Ma y 9 , 201 8 Environment Committee Meeting...Ma y 9 , 201 8 Environment Committee Meeting NetApp Building 2, Sharks Conference Room 1375 Crossman Ave., Sunnyvale, CA 94089 1:30-

May 9, 2018

Environment Committee Meeting

NetApp Building 2, Sharks Conference Room

1375 Crossman Ave., Sunnyvale, CA 94089

1:30- 2:00 pm – Networking

2:00- 4:00 pm – Meeting

Call-in information – Dial: 605-475-3215 | Code: 1052733#

Agenda

Time Item Who Outcome

1:30 Networking & Conversation All Information

2:00 Welcome & Introductions

All Information

2:05 Minutes Approval Committee Co-Chairs Action

2:05 Presentation: Introduction to Climate Impact

Score

Alan Gordon, Senior

Fellow, Climate Action

Reserve

Presentation

2:45 Presentation: San Jose Water Company General

Rate Case (GRC)

John Tang, VP

Regulatory, SJWC

Presentation &

Action

3:10 Legislative / Regulatory

San Jose Water Company GRC

AB 2195 (Chau)- Fugitive Natural Gas

Emissions

SB 1301 (Beall)- Coordinated Permitting

AB 2050 (Caballero)- Consolidated Water

Systems

Kendra Schultz, SVLG

Mike Mielke, SVLG

Discussion &

Action

3:50 Reminders / Open Forum

ESS 18: Register

All Information

4:00 Adjourn All N/A

Reminder: Next meeting will be June 13. Host is still needed.

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March 14, 2018 SVLG Environment Committee Meeting Notes & Action Items

Host: Infinera Corp.

Attendees:

Environment Committee Members (in-person): Jim Davis (xOvertime), Soulaiman Itani (Atheer),

Steve Joesten (Infinera)

Members (on-the-phone): Fran Wahl (Tesla), Noella Tabladillo (KP), Kraig Kurucz (Lockheed)

SVLG: Mike Mielke; Kendra Schultz; Heidi Sickler; Nardin Sarkis

Speakers: Alvaro Sanchez, The Greenlining Institute

Agenda Items

1. Approve February Meeting Minutes

o Unanimous approval

2. Open Forum:

Update on Sacramento Advocacy Trip

o Dinner on May 1st

o May 2nd

full day of advocacy from 9-12:30 there will be plenary sessions with

legislators

o Meetings at Capitol from 1-4:30 PM

o Clean commute to Sacramento on Proterra buses

o Legislative targets: AVs, data privacy, EV infrastructure, others

Submit case studies and panels for the summit by 3/22

Kraig: DACs and ARB’s air monitoring and controls and sources of pollutants (e.g. freeways

or individual sites)

o Action/follow-up: Mike to follow-up with Kraig

3. Action Item: Prop 72 Property Tax Exclusion: rainwater capture system (Kendra Schultz, SVLG)

Motion Steve Joesten, 2nd

Jim Davis: The Environment Committee recommends supporting Prop 72.

o Ayes: All o Opposed: none o Abstain: none

4. Action Item: AB 1889 (Caballero) SCVWD Act Revisions (Kendra Schultz, SVLG)

Motion Jim Davis, 2nd

Steve Joesten: The Environment Committee recommends supporting AB 1889.


5. Action Item: SB 1072 (Leyva) Regional Climate Collaborative Program (Kendra Schultz, SVLG)

Motion Jim Davis, 2nd

Adam Albright (Infinera): The Environment Committee recommends supporting SB 1072.


6. Action Item: AB 2145 (Reyes) EV Infrastructure Act (Heidi Sickler, SVLG)

Motion Steve Joesten, 2nd

Fran Wahl: The Environment Committee recommends supporting AB 2145, and asks SVLG to clarify in our support letter that “electric vehicle charging infrastructure” is called out in the bill

o Ayes: All

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o Opposed: none o Abstain: none

7. Presentation: Environmental Equity (Alvaro Sanchez, Environmental Equity Director, The

Greenlining Institute)

Goal: Economic equity as the cornerstone of the organization, as well as addressing

pollution and poverty.

Strategy: Invest CRA dollars in DACs when banks merge.

