(1)Existing law establishes the Safe Drinking Water Account to be available to the State Water Resources Control Board, upon appropriation by the Legislature, for the purpose of providing funds necessary to administer the California Safe Drinking Water Act.

This bill would expand the use of available funds in the account to be used by the state board, upon appropriation by the Legislature, to include the administration of the Water Shutoff Protection Act. The bill would, subject to the availability of funding, require the state board to make funds available for providing training statewide to community water systems with between 15 and 200 service connections to assist in compliance with the Water Shutoff Protection Act.

(2)Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. Existing law requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment available in English, other designated languages, and any other language spoken by at least 10% of the people residing in its service area.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a covered water system, defined to include specified water systems and suppliers, including a community water system. The bill would require a community water system, that is not otherwise required to comply, to comply with the acts provisions on and after August 1, 2024. The bill would instead apply the above-described language requirements for the written policy of discontinuation of residential service for nonpayment to a covered water system that serves 200 or more service connections. The bill would require a covered water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, other designated languages. The bill would authorize, as part of the act, the Attorney General, at the request of the board or upon the Attorney Generals own motion, to bring an action in state court to restore to any person in interest any money or property, real or personal, that may have been acquired by any method, act, or practice prohibited by the act. The bill would make related changes.

(1)Existing law establishes the Safe Drinking Water Account to be available to the State Water Resources Control Board, upon appropriation by the Legislature, for the purpose of providing funds necessary to administer the California Safe Drinking Water Act.

This bill would expand the use of available funds in the account to be used by the state board, upon appropriation by the Legislature, to include the administration of the Water Shutoff Protection Act. The bill would, subject to the availability of funding, require the state board to make funds available for providing training statewide to community water systems with between 15 and 200 service connections to assist in compliance with the Water Shutoff Protection Act.

(2)Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. Existing law requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment available in English, other designated languages, and any other language spoken by at least 10% of the people residing in its service area.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a covered water system, defined to include specified water systems and suppliers, including a community water system. The bill would require a community water system, that is not otherwise required to comply, to comply with the acts provisions on and after August 1, 2024. The bill would instead apply the above-described language requirements for the written policy of discontinuation of residential service for nonpayment to a covered water system that serves 200 or more service connections. The bill would require a covered water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, other designated languages. The bill would authorize, as part of the act, the Attorney General, at the request of the board or upon the Attorney Generals own motion, to bring an action in state court to restore to any person in interest any money or property, real or personal, that may have been acquired by any method, act, or practice prohibited by the act. The bill would make related changes.

(1)Existing law establishes the Safe and Affordable Drinking Water Fund in the State Treasury to help water systems provide an adequate and affordable supply of safe drinking water in both the near and long terms. Existing law authorizes the State Water Resources Control Board to provide for the deposit into the fund of certain moneys and continuously appropriates the moneys in the fund to the state board for grants, loans, contracts, or services to assist eligible recipients. Drinking Water Account to be available to the State Water Resources Control Board, upon appropriation by the Legislature, for the purpose of providing funds necessary to administer the California Safe Drinking Water Act.

This bill would expand the use of available funds in the account to be used by the state board, upon appropriation by the Legislature, to include the administration of the Water Shutoff Protection Act. The bill would would, subject to the availability of funding, require the state board to, upon appropriation by the Legislature, expend moneys to provide training statewide to community water systems with between 15 and 200 service connections to meet compliance with the Water Shutoff Protection Act. to make funds available for providing training statewide to community water systems with between 15 and 200 service connections to assist in compliance with the Water Shutoff Protection Act.

(2)Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. Existing law requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment available in English, other designated languages, and any other language spoken by at least 10% of the people residing in its service area.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a public covered water system, defined to include specified water systems and suppliers, including a community water system. The bill would require a community water system to comply with the acts provisions on and after August 1, 2024. The bill would instead apply the above-described language requirements for the written policy of discontinuation of residential service for nonpayment to a public covered water system that serves 200 or more service connections. The bill would require a public covered water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, other designated languages. The bill would authorize, as part of the act, the Attorney General, at the request of the board or upon the Attorney Generals own motion, to bring an action in state court to restore to any person in interest any money or property, real or personal, that may have been acquired by any method, act, or practice prohibited by the act. The bill would make related changes.

(1)Existing law establishes the Safe and Affordable Drinking Water Fund in the State Treasury to help water systems provide an adequate and affordable supply of safe drinking water in both the near and long terms. Existing law authorizes the State Water Resources Control Board to provide for the deposit into the fund of certain moneys and continuously appropriates the moneys in the fund to the state board for grants, loans, contracts, or services to assist eligible recipients.

This bill would require the board to, upon appropriation by the Legislature, expend moneys to provide training statewide to community water systems with between 15 and 200 service connections to meet compliance with the Water Shutoff Protection Act.

(2)Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. Existing law requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment available in English, the specified languages in the Civil Code, other designated languages, and any other language spoken by at least 10% of the people residing in its service area.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a community public water system, defined to have the same meaning as existing law. include specified water systems and suppliers, including a community water system. The bill would require a community water system that supplies water to 200 service connections or fewer to comply with the acts provisions on and after August 1, 2024. The bill would instead apply the above-described language requirements for the written policy of discontinuation of residential service for nonpayment to a community public water system that serves 200 or more service connections. The bill would require a community public water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, the specified languages in the Civil Code. other designated languages. The bill would authorize, as part of the act, the Attorney General, at the request of the board or upon the Attorney Generals own motion, to bring an action in state court to restore to any person in interest any money or property, real or personal, that may have been acquired by any method, act, or practice prohibited by the act. The bill would make related changes.

(2)Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. Existing law requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment available in English, the specified languages in the Civil Code, and any other language spoken by at least 10% of the people residing in its service area.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a community water system, defined to have the same meaning as existing law. The bill would require a community water system that supplies water to 200 service connections or fewer to comply with the acts provisions on and after August 1, 2024. The bill would instead apply the above-described language requirements for the written policy of discontinuation of residential service for nonpayment to a community water system that serves 200 or more service connections. The bill would require a community water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, the specified languages in the Civil Code.

Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. Existing law requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment available in English, the specified languages in the Civil Code, and any other language spoken by at least 10% of the people residing in its service area.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a community water system, defined to have the same meaning as existing law. The bill would require a community water system that supplies water to 200 service connections or fewer to comply with the acts provisions on and after August 1, 2024. The bill would instead apply the above-described language requirements for the written policy of discontinuation of residential service for nonpayment to a community water system that serves 200 or more service connections. The bill would require a community water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, the specified languages in the Civil Code.

Existing law, the Water Shutoff Protection Act, prohibits an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, from discontinuing residential service for nonpayment, as specified, and requires specified procedures before it can discontinue residential service for nonpayment. Existing law defines a community water system as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system.

This bill would expand the scope of the Water Shutoff Protection Act by requiring that it instead apply to a community water system, defined to have the same meaning as existing law. The bill would require a community water system that supplies water to 200 service connections or fewer to comply with the acts provisions on and after August 1, 2024.

 UNFINISHED BUSINESS  

Bill No: SB 3

Author: Dodd (D), et al.

Amended: 9/1/23

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-0, 3/21/23

AYES: Bradford, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, McGuire, Min, Newman, Rubio, Skinner

NO VOTE RECORDED: Dahle, Grove, Seyarto, Stern, Wilk

SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/18/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones

NO VOTE RECORDED: Seyarto

SENATE FLOOR: 31-7, 5/31/23

AYES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener

NOES: Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Alvarado-Gil, Wilk

ASSEMBLY FLOOR: 62-15, 9/7/23 - See last page for vote

SUBJECT: Discontinuation of residential water service: covered water system

SOURCE: Clean Water Action

Community Water Center

Leadership Counsel for Justice & Accountability

DIGEST:

This bill eliminates the exemption for water systems that serve less than 200 service connections (but at least 15 service connections) from statutes and policies related to the water service shutoffs due to nonpayment.

Assembly Amendments

(1) restore definitions in statute for urban and community water systems and suppliers; (2) add a new definition, “covered water system”, for purposes of this bill; (3) expand the existing requirements to provide deferred or reduced payments and alternative payment schedules to be available for all customers, instead of only those meeting certain conditions; (4) authorize the Attorney General to bring an action in state court to restore to any person any money or property acquired by a practice declared to be unlawful by this bill; and (5) move to a new code section, specifically referencing the Safe Drinking Water Account, the reference to provide funding for training to assist community water systems to comply with this bill.

ANALYSIS:

Existing law:

1. Establishes the California Public Utilities Commission (CPUC) with regulatory authority over public utilities, including water corporations and ensure rates are just and reasonable. (California Constitution Article XII, Public Utilities Code §451)
2. Establishes the State Water Resources Control Board (SWRCB) and requires the SWRCB to administer provisions relating to the regulation of drinking water to protect public health, including, but 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, adoption of enforcement regulations, and conducting studies and investigations to assess the quality of water in domestic water supplies. (Water Code §174 et seq. and Health and Safety Code §116271)
3. Defines a “community water system” as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. (Health and Safety Code §116275 (i))
4. Defines an “urban and community water system” as a public water system that supplies water to more than 200 service connections.” (Health and Safety Code §116902)
5. Establishes the Water Shutoff Protection Act, which prohibits an urban and community water system, from discontinuing residential water service for nonpayment until a payment by a customer has been delinquent for at least 60 days. Requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment in English, the specified languages in the Civil Code, and any other language spoken by at least 10 percent of the people residing in its service area. Requires an urban and community water system to provide notice of that policy to customers, as provided, including, among other things, specified options for addressing the nonpayment. (Health and Safety Code §116902 et seq.)
6. Prohibits an urban and community water system from discontinuing residential service for nonpayment if certain conditions are met, including that the customer or a tenant submits certification that discontinuation of residential service will be life threatening to, or pose a serious threat to the health and safety of, a resident of the premises. (Health and Safety Code §116910)
7. Requires an urban and community water system to impose specified fees for reconnection of service for customers with a household income below 200 percent of the federal poverty line. (Health and Safety Code §116914)
8. Requires an urban and community water system to report annually the number of discontinuations of residential service for inability to pay, as specified, on the water system’s internet website, if an internet website exists, and to the SWRCB. (Health and Safety Code §116918)
9. Authorizes the Attorney General to enforce the requirements imposed on urban and community water systems in connection with discontinuing residential service for nonpayment by seeking an injunction. (Health and Safety Code §116920)
10. Provides a fee that encompasses any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service. (California Constitution Article XIII D)
11. Provides that any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified contracts or agreements, must deliver to the other party to the contract or agreement a translation of the contract or agreement in the language in which it was negotiated. (Civil Code §1632)

This bill:

1. Requires a community water system to comply with the Water Shutoff Protection Act’s provisions on and after August 1, 2024, thereby eliminating an existing exemption from the Act for community water systems and suppliers that supply water to 200 residential service connections or less (but no fewer than 15).
2. Applies the language requirements in Section 1632 of the Civil Code for the written policy of discontinuation of residential service for nonpayment to a covered water system that serves 200 or more service connections. Requires a covered water system that serves fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10 percent of the people residing in its service area, and, upon request of a customer, other designated languages.
3. Authorizes, as part of the Act, the Attorney General, at the request of the SWRCB or upon the Attorney General’s own motion, to bring an action in state court to restore to any person in interest any money or property, real or personal, that may have been acquired by any method, act, or practice prohibited by the act.
4. Expands the use of available funds in the Safe Drinking Water Account to be used by the SWRCB, upon appropriation by the Legislature, to include the administration of the Water Shutoff Protection Act. Requires the SWRCB to make funds available, subject to the availability of funding, for providing training statewide to community water systems with between 15 and 200 service connections to assist in compliance with the Water Shutoff Protection Act.
5. Makes other technical and non-substantive changes.

