BILL ANALYSIS �
SB 1292
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: SB 1292
AUTHOR: Hueso
INTRODUCED: As Introduced
FISCAL: Yes HEARING DATE: April 30, 2014
URGENCY: No CONSULTANT: Rachel Machi
Wagoner
SUBJECT : SAFE DRINKING WATER STATE REVOLVING FUND
SUMMARY :
Existing law , pursuant to the Safe Drinking Water State
Revolving Fund (SDWSRF) Law of 1997 (Health and Safety Code
�116760 et seq.):
1) Provides funding for public water systems through SDWSRF to
correct deficiencies and problems that pose public health
risks and to meet safe drinking water standards.
(�116760.10).
2) Establishes SDWSRF and requires the California Department
of Public Health (DPH) to administer the fund.
(�116760.30).
3) Requires DPH to establish criteria for eligibility of
SDWSRF funding consideration. (�116761.50).
4) Requires DPH to establish a priority list of proposed
projects to be considered for SDWSRF funding and requires
priority be given to projects that meet specified criteria.
(�116760.70).
5) Authorizes up to 30% of the total amount of funds deposited
in SDWSRF be expended for grants to serve disadvantaged
communities. (�116761.21).
6) Provides specified maximum amounts for grant and loan
funding and authorizes up to 100% grant funding for
eligible costs to a small community water system or
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nontransient noncommunity water system that serves severely
disadvantaged communities. (�116761.23).
7) Sets the maximum grant to each participating public water
system for its share of the costs of the construction at $3
million. (�116761.23).
8) Provides that DPH may increase the amount of the
construction grant award to $10 million if specified
findings of need are made by DPH. (�116761.23).
This bill :
1)Increases the maximum amount of a construction grant award
to $5 million for a water system serving severely
disadvantaged communities.
2)By authorizing the increased expenditure of moneys in a
continuously appropriated fund, makes an appropriation.
COMMENTS :
1) Purpose of Bill . According to the author, this bill would
allow more funds to be provided through SDWSRF by
increasing the size of the grant to match increased costs
of living.
The author asserts that "the current grant cap of $3
Million under the SDWSRF does not reflect the needs and
demands of current infrastructure costs as it was set over
17 years ago. Construction, labor and equipment costs are
high and have risen greatly since the current grant cap was
established in 1997. Increasing the cap to $5 Million will
adjust the grant cap for the cost of inflation. The small
rural water districts struggle to maintain an acceptable
ratio of the total outstanding debt to the value of water
treatment plant assets while keeping the water rates
affordable."
The author states that "severely disadvantaged communities
continue to face difficulties in meeting basic water
quality standards because they cannot afford improvements
to their water systems, especially as the cost of living
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has increased and unemployment levels remain high. The
inability to pay for facility upgrades is putting the
populations relying on this drinking water at risk of
serious health implications and exposing them to
inadequately treated water. Severely disadvantaged
communities in the state already pay high water rates and
they cannot afford another increase to cover substantial
new debt. Increasing the grant cap for severely
disadvantaged communities will prevent water rates from
increasing in severely disadvantaged communities, an
already strained user base."
The author provides the example of the Heber Public Utility
District, which is seeking assistance from SDWSRF to make
improvements to the water treatment and distribution plant
to address recent trihalomethanes violations and increase
the rated water treatment capacity from 2.0 MGD to 4.0 MGD.
The minimum improvements deemed necessary for compliance
place the cost of the water treatment plant at
approximately $5.7 Million, well above the $3 Million cap.
Heber is a severely disadvantaged community where the
median household income is less than 60% of the statewide
median household income. The community of Heber already
pays one of the highest water rates in the County of
Imperial and cannot afford another increase to cover
substantial new debt especially as the county faces the
highest levels of unemployment in the state.
2) SDWSRF . Congress established the federal Drinking Water
State Revolving Fund (DWSRF) as part of the 1996 Safe
Drinking Water Act Amendments to better enable public water
systems to comply with national primary drinking water
standards and to protect public health. DWSRF provides
financial assistance in the form of capitalization grants
to states to provide low-interest loans and other
assistance to public water systems. In order to receive
these funds, states must provide a state match equal to 20%
of the federal capitalization grants and must create a
drinking water state revolving fund program for public
water system infrastructure needs and other drinking water
related activities. In response, California established
SDWSRF through SB 1307 (Costa) Chapter 734, Statutes of
1997, to help fund the state's drinking water needs. The
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fund provides public water systems the opportunity to use
subsidized funding to correct infrastructure problems,
assess and protect source water, and improve technical,
managerial, and financial capability.
The United States Environmental Protection Agency (US EPA)
allocates federal DWSRF funds to the states according to a
formula that reflects their proportional share of needs
identified in the most recent Drinking Water Infrastructure
Needs Survey. California annually receives approximately
$86 million in DWSRF capitalization grant money while the
state matches with approximately $17 million.
