Existing law prohibits a local public entity, charter city, or charter county from requiring a bidder on a public works contract to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on public works projects, except as specified.

Existing law requires the State Water Resources Control Board and the 9 California regional water quality control boards to prescribe waste discharge requirements in accordance with the federal national pollutant discharge elimination system (NPDES) permit program established by the federal Clean Water Act and the Porter-Cologne Water Quality Control Act. Existing law regulates the discharge of pollutants in storm water associated with construction activity to waters of the United States from construction sites that disturb one or more acres of land surface, or that are part of a common plan of development or sale that disturbs more than one acre of land surface.

This bill would prohibit a public entity, charter city, or charter county from delegating to a contractor the development of a plan, as defined, used to prevent or reduce water pollution or runoff on a public works contract, except as provided. By requiring a public entity, charter city, or charter county to prepare a plan, the bill would impose a state-mandated local program. The bill would also prohibit a public entity, charter city, or charter county from requiring a contractor on a public works contract that includes compliance with a plan to assume responsibility for the completeness and accuracy of a plan developed by that entity. The bill would also declare that this is a matter of statewide concern.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law prohibits a local public entity, charter city, or charter county from requiring a bidder on a public works contract to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on public works projects, except as specified.

Existing law requires the State Water Resources Control Board and the 9 California regional water quality control boards to prescribe waste discharge requirements in accordance with the federal national pollutant discharge elimination system (NPDES) permit program established by the federal Clean Water Act and the Porter-Cologne Water Quality Control Act. Existing law regulates the discharge of pollutants in storm water associated with construction activity to waters of the United States from construction sites that disturb one or more acres of land surface, or that are part of a common plan of development or sale that disturbs more than one acre of land surface.

This bill would prohibit a public entity, charter city, or charter county from delegating to a contractor the development of a plan, as defined, used to prevent or reduce water pollution or runoff on a public works contract, except as provided. By requiring a public entity, charter city, or charter county to prepare a plan, the bill would impose a state-mandated local program. The bill would also prohibit a public entity, charter city, or charter county from requiring a contractor on a public works contract that includes compliance with a plan to assume responsibility for the completeness and accuracy of a plan developed by that entity. The bill would also declare that this is a matter of statewide concern.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Date of Hearing: May 20, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1315

Author:(Alejo) – As Amended Ver:April 21, 2015

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill prohibits public agencies from delegating to a contractor the development of a storm water pollution prevention plan (SWPPP), water pollution control program, or any other plan required by a Regional Board to prevent or reduce water pollution or runoff on a public works project. This bill also prohibits public agencies from requiring a contractor, on a public works contract that includes compliance with any of these plans, to assume responsibility for the completeness and accuracy of the plan developed by that entity.

FISCAL EFFECT:

Unknown, but likely major, on-going reimbursable state mandated costs for local agencies to develop SWPPPs.

COMMENTS:

1. Purpose. According to the author, "Although the Permit allocates SWPPP design responsibility to project owners – including the corresponding risk of penalties for design defects – many owners attempt to transfer design responsibility/risk to their contractors. This is done through broad contractual indemnity provisions and design-risk shifting requirements... As a result, contractors are forced to hire a design firm to design the SWPPP/act as [qualified SWPPP developer] QSD, and often attempt to transfer the risk of penalties down to their subcontractors through similarly broad subcontract indemnity provisions…This shift in responsibility undermines the intent of the Permit, results in an inefficient allocation of responsibility and risk; and is contrary to several existing laws."

2. Background. A SWPPP is a comprehensive, detailed, site-specific, written document that identifies potential sources of stormwater pollution on a construction site; describes stormwater control measures and Best Management Practices (BMPs) that will be used to reduce or eliminate pollutants in stormwater discharges from the project site; and identifies the procedures the operator of the project site will implement to comply with the terms and conditions of the Permit.

In order for a construction site to remain in compliance with the Clean Water Act's NPDES permitting program, a SWPPP must be developed and maintained throughout the construction project's entirety. As the project progresses and goes through changes, the SWPPP must be revised to reflect those changes. A project’s SWPPP may be furnished by the project owner or prepared by a contractor’s SWPPP developer. The Permit is typically held in the name of the property owner.