Background

Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.

Publicly owned water utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.

CPUC-regulated water utilities. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other investor-owned utilities, the CPUC regulates rates for service of the water utilities under its jurisdiction, as well as, rules regarding discontinuation of service due to nonpayment.

SB 998 (Dodd, Chapter 891, Statutes of 2018). SB 998 established the Water Shutoff Protection Act, and made numerous changes to the policies required of water providers when discontinuing residential water service due to nonpayment. Specifically, SB 998 required public water systems (those with more than 200 service connections) to: prohibit the shutoff of water service until the residential water bill has been delinquent for 60 days; require the water utility to have a written policy on discontinuation of residential water service due to nonpayment and provide that policy in multiple languages (as specified in statute); include provisions to prevent discontinuation of water service for certain customers that meet specified criteria; and cap the reconnection fees for restoring water service. SB 998 required CPUC-regulated water utilities to comply with these policies by February 1, 2020, and other water providers by April 1, 2020. The bill exempted water service providers that serve less than 200 service connections.

Comments

SB 3. This bill expands provisions from SB 998 providing protections and process to discontinue water service due to nonpayment for customers of community water systems and suppliers (those with fewer than 200 service connections, but at least 15 service connections). This bill provides that the translation requirements apply differently to these smaller water systems compared to other systems by only requiring translation of written policy on discontinuation of water service to be available if ten percent of the customers served speak the language, or specifically in Spanish, Chinese, Tagalog, Vietnamese, and Korean, when requested by a customer.

Need to address affordability for all customers. The supporters of this bill contend that residents of these smaller systems are unfairly at risk of losing an essential service due to lack of affordability and the disparate consumer protections compared to those afforded to customers of larger water systems. The supporters note that water shutoffs due to nonpayment often result from an inability to afford water utility bills. They argue that the lack of affordability for water service results in disproportionate impacts on Black, indigenous, and people of color households.

Need for financial assistance for small water systems. This bill requires the SWRCB to expend funds, upon appropriation by the Legislature, from the Safe Drinking Water Account, to provide training statewide to community water systems, those between 15 and 200 service connections, to help meet compliance with the Water Shutoff Protection Act. In opposition to this bill, California Association of Mutual Water Companies (CalMutuals) raises concerns about the lack of clear financial resources to help these smaller systems comply with the requirements of this bill. CalMutuals contends that many of their smallest systems are operated by volunteers or part-time contractors. They argue they are not able to simply use the information created by the larger systems to comply with the requirements of this bill. Rather, the implementation requires staff resources to: prepare documents, provide and issue notices to customers, make changes to the billing systems, and also requires cash flow to afford the delays in utility bill collections. CalMutuals has requested amendments that would clarify their ability to access funding for technical assistance for small water systems and do not feel the current references to funding, which are subject to availability and appropriation, are sufficient to address their needs.

Related/Prior Legislation

SB 223 (Dodd, 2021) made numerous changes to expand provisions related to prohibiting discontinuation of residential water service due to nonpayment. The bill was held in the Senate Committee on Appropriations.

SB 155 (Committee on Budget and Fiscal Review, Chapter 258, Statutes of 2021), the public resources trailer bill, included numerous policies, including extending from September 30, 2021, to December 31, 2021, the date by when a community water system may discontinue water service due to nonpayment.

AB 148 (Committee on Budget, Chapter 115, Statutes of 2021) established the California Water and Wastewater Arrearage Payment Program to provide utility arrearages debt relief, upon appropriation, by requiring a community water system to provide customers with arrearages accrued during the COVID-19 pandemic bill relief period, as defined, a notice that they may enter into a payment plan, as prescribed. The bill also required a moratorium on discontinuation of water service due to nonpayment through September 30, 2021.

SB 998 (Dodd, Chapter 891, Statutes of 2018) required all public water systems (with more than 200 connections) to have a written policy on discontinuation of residential water service, provide that policy in multiple languages, include provisions for not shutting off water for certain customers that meet specified criteria, prohibit the shutoff of water service until the utility bill has been delinquent for 60 days, and cap the reconnection fees for restoring water service.

SB 401 (Dodd, Chapter 662, Statutes of 2015) required the SWRCB, in collaboration with the State Board of Equalization and stakeholders, to develop a plan for the funding and implementation of a new program to provide water rate relief for low-income ratepayers by January 1, 2018, and provide a corresponding report to the Legislature by February 1, 2018.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, SWRCB estimates ongoing annual costs of approximately $1.1 million (Safe and Affordable Drinking Water Fund, General Fund, other special fund) for five positions, two of which would enforce the requirements of this bill, and three of which would implement statewide training and provide general assistance to water systems. SWRCB estimates additional contracting costs of $500,000 in the first year of implementation and $250,000 annually and ongoing thereafter, to support staff in the development of and updates to the training program.

Committee staff notes that absent additional detail in this bill, the scope of the required training is unclear. Roughly 1,500 public water systems provide water to fewer than 200 customer service connections. If SWRCB offers customized training on a system-by-system basis, costs could be significant, in line with the estimate provided by the State Water Board above. On the other hand, SWRCB could do as little as host and make a training webinar available to all community water systems subject to this bill. In this scenario, costs could be relatively minor and potentially absorbable within the SWRCB’s existing resources.

SUPPORT: (Verified 9/6/23)

Clean Water Action (co-source)

Community Water Center (co-source)

Leadership Counsel for Justice & Accountability (co-source)

State of California Attorney General Rob Bonta

California Coastkeeper Alliance

California Environmental Voters

California Water Association

California Water Service

Carbon Cycle Institute

Center for Environmental Health

Center on Race, Poverty & the Environment

Central California Environmental Justice Network

Central Coast Energy Services

CivicWell

Environmental Working Group

Friends Committee on Legislation of California

League of Women Voters of California

Los Angeles Alliance for a New Economy

Natural Resources Defense Council

Physicians for Social Responsibility - Los Angeles

Pueblo Unido CDC

San Francisco Peninsula Energy Services

Sierra Club California

Solano County Democratic Central Committee

SPUR

Union of Concerned Scientists

Western Center on Law & Poverty

OPPOSITION: (Verified 9/6/23)

California Association of Mutual Water Companies

Community Water Systems Alliance

Yorba Linda Water District

ARGUMENTS IN SUPPORT: According to the author:

The pandemic demonstrated both the importance of affordable and accessible water for drinking and sanitation, and the challenge that many Californians face in affording this necessity. A half-million households received one-time assistance to address their arrearages, but data from the CPUC and other water agencies tell us that consumers continue to fall behind on their bills. The implementation of SB 998, passed in 2018, will help maintain access to water by requiring most water systems to provide notice and opportunity to enroll in a payment plan prior to shutting off water for nonpayment. SB 3 builds on SB 998 by ensuring that all Californians served by community water systems benefit from these common-sense protections, regardless of system size.

ARGUMENTS IN OPPOSITION: The California Association of Mutual Water Companies (CalMutuals) opposes SB 3 due to the lack of clear financial resources to support smaller water systems’ ability to implement the provisions of the Water Shutoff Act. CalMutuals states that many of their smallest water systems do not have staff to carry out the various provisions of the Water Shutoff Act, as many of these systems are operated by volunteers, part-time or contract operators. CalMutuals contends that many of the requirements of the bill could force these smaller water systems into financial hardship, including the translation requirements, billing systems changes, and cash-flow constraints of following the “prescriptive and cumbersome set of steps before discontinuing service.”

ASSEMBLY FLOOR: 62-15, 9/7/23

AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NOES: Chen, Megan Dahle, Davies, Dixon, Flora, Vince Fong, Gallagher, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron

NO VOTE RECORDED: Alanis, Essayli, Wallis

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

9/8/23 13:58:35

**** END ****

SENATE THIRD READING

STR Bill Id:SB 3

Author:(Dodd)

As Amended Ver:September 1, 2023

Majority vote

SUMMARY

Requires, on and after August 1, 2024, covered water systems that supply water to 200 service connections or less to have a written policy on the discontinuation of residential water service. Requires that policy to be provided in writing in multiple languages. Prohibits covered water systems from shutting off water service for certain customers that meet specified criteria and prohibits the shutoff of water service until the water bill has been delinquent for 60 days. Enacts a cap on reconnection fees a covered water system can charge for restoring water service.

Major Provisions

1) Requires, on and after August 1, 2024, a covered water system that supplies water to 200 service connections or fewer to have a written policy on discontinuation of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and upon request of a customer in any of the languages listed in Civil Code Section 1632. Allows a covered water system to provide the written policy in any other language.

2) Prohibits a covered water system from discontinuing residential service for nonpayment until payment by a customer has been delinquent for at least 60 days.

