BILL ANALYSIS �
SB 1292
Page 1
Date of Hearing: June 17, 2014
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Luis Alejo, Chair
SB 1292 (Hueso) - As Introduced: February 21, 2014
SENATE VOTE : 32-2
SUBJECT : Safe Drinking Water State Revolving Fund.
SUMMARY : Increases, from $3,000,000 to $5,000,000, the maximum
amount of a construction grant award authorized under the Safe
Drinking Water State Revolving Fund (SDWSRF) to each
participating public water system serving a severely
disadvantaged community for the system's share of the cost of a
construction project.
EXISTING LAW :
Pursuant to the California Safe Drinking Water Act, requires the
California Department of Public Health (DPH) to regulate
drinking water and to enforce the federal Safe Drinking Water
Act and other regulations. (Health and Safety Code (HSC) �
116275 et seq.):
Pursuant to the SDWSRF Law of 1997 (HSC �116760 et seq.):
1) Provides funding for public water systems through the SDWSRF
to correct deficiencies and problems that pose public health
risks and to meet safe drinking water standards. (HSC
�116760.10)
2) Establishes the SDWSRF and requires DPH to administer the
fund. (�116760.30)
3) Requires DPH to establish criteria for eligibility of SDWSRF
funding consideration. (HSC �116761.50)
4) Authorizes up to 30% of the total amount of funds deposited
in SDWSRF be expended for grants to serve disadvantaged
communities. (HSC �116761.21)
5) Provides specified maximum amounts for grant and loan funding
and authorizes up to 100% grant funding for eligible costs to
a small water system that serves severely disadvantaged
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communities. (HSC �116761.23)
6) Sets the maximum grant to each participating public water
system for its share of the costs of the construction at $3
million. (HSC �116761.23)
7) Provides that DPH may increase the amount of the construction
grant award to $10 million if the following findings are
made:
a) A public water system that serves a disadvantaged
community has a defined project need that exceeds the
maximum grant amount of $3 million;
b) The defined project has been bypassed in at least one
funding cycle due to a lack of funds;
c) The defined project is eligible for funding pursuant to
the program regulations; and,
d) The defined project represents the highest public
health risk among unfunded projects, as determined by DPH
according to its standard criteria. (HSC �116761.23)
FISCAL EFFECT : Unknown.
COMMENTS :
Need for the bill : According to the author's office, "The
current grant cap of $3 Million under the SDWSRF does not
reflect the needs and demands of current infrastructure costs.
Construction, labor, and equipment costs are high and have risen
since the grant cap was established in 2009. Local water
utilities must make costly investments to install, upgrade, or
replace equipment in order to deliver safe drinking water and
protect public health. Increasing the cap to $5 million will
ensure adequate funding for severely disadvantaged communities
with projects of high risk. 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."
Safe Drinking Water State Revolving Fund (SDWSRF) : Congress
established the SDWSRF as part of the 1996 Safe Drinking Water
Act Amendments to better enable public water systems to comply
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with national primary drinking water standards and to protect
public health. The SDWSRF 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 percent 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 the SDWSRF
through SB 1307 (Chapter 734, Statutes of 1997) to help fund the
state's drinking water needs. In California, the SDWSRF is
administered by DPH's Drinking Water Program.
Funding needs of the Heber Public Utility District : The
author's office indicates that the Heber Public Utility District
(HPUD), which serves 7,270 people within the author's district,
is seeking funding through the SDWSRF to make improvements to
its water treatment and distribution plant to address recent
trihalomethane violations and to increase water treatment
capacity. Estimates for improvements to achieve compliance are
$5.7 million. The author notes that Heber is a severely
disadvantaged community in which the median household income is
less than 60% of the statewide median household income. He
argues that 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.
Current law sets the maximum SDWSRF grant to each participating
public water system for its share of the costs of the
construction at $3 million; however, statute authorizes DPH to
approve an increase of a planning grant award of up to $10
million if certain findings are made, including that the project
administrators must have applied for and been denied funding in
a previous funding cycle. The author's office argues that the
existing requirements for an increased award are onerous and
time-consuming for communities most in need.
Drinking Water Program reorganization and the administration of
the SDWSRF : Governor Brown's 2014-15 budget proposes, with the
Legislature's approval, to transfer the State's Drinking Water
Program from DPH to the State Water Resources Control Board
(SWRCB) on July 1, 2014. In March 2014, after a three-month
task force and stakeholder process, Health and Human Services
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Secretary Diana Dooley and Secretary for Environmental
Protection Matt Rodriquez published a Drinking Water
Reorganization Transition Plan to accomplish this
reorganization. In May 2014, the Administration released
proposed trailer bill language consistent with the Transition
Plan. DPH and the SWRCB have indicated that, once the
reorganization is complete, the SWRCB will consolidate the
administration of the SDWSRF with the Clean Water State
Revolving Fund. Should the budget trailer bill be enacted, SB
1292 will need to be amended to conform with the new law.
Would increasing the cap on grants affect the health of the
SDWSRF ? The United States Environmental Protection Agency has
estimated that California will need more than $40 billion
dollars in drinking water infrastructure improvements over the
next 20 years. Unlike loans that provide a return to the SDWSRF
in the form of interest repayment, grants from the SDWSRF reduce
the balance of the fund without contributing to it in the
future. While increasing the cap on SDWSRF funds authorized to
be disbursed in grants to severely disadvantaged communities
will surely help those communities that receive the grants,
larger grant allocations will reduce the overall balance of the
fund and could result in fewer communities receiving needed
funding.
Prior related legislation :
1)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.
2)AB 118 (Environmental Safety and Toxic Materials Committee),
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.
3)AB 983 (Perea) Chapter 515, Statutes of 2011, made several
changes to the laws governing the SDWSRF, including allowing
certain disadvantaged communities to be eligible for grants up
to 100% of project costs.
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4)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.
REGISTERED SUPPORT / OPPOSITION :
Support :
Association of California Water Agencies
California Municipal Utilities Association
California Special Districts Association
California Water Association
Heber Public Utility District
Rural County Representatives of California
Opposition :
None received.
Analysis Prepared by : Shannon McKinney / E.S. & T.M. / (916)
319-3965