ensure that a project funded pursuant to
this section complies with water quality laws and does
not put at risk any groundwater or surface water
supplies.
Chapter 10. Groundwater Sustainability. This chapter would
authorize $500 M, upon appropriation by the Legislature to the
state board, for expenditures, grants, and loans for projects to
prevent or cleanup the contamination of groundwater that serves
or has served as a source of drinking water. Funds appropriated
pursuant to this section would be available for projects
necessary to protect public health by preventing or reducing the
contamination of groundwater that serves or has served as a
major source of drinking water for a community.
Projects would be prioritized based upon the following criteria:
The threat posed by groundwater contamination to the affected
community's overall drinking water supplies, including an
urgent need for treatment of alternative supplies or increased
water imports if groundwater is not available due to
contamination.
The potential for groundwater contamination to spread and
impair drinking water supply and water storage for nearby
population areas.
The potential of the project, if fully implemented, to enhance
local water supply reliability.
The potential of the project to maximize opportunities to
recharge vulnerable, high-use groundwater basins and optimize
groundwater supplies.
The project addresses contamination at a site for which the
courts or the appropriate regulatory authority has not yet
identified responsible parties, or where the identified
responsible parties are unwilling or unable to pay for the
total cost of cleanup.
The Legislature, by statute, would be required to establish both
of the following:
11
A requirement that the grantee repay grant funds in the event
of cost recovery from the parties responsible for the
groundwater contamination.
A requirement that the grantee make reasonable efforts to
attempt to recover the costs of cleanup from the parties
responsible for the contamination, except that a grantee shall
not be required to seek cost recovery related to the costs of
response actions apportioned to responsible parties who are
insolvent or cannot be identified or located or when a
requirement to seek cost recovery would impose a financial
hardship on the grantee.
Other provisions include:
Projects would be selected by a competitive grant or loan
process with added consideration for those projects that
leverage private, federal, or local funding.
Projects would require a local cost share of not less than 50
percent of the total costs of the project. The cost-sharing
requirement could be waived or reduced for projects that
directly benefit a disadvantaged community or an economically
distressed area.
Any agency administering grants or loans would be required to
assess the capacity of a community to pay for the operation
and maintenance of the facility to be funded.
At least 10 percent of the funds available pursuant to this
chapter would be allocated for projects serving severely
disadvantaged communities.
Any agency administering funding from this chapter would be
required to operate a multidisciplinary technical assistance
program for small and disadvantaged communities and shall
provide funding for technical assistance to disadvantaged
communities.
Chapter 11. Water Recycling Program. This chapter would
authorize $500 M, upon appropriation by the Legislature to the
state board, for grants for water recycling and advanced
treatment technology projects, including all of the following:
Water recycling projects, including, but not limited to,
treatment, storage, conveyance, and distribution facilities
for potable and nonpotable recycling projects.
Contaminant and salt removal projects, including groundwater
and seawater desalination and associated treatment, storage,
conveyance, and distribution facilities.
Dedicated distribution infrastructure to serve residential,
agricultural, commercial, and industrial end-users to allow
the use of recycled water.
Pilot projects for new salt and contaminant removal
12
technology.
Groundwater recharge infrastructure related to recycled water.
Technical assistance and grant writing assistance for
disadvantaged communities.
Projects would require a local cost share of not less than 50
percent of the total costs of the project. The cost-sharing
requirement could be waived or reduced for projects that
directly benefit a disadvantaged community or an economically
distressed area.
Projects would be selected on a competitive basis, considering
all of the following criteria:
Water supply reliability improvement.
Water quality and ecosystem benefits related to decreased
reliance on diversions from the Delta or instream flows.
Public health benefits from improved drinking water quality.
Cost effectiveness.
Energy efficiency and greenhouse gas emission impacts.
Reasonable geographic allocation to eligible projects
throughout the state, including both northern and southern
California and coastal and inland regions.
The program authorized by this chapter would be required to be
implemented consistent with water recycling programs established
under Proposition 13 (2000) or consistent with desalination
programs established under Proposition 50 (2002).