Priority Bills: AB 32, AB 350, AB 197, AB 398, SB 32, AB 617

AB/SB 1275: put 1M EVs by 2023 and incentivize uptake of EVs in DACs, make sure

vehicles and charging infrastructure are both available in DACs and incentivizing clean

mobility in DACs, not just focusing on the purchase of single-occupancy vehicles.

$6.1B in C&T → invested through 2017

o HSR

o Affordable housing sustainable communities

o Transit and Active Transportation

o Water efficiency

o Urban forestry and energy efficiency

o Low Carbon Transportation

o Electric Vehicles

Cal Enviro Screen: 25% of GGRF funds must be invested in communities burdened by

pollution and poverty (DACs)

o Through December 2016: $1.2B in C&T dollars invested in DACs

o Lifetime GHG emissions reductions from awarded projects by sector: 14.3 MMTCO2e

o Sustainable Communities and Clean Transportation: Over 5 MMT

o Transportation: $806 M (HSR doesn’t perform well)

o EE & Renewable Energy: $189 M

o Affordable Housing & Transformative Climate Communities: $1.06B (housing near

transit don’t perform well)

o Urban Forestry & Urban Greening: $157 M (biggest bang for the buck)

o Low-carbon transportation: $1.25 B

Challenges:

o How to prevent displacement in DACs due to new investments

o Provide a stronger carbon C&T price signal

Priority bill: SB 1072

Upliftca.org priority projects:

o EE and solar programs for the household

o Community groups want access to affordable housing and transformative sustainable

communities

Discussion

o Q: What is the difference between EJ vs. EE (Mike):

A: EJ: focused on why facilities are located in their communities. Strategy is

to get rid of these facilities and eliminating pollution in DACs. EE: ensure

investments focus on clean technology and DACs can benefit economically

from these investments, bringing resources into community to make sure

DACs benefit from clean technology investments

o Q: Low-income vs. Disadvantaged communities? (Jim):

A: DACs: defined by the state, communities burdened by pollution and

poverty. LI: burdened by poverty (not pollution)

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o Q: Has anyone done an analysis on the allocation of C&T dollars to DACs? (Jim)

A: Not aware of any such analysis, but there is a push to invest CRA funds in

Greenlining districts

8. Adjourn

SVLG Environment Committee—Speaker Bio May 9, 2018

Alan Gordon, Senior Fellow for Climate Impact Score, Climate Action Reserve

As Senior Fellow for the Climate Impact Score (CIS), a program of the Climate Action Reserve, Mr. Gordon is assisting the Reserve with advice and business development efforts for CIS.

Immediately prior to joining the Reserve, Mr. Gordon served as Deputy Treasurer for Legislation and Infrastructure Financing for State Treasurer John Chiang, where his responsibilities consisted of managing opportunities for green finance throughout the 16 Boards Commissions and Authorities in the office of the State Treasurer. Prior to that, Mr. Gordon served as Deputy Controller for Environmental Affairs for Controller Chiang, serving as Chair of the State Lands Commission and as a member of the Ocean

Protection Council, among other roles. He began his career as an environmental attorney and served as Counsel and Principal Consultant to the California Senate Committee on Environmental Quality for more than 20 years. Mr. Gordon is also an adjunct faculty member at the University of California, Davis where he teaches environmental policy.