3) Prohibits a covered water system from discontinuing residential service for nonpayment if all of the following conditions are met: the customer, or tenant of a customer, submits to the community water system the certification of a primary care provider that discontinuation of residential service will be life threatening to, or pose a serious threat to, the health and safety of a resident of the premises where residential service is provided; the customer demonstrates that he or she is financially unable to pay for residential service within the covered water system's normal billing cycle; and, the customer is willing to enter into an amortization agreement, alternative payment schedule, or plan for deferred or reduced payment with respect to all delinquent charges.

4) Requires a covered water system to make service available to residential occupants who are the tenant of a property whose account is in arrears, if the residential occupant is willing and able to assume responsibility for charges to the account to the satisfaction of the community water system.

5) Authorizes the Attorney General, at the request of the State Water Resources Control Board (State Water Board) or upon his or her own motion, to bring an action in state court to restrain by temporary or permanent injunction the provisions of this bill.

6) Requires the State Water Board, subject to availability of funding, to make funds available to provide training statewide to community water systems with between 15 and 200 service connections to assist in compliance with the provisions of this bill.

COMMENTS

Federal Safe Drinking Water Act (SDWA): The United States Environmental Protection Agency enforces the federal SDWA at the national level. Most states, including California, have been granted "primacy" by the US EPA, giving them the authority to implement and enforce the federal SDWA at the state level.

California's drinking water program: The State Water Board has regulatory oversight of approximately 7,500 public drinking water systems in California. The State Water Board directly enforces the federal SDWA for all large water systems (those with 200 or more service connections), including those water systems regulated under the California Public Utilities Commission, the Department of Financial Protection and Innovation, or the Department of Housing and Community Development.

For small water systems (those with less than 200 connections), local health departments can be delegated, by the State Water Board, to have regulatory authority as the local primacy agency (LPA). Thirty of California's 58 counties have LPA delegation agreements with the State Water Board, and therefore have primary responsibility of regulatory oversight of the public drinking water systems in their counties. LPA counties regulate a total of approximately 4,500 public drinking water systems, which consist of community water systems with more than 14 and less than 200 connections, non-community non-transient systems, and non-community transient systems. In the remaining 28 counties, all public water systems, regardless of size, are directly overseen by the State Water Board.

Drinking water affordability: According to the State Drinking Water Plan for California, June 2015, "Over the last two decades, water costs have, on average, increased about 45 percent within all size groups of water systems (range of 42% to 47%). Average water costs remain highest in the San Francisco Bay Area, Central Coast, and Southern California, and lowest in the Central Valley/Agricultural (including Imperial County), Foothill, and Mountain/Desert regions. On average, customers of small water systems (serving less than 200 service connections) pay approximately 20% more for water than those customers served by larger systems. Many disadvantaged communities are served by small water systems. As a result, water affordability has become a significant issue among residents in these communities."

Human right to water: In 2012, California became the first state to enact a Human Right to Water law, AB 685 (Eng), Chapter 524, Statutes of 2012. Public policy continues to be focused on the right of every human being to have safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitation. Water supply, contaminants, costs of treatment and distribution systems, the number and nature of small public water systems, especially in disadvantaged communities, and many other factors will continue to challenge progress in addressing the Human Right to Water.

Recent legislation regarding discontinuation of water service: SB 998 (Dodd), Chapter 891, Statutes of 2018, requires all public water systems (with more than 200 connections) to have a written policy on the discontinuation of residential water service and to provide that policy in multiple languages. SB 998 prohibits a public water system from shutting off water for customers who can demonstrate that losing water service will be life threatening; are unable to pay during the water system's normal billing cycle; and, are willing to enter into a payment schedule for all delinquent charges.

SB 998 also requires public water systems to give the residential customer 60 days before the water can be shutoff and caps the amount of the reconnection fee that can be charged to the customer at $50 during normal business hours and $150 for non-operational hours. It waives the reconnection fee for customers that can demonstrate they have a household income below 200 percent of the federal poverty line. Additionally, SB 998 requires that the tenant be informed by the water system before the water is shut off and creates a process where the tenant can take over paying the bill, to the satisfaction of the water system, when the landlord has not paid the bill.

This bill: This bill applies the same requirements on covered water systems with less than 200 service connections that currently apply to community water systems with 200 or more service connections. Specifically, SB 3 requires covered water systems with less than 200 service connections to provide a written policy on the discontinuation of residential water service, provide that policy in multiple languages, require that the policy include provisions for not shutting off water for certain customers that meet specified criteria, prohibit the shutoff of water service until the bill has been delinquent for 60 days, and caps reconnection fees for restoring water service to water systems. It makes sense to apply uniform rules for the discontinuation of residential water service to all water systems in the state. This bill ensures that existing protections for customers of larger water systems are in place for customers of water systems with fewer than 200 connections.

According to the Author

"The pandemic demonstrated both the importance of affordable and accessible water for drinking and sanitation, and the challenge that many Californians face in affording this necessity. A half-million households received one-time assistance to address their arrearages, but data from the CPUC and water agencies tells us that consumers continue to fall behind on their bills. The implementation of SB 998, passed in 2018, will help maintain access to water by requiring most water systems to provide notice and opportunity to enroll in a payment plan prior to shutting off water for nonpayment. SB 3 builds on SB 998 by ensuring that all Californians served by community water systems benefit from these common-sense protections, regardless of system size."

Arguments in Support

According to a coalition of supporters of this bill, including Clean Water Action, the Community Water Center, and the Western Center on Law and Poverty, "Access to safe and affordable drinking water and sanitation is a human right. (AB 685 of 2012.) It is also essential to public health, with recent studies demonstrating a link between policies that maintain access to drinking water and reductions in COVID-19 infection and death. As such, no Californian should lose access to tap water because of an inability to pay. Yet, in 2018 and again in 2019, more than 500,000 Californians lost access to tap water due to a water shutoff for nonpayment. Now that the COVID-19 water shutoff moratorium (which had been in place from April 2020 to December 2021) has expired, shutoffs for nonpayment have resumed.

In response to Senator Dodd's leadership on this issue, the state recently acted by passing SB 998 (2018), which established common-sense protections to limit water shutoffs. Now that SB 998 is fully implemented, it is time to expand the bill to reach small community water systems serving 200 or fewer connections. These systems can use information created by other systems to comply with SB 998 (such as shutoff policies, resolutions, and past due notices) to simplify compliance. It is fundamental that, regardless of community size, all people should have basic due process before losing access to essential drinking water for missing a payment."

Arguments in Opposition

According to the California Association of Mutual Water Companies (CalMutuals), "CalMutuals remains opposed to SB 3. We appreciate that your staff took the time to meet with us early in the legislative session to hear our concerns. During that meeting, we identified two primary concerns for small systems with limited financial and managerial capacity: 1) the bill would require dedicated resources for small systems to implement its provisions successfully, and 2) access to funding to mitigate the financial impact resulting from the delayed collection of arrearages. Unfortunately, the offered amendments do not address either of these concerns. This bill amends the code sections added by SB 998, originally passed in 2018, for larger systems, i.e., those with more than 200 service connections. However, the cost burden and implications differ for small systems, whose budgets are modest and oftentimes are managed by volunteers with contract operators. We remain committed to supporting legislative efforts to help the State deliver on its promise that every person has the right to clean, safe, and affordable drinking water."

FISCAL COMMENTS

According to the Assembly Appropriations Committee, enactment of this bill could result in ongoing annual costs to the State Water Board of approximately $1.1 million and $500,000 in contracting costs in the first year of implementation, and $250,000 a year in subsequent years.

VOTES

SENATE FLOOR: 31-7-2

YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener

NO: Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

ABS, ABST OR NV: Alvarado-Gil, Wilk

ASM ENVIRONMENTAL SAFETY AND TOXIC MATERIALS: 7-2-0

YES: Lee, Arambula, Bauer-Kahan, Connolly, McKinnor, Pacheco, Zbur

NO: Hoover, Ta

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Wilson

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Soria

UPDATED

VERSION: September 1, 2023

CONSULTANT: Josh Tooker / E.S. & T.M. / (916) 319-3965 FN: 0001469

Date of Hearing: August 23, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 3

Author:(Dodd) – As Amended Ver:June 15, 2023

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

SUMMARY:

This bill eliminates the exemption for community water systems that serve less than 200 service connections from requirements related to the discontinuation of water service due to nonpayment.

Specifically, this bill, among other things:

1) Eliminates, by August 1, 2024, the existing exemption for small community water systems, those that serve less than 200 service connections, from the policies and requirements of the Water Shutoff Protection Act established by SB 998 (Dodd), Chapter 891, Statutes of 2018. As such, this bill extends specified requirements of the Water Shutoff Protection Act to these smaller water systems.

2) Requires water systems that serve fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10% of the people residing in its service area, and, upon request of a customer, other specified languages.

3) Applies the definition of “community water system” in section 116275 of the Health and Safety Code – a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system – to the requirements of this bill.

4) Requires the State Water Resources Control Board (State Water Board), consistent with the Safe and Affordable Drinking Water Fund, upon appropriation by the Legislature, to expend moneys to provide training statewide to community water systems with between 15 and 200 service connections to comply with the Water Shutoff Protection Act.

FISCAL EFFECT:

The State Water Board estimates ongoing annual costs of approximately $1.1 million (Safe and Affordable Drinking Water Fund, General Fund, other special fund) for five positions, two of which would enforce the requirements of this bill, and three of which would implement statewide training and provide general assistance to water systems. The State Water Board estimates additional contracting costs of $500,000 in the first year of implementation and $250,000 annually and ongoing thereafter, to support staff in the development of and updates to the training program.

Committee staff notes that absent additional detail in the bill, the scope of the required training is unclear. Roughly 1,500 public water systems provide water to fewer than 200 customer service connections. If the State Water Board offers customized training on a system-by-system basis, costs could be significant, in line with the estimate provided by the State Water Board above. On the other hand, the State Water Board could do as little as host and make a training webinar available to all community water systems subject to this bill. In this scenario, costs could be relatively minor and potentially absorbable within the State Water Board’s existing resources.

COMMENTS:

1) Purpose. According to the author:

The pandemic demonstrated both the importance of affordable and accessible water for drinking and sanitation, and the challenge that many Californians face in affording this necessity. A half-million households received one-time assistance to address their arrearages, but data from the CPUC and water agencies tells us that consumers continue to fall behind on their bills. The implementation of SB 998, passed in 2018, will help maintain access to water by requiring most water systems to provide notice and opportunity to enroll in a payment plan prior to shutting off water for nonpayment. SB 3 builds on SB 998 by ensuring that all Californians served by community water systems benefit from these common-sense protections, regardless of system size.