Chapter 12. Water Conservation. This chapter would authorize
$250 M, upon appropriation by the Legislature to DWR, for direct
expenditures and grants for water conservation and water use
efficiency plans, projects, and programs, including any of the
following:
Urban water conservation plans, projects, and programs,
including regional projects and programs, implemented to meet
the 20x2020 conservation targets.
Agricultural water management plans and efficiency projects
and programs.
The department would be required to award grants in a
competitive process that considers, as primary factors, the
local and statewide conservation and water use efficiency
benefits of the measures proposed for grants.
Chapter 13. Local and Regional Storage Projects. This chapter
would provide $100 M continuously appropriated to DWR for the
13
public benefits associated with the following:
Local and regional surface and groundwater storage projects
that improve the operation of water systems in the state;
Local and regional conjunctive use and reservoir reoperation
projects; and
Local and regional projects that improve dam stability in
seismic events.
DWR would be required to fund projects through a competitive
public process that ranks potential projects based upon the
expected return for public investment as measured by the
magnitude of the public benefits provided.
Funds could not be expended for the costs of environmental
mitigation measures or compliance obligations except for those
associated with providing the public benefits.
Other Provisions of the Bond:
No more than 5 percent of the funds allocated for a program
could be used to pay the administrative costs of that program.
Up to 10 percent of funds allocated for each program could be
used to finance planning and monitoring necessary for the
successful design, selection, and implementation of the
projects authorized under that program.
Each state agency administering a bond funded competitive
grant program would be required to develop project
solicitation and evaluation guidelines. The guidelines could
include a limitation on the dollar amount of grants to be
awarded. Agencies could use existing guideline if those
guidelines otherwise met the requirements the programs funded
through this bond.
Exempts all bond funded programs, except those funded by
Chapter 8. Statewide Water System Operational Improvement for
Drought Preparedness, from Administrative Law review of
guidelines, funding criteria, etc.
Establishes the intent of the people that the investment of
public funds pursuant to this division will result in public
benefits.
States that the bond is intended to promote the coequal goals
of providing a more reliable water supply for California and
protecting, restoring, and enhancing the Delta ecosystem
The State Auditor would be required to conduct an annual
programmatic review and an audit of expenditures from the
fund. The State Auditor would report its findings annually on
or before March 1 to the Governor and the Legislature, and
would make the findings available to the public.
The Legislature would be authorized to enact legislation
14
necessary to implement programs funded by this measure.
Bond funds may not be expended to support or pay for the costs
of environmental mitigation measures except as part of the
environmental mitigation costs of projects financed by this
bond. Funds provided by this division may be used for
environmental enhancements or other public benefits.
Funds provided by this division could not be expended to pay
the costs of the design, construction, operation, mitigation,
or maintenance of Delta conveyance facilities. Those costs
would be the responsibility of the water agencies that benefit
from the design, construction, operation, or maintenance of
those facilities.
Eligible applicants would be public agencies, public
utilities, federally recognized Indian tribes, state Indian
tribes listed on the Native American Heritage Commission's
California Tribal Consultation List, and nonprofit
organizations.
All references in this bond to other provisions of law would
incorporate any future amendments to those provisions of law.
Funds provided by this bond could be used to acquire water if
both of the following conditions are met:
" The acquisition involves a long-term water transfer, a
purchase of water, or other agreement that results in
enhanced stream flow such as reservoir reoperation.
" The Department of Fish and Wildlife determines that the
acquisition will provide fisheries or ecosystem benefits or
improvements.
ARGUMENTS IN SUPPORT
According to a coalition of water agencies and farming and
business interests, "In 2009, the Legislature recognized that
bond funding was needed for water supply reliability, Delta
ecosystem restoration and other water-related needs. The severe
drought that California is experiencing has dramatically brought
California's water supply reliability problems to the public's
attention. With communities running out of drinking water, fish
being transported in trucks, and water deliveries for farmers
being cut dramatically - the time is now for California to pass
a comprehensive water bond to prepare for future droughts and
address critical water-related needs."
"SB 1250 includes substantial funding for local and regional
water projects throughout the state through the Integrated
Regional Water Management Plan program. It includes funding for
drinking water projects - with special focus on funding for
disadvantaged communities that do not have safe drinking water."
15
"The bill also includes a stand-alone chapter regarding
groundwater quality - and more funding for this category than
the other water bond bills that the Senate Natural Resources and
Water Committee has heard to date. The bill will also address
watershed protection which is critical to both water quality and
water supply."