3) Stretching the SDWSRF . US EPA has estimated that
California will need more than $40 billion dollars in
drinking water infrastructure improvements over the next 20
years. There are many severely disadvantaged communities
across California that are in need of state assistance.
Raising the cap for grants will provide greater assistance
for some of these communities, but that does not mean that
there will be more money available. It just means the
limited funds in the SDWSRF will be concentrated in fewer
communities. By taking a larger piece of this limited
funding for some communities, this may very well mean that
some communities in need that would have otherwise received
state assistance would now receive none.
Additionally, current law already allows for higher grant
awards if DPH makes specified findings of need. This
provision of current law ensures that the higher awards are
made to those communities with the greatest need while
still providing assistance to other communities.
4) Changes to the State Drinking Water Program . Over the last
five years, the Senate Environmental Quality Committee has
considered numerous bills making changes to the
administration of the Drinking Water Program.
In 2013, the Senate Environmental Quality committee heard
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AB 145 (Perea) that would have transferred, during the
2014-15 fiscal year, the duties and responsibilities
related to the regulation and oversight of drinking water,
including the authority to administer SDWSRF from DPH to
the State Water Resources Control Board (SWRCB). In that
hearing, the committee heard testimony over DPH's
non-compliance with federal regulation of the
administration of SDWSRF. The committee contemplated
various solutions and ultimately concluded that a
comprehensive change to SDWSRF was necessary to effectively
fix this funding program. The Senate Environmental Quality
Committee passed AB 145, however the bill was held in the
Senate Appropriations Committee.
In January 2014, Governor Brown proposed to transfer the
Drinking Water Program from DPH to SWRCB on July 1, 2014 as
part of the State Budget. Both the Assembly and Senate
Budget Committees have considered this proposal and the
item has been left open as part of the final budget
discussion.
If this program is going to be transferred to a new
administering agency in July, it would be prudent for the
Legislature to hold off on any additional changes to the
drinking water program and the allocation of funds from
this program until that transfer has been completed. Once
the transfer has been completed, SWRCB will combine the
administration of SDWSRF with the Clean Water State
Revolving Fund and would likely make or recommend
comprehensive changes that would help California's most
disadvantaged communities.
5) Prior legislation . AB 21 (Alejo), Chapter 628, Statutes of
2013, created the Safe Drinking Water Small Community
Emergency Grant Fund which would be administered by DPH and
used to provide grants for emergency drinking water
projects that serve disadvantaged and severely
disadvantaged communities.
AB 118 (Environmental Safety and Toxic Materials Committee),
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Chapter 631, Statutes of 2013, declared certain water
systems serving a severely disadvantaged community as
eligible for a grant instead of a loan from SDWSRF and
allowed loans from SDWSRF to cover the full cost of a
project, subject to availability of funds and the
applicant's ability to repay.
AB 2208 (Perea) (2012) authorized DPH to combine proposed
studies or projects from multiple applicants, with their
consent, when evaluating applications for SDWSRF funding.
The bill was subsequently amended to a different subject
and was held in Senate Committee on Rules.
AB 2238 (Perea) (2012) required DPH to review and consider
pertinent local agency formation commission (LAFCO) studies
or reports and consult with the LAFCO executive officer
when processing an application for SDWSRF funding. The
bill was subsequently amended to a different subject and
held in Senate Appropriations Committee.
AB 2529 (Wieckowski) (2012) contained several changes to
SDWSRF pertaining to implementation and administration of
the fund. The bill was subsequently amended to a different
subject and was held in Senate Committee on Rules.
AB 983 (Perea) Chapter 515, Statutes of 2011, made several
changes to the laws governing the state program providing
grants and loans for safe drinking water projects,
including allowing certain disadvantaged communities to be
eligible for grants up to 100% of project costs.
AB 2515 (V.M. Perez) Chapter 601, Statutes of 2010,
authorized DPH to provide a grant from SDWSRF for
point-of-entry and point-of-use water treatment systems.
AB 2356 (Arambula) Chapter 609, Statutes of 2008, required
SWRCB to take specified actions when allocating funds to
small, disadvantaged communities for wastewater collection,
treatment or disposal projects and establishing a payment
process pursuant to which the recipient of financial
assistance receives funds within 30 days of the date on
which SWRCB received a project payment request.
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AB 783 (Arambula) Chapter 614, Statutes of 2007, directed
DPH to prioritize funding of water projects in
disadvantaged communities; and directed DPH to promote,
provide funds for studies on, and prioritize funding for
projects which consolidate small public water systems in
certain situations.
SOURCE : Author
SUPPORT : California Municipal Utilities Association
California Special Districts Association
California Water Association
Heber Public Utility District
OPPOSITION : None on file