BILL NUMBER: AB 118 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 17, 2013
INTRODUCED BY Committee on Environmental Safety and Toxic Materials
(Alejo (Chair), Bloom, Lowenthal, Stone, and Ting)
(Coauthors: Assembly Members Perea and Wieckowski)
JANUARY 14, 2013
An act to amend Sections 116760.43, 116760.50,
116761.20 , 116761.21, and 116761.23
, 116761.50, 116761.65, and 116761.70 of the
Health and Safety Code, relating to drinking water.
LEGISLATIVE COUNSEL'S DIGEST
AB 118, as amended, Committee on Environmental Safety and Toxic
Materials. Safe Drinking Water State Revolving Fund.
Existing law, the California Safe Drinking Water Act, requires the
State Department of Public Health to administer provisions relating
to the regulation of drinking water to protect public health. The
department's duties include, but are not limited to, conducting
research, studies, and demonstration programs relating to the
provision of a dependable, safe supply of drinking water, enforcing
the federal Safe Drinking Water Act, adopting and enforcing
regulations, and conducting studies and investigations to assess the
quality of water in domestic water supplies.
Existing law establishes the Safe Drinking Water State Revolving
Fund, which is continuously appropriated to the department for
the provision of grants and revolving fund loans
to provide for the design and construction of
projects for public water systems that will enable suppliers to meet
safe drinking water standards. Existing law authorizes the
department to establish specified separate accounts or subaccounts
within the fund. Under existing law, a grant is
authorized only to the extent the department finds the public agency
or not-for-profit water company is unable to repay the full costs of
a loan.
This bill would limit loans and grants from the fund for planning
and preliminary engineering studies, project design, and construction
costs to those incurred by community and not-for-profit noncommunity
public water systems and would specify that a small community water
system or nontransient noncommunity water system that is owned by a
public agency or a private not-for-profit water company and is
serving a severely disadvantaged community, is deemed to have no
ability to repay a loan.
Existing law requires applicants for loans or grants to provide
specified information to the department. Existing law authorizes the
department to enter into contracts with applicants for grants or
loans, and requires and authorizes these contracts to contain
specified information.
Under existing law, the maximum amount of a construction grant
award to a public water system for a single project is $3 million or,
for a public water system that serves a disadvantaged community, $10
million, as specified.
This bill would authorize the department to adopt interim
regulations for purposes of implementing provisions relating to the
Safe Drinking Water State Revolving Fund. The bill would require an
applicant for funding to demonstrate that it has the technical,
managerial, and financial capacity to operate and maintain its water
system for at least 20 years, as specified. The bill would
authorize an applicant, subject to specified conditions, to receive
up to the full cost of a project in the form of a loan. The
bill would require that contracts entered into between the department
and an applicant include certain additional information, including
the time for the completion of the project, and authorize the
contracts to include certain additional information, including an
agreement by the supplier to complete, as part of the project, a rate
study.
This bill would make other related changes.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 116760.43 of the Health and
Safety Code is amended to read:
116760.43. (a) The department may adopt emergency regulations
pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code necessary or convenient
to implement this chapter and to meet requirements pursuant to the
federal act.
(b) The adoption of any emergency regulations that are filed with
the Office of Administrative Law within 18 months of the effective
date of this act shall be deemed to be an emergency and necessary for
the immediate preservation of the public peace, health and safety,
or general welfare.
(c) In addition to the authority granted pursuant to subdivision
(a), the department may adopt interim regulations to implement this
chapter and to meet the requirements of the federal act and its
implementing regulations or guidelines. The interim regulations shall
not be subject to the rulemaking provisions of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, and:
(1) Shall be subject to a public review and comment period of not
less than 30 days.
(2) Shall take effect when filed with the Secretary of State, and
shall be published in the California Code of Regulations.
(3) Shall remain in effect for three years, unless sooner repealed
or amended by additional regulations adopted pursuant to this
subdivision.
(4) May amend or repeal emergency regulations adopted pursuant to
subdivision (a).
(5) Shall supersede any conflicting emergency regulations adopted
pursuant to subdivision (a).
(d) Applicable regulations in effect at the time a complete
application for funding a project pursuant to this chapter is
received by the department shall apply to the project funding, unless
the department determines a regulation adopted later, but prior to
the date a funding agreement is issued for a project, would be more
beneficial to the project applicant, in which case the later adopted
regulation may be applied.
SEC. 2. Section 116760.50 of the Health and
Safety Code is amended to read:
116760.50. The department shall establish criteria that shall be
met for projects to be eligible for consideration for funding under
this chapter. The criteria shall include all of the following:
(a) Except as provided in subdivision (d), all preliminary design
work for a defined project that will enable the applicant to supply
water that meets safe drinking water standards, including a cost
estimate for the project, shall be completed.