3. State Water Board. According to staff at the State Water Board, the practice of delegating development of an SWPPP to the contractor is neither new nor unusual. This is frequently the practice they see in construction projects that must obtain a Permit and develop an SWPPP. They note that the discharger, or the responsible party for the Permit, is named on the Permit and is always the owner/agency, not the contractor. Thus, responsibility for compliance with the Permit remains with the owner/agency, regardless of which party develops the SWPPP.

Water Board staff also asserts that most municipalities don’t have the expertise to develop SWPPPs and don't have the resources to retain QSDs on staff. QSDs are typically employed by environmental consulting firms that perform the work of developing SWPPPs under contract, either with a contractor (which is more common), or with the owner/agency. (Some large contracting firms keep QSDs on staff, but many smaller firms don't have the resources to do so.)

4. Arguments in Support. Supporters, primarily contractors and industry organizations, write, "AB 1315 clarifies that public owners are responsible for the preparation of Storm water Pollution Prevention Plans (SWPPP) required on public works projects and prohibits public owners from delegating responsibility to contractors or forcing contractors to assume responsibility for SWPPP design.

"Local agencies have begun requiring contractors to prepare the state required storm water plan and submit it as part of the bid. At this point the contractor or subcontractor cannot price the storm water plan because it hasn’t been designed yet – so the result is the contractor or subcontractor is forced to estimate the cost of implementing a storm water plan – and include that cost into a bid – even before the plan has been designed."

5. Arguments in Opposition. Opponents, primarily cities, counties, and other local agencies, state, "SWPPPs are currently created in accordance with the general contractor's construction plans. As construction progresses, SWPPPs must often be modified to accommodate the constantly changing conditions of a construction site. The general contractor is in the best position to create the construction plan and contract for the corresponding SWPPP. A general contractor-developed SWPPP can incorporate an optimal construction sequence selected by the contractor, thereby maximizing efficiency and reducing costs. A separate entity developing a SWPPP would have to assume a sequence of work that might occur under one construction scenario but not another.

"AB 1315 would turn this standing process on its head by prohibiting public agencies from contracting with the general contractor to develop a SWPPP and statutorily restricting their remaining options to an engineer or architect. Public agencies, engineers and architects simply do not have the direct control over the day-to-day construction, let alone the expertise, to perform this function."

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 29, 2015

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Brian Maienschein, Chair

ABPCA Bill Id:AB 1315

Author:(Alejo) – As Amended Ver:April 21, 2015

SUBJECT: Public contracts: water pollution prevention plans: delegation.

SUMMARY: Prohibits local agencies, including charter cities, from requiring contractors to develop, or assume responsibility for the completeness and accuracy of, plans to prevent or reduce water pollution or runoff on public works projects. Specifically, this bill:

1. Defines "plan" to mean a stormwater pollution prevention plan (SWPPP), water pollution control program, or any other plan required by a regional water quality control board to prevent or reduce water pollution or runoff on a public works project, pursuant to State Water Resources Control Board (Water Board) Order No. 2009-0009-DWQ (Order).

2. Prohibits a public entity, charter city, or charter county from delegating to a contractor the development of a plan on a public works contract.

3. Provides that the provision described in 2), above, does not apply to a contract for architectural or engineering services relating to the development of a plan on a public works contract.

4. Provides that this bill does not restrict a public entity, charter city, or charter county from contracting with a duly licensed architect or engineer for the design of a plan.

5. Prohibits a public entity, charter city, or charter county from requiring a contractor on a public works contract that includes compliance with a plan to assume responsibility for the completeness and accuracy of the plan developed by that entity.

6. Specifies that the above provisions apply regardless of the project delivery method required in a public works contract.

7. Provides that nothing in this bill shall be construed to prohibit a local public entity, charter city, or charter county from requiring a bidder or contractor on a public works contract to review any applicable plan and report any errors or omissions noted to the public entity or its plan developer. The review by the contractor shall be limited to the contractor’s capacity as a contractor and not as a licensed design professional or plan developer.

8. Defines "plan developer" to mean a qualified SWPPP developer (QSD) or a qualified SWPPP practitioner (QSP) as those terms are defined in Appendix 5 of the Water Board's Order.

9. Finds and declares that it is of statewide concern to require a public entity, charter city, or charter county to be responsible for the development of, and completeness and accuracy of,
   a plan to prevent or reduce water pollution or runoff on a public works project.

10. Provides that, if the Commission on State Mandates determines that this bill contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to current law governing state mandated local costs.