2) Background.

Water Utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Roughly 1,500 of these providers provide water to fewer than 200 customer service connections.

SB 998. SB 998 established the Water Shutoff Protection Act and made numerous changes to the policies required of water providers when discontinuing residential water service due to nonpayment. Specifically, SB 998 requires public water systems (those with more than 200 service connections) to: prohibit the shutoff of water service until the residential water bill has been delinquent for 60 days; have a written policy on discontinuation of residential water service due to nonpayment and provide that policy in multiple languages (as specified in statute); include provisions to prevent discontinuation of water service for certain customers that meet specified criteria; and cap reconnection fees for restoring water service. SB 998 exempted water service providers that serve less than 200 service connections.

COVID-19. In response to the COVID-19 pandemic, California instituted a number of policies to protect residents from the economic fallout of the pandemic. These measures included moratoriums on rental evictions and disconnection of utility services due to nonpayment (including water utility service). The utility shutoff moratorium was initially authorized by a California Public Utilities Commission resolution and was subsequently expanded and extended by a gubernatorial executive order. As the pandemic persisted, the Legislature and Governor extended the moratorium to December 31, 2021, and approved $1 billion in debt relief funding for customers via the California Water and Wastewater Arrearage Payment Program. These funds were applied to utility debt for both drinking water and wastewater services. These moratoriums and utility debt relief appear to have temporarily shielded many customers from losing water service during the pandemic.

However, the moratoriums have since been lifted and customers of water service providers with over 200 service connections who have fallen behind on their utility bills are now receiving protections afforded by SB 998. These protections are not available to customers of water providers with less than 200 service connections. In response, this bill extends existing protections currently applicable to large systems — such as the requirement to provide notice and opportunity to enroll in a payment plan prior to water shutoff for nonpayment — to small community water systems.

Enforcement. According to the State Water Board, recent implementation of SB 998 has resulted in enforcement costs not anticipated when the legislation originally passed in 2018. Thus far, the State Water Board has absorbed this enforcement workload. However, the State Water Board contends the anticipated increase in workload expected from this bill will not be absorbable. According to the State Water Board, roughly 1,500 public water systems provide water to fewer than 200 customer service connections. This bill represents a significant expansion of the number of systems for which the State Water Board would need to implement enforcement. Moreover, the enforcement environment for small water systems could be more complex than that for the larger systems currently required to comply with SB 998.

Safe and Affordable Drinking Water Fund (SADWF). The SADWF was established by SB 200 (Monning), Chapter 120, Statutes of 2019. SB 200 requires the annual transfer of 5% of revenues in the Greenhouse Gas Reduction Fund (up to $130 million) into the SADWF until June 30, 2030. Money transferred into the fund is continuously appropriated and must be expended consistent with a fund expenditure plan, which is adopted annually by the State Water Board. The State Water Board released its fiscal year 2023-24 fund expenditure plan in July 2023. This bill requires the State Water Board, upon appropriation by the Legislature and consistent with the SADWF, to expend moneys to provide training statewide to community water systems with between 15 and 200 service connections to meet compliance with the Water Shutoff Protection Act.

Support and Opposition. A coalition of environmental and environmental justice organizations writes in support:

Now that SB 998 is fully implemented, it is time to expand the bill to reach small community water systems serving 200 or fewer connections. These systems can use information created by other systems to comply with SB 998 (such as shutoff policies, resolutions, and past due notices) to simplify compliance. While this bill will impose new requirements on small water systems, SB 998 struck a balance between administrative burden and customer protections that is continued in SB 3. Additionally, small water systems are already operating under a requirement to offer payment plans consistent with SB 998 for water debt that accrued during the early portion of the COVID-19 pandemic, and can use the administrative processes and knowledge they have developed in complying with permanent protections.

The California Association of Mutual Water Companies writes in opposition:

The cost burden and implications differ for small systems, whose budgets are modest and oftentimes are managed by volunteers with contract operators. This year, in addition to the proposed obligations of SB 3, small systems are being called on to implement an array of drought planning improvements (SB 552) and to adopt treatment to remove contamination from PFAS and hexavalent chromium to very low levels. Small systems cannot absorb the added costs resulting from these unfunded mandates at the same speed that much larger systems can, and these added regulatory burdens would require assistance from the State… The more appropriate response is to work with small systems to identify their specific needs and provide targeted support to help them achieve and maintain compliance with SB 3 if that bill is to continue to move forward.

Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081

Date of Hearing: June 20, 2023

ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS

Alex Lee, Chair

SBPCA Bill Id:SB 3

Author:(Dodd) – As Amended Ver:June 15, 2023

SENATE VOTE: 31-7

SUBJECT: Discontinuation of residential water service: community water system

SUMMARY: Requires, on and after August 1, 2024, community water systems that supply water to 200 service connections or less to have a written policy on the discontinuation of residential water service. Requires that policy be provided in writing in multiple languages. Prohibits community water systems from shutting off water service for certain customers that meet specified criteria and prohibits the shutoff of water service until the bill has been delinquent for 60 days. Enacts a cap on reconnection fees a community water system can charge for restoring water service. Specifically, this bill:

1) Requires, on and after August 1, 2024, a community water system that supplies water to 200 service connections or fewer to have a written policy on discontinuation of residential service for nonpayment available in English, any language spoken by at least 10 percent of the people residing in its service area, and upon request of a customer any of the languages listed in Section 1632 of the Civil Code. Allows a community water system to provide the written policy in any other language.

2) Prohibits a community water system from discontinuing residential service for nonpayment until payment by a customer has been delinquent for at least 60 days.

3) Prohibits a community water system from discontinuing residential service for nonpayment if all of the following conditions are met: the customer, or tenant of a customer, submits to the community water system the certification of a primary care provider that discontinuation of residential service will be life threatening to, or pose a serious threat to, the health and safety of a resident of the premises where residential service is provided; the customer demonstrates that he or she is financially unable to pay for residential service within the community water system's normal billing cycle; and, the customer is willing to enter into an amortization agreement, alternative payment schedule, or plan for deferred or reduced payment with respect to all delinquent charges.

4) Requires a community water system that discontinues residential service for nonpayment to provide the customer with information on how to restore residential service and how to petition for a waiver of reconnection fees.

5) Requires a community water system to waive reconnection fees and offer a reduction or waiver of interest charges on delinquent bills once every 12 months for a residential customer who demonstrates that they have income below 200 percent of the federal poverty line.

6) Authorizes a community water system to set a reconnection of service fee at fifty dollars ($50), but not to exceed the actual cost of reconnection if it is less for residential customers that do not meet the criteria for having reconnection fees waived.

7) Requires a community water system to make every good faith effort to inform the residential occupants, by means of written notice, of a single-family dwelling, multiunit residential structure, mobile-home park or permanent resident structure in a labor camp, when the residential occupant is the tenant and the owner of the property's account is in arrears and service is going to be terminated.

8) Requires a community water system to make service available to residential occupants who are the tenant of a property whose account is in arrears, if the residential occupant is willing and able to assume responsibility for charges to the account to the satisfaction of the community water system.

9) Requires a community water system to report the number of annual discontinuations of residential service for inability to pay on the community water system's Internet Web site and to the State Water Resources Control Board (State Water Board). Requires the State Water Board to post this information on its Internet Web site.

10) Authorizes the Attorney General, at the request of the State Water Board or upon his or her own motion, to bring an action in state court to restrain by temporary or permanent injunction the provisions of this bill.

11) States that the provisions of the bill do not apply to the termination of a service connection by a community water system due to an unauthorized action of a customer.

12) Authorizes the State Water Board, upon appropriation by the Legislature, to expend moneys from the Safe and Affordable Drinking Water Fund, to provide training statewide to community water systems with between 15 and 200 service connections to comply with the provisions of this bill.

EXISTING LAW:

1. Vests the State Water Board with all of the authority, duties, powers, purposes, functions, responsibilities, to enforce the State Drinking Water Act (SDWA). (Health and Safety Code (HSC) § 116271)
2. Defines "urban and community water system" as a public water system that supplies water to more than 200 service connections. (HSC § 116902)

3) Requires an urban and community water system that supplies water to more than 200 service connections to have a written policy on discontinuation of residential service for nonpayment available in English, the languages listed in Section 1632 of the Civil Code, and any other language spoken by at least 10 percent of the people residing in its service area. (HSC § 116906)

4) Prohibits an urban and community water system from discontinuing residential service for nonpayment until payment by a customer has been delinquent for at least 60 days. (HSC § 116908)

5) Requires any person who owns a public water system to ensure that the system does all of the following:

1. Complies with primary and secondary drinking water standards;
2. Will not be subject to backflow under normal operating conditions;
3. Provides a reliable and adequate supply of pure, wholesome, healthful, and potable water;
4. Employs or utilizes only water treatment operators or water treatment operators-in-training that have been certified by the State Water Board at the appropriate grade; and,
5. Complies with the operator certification program. (HSC § 116555 (a))

6) Defines a "public water system" as a system for the provision of water for human consumption through pipes or other constructed conveyances that has 15 or more service connections or regularly serves at least 25 individuals daily at least 60 days out of the year. (HSC § 116275 (h))

7) Defines "community water system" as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. (HSC § 116275(i))

8) Defines "service connection" as the point of connection between the customer’s piping or constructed conveyance, and the water system’s meter, service pipe, or constructed conveyance. (HSC § 116275(s))

9) Defines "resident" as a person who physically occupies, whether by ownership, rental, lease, or other means, the same dwelling for at least 60 days of the year. (HSC § 116275(t))

10) Authorizes the State Water Board to delegate primary responsibility of administration and enforcement of public water system compliance to local health officers in a county through a local primacy delegation agreement. Declares that the delegation shall not include community water systems serving 200 or more service connections. (HSC § 116330 et seq.)

11) Declares the established policy of the state to be that every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes. (Water Code § 106.3)

12) Provides that any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into a contract, as specified, shall deliver to the other party to the contract or agreement and prior to the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, including a translation of every term and condition in that contract or agreement. (Civil Code § 1632)

FISCAL EFFECT: Unknown.