"SB 1250 would help fund broader needs in California - such as
Delta ecosystem restoration and storage - both surface storage
and below surface storage. It would provide for continuous
appropriation of the storage dollars so that the decisions on
storage can be made by a commission in a fact-driven process
with criteria and procedural safeguards."
"For these reasons, our organizations support SB 1250 and
respectfully request your "AYE" vote."
ARGUMENTS IN OPPOSITION
Natural Resources Defense Council (NRDC) writes "Chapter 8
(storage) is one of the most problematic parts of the SB 1250.
NRDC supports substantial bond funding for storage, provided
that: (1) there is legislative oversight of these funds, like
all other chapters of the bond; (2) the bond provides as much or
more funding for conservation, water recycling, and other
integrated water management programs which are a far more
cost-effective and environmentally sustainable source of new
water for California; (3) surface storage and groundwater
storage projects compete for funding on a level playing field,
to ensure that the best projects are funded; and (4) the bond
explicitly prohibits funding for any storage project that would
impact a river currently protected by the state or Federal Wild
& Scenic River Acts, including explicitly prohibiting spending
to expand Shasta Dam (as the State has already concluded this
project would violate state law). Unfortunately, Chapter 8 does
not meet these criteria."
NRDC also wants to see more explicit accountability requirements
for complying with the Water Conservation Act of 2009. "Chapter
4 of SB 1250 should be amended to explicitly provide that an
urban or agricultural water supplier is ineligible to apply for
funds unless they demonstrate compliance with the provisions of
section 10608.56 of the Water Code and related requirements."
A number of other environmental organizations further question
the size of the bond, raising concerns about the impact of its
repayment on the General Fund, and about the willingness of
16
voters to approve a bond of this size. (This letter referred to
the previous $9.45 B version of this bill).
COMMENTS
1. How Much Is Too Much? The 2009 bond that is currently on the
November ballot would authorize $11.14 B in general obligation
bond for water related investments. This bill, the largest bond
bill heard in this committee this year, would authorize a $10.15
B bond - about $1 B less that that currently on the ballot.
Some of the motivation for replacing the 2009 bond is that it is
perceived by some to be simply too large. This raises the
question generally, what is the right size? And in the context
of this proposal, is it too big?
------------------------------------
| Bond Bills Heard In Committee This |
| Year: |
------------------------------------
|--------+------------------+--------|
|SB 1370 |Galgiani | $ 6.26 |
| | | B|
|--------+------------------+--------|
| SB 848 |Wolk | $ 6.83 |
| | | B|
|--------+------------------+--------|
|AB 1331 |Rendon | $ 8.00 |
| | | B|
|--------+------------------+--------|
| SB 927 |Cannella & Vidak | $ 9.22 |
| | | B|
|--------+------------------+--------|
|SB 1250 |Hueso |$ 10.15 |
| | |B |
| | | |
------------------------------------
2. Where To Trim? If this bond were deemed too large, what
funding categories would be reduced or eliminated? Recent
amendments added $700 M in new funding programs ($350 M for
conveyance projects, $250 M for water conservation, and $100 M
for local and regional storage). If this bond was to be
reduced, would the newly added programs be the first to be cut?
Would cuts be across the board? Are some programs sacrosanct?
3. Geographic Equity. This bond would provide more than half
its funding to support the Delta and create more storage. As
17
discussed below, the storage funds would largely benefit the
Central Valley, and the Delta funds would largely benefit those
who export water from the Delta, namely Central Valley Project
(CVP) and State Water Project (SWP) contractors. Conversely,
these funds would not benefit those parts of the state outside
of the Central Valley that are not served by the Central Valley
Project or State Water Project; namely, the Central and North
Coasts and most of the Bay Area.
To more precisely evaluate the relative geographic benefits of
the bond, one must classify the funding programs by potential
beneficiaries. Some funds, such as the water quality programs,
are available competitively statewide, so potentially all parts
of the state could benefit. Others, such as IRWMP, are
specifically distributed by region. Still others are assigned
to agencies with specific geographic jurisdictions, so the
regional distribution must be inferred. Finally, service areas
of the CVP and SWP, for example, do not encompass or exclude
entire regions, so some judgment must be used as well.