EXISTING LAW:

1. Prohibits a local public entity, charter city, or charter county from requiring a bidder on a public works contract to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on public works projects, except as specified.

2. Regulates the discharge of pollutants in stormwater associated with construction activity to waters of the United States from construction sites that disturb one or more acres of land surface, or that are part of a common plan of development or sale that disturbs more than one acre of land surface.

3. Requires the Water Board and the nine California Regional Water Quality Control Boards (Regional Boards) to prescribe waste discharge requirements in accordance with the federal National Pollutant Discharge Elimination System (NPDES) permit program established by the federal Clean Water Act and California's Porter-Cologne Water Quality Control Act.

4. Regulates NPDES permit requirements under a General Construction Permit (Permit) via the Water Board's Order.

FISCAL EFFECT: This bill is keyed fiscal and contains a state-mandated local program.

COMMENTS:

1. Bill Summary. This bill prohibits pubic agencies from delegating to a contractor the development of an SWPPP, water pollution control program, or any other plan required by a Regional Board to prevent or reduce water pollution or runoff on a public works project.

This bill also prohibits public agencies from requiring a contractor on a public works contract that includes compliance with any of these plans to assume responsibility for the completeness and accuracy of the plan developed by that entity. This bill is sponsored by the Associated General Contractors, the Construction Employers Association, the Southern California Contractors Association, the California Legislative Conference of the Plumbing, Heating and Piping Industry, and the National Electrical Contractors Association, California Chapters.

2. Background. In 1948, Congress passed the first version of the Federal Water Pollution Control Act, or the Clean Water Act. The NPDES was amended into the Act in 1972, with a focus on point sources of pollution such as sewage treatment and wastewater from industrial and manufacturing facilities. After 1972, studies began showing that non-point sources, including stormwater runoff, were a major contributor to surface water pollution. This led to further amendments to the Act that created a framework for regulating stormwater. In 1990, the U.S. Environmental Protection Agency published final regulations establishing permit requirements for stormwater discharges associated with industrial activities, including construction activities. California's first Permit was adopted in 1992. The latest Permit, which is regulated by the Water Board's Order, became effective July 1, 2010.

Owners of construction projects that disturb one or more acres of land must comply with the Permit, which regulates the discharge of stormwater and non-stormwater (i.e., improper dumping, spills, leakage from storage tanks) from certain construction activities and is enforced by California's nine Regional Boards. The Permit requires, among other things, the development of a site-specific SWPPP that demonstrates compliance with the Permit.

A SWPPPs is a comprehensive, detailed, site-specific, written document that identifies potential sources of stormwater pollution on a construction site; describes stormwater control measures and Best Management Practices (BMPs) that will be used to reduce or eliminate pollutants in stormwater discharges from the project site; and, identifies the procedures the operator of the project site will implement to comply with the terms and conditions of the Permit.

SWPPPs are ever-changing documents. In order for a construction site to remain in compliance with the Clean Water Act's NPDES permitting program, an SWPPP must be developed and maintained throughout the construction project's entirety. As the project progresses and goes through changes, the SWPPP must be revised to reflect those changes. The SWPPP is comprised of site maps, BMP details, inspection reports, spill reports, corrective action logs and associated waivers.

A project’s SWPPP may be furnished by the project owner or prepared by a contractor’s SWPPP developer.

3. Who Develops the SWPPP? The Permit requires SWPPPs to be prepared and certified by a QSD. Many other SWPPP tasks (i.e. inspections) must be conducted directly by, or under the supervision of, a QSD or QSP. There are extensive qualification and training requirements for both the QSD and QSP.

To become a QSD or a QSP, a person must complete a training course offered by a qualified California Construction General Permit Trainer of Record, pass an exam, and register and be certified by the California Stormwater Quality Association. In addition, each qualification requires an underlying pre-registration or pre-certification.

To become a QSD, a person must be one of the following: Registered Civil Engineer; Registered Professional Geologist; Registered Landscape Architect; Registered Professional Hydrologist; Certified Professional in Erosion and Sediment Control (CPESC); Certified Professional in Storm Water Quality (CPSWQ); or, Professional in Erosion and Sediment Control registered through the National Institute for Certification in Engineering Technologies.

To be a QSP, one must be a QSD or be one of the following: Certified Erosion, Sediment, and Storm Water Inspector (CESSWI) or a Certified Inspector of Sediment and Erosion Control (CISEC).