COMMENTS:

Need for the bill: According to the author: "The pandemic demonstrated both the importance of affordable and accessible water for drinking and sanitation, and the challenge that many Californians face in affording this necessity. A half-million households received one-time assistance to address their arrearages, but data from the CPUC and water agencies tells us that consumers continue to fall behind on their bills. The implementation of SB 998, passed in 2018, will help maintain access to water by requiring most water systems to provide notice and opportunity to enroll in a payment plan prior to shutting off water for nonpayment. SB 3 builds on SB 998 by ensuring that all Californians served by community water systems benefit from these common-sense protections, regardless of system size."

Federal Safe Drinking Water Act (SDWA): The federal SDWA was enacted in 1974 to protect public health by regulating drinking water. California has enacted its own safe drinking water act to implement the federal law and establish state standards under the state SDWA. The United States Environmental Protection Agency (US EPA) enforces the federal SDWA at the national level. Most states, including California, have been granted "primacy" by the US EPA, giving them the authority to implement and enforce the federal SDWA at the state level. In accordance with the federal SDWA, the US EPA provides funds to states for their drinking water loan programs, conducts an annual oversight review of each state’s program, and issues an annual program evaluation report.

California’s drinking water program: The State Water Board has regulatory oversight of approximately 7,500 public drinking water systems in California. The State Water Board directly enforces the federal SDWA for all large water systems (those with 200 or more service connections), including those water systems regulated under the California Public Utilities Commission (CPUC), the Department of Financial Protection and Innovation (DFPI), or the Department of Housing and Community Development (DHCD).

For small water systems (those with less than 200 connections), local health departments can be delegated, by the State Water Board, to have regulatory authority as the local primacy agency (LPA). 30 of California’s 58 counties have LPA delegation agreements with the State Water Board, and therefore have primary responsibility of regulatory oversight of the public drinking water systems in their counties. LPA counties regulate a total of approximately 4,500 public drinking water systems, which consist of community water systems with more than 14 and less than 200 connections, non-community non-transient systems, and non-community transient systems. In the remaining 28 counties, all public water systems, regardless of size, are directly overseen by the State Water Board.

The State Water Board has adopted regulations for drinking water standards, monitoring requirements, cross-connections, design and operational standards, and operator certification. The implementation of the drinking water program involves: (1) establishment of drinking water standards, (2) certification of operators and point-of-use treatment devices, and (3) direct regulation of public water systems with the authority to delegate oversight responsibility of small water systems to local county health departments. The regulation of public water systems includes: (1) issuance of permits covering the approval of water system design and operation procedures, (2) inspection of water systems, (3) the enforcement of laws and regulations to assure that all public water systems routinely monitor water quality and meet current standards, and (4) assuring notification is provided to consumers when standards are not being met.

According to the State Drinking Water Plan for California, June 2015, "Over the last two decades, water costs have, on average, increased about 45 percent within all size groups of water systems (range of 42 to 47 percent). Average water costs remain highest in the San Francisco Bay Area, Central Coast, and Southern California, and lowest in the Central Valley/Agricultural (including Imperial County), Foothill, and Mountain/Desert regions. On average, customers of small water systems (serving less than 200 service connections) pay approximately 20 percent more for water than those customers served by larger systems. Many disadvantaged communities are served by small water systems. As a result, water affordability has become a significant issue among residents in these communities."

What is a public water system? A public water system is defined as a system that provides water for human consumption to 15 or more connections or regularly serves 25 or more people daily for at least 60 days out of the year. Many people think of public water systems as large city or regional water suppliers, but they also include small housing communities, businesses, and even schools and restaurants that provide water. A public water system is not necessarily a public entity, and most public water systems are privately owned. There are three legal distinctions between the types of public water systems: community, non-transient non-community, and transient. The type of water system is based on how often people consume the water. Drinking water regulations impose the most stringent monitoring requirements on community and non-transient non-community water systems because the people they serve obtain all or much of their water from that system each day. Community water systems are city, county, regulated utilities, regional water systems, and even small water companies and districts where people live.

Being a public water system means providing affordable, safe drinking water to customers 24 hours a day, 7 days a week, 365 day a year. This includes the associated legal, fiscal, and operational responsibilities, and future planning. Public water systems typically are run more efficiently when costs can be spread out over a large group of people to obtain good economies of scale. Small public water systems without a very high level of managerial, technical, and financial capacity tend to be unsustainable.

Human right to water: In 2012, California became the first state to enact a Human Right to Water law, AB 685 (Eng, Chapter 524, Statutes of 2012). Public policy continues to be focused on the right of every human being to have safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitation. Water supply, contaminants, costs of treatment and distribution systems, the number and nature of small public water systems, especially in disadvantaged communities, and many other factors will continue to challenge progress in addressing the Human Right to Water.

Recent legislation regarding discontinuation of water service: SB 998 (Dodd, Chapter 891, Statutes of 2018) requires all public water systems (with more than 200 connections) to have a written policy on the discontinuation of residential water service and to provide that policy in multiple languages. SB 998 prohibits a public water system from shutting off water for those customers that can demonstrate that losing water service will be life threatening; the customer is unable to pay during the water system's normal billing cycle; and if the customer is willing to enter into a payment schedule for all delinquent charges.

SB 998 not only requires a public water system to have a written policy on the discontinuation of water service for residential customers, it requires the public water systems to give the residential customer 60 days before the water can be shutoff and caps the amount of the reconnection fee that can be charged to the customer at $50 during normal business hours and $150 for non-operational hours. It waives the reconnection fee for those customers that can demonstrate they have a household income below 200 percent of the federal poverty line. Additionally, SB 998 requires that the tenant be informed by the water system before the water is shut off and creates a process where the tenant can take over paying the bill, to the satisfaction of the water system, when the landlord has not paid the bill.

This bill: SB 3 applies the same requirements on community water systems with less than 200 service connections that currently apply to community water systems with 200 or more service connections. Specifically, SB 3 requires community water systems with less than 200 service connections to provide a written policy on the discontinuation of residential water service, provide that policy in multiple languages, include provisions for not shutting off water for certain customers that meet specified criteria, prohibit the shutoff of water service until the bill has been delinquent for 60 days, and caps the reconnection fees for restoring water service to water systems. It makes sense to apply uniform rules for the discontinuation of residential water service to all water systems in the state. SB 3 ensures that those protections are in place for customers of water systems with fewer than 200 connections.

Arguments in support: According to a coalition in support of the bill, including Clean Water Action, the Community Water Center, and the Western Center on Law and Poverty, "Access to safe and affordable drinking water and sanitation is a human right. (AB 685, 2012.) It is also essential to public health, with recent studies demonstrating a link between policies that maintain access to drinking water and reductions in COVID-19 infection and death.1 As such, no Californian should lose access to tap water because of an inability to pay. Yet, in 2018 and again in 2019, more than 500,000 Californians lost access to tap water due to a water shutoff for nonpayment. Now that the COVID-19 water shutoff moratorium (which had been in place from April 2020 to December 2021) has expired, shutoffs for nonpayment have resumed.

In response to Senator Dodd’s leadership on this issue, the state recently acted by passing SB 998 (2018), which established common-sense protections to limit water shutoffs. Now that SB 998 is fully implemented, it is time to expand the bill to reach small community water systems serving 200 or fewer connections. These systems can use information created by other systems to comply with SB 998 (such as shutoff policies, resolutions, and past due notices) to simplify compliance. It is fundamental that, regardless of community size, all people should have basic due process before losing access to essential drinking water for missing a payment. SB 3 would eliminate the gap in existing legal protections."

Arguments in opposition: According to the California Association of Mutual Water Companies (CalMutuals), "CalMutuals remains opposed to SB 3. We appreciate that your staff took the time to meet with us early in the legislative session to hear our concerns. During that meeting, we identified two primary concerns for small systems with limited financial and managerial capacity: 1) the bill would require dedicated resources for small systems to implement its provisions successfully, and 2) access to funding to mitigate the financial impact resulting from the delayed collection of arrearages. Unfortunately, the offered amendments do not address either of these concerns. This bill amends the code sections added by SB 998, originally passed in 2018, for larger systems, i.e., those with more than 200 service connections. However, the cost burden and implications differ for small systems, whose budgets are modest and oftentimes are managed by volunteers with contract operators. We remain committed to supporting legislative efforts to help the State deliver on its promise that every person has the right to clean, safe, and affordable drinking water. Ensuring the overall health of our water systems is crucial in delivering this vital resource to our communities while maintaining affordability for all families. We do not believe SB 3 furthers this noble goal and are concerned the bill may end up doing more harm than good."

Related legislation:

SB 998 (Dodd, Chapter 891, Statutes of 2018). Requires all public water systems (with more than 200 connections) to have a written policy on discontinuation of residential water service and to provide that policy in multiple languages. Prohibits a public water system from shutting off water service for certain customers that meet specified criteria and prohibits the shutoff of water service until the bill has been delinquent for 60 days. Caps the reconnection fees a public water system can charge for restoring water service.

REGISTERED SUPPORT / OPPOSITION:

Support

California Coastkeeper Alliance
California Environmental Voters (formerly CLCV)
Carbon Cycle Institute
Center on Race, Poverty & the Environment
Central California Environmental Justice Network
Central Coast Energy Services
Clean Water Action
Community Water Center
Environmental Working Group
Friends Committee on Legislation of California
LAANE (Los Angeles Alliance for A New Economy)
Leadership Counsel for Justice & Accountability
League of Women Voters of California
Natural Resources Defense Council (NRDC)
Physicians for Social Responsibility - Los Angeles
Pueblo Unido CDC
San Francisco Peninsula Energy Services
Spur
Union of Concerned Scientists
Western Center on Law & Poverty

Opposition

California Association of Mutual Water Companies

Analysis Prepared by: Josh Tooker / E.S. & T.M. /

 THIRD READING  

Bill No: SB 3

Author: Dodd (D), et al.

Amended: 5/23/23

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-0, 3/21/23

AYES: Bradford, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, McGuire, Min, Newman, Rubio, Skinner

NO VOTE RECORDED: Dahle, Grove, Seyarto, Stern, Wilk

SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/18/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones

NO VOTE RECORDED: Seyarto

SUBJECT: Discontinuation of residential water service: community water system

SOURCE: Clean Water Action

Community Water Center

Leadership Counsel for Justice & Accountability

DIGEST:

This bill eliminates the exemption for water systems that serve less than 200 service connections (but at least 15 service connections) from statutes and policies related to the discontinuation of water service due to nonpayment.