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Date: May 9, 2018

To: Silicon Valley Leadership Group Environment Committee

From: Kendra Schultz, Energy and Environment Associate

RE: San Jose Water Company General Rate Case Application

Issue Every three years San Jose Water Company (SJWC) must file an application with the California Public Utilities Commission (CPUC) to set water rates for the following three-year period. For the period of 2019-2021, SJWC requests authorization to increase rates charged for water service by 9.76 percent in 2019, 3.70 percent in 2020, and 5.17 percent in 2021. Action Environment Committee Staff recommend supporting SJWC’s proposed water rate increases through 2021 to ensure the region has safe and reliable water. Summary SJWC’s proposed rate increases of 9.9% in 2019, 3.7% in 2020, and 5.2% in 2021 would generate $34.3 million, $14.2 million, and $20.6 million, respectively. SJWC cites five primary cost changes as drivers for the increased water rates: decrease in water sales (approximately $14 million), infrastructure replacement ($88 million for a 3-year capex budget increase), depreciation ($8.5 million increase), payroll, pension and benefit costs ($5.3 million increase), and purchased materials and services ($1.3 million increase). During the 2012-2016 drought, SJWC’s water sales decreased significantly as customers increasingly conserved water. Water rate design allocates the majority of costs to volumetric charge, so SJWC experienced significant shortfalls in recovery of fixed costs during those years. Simultaneously, SJWC needs to make significant investments in aging capital infrastructure to ensure it is safe and resilient to stresses of climate change, investments in staff to ensure compliance with increasingly stringent water standards, and investments in purchased materials to aid in cloud computing, customer care and billing, and cybersecurity. Background SJWC has served the San Jose region for over 150 years and provides 230,000 customers with water. They operate 2,470 miles of pipe, 106 pump stations, 96 storage facilities, and 2 water treatment facilities through a workforce of more than 350 employees. In SJWC’s last GRC, the CPUC approved an increase of 8.60 percent in 2016, 3.83 percent in 2017, and 4.22 percent in 2018 to support capital improvements, and other increased costs similar to those outlined in the current GRC. Water utilities are the most capital-intensive of the utility industry; there are high fixed costs of service required to maintain, build, and operate water infrastructure. Drought conservation mandates from the state and the Santa Clara Valley Water District have caused SJWC’s sales to decrease significantly. Even though the drought mandates ended, Californians continue to use less water which affects water utilities’ ability to recover fixed costs to maintain safe water service. Fixed costs make up approximately two-thirds of SJWC’s total costs, and variable costs constitute only one-third. Below is an approximate breakdown of how each dollar is spent:

Water supply costs (38 cents): costs to the Santa Clara Valley Water District for the purchase of treated water

Operating costs (22 cents): operations, maintenance, power purchased from Pacific Gas & Electric (PG&E)

System improvements (21 cent): capital improvements and depreciation Taxes and fees (11 cents): federal, state and local taxes Cost of capital (8 cents): interest paid on debt, and return paid on equity to finance system

improvements

Many SJWC customers express confusion over increased rates despite using less water. The City of San Jose recently became a party to this GRC proceeding citing concerns heard from city residents, 80 percent of whom receive their water from SJWC. The City of San Jose also expressed concerns about how the

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proposed merger between San Jose Water Group (SJWC ’s parent company) and Connecticut Water will affect water rates and expenses. Every three years, the CPUC also approves the cost of capital for SJWC, and other major water utilities. The cost of capital impacts SJWC’s ability to attract private investment necessary to make capital investments in critical water infrastructure. The CPUC adjusted SJWC ’s cost of capital down from 8.09 percent to 7.64 percent for the period of 2018-2020. This is equal to a decrease in service charge of approximately $0.47/month for a typical customer. Analysis SJWC operates, maintains, and periodically replaces more than 2,400 miles of pipes and other critical water infrastructure. Much of the water system SJWC operates was constructed more than 50 years ago and has reached the end of its useful life and ability to deliver safe and reliable water. To protect public health and safety, SWJC has made over $1 billion in system improvements over the last decade, and requires increases in water rates to help pay for these significant capital expenditure costs. Many water system components, including pipes, wells, and tanks, have reached the end of their useful lives, a nd waiting until they fail is not an option. It is critical that SJWC has the resources to protect and maintain the reliability of its water system while balancing affordability and access of safe water to all. While water rates have increased in recent years, water is still one the most cheaply priced commodities. The average SJWC customer pays less than $100 a month, approximately a penny/gallon, for their water supply. SJWC also offers a Water Rate Assistance Program (WRAP), which provides a 15 percent discount on the total water bill for low-income customers. The rate structure outlined in their GRC will allow SJWC to continue its robust low-income rate support program. The Leadership Group has supported member companies ’ GRCs in the past, including PG&E’s GRC in 2013 and 2016. This support allowed PG&E to improve grid reliability, increase access to energy efficiency services, expand supply and distribution capacity, and maintain and replace existing facilities. Like PG&E, SJWC provides an essential service that underlies the economic well-being and quality-of-life of every resident in the Silicon Valley. Timeline San Jose City Council is hosting a public participation hearing on May 30, 2018 to seek feedback from the public on SJWC’s proposed rate increases. SJWC has requested the Leadership Group ’s participation and testimony at this hearing. The GRC will likely be heard before the CPUC in October, with a decision expected in December. The new rates would go into effect on January 1, 2019. Notably, the decision for SJWC’s 2012 GRC was delayed by the CPUC almost two years, and the most recent GRC decision was delayed six months.