4. Responsibility and Consequences. The Permit defines the “discharger” as “[t]he Legally Responsible Person or entity subject to the General Permit.” The Permit defines the Legally Responsible Person as falling into specified eligible categories, including “[a] person, company, agency or other entity that possesses a real property interest. . . .in the land upon which the construction or land disturbance activities will occur for the regulated site.” The Permit states a contractor is not qualified to be the Legally Responsible Person, unless they fall into limited categories (those employed and duly authorized on U.S. Army Corp of Engineers Projects or those engaged in pollution and remediation projects).

The Permit is typically held in the name of the property owner. Consequently, the party required to ensure compliance with the Permit is the property owner, not the contractor. The Permit also requires the discharger (i.e., owner) to file Permit registration documents, annual reports and other compliance information. The discharger must certify that the information provided regarding the project site is accurate and complete. The discharger must allow entry to the project site for inspections and provide records required to be kept under the Permit.

There are serious potential costs for failure to comply with the Permit. Any person who violates a condition of the Permit is subject to a civil penalty, which could be as high as $37,500 per calendar day of a violation, plus sanctions provided by the Clean Water Act.

5. Author's Statement. According to the author, "Although the Permit allocates SWPPP design responsibility to project owners – including the corresponding risk of penalties for design defects – many owners attempt to transfer design responsibility/risk to their contractors. This is done through broad contractual indemnity provisions and design-risk shifting requirements... As a result, contractors: (1) are forced to hire a design firm to design the SWPPP/act as QSD; and (2) often attempt to transfer the risk of penalties down to their subcontractors through similarly broad subcontract indemnity provisions…This shift in responsibility: (1) undermines the intent of the Permit; (2) results in an inefficient allocation of responsibility and risk; and (3) is contrary to several existing laws.

"(This is) not what the drafters of the Permit envisioned – they nullify the policy decision
of the State Water Resources Control Board to designate the project owner as the 'Legally Responsible Party.' Owners should retain design responsibility and the risk of design flaws. To conform to the Permit, project owners should retain a QSD as part of their design team before a project is bid. The SWPPP should be published pre-bid so bidders submit prices on a level playing field – all contractors proposing to perform a job can propose a price for the same quality of SWPPP and be held to a uniform standard of being required to build what the owner’s plan shows."

The sponsors of this bill indicate that they are unaware of any litigation being brought as a result of this practice, and that they are seeking a legislative solution, instead.

6. Contracting Agencies' Perspective. According to staff at the State Water Board, the practice of delegating development of an SWPPP to the contractor is neither new nor unusual. This is frequently the practice they see in construction projects that must obtain a Permit and develop an SWPPP. They note that the discharger, or the responsible party for the Permit, is named on the Permit and is always the owner/agency, not the contractor. Thus, responsibility for compliance with the Permit remains with the owner/agency, regardless of which party develops the SWPPP.

Water Board staff also asserts that most municipalities don’t have the expertise to develop SWPPPs and don't have the resources to retain QSDs on staff. QSDs are typically employed by environmental consulting firms that perform the work of developing SWPPPs under contract, either with a contractor (which is more common), or with the owner/agency. (Some large contracting firms keep QSDs on staff, but many smaller firms also don't have the resources to do so.)

Local contracting agencies indicate that they often require contractors to design and submit SWPPPs because a contractor's plan or approach for construction dictates the sequence of excavation, backfill, and temporary stockpiling of material on a typical project. They contend that a contractor-designed SWPPP can incorporate an optimal construction sequence selected by the contractor and incorporate it into their SWPPP, thereby maximizing efficiency and reducing costs.

An owner-designed SWPPP would necessarily have to assume a sequence of excavation, etc. (and effects upon drainage) that might occur under one construction sequence/scenario. This might not be the optimum sequence that the contractor would elect to use (and would have incorporated into its own SWPPP plan). For this reason, it makes more sense to require the party actually responsible for the construction sequence of operations to be the one implementing its sequence into the design of an SWPPP. An owner-designed SWPPP would unnecessarily lock in all bidders to one single type of construction sequence/plan envisioned by the owner prior to the bid opening, one which may not necessarily be the lowest cost option.

7. State Mandate. This bill is keyed a state mandate, which means the state could be required to reimburse local agencies and school districts for implementing the bill's provisions, if the Commission on State Mandates determines that the bill contains costs mandated by the state.