ANALYSIS:

Existing law:

1. Establishes the California Public Utilities Commission (CPUC) with regulatory authority over public utilities, including water corporations and ensure rates are just and reasonable. (California Constitution Article XII, Public Utilities Code §451)
2. Establishes the State Water Resources Control Board (SWRCB) and requires the SWRCB to administer provisions relating to the regulation of drinking water to protect public health, including, but 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, adoption of enforcement regulations, and conducting studies and investigations to assess the quality of water in domestic water supplies. (Water Code §174 et seq. and Health and Safety Code §116271)
3. Defines a “community water system” as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. (Health and Safety Code §116275 (i))
4. Defines an “urban and community water system” as a public water system that supplies water to more than 200 service connections.” (Health and Safety Code §116902)
5. Establishes the Water Shutoff Protection Act, which prohibits an urban and community water system, from discontinuing residential water service for nonpayment until a payment by a customer has been delinquent for at least 60 days. Requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment in English, the specified languages in the Civil Code, and any other language spoken by at least 10 percent of the people residing in its service area. Requires an urban and community water system to provide notice of that policy to customers, as provided, including, among other things, specified options for addressing the nonpayment. (Health and Safety Code §116902 et seq.)
6. Prohibits an urban and community water system from discontinuing residential service for nonpayment if certain conditions are met, including that the customer or a tenant submits certification that discontinuation of residential service will be life threatening to, or pose a serious threat to the health and safety of, a resident of the premises. (Health and Safety Code §116910)
7. Requires an urban and community water system to impose specified fees for reconnection of service for customers with a household income below 200 percent of the federal poverty line. (Health and Safety Code §116914)
8. Requires an urban and community water system to report annually the number of discontinuations of residential service for inability to pay, as specified, on the water system’s internet website, if an internet website exists, and to the SWRCB. (Health and Safety Code §116918)
9. Authorizes the Attorney General to enforce the requirements imposed on urban and community water systems in connection with discontinuing residential service for nonpayment by seeking an injunction, as specified. (Health and Safety Code §116920)
10. Establishes the Safe and Affordable Drinking Water Fund (SAFER Drinking Water) in the State Treasury to help water systems provide an adequate and affordable supply of safe drinking water in both the near and long terms. Authorizes the SWRCB to provide for the deposit into the fund of certain moneys and continuously appropriates the moneys in the fund to the SWRCB for grants, loans, contracts, or services to assist eligible recipients.
11. Provides a fee that encompasses any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service. (California Constitution Article XIII D)
12. Provides, among its provisions, that any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified contracts or agreements, must deliver to the other party to the contract or agreement a translation of the contract or agreement in the language in which it was negotiated. (Civil Code §1632)

This bill:

1. Eliminates, by August 1, 2024, the existing exemption for small community water systems, those that serve less than 200 service connections, from the policies and requirements of the Water Shutoff Protection Act. As such, this bill extends the requirements of the Water Shutoff Protection Act to these smaller water systems.
2. Requires water systems that serve fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10 percent of the people residing in its service area, and, upon request of a customer, the languages specified in section 1632 of the Civil Code (specifically: Spanish, Chinese, Tagalog, Vietnamese, and Korean).
3. Applies the definition of “community water system” in section 116275 of the Health and Safety Code – a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system.
4. Requires the SWRCB to, upon appropriation by the Legislature, as part of the SAFER program, expend moneys to provide training statewide to community water systems between 15 and 200 service connections to meet compliance with the Water Shutoff Act.
5. Makes other technical and non-substantive changes.

Background

Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.

Publicly owned water utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.

CPUC-regulated water utilities. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other investor-owned utilities, the CPUC regulates rates for service of the water utilities under its jurisdiction, as well as, rules regarding discontinuation of service due to nonpayment.

SB 998 (Dodd, Chapter 891, Statutes of 2018). SB 998 established the Water Shutoff Protection Act, and made numerous changes to the policies required of water providers when discontinuing residential water service due to nonpayment. Specifically, SB 998 requires public water systems (those with more than 200 service connections) to: prohibit the shutoff of water service until the residential water bill has been delinquent for 60 days; requires the water utility to have a written policy on discontinuation of residential water service due to nonpayment and provide that policy in multiple languages (as specified in statute); include provisions to prevent discontinuation of water service for certain customers that meet specified criteria; and caps the reconnection fees for restoring water service. SB 998 required CPUC-regulated water utilities to comply with these policies by February 1, 2020 and other water providers by April 1, 2020. The bill exempted water service providers that serve less than 200 service connections.

SB 3. This bill expands provisions from SB 998 providing protections and process to discontinue water service due to nonpayment for customers of community water systems (those with fewer than 200 service connections, but at least 15 service connections). This bill provides that the translation requirements apply differently to these smaller water systems compared to other systems by only requiring translation of written policy on discontinuation of water service to be available if ten percent of the customers served speak the language, or specifically in Spanish, Chinese, Tagalog, Vietnamese, and Korean, when requested by a customer.

Need to address affordability for all customers. The supporters of this bill contend that residents of these smaller systems are unfairly at risk of losing an essential service due to lack of affordability and consumer protections afforded to customers of larger water systems. The supporters note that water shutoffs due to nonpayment often result from an inability to afford water utility bills. They argue that the lack of affordability for water service results in disproportionate impacts on Black, indigenous, and people of color households.

Need for financial assistance for small water systems. This bill would require the SWRCB to expend funds, upon appropriation by the Legislature, from the SAFER Drinking Water program to provide training statewide to community water systems, those between 15 and 200 service connections, to help meet compliance with the Water Shutoff Protection Act. In opposition to this bill, California Association of Mutual Water Companies (CalMutuals) raises concerns about the lack of clear financial resources to help these smaller systems comply with the requirements of this bill. CalMutuals contends that many of their smallest systems are operated by volunteers or part-time contractors. They note that they can’t just use the information created by the larger systems to comply with the requirements of this bill. Rather, the implementation requires staff resources to prepare documents, provide notice, make changes to the billing systems, and also requires cash-flow to afford the delays in utility bill collections. CalMutuals has requested amendments that would clarify their ability to access funding for technical assistance for small water systems from the funding authority in the SAFER Drinking Water program funded from the sale of greenhouse gas allowances in the state’s Cap-and-Trade Program.

Related/Prior Legislation

SB 223 (Dodd, 2021) made numerous changes to expand provisions related to prohibiting discontinuation of residential water service due to nonpayment. The bill was held in the Senate Committee on Appropriations.

SB 155 (Committee on Budget and Fiscal Review, Chapter 258, Statutes of 2021) public resources trailer bill includes numerous policies, including extending from September 30, 2021 to December 31, 2021 the date by when a community water system may discontinue water service due to nonpayment.

AB 148 (Committee on Budget, Chapter 115, Statutes of 2021) established the California Water and Wastewater Arrearage Payment Program to provide utility arrearages debt relief, upon appropriation, by requiring a community water system to provide customers with arrearages accrued during the COVID-19 pandemic bill relief period, as defined, a notice that they may enter into a payment plan, as prescribed. The bill also required a moratorium on discontinuation of water service due to nonpayment through September 30, 2021.

SB 998 (Dodd, Chapter 891, Statutes of 2018) required all public water systems (with more than 200 connections) to have a written policy on discontinuation of residential water service, provide that policy in multiple languages, include provisions for not shutting off water for certain customers that meet specified criteria, prohibit the shutoff of water service until the utility bill has been delinquent for 60 days, and cap the reconnection fees for restoring water service.

SB 401 (Dodd, Chapter 662, Statutes of 2015) required the SWRCB, in collaboration with the State Board of Equalization and stakeholders, to develop a plan for the funding and implementation of a new program to provide water rate relief for low-income ratepayers by January 1, 2018, and provide a corresponding report to the Legislature by February 1, 2018.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• The SWRCB estimates ongoing costs of $225,000 annually (likely the Safe Drinking Water Fund [SDWF]) to implement the enforcement requirements of this bill that small community water systems have a written discontinuation policy, as specified.
• Unknown but potentially significant ongoing cost pressure (General Fund or SDWF) to provide technical and financial assistance for the implementation of this bill.

SUPPORT: (Verified 5/18/23)

Clean Water Action (co-source)

Community Water Center (co-source)

Leadership Counsel for Justice & Accountability (co-source)

California Coastkeeper Alliance

California Environmental Voters

California Water Service

Carbon Cycle Institute

Center on Race, Poverty & the Environment

Central California Environmental Justice Network

Central Coast Energy Services

CivicWell

Environmental Working Group

Friends Committee on Legislation of California

League of Women Voters of California

Los Angeles Alliance for a New Economy

Natural Resources Defense Council

Physicians for Social Responsibility - Los Angeles

Pueblo Unido CDC

San Francisco Peninsula Energy Services

Sierra Club California

SPUR

Union of Concerned Scientists

Western Center on Law & Poverty

OPPOSITION: (Verified 5/18/23)

California Association of Mutual Water Companies

Community Water Systems Alliance

Yorba Linda Water District

ARGUMENTS IN SUPPORT: According to the author:

The pandemic demonstrated both the importance of affordable and accessible water for drinking and sanitation, and the challenge that many Californians face in affording this necessity. A half-million households received one-time assistance to address their arrearages, but data from the CPUC and other water agencies tell us that consumers continue to fall behind on their bills. The implementation of SB 998, passed in 2018, will help maintain access to water by requiring most water systems to provide notice and opportunity to enroll in a payment plan prior to shutting off water for nonpayment. SB 3 builds on SB 998 by ensuring that all Californians served by community water systems benefit from these common-sense protections, regardless of system size.

ARGUMENTS IN OPPOSITION: The California Association of Mutual Water Companies (CalMutuals) opposes SB 3 due to the lack of clear financial resources to support smaller water systems ability to implement the provisions of the Water Shutoff Act. CalMutuals states that many of their smallest water systems do not have staff to carry out the various provisions of the Water Shutoff Act, as many of these systems are operated by volunteers, part-time or contract operators. CalMutuals contends that many of the requirements of the bill could force these smaller water systems into financial hardship, including the translation requirements, billing systems changes, and cash-flow constraints of following the “prescriptive and cumbersome set of steps before discontinuing service.”