Staff categorized the funding proposed by this bond by IRWMP
region. Generally, the mountain, desert, and north-of-Ventura
Coastal regions would be able to compete for or would directly
benefit from about one-third of the programs funded by this
proposal. Southern California regions would be able to compete
for or would directly benefit from about 55 percent of the bond
funds, and the Central Valley regions would be able to compete
for or would directly benefit from over 85 percent of the funds.
4. Storage - Chapter 8 . Most of the storage provisions in this
bond are virtually identical to those the 2009 bond, so the
comments on that bond in the committee background for our
September 25, 2013 informational hearing apply here as well.
As with many of the previous bonds presented to this committee
this year, the storage provisions of this bond are contentious.
The issues fall into the following categories:
Loss of the Legislative Branch's power to allocate funds.
Criteria that are biased against groundwater storage and that
restrict geographic eligibility.
Broadening the eligible uses of the funds.
Loss of the Legislative Branch's power to allocate funds.
This bill provides that funds for water storage projects would
be continuously appropriated to the California Water
Commission. As noted in the committee background for our
September 25, 2013 informational hearing, continuous
appropriations eliminate one of the Legislature's key checks
18
on the powers of the executive branch, namely, the power to
appropriate funds.
Criteria that are biased against groundwater storage & that
restrict geographic eligibility. While the provisions in
Chapter 8 do set up a competitive process, the deck appears to
be stacked to approve only the three CalFed storage projects.
Specifically, by including recreation and emergency supplies
as public benefits, and further, by using the value of public
benefits as the criteria for selecting projects, only the
large surface storage projects could truly compete for
funding. Indeed, it is difficult to imagine what the
recreational benefits of a groundwater recharge basin might
be. Additionally, projects funded under Chapter 8 are
required to provide "measurable improvements to the Delta
ecosystem or to the tributaries to the Delta.' This
requirement effectively eliminates funding for projects
outside the Central Valley. As the criteria for funding
appear skewed such that only the 3 large storage projects can
effectively compete for funding, one might argue that Chapter
8 constitutes a covert earmark.
Broadening the eligible uses of the funds. In addition to
building more traditional storage projects, there is a desire
of many to explore recovering lost storage capacity, capacity
lost by seismic vulnerability or sedimentation. Additionally,
some water agencies are looking to build surface storage not
for drinking water supplies, but for recycled water. However,
recent amendments, instead of broadening the list of eligible
projects, deleted the provision that would have made seismic
retrofit projects eligible for funding from this program.
5. Local and Regional Storage. Recent amendments did add a new
storage program, $100 M continuously appropriated to DWR for the
public benefits of local and regional storage projects.
Especially when compared to the language in Chapter 8, the new
language seems short of detail. However, it does raise a number
of questions.
Why create an all-new program? Chapter 8 provides much
guidance as to how to measure public benefits, the method for
selecting projects, etc. It is not clear why an all-new
program is necessary.
Why a statewide program? As it appears that the Central
Valley is the principal beneficiary of Chapter 8, why would
Central Valley projects be eligible for this new funding
19
program as well?
Why only $100 M? It is not apparent why the storage needs of
the Central Valley are $3 B, yet the rest of the state needs
only one-thirtieth that amount.
Why not simply broaden Chapter 8? Those provisions could be
amended so that all the state's storage projects could compete
on an even basis. That would ensure the state's capacity to
store more water was accomplished through the most cost
effective projects.
6. Necessary Changes to Storage Provisions. Amendments are
needed to do the following:
Make storage projects under Chapter 8 subject to appropriation
by the Legislature.
Delete emergency response as fundable public benefit and a
criterion for project selection.
Delete recreation as fundable public benefit and a criterion
for project selection.
Clarify that only projects within the Delta watershed need to
provide measurable improvements to the Delta ecosystem.
Add sediment removal and current seismic improvements to the
list of projects eligible for storage funds, and clarify that
storage for recycled water is also an eligible project.
Delete the new Chapter 13 regarding local and regional
storage.
7. Covert Earmark. This committee has been very consistent in
not approving any bond measures that contain earmarks, whether
overt or covert. (See previous analysis of SB 927 (Cannella and
Vidak) for a discussion of the distinction between overt and
covert earmarks.)