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Date: May 9, 2018



RE: AB 2195 (Chau (D-49))– Natural Gas Emissions

Issue AB 2195 would require the California Air Resources Board (CARB) to include in the state’s annual greenhouse gas (GHG) excluded emissions inventory an estimate of the total GHG emissions resulting from the loss or release of uncombusted natural gas that is imported from out-of-state sources. Action Environment Committee staff recommend a support position on AB 2195. Background Almost two-thirds of California households use natural gas for home heating, and almost half of the state ’s utility-scale electricity generation is fueled by natural gas.

1 About 90 percent of natural gas used is

imported through pipelines from the Southwest, Rocky Mountain region, and western Canada. In the production, processing, and transport process, a percentage of that gas is released into the atmosphere. The U.S. Environmental Protection Agency estimates current leakage in the natural gas supply chain at 2-3 percent. A primary component of natural gas is methane, a GHG 84 times more potent than carbon dioxide at trapping heat in the atmosphere over the first 20 years of its release. AB 32 directs CARB to inventory GHG emissions from in-state and out-of-state sources. The state’s emission inventories reflect the best available data at the time of their compilation. Since the state began accounting emissions in 2006, it has updated its collection sources and methodology in line with improved data and technical expertise. For example, in 2015 CARB updated their emissions estimation methodology to capture additional fugitive methane emissions in oil and gas production. When CARB began to inventory emissions in 2006, the pervasiveness of natural gas leakage was not studied as much as it is today. New studies show that fugitive emissions from imported natural gas in California may be substantial. Assuming a conservative leakage rate of 2.4 percent, the state would be causing emissions equal to approximately 60 million metric tons of carbon dioxide equivalent (mtCO 2e) or the equivalent CO2 emitted from 18 coal plants on a 20-year basis. Globally, studies suggest that emissions from natural gas leakage could represent as much as seven percent of total global greenhouse gas emissions as of 2012. Analysis AB 2195 would inventory GHG emissions during the production, processing, and transport of natural gas used in California to increase the state’s understanding of its full emissions profile. These fugitive emissions would be included in the inventory as an informational item, and would not be counted in California’s overall inventory used to measure the state’s progress towards reaching its GHG reduction goals, nor would it affect the cap-and-trade program. The state includes other items in an “excluded emissions” inventory, including interstate and international airline emissions, maritime emissions, oil and gas production and processing, and some military-associated emissions. Implicit in AB 32 is an understanding that to comprehend the full scope of California’s GHG emissions, the state must account for emissions associated with losses, even when those losses occur out-of-state. CARB does this in its accounting of fugitive emissions associated with imported electricity production (eight percent of total GHG emissions in 2015), as well as emissions associated with the combustion of airline fuels for flights ending or originating out-of-state. The state would use the same framework it uses to measure fugitive emissions with imported electricity to count fugitive emissions for imported natural gas. The market and policy makers rely on both the included and excluded emissions inventory to value efforts to reduce the combustion of fossil-fuel based natural gas and scale clean energy. If the state is undercounting emissions associated with out-of-state imported natural gas, this sends incorrect market and policy signals and undermines the true value of clean energy. AB 2195 would help the state more

1 https://www.eia.gov/state/analysis.php?sid=CA

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accurately count its total emissions so that policymakers and the public have a more com plete understanding of the scope and pervasiveness of the natural gas emissions. Fiscal Effect: Estimated increased annual cost of $75,000 for CARB to contract for inventory modeling and expand the Oil Production Greenhouse Gas Emission Estimator. Status Referred to the Appropriations Committee Suspense File. Passed the Committee on Natural Resources. Support Environmental Defense Fund (Sponsor); American Lung Association in California; Asian Pacific Environmental Network; Clean Water Action; Coalition for Clean Air; Natural Resources Defense Council; Sierra Club California; Union of Concerned Scientists Opposition None on file. Likely opposition from the oil and gas industry.

