Trailer bills seek to expand CA Water Board authority

Two drafted trailer bill proposals seek to change regulations for water program fees and water systems.

Draft Trailer Bill 807 would expand the State Water Resources Control Board’s authority by allowing it to impose operating fees paid by public water systems. The state board would be required to adopt, by emergency regulation, “a fee schedule, to be paid annually by each public water system for the purpose of reimbursing the state board for specified activities.” The bill goes on to require the state board to also “set the total amount of revenue collected through the fee schedule to be equal to the amount appropriated by the Legislature.”

According to analysis from the Association of California Water Agencies, these changes “would repeal most of the existing fee program, including safeguards in existing law, and authorize adoption of a new fee schedule by emergency regulation.” Under existing law, fees for large water systems are determined by actual costs incurred in administering the program, such as a fee-for-service model.

ACWA notes the proposed trailer bill “would not require fees to be based on actual costs.” In fact, the new language “would remove the existing statutory cap on the base total for the fees and the existing cap on annual increases.” These additional fees charged to water agencies will likely be passed on as costs to ratepayers.

In a letter addressed to the members of the California state Senate and Assembly, ACWA and a number of other local water-regulating entities expressed their reservations about the language in TB807:

“The proposed trailer bill language, which would repeal most of the existing fee program, including safeguards in existing law, without sufficient financial context and authorize the adoption of a new fee schedule by emergency regulation is in stark contrast to the commitment of increased transparency and public participation as pledged to the water community when the Program was transferred last year to the SWRCB. …

 

“We have significant concerns related to the current language. Not only does the proposed emergency regulatory authority circumvent public process in raising fees on drinking water systems throughout the state, but many questions remain unanswered related to the Program’s financial structure that is being used as context for the proposal.”

A second proposal, draft Trailer Bill 825, would also broaden SWRCB’s authority, allowing the state board to mandate consolidation of public water systems, in the event that “a public water system fails to reliably provide an adequate supply of safe potable water.”

ACWA says this proposal “would authorize the State Water Board to require a public water system that fails to provide an adequate supply of safe drinking water to consolidate with another public water system.” Concern was expressed in a May 29 letter to the Joint Budget Conference Committee that the trailer bill skips the regular policy and fiscal committee process and “does not provide adequate time for stakeholder comment or public input.”

Aside from the lack of transparency, the proposal to give the state board authority to force consolidations is not an immediate fix to the current drought emergency, says ACWA. SWRCB would have the authority to consolidate “under a broad scope of circumstances,” despite the fact that “consolidations of water purveyors are complex and take time.”

California Special Districts Association also wrote a letter of opposition, stating TB825 would “grant the [state board] unprecedented unilateral power to take ownership and operation of a water system from one entity and force it upon another.” Water rights would be placed in jeopardy, the CSDA alleges, and the proposal “could upend these rights and create legal gridlock.” Ratepayers would also be exposed to unlimited liabilities by “taking on failing systems” in the costs of “environmental cleanup, regulatory penalties, vendor and employee claims and other legal and financial risks.”

Neither of these bills have been formally introduced in the Legislature but are listed on the Department of Finance website as part of budget trailer bill language.