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

5/23/23 13:27:56

**** END ****

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 3 (Dodd) - Discontinuation of residential water service: community water system

Bill Summary:

This bill would eliminate the exemption for water systems that serve less than 200 service connections (but at least 15 service connections) from statutes and policies related to the discontinuation of water service due to nonpayment.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 18, 2023

Fiscal Impact:

• The State Water Resources Control Board (SWRCB) estimates ongoing costs of $225,000 annually (likely the Safe Drinking Water Fund [SDWF]) to implement the enforcement requirements of this bill that small community water systems have a written discontinuation policy, as specified.
• Unknown but potentially significant ongoing cost pressure (General Fund or SDWF) to provide technical and financial assistance for the implementation of this bill.

Committee Amendments:

The committee amendments require the SWRCB to provide statewide trainings to community water systems to meet compliance with the Water Shutoff Protection Act.

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 3 (Dodd) - Discontinuation of residential water service: community water system

Bill Summary:

This bill would eliminate the exemption for water systems that serve less than 200 service connections (but at least 15 service connections) from statutes and policies related to the discontinuation of water service due to nonpayment.

Fiscal Impact:

• The State Water Resources Control Board (SWRCB) estimates ongoing costs of $225,000 annually (likely the Safe Drinking Water Fund [SDWF]) to implement the enforcement requirements of this bill that small community water systems have a written discontinuation policy, as specified.
• Unknown but potentially significant ongoing cost pressure (General Fund or SDWF) to provide technical and financial assistance for the implementation of this bill (see staff comments).

Background:

Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.

• Publicly owned water utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.
• CPUC-regulated water utilities. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other investor-owned utilities, the CPUC regulates rates of the water utilities under its jurisdiction, as well as, rules regarding discontinuation of service due to nonpayment.

SB 998 (Dodd, Chapter 891, Statutes of 2018). SB 998 established the Water Shutoff Protection Act, and made numerous changes to the policies required of water providers when discontinuing residential water service due to nonpayment. Specifically, SB 998 requires public water systems (those with more than 200 service connections) to: prohibit the shutoff of water service until the residential water bill has been delinquent for 60 days; requires the water utility to have a written policy on discontinuation of residential water service due to nonpayment and provide that policy in multiple languages (as specified in statute); include provisions to prevent discontinuation of water service for certain customers that meet specified criteria; and caps the reconnection fees for restoring water service. SB 998 required CPUC-regulated water utilities to comply with these policies by February 1, 2020 and other water providers by April 1, 2020. The bill exempted water service providers that serve less than 200 service connections.

COVID-19 pandemic crisis prompts statewide moratorium and funding for utility debt relief. As the provisions of SB 998 were scheduled to be implemented, the COVID-19 pandemic abruptly changed the world. In response to the COVID-19 crisis, California instituted a number of protections for residents from the economic fallout of the pandemic. These measures included moratoriums on rental evictions and disconnection of utility services due to nonpayment (including water utility service). The moratorium was initially authorized by CPUC resolution that was subsequently expanded and extended by an Executive Order authored by the governor. As the pandemic continued, the Legislature and governor adopted legislation to extend the moratorium to December 31, 2021, and provide utility debt relief for customers. Specifically, one billion dollars was appropriated to the newly established California Water and Wastewater Arrearage Payment Program in order to help offset water utility bill debt. These funds were applied to utility debt for both drinking water and wastewater services. As such, moratoriums and utility debt relief appear to have temporarily shielded many customers from losing water service during the pandemic. However, the moratoriums have since been lifted and customers of water service providers with over 200 service connections who have fallen behind on their utility bill are now receiving the protections and process afforded by the Water Shutoff Act. However, per the statute, these protections are not applicable to customers of water providers with less than 200 service connections.

Proposed Law:

This bill would eliminate the exemption for water systems that serve less than 200 service connections (but at least 15 service connections) from statutes and policies related to the discontinuation of water service due to nonpayment. Specifically, this bill would:

1. Eliminate, by August 1, 2024, the existing exemption for small community water systems, those that serve less than 200 service connections, from the policies and requirements of the Water Shutoff Protection Act. As such, this bill would extend the requirements of the Water Shutoff Protection Act to these smaller water systems.
2. Require water systems that serve fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10 percent of the people residing in its service area, and, upon request of a customer, the languages specified in section 1632 of the Civil Code (specifically: Spanish, Chinese, Tagalog, Vietnamese, and Korean).
3. Apply the definition of “community water system” in section 116275 of the Health and Safety Code – a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system.
4. Make other technical and non-substantive changes.

Related Legislation:

SB 223 (Dodd, 2021) would have made numerous changes to expand provisions related to prohibiting discontinuation of residential water service due to nonpayment. The bill was held in this committee.

SB 155 (Committee on Budget and Fiscal Review, Chapter 258, Statutes of 2021) public resources trailer bill includes numerous policies, including extending from September 30, 2021 to December 31, 2021 the date by when a community water system may discontinue water service due to nonpayment.

AB 148 (Committee on Budget, Chapter 115, Statutes of 2021) establishes the California Water and Wastewater Arrearage Payment Program to provide utility arrearages debt relief, upon appropriation, by requiring a community water system to provide customers with arrearages accrued during the COVID-19 pandemic bill relief period, as defined, a notice that they may enter into a payment plan, as prescribed. The bill also requires a moratorium on discontinuation of water service due to nonpayment through September 30, 2021.

SB 998 (Dodd, Chapter 891, Statutes of 2018) required all public water systems (with more than 200 connections) to have a written policy on discontinuation of residential water service, provide that policy in multiple languages, include provisions for not shutting off water for certain customers that meet specified criteria, prohibit the shutoff of water service until the utility bill has been delinquent for 60 days, and cap the reconnection fees for restoring water service.

SB 401 (Dodd, Chapter 662, Statutes of 2015) required the SWRCB, in collaboration with the State Board of Equalization and stakeholders, to develop a plan for the funding and implementation of a new program to provide water rate relief for low-income ratepayers by January 1, 2018 and provide a corresponding report to the Legislature by February 1, 2018.

Staff Comments:

SWRCB enforcement costs. As discussed above, SB 998 (Dodd 2018) made numerous changes to the policies required of water providers when discontinuing residential water service due to nonpayment, and exempted from those requirements water service providers that serve less than 200 service connections. Pursuant to Senate Rule 28.8, SB 998 proceeded directly to the Senate Floor and was not heard in this committee, meaning that the committee Chair determined any state costs were not significant. Similarly, the Assembly Appropriations Committee analysis identified minor and absorbable costs.

SB 3 would simply take the provisions of SB 998 and apply them to water agencies with between 15 and 200 connections, making no other major changes to the Water Shutoff Protection Act. Despite the similarities of the two bills, state costs for SB 3 are estimated to be higher than the minimal costs expected for SB 998 when it was analyzed.

According to the SWRCB, recent implementation of SB 998 has resulted in enforcement costs not anticipated in 2018. Thus far, the SWRCB has absorbed the SB 998 workload. However, the State Water Board stated it could not continue to absorb additional workload, and that increases expected from SB 3 would not be absorbable. Based on its to-date costs for implementing SB 998, SWRCB estimates SB 3 would have annual state costs of $225,000. Absent a General Fund appropriation, these costs would likely be attributable to the Safe Drinking Water Fund.

Staff find the SWRCB estimate to be reasonable. As discussed above, roughly half of California water providers—or about 1,100 out of 2,800—provide water to fewer than 200 customer service connections. SB 3 would represent a significant expansion of the number of systems for which the SWRCB would need to implement enforcement. Moreover, the enforcement environment for small community water systems could be more complex than that for the larger systems currently required to comply with SB 998. The SWRCB’s estimate is in line with costs estimated last year for SB 223 (Dodd 2021). SB 223 would have made numerous changes to expand provisions related to prohibiting discontinuation of residential water service due to nonpayment. The State Water Board estimated ongoing costs of $1.575 million annually to assume new enforcement responsibilities and investigate complaints from consumers under SB 223. That bill was held on the Suspense File in this committee.

Need for financial assistance for small water systems. In opposition to this bill, California Association of Mutual Water Companies (CalMutuals) raises concerns about the lack of clear financial resources to help these smaller systems comply with the requirements of this bill. CalMutuals contends that many of their smallest systems are operated by volunteers or part-time contractors. They note that they can’t just use the information created by the larger systems to comply with the requirements of this bill. Rather, the implementation requires staff resources to prepare documents, provide notice, make changes to the billing systems, and also requires cash-flow to afford the delays in utility bill collections. CalMutuals has requested amendments that would clarify their ability to access funding for technical assistance for small water systems from the funding authority in the Safe and Affordable Funding for Equity and Resilience (SAFER) program funded from the sale of greenhouse gas allowances in the state’s Cap-and-Trade Program. The Senate Committee on Energy, Utilities, and Communications analysis notes, “the author and Committee on Appropriations should consider whether CalMutuals proposed amendments should be adopted.”

Potential cost pressure to provide financial assistance. To the extent small water systems need financial assistance, this bill could result in significant cost pressure on the SDWF, GGRF, or other funding source. The overall need for assistance statewide and any cost pressure that could result from it are unknown. However, it is possible they could be significant. For example, at the time of analysis, SB 223 costs were estimated to be between $43 million and $120 million (General Fund, special fund, or bond funds) one-time in order to provide technical assistance and bridge loans to all “very small community water systems” that might have been eligible for assistance under that bill. SB 223 was similar to this bill but did go beyond SB 3 in some ways, such as its provision of bridge loans. The broader implications of SB 223 meant a bigger price tag—it is certainly not an apples-to-apples comparison. Nonetheless, estimated costs for SB 223 demonstrate the potential that could exist for significant cost pressure, maybe in the tens of millions of dollars, for small water system assistance. Staff note that this bill does not explicitly provide for any financial assistance. Nonetheless, it could result in cost pressure if small water systems need state financial assistance in order to comply with its provisions.

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: Hearing Date: 3/21/2023

SUBJECT:

DIGEST: This bill eliminates the exemption for water systems that serve less than 200 service connections (but at least 15 service connections) from statutes and policies related to the discontinuation of water service due to nonpayment.