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Date: May 9, 2018



RE: SB 1301 (Beall (D-15))– Expedited Permitting for Flood Protection and Dam Safety

Issue SB 1301 would increase transparency on permit processing times for flood protection and dam safety projects in California, and would provide a mechanism for interagency collaboration for permit processing for projects related to dam safety and flood risk reduction. Action Environment Committee staff recommend a support position on SB 1301. Summary SB 1301 would require state natural resources agencies to report to the Legislature and the public their average permit processing times for flood risk reduction and dam safety projects. The following five state agencies would be required to submit a quarterly report to the Legislature that discloses average permit processing times and other relevant information for the corresponding permits:

1. Department of Fish and Wildlife (Lake and Streambed Alteration Agreements) 2. San Francisco Bay Conservation and Development Commission (BCDC Major Permits) 3. California Coastal Commission (Coastal Development Permits) 4. State Water Resources Control Board and/or 5. Regional Water Quality Control Board (Waste Discharge Requirements and Water Quality

Certifications and National Pollutant Discharge Elimination System Permits)

Additionally, SB 1301 would implement a mechanism for interagency collaboration on permit processing for flood risk reduction and dam safety projects.

1 An interagency team consisting of the agencies listed

above would meet periodically with the project applicant throughout the design phase and permitting process to identify actions to expedite permits, discuss environmental mitigation, and resolve conflicts between the various permitting agency processes. This process would be paid for by project applicants, and the Office of Planning and Research (OPR) would develop the multiagency preapplication and model fee-for-service agreement in consultation with the state agencies identified and interested project applicants. Background Dam failure, flash flooding, and natural disasters have long jeopardized community safety across the state. Most notably, the St. Francis Dam failure in the early twentieth century resulted in an estimated 431 deaths, the second-greatest loss of life in California ’s history after the 1906 San Francisco earthquake. In the more recent past, flash flooding and mudslides in Southern California claimed over 20 lives in early 2018, in addition to significant injuries, economic losses, and infrastructure damage , and the Oroville Dam crisis prompted 180,000 evacuations in February of last year. With the reality of climate change, the state can expect increased risk of flooding from sea level rise and more virulent natural disasters. The disparate regional, state, and federal agencies involved in permitting flood risk reduction and dam safety projects create a significant barrier, with some of these critical multi-benefit projects taking decades to receive necessary permits. Current law permits authorities to exempt emergency lifesaving projects from normal regulatory permitting. However, flood risk reduction and dam safety projects, which mitigate effects of natural disasters and often save lives, do not meet the criteria of an emergency of clear and imminent danger. SB 1301 would provide a mechanism to help expedite permitting for these critical projects before a natural disaster triggers an emergency when it is too late. The Leadership Group, in conjunction with Bay Area Council and Resources Legacy Fund, has been leading an effort to create a standing multi-agency working group to coordinate permitting for multi-benefit wetland restoration projects in the SF Bay. The proposal outlined in SB 1301 mirrors the strawman proposal developed through Leadership Group efforts, but it differs in three significant ways. First, there is

1 This process would only apply to projects related to existing dams. New dams would still go through the normal process.