Recent amendments provide $350 M in �79733 for planning, design,
and construction of local and regional conveyance projects that
support regional and interregional connectivity and water
management. Staff is aware of only one set of projects that
meets the requirements of that section, one or more proposed
bidirectional canal(s) in the San Joaquin Valley to connect the
Central Valley Project's Friant-Kern Canal to the State Water
Project's California Aqueduct.
To be consistent with previous committee actions, an amendment
is needed to remove this provision. Alternatively, as one of
the purposes of the cross valley canal is to facilitate
operations of the proposed Temperance Flat Reservoir, an
20
amendment could be made that would make this project eligible
for funding under the Chapter 8 storage program.
8. Compliance . The background observed that while each bond
proposal made grants contingent on complying with specific
statutes, proposals were not consistent regarding which statutes
are prerequisite. This measure does not require DWR to certify
that IRWMP applicants are compliant with the Urban Water
Management Planning Act, Agricultural Plans, or Groundwater
Management plan requirements. Instead, DWR would likely
continue its current practice of having agencies self-certify
that they are compliant.
Moreover, the compliance requirements only apply to regional
IRWMP: Not other funding programs for which urban and
agricultural suppliers and groundwater managers may otherwise be
eligible. These include the groundwater sustainability, water
recycling, water conservation programs.
While DWR's approach may seem efficient, committee staff is
aware of a number of instances where agencies have in fact not
been fully compliant with statutory requirements and yet
received bond funds. Staff of the Delta Stewardship Council
have made similar observations. If a requirement is important
enough for the Legislature to put it in statute, it is important
enough for the bond managing agencies to ensure full compliance
with that statute.
To address this issue, an amendment is needed to require DWR to
certify that urban and agricultural suppliers and groundwater
managers are be compliant with the Urban Water Management
Planning Act, Agricultural Plans, or Groundwater Management Plan
requirements, as appropriate, and a condition of receiving any
funds from this bond. Further, an exception should be made for
grants intended to bring the agency into compliance with the
applicable law.
9. Matching Rates. This bill requires a 50 percent cost share
for most grant programs, which can be reduced or waived for
disadvantaged communities. Some complain the 50% share is
difficult for smaller, though not disadvantaged, communities to
afford. An amendment is needed to reduce matching rates to 25
percent that could be reduced or waived for disadvantaged
communities
10. Grants Versus Direct Expenditures. Previous bond proposals
heard by this committee generally provided all of the funds
21
through competitive grant programs. For a number of programs,
this proposal would provide funds for grants and direct
expenditures. This raised two sets of questions:
Should DWR, for example, have access to bond funds to fund
projects or programs outside of the competitive grant
framework?
If so, what guidance is necessary in the bond to ensure those
direct expenditures are appropriate?
11. Other Issues. Recent amendments raise two technical
issues:
Coequal Goals. A new provision was added to the intent
language in �79701 (f) regarding the coequal goals, as defined
in �85054. The section both cites and paraphrases the
language in �85054. Given the sensitivities regarding the
definition of coequal goals, an amendment is needed to either
simply cite �85054 or to repeat the entire section verbatim.
Funds for Water Purchases. A new provision was added stating
that funds provided by this bond could be used to acquire
water if both of the following conditions are met:
" The acquisition involves a long-term water transfer, a
purchase of water, or other agreement that results in
enhanced stream flow such as reservoir reoperation.
" The Department of Fish and Wildlife determines that the
acquisition will provide fisheries or ecosystem benefits or
improvements.
This language would allow the use of bond funds to make single
year water purchases. Generally, use of bond should funds
should be limited to expenditures and purchases that provide
benefits for roughly the same period that the debt is
outstanding. Practically, this means one doesn't go into debt
to fund an annual expense. An amendment is needed to restrict
the purchase of water to the acquisition of water rights or
long term transfers.
12. Related Measures:
SB 848 (Wolk) - would repeal the water bond currently on the
November 2014 and would replace it with the Safe Drinking
Water, Water Quality, and Water Supply Act of 2014, a $6.825 B
general obligation bond to finance a variety of water
resources related programs and projects. (Passed SNR&W 6-0)
SB 927 (Cannella & Vidak) - would amend the water bond
currently on the November 2014, reducing the authorized amount
22
from $11.14 B to $9.217 B, and rename the measure the Safe,
Clean, and Reliable Drinking Water Supply Act of 2014.