(b) A legal entity shall exist that has the authority to enter
into contracts and incur debt on behalf of the community to be served
and owns the public water system or has the right to operate the
public water system under a lease with a term of at least 20 years,
unless otherwise authorized by the department. If the proposed
project is funded by a loan under this chapter, the department may
require the applicant to secure a lease for the full term of the loan
if the loan exceeds 20 years.
(c) The applicant shall hold all necessary water rights.
(d) (1) The applicant shall have completed, prior to receiving a
funding agreement, environmental review and documentation of the
defined project, including, but not limited to, any review required
pursuant to the California Environmental Quality Act (Division 13
(commencing with Section 21000) of the Public Resources Code) and the
guidelines adopted pursuant thereto. Any measures required for
compliance with applicable environmental laws and regulations shall
be included in the final plans for the defined project.
(2) Notwithstanding paragraph (1), a defined project may be
subject to further or supplemental review consistent with the
requirements of any applicable environmental laws or regulations.
(e) The applicant has assembled sufficient financial data to
establish its ability to complete the proposed project and to
establish the amount of debt financing it can undertake.
(f) The applicant shall demonstrate that it has the technical,
managerial, and financial capacity to operate and maintain its water
system, including the project, in accordance with the federal act,
state law, and applicable regulations for at least 20 years, or shall
submit an acceptable plan for achieving this capacity by the time
the project is scheduled to be completed.
SEC. 3. SECTION 1. Section 116761.20
of the Health and Safety Code is amended to read:
116761.20. (a) Planning and preliminary engineering studies,
project design, and construction costs incurred by community and
not-for-profit noncommunity public water systems may be funded under
this chapter by loans, and, if these systems are owned by public
agencies or private not-for-profit water companies, by grants or a
combination of grants and loans.
(b) (1) The department shall determine what portion of the full
costs the public agency or private not-for-profit water company is
capable of repaying and authorize funding in the form of a loan for
that amount. The department shall authorize a grant only to the
extent the department finds the public agency or not-for-profit water
company is unable to repay the full costs of a loan.
(2) Notwithstanding any other provision of this chapter, a small
community water system or nontransient noncommunity water system that
is owned by a public agency or a private not-for-profit water
company and serving a severely disadvantaged community, is deemed to
have no ability to repay a loan.
(c) At the request of the department, the Public Utilities
Commission shall submit comments concerning the ability of suppliers,
subject to its jurisdiction, to finance the project from other
sources and to repay the loan.
SEC. 4. Section 116761.21 of the Health and
Safety Code is amended to read:
116761.21. Not more than 30 percent and not less than 15 percent,
provided that there are projects eligible for funding as prescribed
in Section 116760.70, of the total amount of the capitalization grant
may be expended for grants. This amount shall be limited to
disadvantaged communities specified in Section 1452(d) of the federal
act (42 U.S.C. Sec. 300j-12).
SEC. 5. SEC. 2. Section 116761.23 of
the Health and Safety Code is amended to read:
116761.23. (a) The maximum amount of a planning grant permitted
under this chapter for each participating public water system's share
of the costs of the planning, engineering studies, environmental
documentation, and design of a single project shall be no more than
five hundred thousand dollars ($500,000).
(b) Unless the department approves an increase pursuant to this
subdivision, the maximum amount of a construction grant award
authorized under this chapter to each participating public water
system for its share of the cost of the construction of a single
project shall be no more than three million dollars ($3,000,000). The
department may approve an increase in the maximum amount for a
construction grant award authorized under this chapter so that the
maximum amount of the construction grant award does not exceed ten
million dollars ($10,000,000) only if the department makes all of the
following findings:
(1) A public water system that serves a disadvantaged community
has a defined project need that exceeds the maximum grant amount of
three million dollars ($3,000,000).
(2) The defined project has been bypassed in at least one funding
cycle due to a lack of funds.
(3) The defined project is eligible for funding pursuant to the
program regulations.
(4) The defined project represents the highest public health risk
among unfunded projects, as determined by the department according to
its standard criteria.
(c) Total funding under this article for planning, engineering
studies, environmental documentation, project design, and
construction costs of a single project, whether in the form of a loan
or a grant, or both, shall be determined by an assessment of
affordability using criteria established by the department.
(d) Subject to all other limitations of this chapter, a small
community water system or nontransient noncommunity water system,
owned by a public agency or private not-for-profit water company,
serving severely disadvantaged communities shall be eligible to
receive up to 100 percent of eligible project costs in the form of a
grant, to the extent the system cannot afford a loan as determined by
the department pursuant to Section 116761.20.