8. Arguments in Support. The Associated General Contractors, Construction Employers Association, Southern California Contractors Association, California Legislative Conference of the Plumbing, Heating and Piping Industry, and National Electrical Contractors Association, California Chapters, co-sponsors of this measure, write, "AB 1315 clarifies that public owners are responsible for the preparation of Storm water Pollution Prevention Plans (SWPPP) required on public works projects and prohibits public owners from delegating responsibility to contractors or forcing contractors to assume responsibility for SWPPP design.

"Local agencies have begun requiring contractors to prepare the state required storm water plan and submit it as part of the bid. At this point the contractor or subcontractor cannot price the storm water plan because it hasn’t been designed yet – so the result is the contractor or subcontractor is forced to estimate the cost of implementing a storm water plan – and include that cost into a bid – even before the plan has been designed.

"AB 1315 will result in public works project owners design(ing) SWPPPs with the best level of protection for California’s beaches and waterways and allow the contractor to accurately reflect the cost of the storm water plan in their bid.

"Notably, this bill does not relieve contractors of their duty to prevent storm water pollution. If a contractor is negligent in constructing the SWPPP, the owner retains the right to hold the contractor responsible for the resulting penalties. Additionally, the Regional Water Quality Control Boards retain their rights to fine any person directly for violations of the Permit."

9. Arguments in Opposition. The Association of California Healthcare Districts, the Association of California School Administrators, the Association of California Water Agencies, the California Association of School Business Officials, the California Association of Sanitation Agencies, the California Municipal Utilities Association, the California Special Districts Association, the California State Association of Counties, the Coalition for Adequate School Housing, the League of California Cities, the Rural County Representatives of California, the Three Valleys Municipal Water District, and the Urban Counties Caucus, in opposition to this bill, state, " SWPPPs must be written, amended and certified by qualified personnel who are knowledgeable in the principles and practice of erosion and sediment controls and possess the skills to assess conditions at the construction site that could impact stormwater quality. Public agencies rely on the expertise of qualified SWPPP developers, known as QSDs, to conduct this work, as agencies do not have the resources nor the regular workload required to employ such personnel throughout the year.

"SWPPPs are currently created in accordance with the general contractor's construction plans. As construction progresses, SWPPPs must often be modified to accommodate the constantly changing conditions of a construction site. The general contractor is in the best position to create the construction plan and contract for the corresponding SWPPP. A general contractor-developed SWPPP can incorporate an optimal construction sequence selected by the contractor, thereby maximizing efficiency and reducing costs. A separate entity developing a SWPPP would have to assume a sequence of work that might occur under one construction scenario but not another.

"AB 1315 would turn this standing process on its head by prohibiting public agencies from contracting with the general contractor to develop a SWPPP and statutorily restricting their remaining options to an engineer or architect. Public agencies, engineers and architects simply do not have the direct control over the day-to-day construction, let alone the expertise, to perform this function.

"Ultimately, the success or failure of a SWPPP lies with the general contractor carrying it out. If the Legislature statutorily shifts the development and liability of the SWPPP to the public agency or to a design professional or architect, it will create confusion and conflict within the public works process. AB 1315 will only further disconnect the entity responsible for the development of the SWPPP from the entity that performs the work related to the SWPPP. This is akin to asking the public agency or design professional to separately plan and contract for the security of the general contractor’s equipment on the job site, the number of portable restrooms needed or any other function that is intimately connected to the performance and sequence of a construction project."

REGISTERED SUPPORT / OPPOSITION:

Support

Associated General Contractors [CO-SPONSOR]

Construction Employers Association [CO-SPONSOR]

Southern California Contractors Association [CO-SPONSOR]

California Legislative Conference of the Plumbing, Heating and

Piping Industry [CO-SPONSOR]

National Electrical Contractors Association, California Chapters [CO-SPONSOR]

American Subcontractors Association California, Inc.

California Concrete Contractors Association

United Contractors

Opposition

Association of California Healthcare Districts

Association of California School Administrators

Association of California Water Agencies

California Association of Sanitation Agencies

California Association of School Business Officials

California Municipal Utilities Association

California Special Districts Association

California State Association of Counties

Coalition for Adequate School Housing

League of California Cities

Los Angeles County Board of Supervisors

Rural County Representatives of California

Sonoma County Water Agency

Three Valleys Municipal Water District

Urban Counties Caucus

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958