(Failed SNR&W 3-6)
SB 1370 (Galgiani) would repeal the water bond currently on
the November 2014 the Reliable Water Supply Bond Act of 2014,
a $5.1 B general obligation bond to finance surface water
storage projects. (Held in SNR&W)
AB 1445 (Logue) - would repeal the water bond currently on the
November 2014 and would replace it with the California Water
Infrastructure Act of 2014, a $5.8 B general obligation bond
to finance public benefits associated with water storage
projects.
AB 1331 (Rendon) - would repeal the water bond currently on
the November 2014 and would replace it with the Clean and Safe
Drinking Water Act of 2014, a $8.0 B general obligation bond
to finance a variety of water resources related programs and
projects. (Passed with committee amendments 7-2)
AB 2043 (Bigelow & Conway) - would repeal the water bond
currently on the November 2014 and would replace it with the
Safe, Clean, and Reliable Drinking Water Supply Act of 2014, a
$7.935 B general obligation bond to finance a variety of water
resources related programs and projects.
AB 2554 (Rendon) - would repeal the water bond currently on
the November 2014 and would replace it with the California
Water Infrastructure Act of 2014, a $8.5 B general obligation
bond to finance public benefits associated with water storage
projects.
AB 2686 (Perea) - would repeal the water bond currently on the
November 2014 and would replace it with the Clean, Safe, and
Reliable Water Supply Act of 2014, a $9.25 B general
obligation bond to finance a variety of water resources
related programs and projects.
13. Referred to Environmental Quality Committee. This analysis
does not address issues within the purview of the Senate
Environmental Quality Committee. Issues likely to be raised by
that committee include:
Definitions of "disadvantaged community," "severely
disadvantaged community," and "economically distressed
community."
The structure of the grant and loan program for public water
23
system infrastructure improvements.
The role of the State Water Resources Control Board in
awarding IRWMP grants.
The provision of funds for private well owners.
Whether to provide funds to State Parks to comply with
drinking water and wastewater requirements.
Other water quality related issues raised in the committee
background for the September 25, 2013 joint hearing.
14. Referred to Governance and Finance Committee. This analysis
does not address issues within the purview of the Senate
Governance and Finance Committee. Issues likely to be raised by
that committee include:
The potential effect of this measure on the state's bonded
indebtedness.
The requirements for establishing loan programs authorized by
this bond.
Other issues associated with the authorization of general
obligation debt.
SUGGESTED AMENDMENTS:
Amendments are suggested in comments 6, 7, 8, 9, and 11
SUPPORT
American Pistachio Growers
Angiola Water District
Association of California Egg Farmers
Association of California Water Agencies
Browns Valley Irrigation District
California Bean Shippers Association
California Chamber of Commerce
California Citrus Mutual
California Cotton Ginners Association
California Cotton Growers Association
California Farm Bureau Federation
California Grain and Feed Association
California Latino Water Coalition
California Pear Growers Association
California Rice Industry Association
California Seed Association
California State Council Of Laborers
City of Corona
City of Sacramento
Cucamonga Valley Water District
Dublin San Ramon Services District
Elsinore Valley Municipal Water District
Friant Water Authority
24
Imperial Irrigation District
Indian Wells Valley Water District
Metropolitan Water District of Southern California (If Amended)
Mojave Water Agency
Monte Vista Water District
Regional Water Authority
Rialto Road Water District
San Gorgonio Pass Water Agency
San Joaquin River Exchange Contractors Authority
Scotts Valley Water District
South Tahoe Public Utility District
Southwest California Legislative Council
The Tehama Colusa Canal Authority
Three Valleys Municipal Water District
Valley Center Municipal Water District
West Valley Water District
Western Agricultural Processors Association
Western Municipal Water District
Westlands Water District
Wheeler Ridge Maricopa Water Storage District
Wilbur Reclamation District #825
OPPOSITION
Clean Water Action
Natural Resources Defense Council
Planning and Conservation League
Sierra Club California
25