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a difference in scope between the two proposals. SB 1301 applies to dam safety projects and flood risk reduction projects across the state, while the Leadership Group proposal applies to multi -benefit wetlands restoration projects in the SF Bay. There will likely be some overlap of projects that fall into both buckets , but the targeted projects of both efforts are different. Second, the interagency working group in SB 1301 would be comprised of only state and regional agencies, although it encourages relevant federal agencies to participate. The Leadership Group ’s proposal includes the federal agencies involved in permitting flood risk reduction projects, including U.S. Army Corps of Engineers, National Oceanic Atmospheric Administration, and U.S. Environmental Protection Agency. Finally, the Leadership Group proposal would be paid for through Measure AA funds instead of by project applicants. While there has been some contention with using Measure AA funds to pay for agency staff time, having project applicants pay for the interagency group’s time means that myriad smaller projects that do not have the capacity to pay would be disadvantaged throughout the process. The State Coastal Conservancy does not anticipate that SB 1301 will impede the efforts or efficacy of the SF Bay strawman proposal. Analysis Understaffing at state permitting agencies and incongruous permitting requirements often cause missed permitting deadlines, especially for large, complex projects that can yield the greatest public safety benefit. Furthermore, late engagement and lack of coordination between state agencies in the permitting process can result in costly project redesigns and last-minute funding shortfalls. Under SB 1301, a project applicant would pay a flat fee to OPR to assemble an interagency working group, and OPR would establish a fee-for-service model to pay for agency members to conduct the permitting coordination. This upfront payment by the project application would help deter future costs accrued through missed deadlines and project redesign. The Santa Clara Valley Water District believes that delayed permit processing times for dam safety and flood risk reduction projects that affect human life and safety is a statewide issue. This bill would apply a solution, carefully developed in conjunction with the relevant agencies, to help kickstart these projects across the state to the benefit of California communities and the state economy. Fiscal Impact Unknown. Status Re-referred to the Appropriations Committee. May 7 hearing date was cancelled at the author ’s request. Passed the Committee on Natural Resources and Water, and the Committee on Environmental Quality. Support Santa Clara Valley Water District (Sponsor); Employees Association of Santa Clara Valley Water District/AFSCME Local 101 Opposition None on file.

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Date: May 9, 2018



RE: AB 2050 (Caballero (D-30))– Small System Water Authority Act of 2018

Issue The Small System Water Authority Act would create a new system for consolidating chronically out-of-compliance small water systems into new, larger authorities using Local Agency Formation Commissions (LAFCO). These larger and more robust water systems would have the advantage of improved economies of scale and enhanced managerial, technical, and financial capacity to ensure the provision of safe, clean, and affordable water. Action Environment Committee Staff recommend a support position on AB 2050. Summary AB 2050 proposes to merge small public and private out-of-compliance water systems into larger public water authorities. The State Water Resources Control Board (SWRCB) would serve a notice of chronic violation to small water systems.

1 Systems would have the opportunity to present a plan to remedy the

issues no later than January 1, 2024. If a small public water system cannot present a plan to remedy before that date, or if SWRCB rejects the plan, the applicable LAFCO would dissolve the public agency and consolidate it into a new authority with other small, non-compliant agencies. Non-compliant private or mutual water companies would be dissolved and receive compensation based on the distressed business valuation process conducted by the SWRCB before dissolution into a new authority. The SWRCB would provide written notice to each county, city, water district, and private or mutual water company located within a county where an entity is being dissolved inviting those entities to consider a voluntary dissolution and inclusion into the new authority. A LAFCO will not form a new authority unless there are at least five systems that may be included in the new authority to achieve the desired economies of scale. The SWRCB would appoint an independent administrator for each proposed new authority to act as the interim manager and prepare plans for the new authority. The administrator would prepare a plan detailing available infrastructure and known deficiencies, financial and operational plans, governance, and other criteria. If the administrator determines that the formation of a new authority would be infeasible for financial, technical, or operational reasons, or if it would not achieve the intended economies of scale, the administrator would submit a report detailing that conclusion in lieu of a plan to SWRCB. The administrator would be responsible for identifying and hiring staff and completing and executing the final plan for service, approved through an iterative process with the SWRCB, LAFCO, and public hearings. New systems would be independent special districts with a Board of Directors

2, increased

financing and transparency, and scaled to a size with resources to sustain safe and affordable drinking water. The new authority would submit a report to the LAFCO detailing any violations and plans to remediate a violation annually for the first three years after the date of its formation. Background In 2012 Governor Brown signed into law the Human Right to Water Act, which made California the first state to establish water as a human right. Despite this declaration, over 800,000 Californians lack access to safe, clean drinking water on a daily basis. As of November 2017, SWRCB has identified 329 water systems statewide that either cannot provide reliable water service, or chronically provide contaminated drinking water. Most of these systems are small and serve rural populations of less than 10,000 people. These small systems lack the managerial, technical, and financial capacity to invest in needed infrastructure to provide clean, safe drinking water. A University of California Davis study suggests that drinking water contamination disproportionally affects small, rural, and low-income communities. For

1 Applies to water systems that have either less an 3,000 service connections or that serve less than 10,00 people and have been out of compliance with one or more state or federal primary drinking water standard maximum contaminant levels for at least one year as of December 31, 2018. 2 A Board would be required to consist of at least one representative from each entity before its dissolution and one representative from the county board of supervisors.