ANALYSIS:

Existing law:

1. Establishes the California Public Utilities Commission (CPUC) with regulatory authority over public utilities, including water corporations and ensure rates are just and reasonable. (California Constitution Article XII, Public Utilities Code §451)
2. Establishes the State Water Resources Control Board (SWRCB) and requires the SWRCB to administer provisions relating to the regulation of drinking water to protect public health, including, but 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, adoption of enforcement regulations, and conducting studies and investigations to assess the quality of water in domestic water supplies. (Water Code §174 et seq. and Health and Safety Code §116271)
3. Defines a “community water system” as a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system. (Health and Safety Code §116275 (i))
4. Defines an “urban and community water system” as a public water system that supplies water to more than 200 service connections.” (Health and Safety Code §116902)
5. Establishes the Water Shutoff Protection Act, which prohibits an urban and community water system, from discontinuing residential water service for nonpayment until a payment by a customer has been delinquent for at least 60 days. Requires an urban and community water system to have a written policy on discontinuation of residential service for nonpayment in English, the specified languages in the Civil Code, and any other language spoken by at least 10 percent of the people residing in its service area. Requires an urban and community water system to provide notice of that policy to customers, as provided, including, among other things, specified options for addressing the nonpayment. (Health and Safety Code §116902 et seq.)
6. Prohibits an urban and community water system from discontinuing residential service for nonpayment if certain conditions are met, including that the customer or a tenant submits certification that discontinuation of residential service will be life threatening to, or pose a serious threat to the health and safety of, a resident of the premises. (Health and Safety Code §116910)
7. Requires an urban and community water system to impose specified fees for reconnection of service for customers with a household income below 200 percent of the federal poverty line. (Health and Safety Code §116914)
8. Requires an urban and community water system to report annually the number of discontinuations of residential service for inability to pay, as specified, on the water system’s internet website, if an internet website exists, and to the SWRCB. (Health and Safety Code §116918)
9. Authorizes the Attorney General to enforce the requirements imposed on urban and community water systems in connection with discontinuing residential service for nonpayment by seeking an injunction, as specified. (Health and Safety Code §116920)
10. Provides a fee that encompasses any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service. (California Constitution Article XIII D)
11. Provides, among its provisions, that any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified contracts or agreements, must deliver to the other party to the contract or agreement a translation of the contract or agreement in the language in which it was negotiated. (Civil Code §1632)

This bill:

1. Eliminates, by August 1, 2024, the existing exemption for small community water systems, those that serve less than 200 service connections, from the policies and requirements of the Water Shutoff Protection Act. As such, this bill extends the requirements of the Water Shutoff Protection Act to these smaller water systems.
2. Requires water systems that serve fewer than 200 service connections to have a written policy on disconnection of residential service for nonpayment available in English, any language spoken by at least 10 percent of the people residing in its service area, and, upon request of a customer, the languages specified in section 1632 of the Civil Code (specifically: Spanish, Chinese, Tagalog, Vietnamese, and Korean).
3. Applies the definition of “community water system” in section 116275 of the Health and Safety Code – a public water system that serves at least 15 service connections used by yearlong residents or regularly serves at least 25 yearlong residents of the area served by the system.
4. Makes other technical and non-substantive changes.

Background

Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.

• Publicly owned water utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.
• CPUC-regulated water utilities. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other investor-owned utilities, the CPUC regulates rates of the water utilities under its jurisdiction, as well as, rules regarding discontinuation of service due to nonpayment.

SB 998 (Dodd, Chapter 891, Statutes of 2018). SB 998 established the Water Shutoff Protection Act, and made numerous changes to the policies required of water providers when discontinuing residential water service due to nonpayment. Specifically, SB 998 requires public water systems (those with more than 200 service connections) to: prohibit the shutoff of water service until the residential water bill has been delinquent for 60 days; requires the water utility to have a written policy on discontinuation of residential water service due to nonpayment and provide that policy in multiple languages (as specified in statute); include provisions to prevent discontinuation of water service for certain customers that meet specified criteria; and caps the reconnection fees for restoring water service. SB 998 required CPUC-regulated water utilities to comply with these policies by February 1, 2020 and other water providers by April 1, 2020. The bill exempted water service providers that serve less than 200 service connections.

COVID-19 pandemic crisis prompts statewide moratorium and funding for utility debt relief. As the provisions of SB 998 were scheduled to be implemented, the COVID-19 pandemic abruptly changed the world. In response to the COVID-19 crisis, California instituted a number of protections for residents from the economic fallout of the pandemic. These measures included moratoriums on rental evictions and disconnection of utility services due to nonpayment (including water utility service). The moratorium was initially authorized by CPUC resolution that was subsequently expanded and extended by an Executive Order authored by the governor. As the pandemic continued, the Legislature and governor adopted legislation to extend the moratorium to December 31, 2021, and provide utility debt relief for customers. Specifically, one billion dollars was appropriated to the newly established California Water and Wastewater Arrearage Payment Program in order to help offset water utility bill debt. These funds were applied to utility debt for both drinking water and wastewater services. As such, moratoriums and utility debt relief appear to have temporarily shielded many customers from losing water service during the pandemic. However, the moratoriums have since been lifted and customers of water service providers with over 200 service connections who have fallen behind on their utility bill are now receiving the protections and process afforded by the Water Shutoff Act. However, per the statute, these protections are not applicable to customers of water providers with less than 200 service connections.

SB 3. SB 3 expands provisions from SB 998 providing protections and process to discontinue water service due to nonpayment for customers of community water systems (those with fewer than 200 service connections, but at least 15 service connections). The bill provides that the translation requirements apply differently to these smaller water systems compared to other systems by only requiring translation of written policy on discontinuation of water service to be available if ten percent of the customers served speak the language, or specifically in Spanish, Chinese, Tagalog, Vietnamese, and Korean, when requested by a customer.

Need to address affordability for all customers. The supporters of this bill contend that residents of these smaller systems are unfairly at risk of losing an essential service due to lack of affordability and consumer protections afforded to customers of larger water systems. The supporters note that water shutoffs due to nonpayment often result from an inability to afford water utility bills. They argue that the lack of affordability for water service results in disproportionate impacts on Black, indigenous, and people of color households.

Need for financial assistance for small water systems. In opposition to this bill, California Association of Mutual Water Companies (CalMutuals) raises concerns about the lack of clear financial resources to help these smaller systems comply with the requirements of this bill. CalMutuals contends that many of their smallest systems are operated by volunteers or part-time contractors. They note that they can’t just use the information created by the larger systems to comply with the requirements of this bill. Rather, the implementation requires staff resources to prepare documents, provide notice, make changes to the billing systems, and also requires cash-flow to afford the delays in utility bill collections. CalMutuals has requested amendments that would clarify their ability to access funding for technical assistance for small water systems from the funding authority in the Safe and Affordable Funding for Equity and Resilience (SAFER) program funded from the sale of greenhouse gas allowances in the state’s Cap-and-Trade Program. Should this bill move forward, the author and Committee on Appropriations should consider whether CalMutuals proposed amendments should be adopted.

Prior/Related Legislation

SB 223 (Dodd, 2021) made numerous changes to expand provisions related to prohibiting discontinuation of residential water service due to nonpayment. The bill was held in the Senate Committee on Appropriations.

SB 155 (Committee on Budget and Fiscal Review, Chapter 258, Statutes of 2021) public resources trailer bill includes numerous policies, including extending from September 30, 2021 to December 31, 2021 the date by when a community water system may discontinue water service due to nonpayment.

AB 148 (Committee on Budget, Chapter 115, Statutes of 2021) establishes the California Water and Wastewater Arrearage Payment Program to provide utility arrearages debt relief, upon appropriation, by requiring a community water system to provide customers with arrearages accrued during the COVID-19 pandemic bill relief period, as defined, a notice that they may enter into a payment plan, as prescribed. The bill also requires a moratorium on discontinuation of water service due to nonpayment through September 30, 2021.

SB 998 (Dodd, Chapter 891, Statutes of 2018) required all public water systems (with more than 200 connections) to have a written policy on discontinuation of residential water service, provide that policy in multiple languages, include provisions for not shutting off water for certain customers that meet specified criteria, prohibit the shutoff of water service until the utility bill has been delinquent for 60 days, and cap the reconnection fees for restoring water service.

SB 401 (Dodd, Chapter 662, Statutes of 2015) required the SWRCB, in collaboration with the State Board of Equalization and stakeholders, to develop a plan for the funding and implementation of a new program to provide water rate relief for low-income ratepayers by January 1, 2018 and provide a corresponding report to the Legislature by February 1, 2018.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Clean Water Action, Co-sponsor

Community Water Center, Co-sponsor

Leadership Counsel for Justice & Accountability, Co-sponsor

California Coastkeeper Alliance
California Environmental Voters
Carbon Cycle Institute
Center on Race, Poverty & the Environment

Central California Environmental Justice Network
Central Coast Energy Services
Environmental Working Group
Friends Committee on Legislation of California
Los Angeles Alliance for a New Economy
Natural Resources Defense Council
Physicians for Social Responsibility - Los Angeles
Pueblo Unido CDC
San Francisco Peninsula Energy Services
Sierra Club California
SPUR
Union of Concerned Scientists
Western Center on Law & Poverty

OPPOSITION:

California Association of Mutual Water Companies, unless amended

ARGUMENTS IN SUPPORT: According to the author:

The pandemic demonstrated both the importance of affordable and accessible water for drinking and sanitation, and the challenge that many Californians face in affording this necessity. A half-million households received one-time assistance to address their arrearages, but data from the CPUC and other water agencies tell us that consumers continue to fall behind on their bills. The implementation of SB 998, passed in 2018, will help maintain access to water by requiring most water systems to provide notice and opportunity to enroll in a payment plan prior to shutting off water for nonpayment. SB 3 builds on SB 998 by ensuring that all Californians served by community water systems benefit from these common-sense protections, regardless of system size.

ARGUMENTS IN OPPOSITION: The California Association of Mutual Water Companies (CalMutuals) opposes SB 3 due to the lack of clear financial resources to support smaller water systems ability to implement the provisions of the Water Shutoff Act. CalMutuals states that many of their smallest water systems do not have staff to carry out the various provisions of the Water Shutoff Act, as many of these systems are operated by volunteers, part-time or contract operators. CalMutuals contends that many of the requirements of the bill could force these smaller water systems into financial hardship, including the translation requirements, billing systems changes, and cash-flow constraints of following the “prescriptive and cumbersome set of steps before discontinuing service.”

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