(e) Subject to the availability of funds and the applicant's
ability to repay, an applicant may receive up to the full cost of the
project in the form of a loan bearing interest at the rate
established pursuant to subdivision (a) of Section 116761.65.
SEC. 6. Section 116761.50 of the Health and
Safety Code is amended to read:
116761.50. (a) The department may enter into contracts with
applicants for grants or loans for the purposes set forth in this
chapter. Any contract entered into pursuant to this section shall
include only terms and conditions consistent with this chapter and
the regulations established under this chapter.
(b) The contract shall include all of the following terms and
conditions that are applicable:
(1) An estimate of the reasonable cost of the project or study.
(2) An agreement by the department to loan or grant, or loan and
grant, the applicant an amount that equals the portion of the costs
found by the department to be eligible for a state loan or grant. The
agreement may provide for disbursement of funds during the progress
of the study or construction, or following completion of the study or
construction, as agreed by the parties.
(3) An agreement by the applicant to proceed expeditiously with
the project or study.
(4) An agreement by the applicant to commence operations of the
project upon completion of the project, and to properly operate and
maintain the project in accordance with the applicable provisions of
law.
(5) In the case of a loan, an agreement by the applicant to repay
the state, over a period not to exceed the useful life of the project
or 20 years, whichever is shorter, except as provided in the federal
act, or in the case of a study, over a period not to exceed five
years, that includes all of the following:
(A) The amount of the loan.
(B) The administrative fee specified in subdivision (a) of Section
116761.70.
(C) Interest on the principal, which is the amount of the loan
including, if applicable, an administrative fee.
(6) In the case of a grant, an agreement by the public agency or
private not-for-profit water company to operate and maintain the
water system for a period of 20 years, unless otherwise authorized by
the department.
(7) The time for the completion of the project. Subject to any
requirements of the federal act and its implementing regulations and
guidelines, in the case of a project for planning and a preliminary
design, pursuant to Section 116760.80, the department may determine
on a case-by-case basis an appropriate amount of time for completion
of the project, not to exceed 36 months.
(c) The contract may include any of the following terms and
conditions:
(1) An agreement by the supplier to adopt a fee structure that
provides for the proper maintenance and operations of the project and
includes a sinking fund for repair and replacement of the facilities
in cases where appropriate. The fee structure shall also provide an
acceptable dedicated source of revenue for the repayment of the
amount of the loan, and the payment of administrative fees and
interest.
(2) If the entire project is not funded pursuant to this chapter,
the department may include a provision requiring the applicant to
share the cost of the project or obtain funding from other sources.
(3) An agreement by the supplier to complete, as part of the
project, a rate study pursuant to guidelines established by the
department.
(4) An agreement by the supplier to implement, not later than the
conclusion of the project, the approved plan for achieving technical,
managerial, and financial capacity as specified in subdivision (f)
of Section 116760.50.
(5) If the supplier is a small community water system or
nontransient noncommunity water system, owned by a public agency or
private not-for-profit water company, receiving grant funding, an
agreement by the supplier to comply with guidelines adopted by the
department for any procurement of engineering, environmental
compliance, or architectural services.
(d) The department may require applicants to provide security for
loan contracts.
SEC. 7. Section 116761.65 of the Health and
Safety Code is amended to read:
116761.65. (a) The department shall annually establish the
interest rate for loans made pursuant to this chapter at 50 percent
of the average interest rate, computed by the true interest cost
method, paid by the state on general obligation bonds issued in the
prior calendar year. All loans made pursuant to this chapter shall
carry the interest rate established for the calendar year in which
the funds are committed to the loan, as of the date of the issuance
of the funding commitment. The interest rate set for each loan shall
be applied throughout the repayment period of the loan. Interest on
the loan shall not be deferred.
(b) Notwithstanding subdivision (a), if the loan applicant is a
public water system that is a disadvantaged community or provides
matching funds, the interest rate on the loan shall be zero percent.
SEC. 8. Section 116761.70 of the Health and
Safety Code is amended to read:
116761.70. (a) Not more than 4 percent of the capitalization
grant may be used by the department for administering this chapter.
The department may establish a reasonable schedule of administrative
fees for loans, which shall be paid by the funding recipient to
reimburse the state for the costs of the state administration of this
chapter. The department annually shall establish in the Intended Use
Plan the amount of any administrative fee.
(b) Charges incurred by the Attorney General in protection of the
state's interest in the use of repayment of grant and loan funds
under this chapter shall be paid. These charges shall not be paid
from funds allocated for administrative purposes, but shall be
treated as a program expense not to exceed one-half of 1 percent of
the total amount deposited in the fund.