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example, in Kern County, which has the largest number of out-of-compliance systems, there are 47 systems eligible to partake in the economies of scale model outlined in the bill. This bill builds on previous efforts by the state to improve governance and capacity of small agencies. SB 88 (Budget Committee, Chapter 27 Statutes of 2015) authorizes SWRCB to require water systems serving disadvantaged communities with unsafe drinking water to consolidate with , or receive service from, in-compliance public water systems. Consolidation may involve physical consolidation, managerial consolidation, or both. To date, there have been two mandatory consolidations and approximately 40 voluntary consolidations. SB 552 (Wolk, Chapter 773, Statutes of 2016) authorized SWRCB to contract an administrator to provide managerial and technical expertise to out-of-compliance public water systems when funding is available. Analysis The California Safe Drinking Water Act allows the SWRCB to order the consolidation of a small out-of-compliance water system into a larger, receiving water system. However, some regions don’t have access to an in-compliance “anchoring” water system. When there is an available compliant water system, the process of consolidation is costly to those who pay into the compliant system, so many compliant systems do not want to take on non-compliant systems. Many of the “voluntary” consolidations that have taken place under existing law (SB 88) were done so by force. Additionally, when a small district is consolidated into a larger existing district, there often isn ’t fair representation for the residents who were formerly served by the smaller water agency. AB 2050 provides SWRCB the flexibility to combine smaller systems with each other, leveraging economies of scale to increase financial capacity and managerial efficiency, while maintaining fair representation. There are multiple efforts underway in the state to identify funding sources to help increase access to safe drinking water. These efforts include $250 million in funding outlined in Proposition 68, slated for the June ballot, and $500 million in funding outlined in a Water Bond slated for the November ballot. Additionally, SB 623 (Monning) proposes a water fee to provide an ongoing source of funding to provide safe, affordable drinking water. Funding to help improve the state’s ailing water infrastructure is just one needed element to address this urgent issue. AB 2050 addresses a lack of managerial and technical expertise and capacity by consolidating and improving governance structures. AB 2050 is not being proposed as an alternative to securing funding for safe drinking water, but rather as a complement that will allow future funding to be leveraged more efficiently through consolidated governance. Additionally, with the current vacant seats in the state legislature, it will be difficult to achieve a two-thirds vote needed to pass a funding bill such as SB 623. AB 2050 would work in conjunction with proposed funding sources to help increase access to safe drinking water. Fiscal Impact The bill would require the SWRCB, upon appropriation by the Legislature, to provide funding for the administrator and for formation and startup costs for the authority for up to two fiscal years. SWRCB would also receive an unspecified amount, upon appropriation by the Legislature, per water company consolidated into an authority for the preparation of a distressed business valuation. Status Re-referred to the Committee on Appropriations. Passed the Senate Committee on Environmental Safety and Toxic Materials, and the Committee on Local Government. Support Association of California Water Agencies; California Association of Mutual Water Companies (if amended); California Municipal Utilities Association (Co-sponsor); California Special Districts Association; California State Association of Counties; Calleguas Municipal Water District; City of Riverside; City of Sacramento; Cucamonga Valley Water District; Eastern Municipal Water District (Co-sponsor); Inland Empire Utilities Agency; Irvine Ranch Water District; Las Virgenes Municipal Water District; Long Beach Water Department; Mesa Water District; Metropolitan Water District of Southern California; Municipal Water District of Orange County; Northern California Water Association; Orange County Water District; Rural County Representatives of California; San Diego County Water Authority; Santa Ana Watershed Project Authority; Western Municipal Water District Opposition Howard Jarvis Taxpayers Association

Ma y 9 , 201 8 Environment Committee Meeting...Ma y 9 , 201 8 Environment Committee Meeting NetApp Building 2, Sharks Conference Room 1375 Crossman Ave., Sunnyvale, CA 94089 1:30-

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