SENATE BILL REPORT

SSB 6447

BYSenate Committee on Energy & Utilities (originally sponsored by Senators Benitz, Madsen, Patrick, Sutherland and Barr)

Regarding failing public water systems.

Senate Committee on Energy & Utilities

Senate Hearing Date(s):January 19, 1990; January 23, 1990

Majority Report:  That Substitute Senate Bill No. 6447 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Benitz, Chairman; Metcalf, Nelson, Owen, Patrick, Stratton, Sutherland, Williams.

Senate Staff:David Monthie (786-7198)

                  March 2, 1990

House Committe on Energy & Utilities

Rereferred House Committee on Revenue

AS PASSED SENATE, FEBRUARY 13, 1990

BACKGROUND:

There are over 12,000 public water systems in Washington, an increase of more than 100 percent from the number ten years ago.  Approximately 80 percent of these are small systems with fewer than 100 connections.  Virtually all of these are investor-owned, cooperatives, mutual companies, or homeowner association-operated.

These small systems have been failing with increasing frequency to comply with the legal requirement to deliver water of adequate quantity and quality.  It is well accepted by professionals in the drinking water field that small systems commonly have problems with design, financing, operation, and management.  Often these problems are directly related to the limited capital available from the small rate base, and because privately-operated systems do not have access to funding sources that publicly-operated systems have.

The burden on such small systems will be increasing in the future as they are ordered to comply with costly new testing and treatment requirements under federal law.  On many occasions in the past, owners or operators of such systems have refused to meet their legal obligations, or have abandoned the systems entirely, which has created a potential threat to the health of their customers.  Solutions to this problem, which range from stricter enforcement to takeovers of failing systems by well-operated systems, are complicated by legal ambiguities or barriers.

SUMMARY:

The authority to file legal actions against non-complying systems is made explicit and strengthened.  The Secretary of Health or local health officer is given express authority to bring legal actions and obtain temporary injunctive orders if there is an immediate and serious danger to residents constituting an emergency.  In receivership actions brought by the department, it must recommend to the court an available and willing person, municipal entity, special purpose district, or investor-owned utility to act as a receiver from a list the department maintains.  In the absence of such a person, the county or county health officer is to be named as receiver.  The department is to recommend to the court that receivers act in the best interests of customers.  A receiver may be appointed ex parte on a showing of an immediate and serious danger constituting an emergency.  Court-established bond for a receiver is to be minimal.  The department may initiate an action for a receivership at the request of a local health officer.  Persons appointed to act as receivers are not personally liable for good faith, reasonable actions in taking over and operating such systems.

An exemption from sales tax, a revision to condemnation statutes, an allowance for different rates that reflect the cost of acquisition and improvement of a system, and access to public works trust fund monies are provided to assist local governments to purchase and improve water systems that are failing to meet health and safety standards.

Administrative fines for violations of health and safety standards must be at least $500.  Local health officers are authorized to impose administrative penalties for violations of state regulations, to file legal actions, and to inspect as necessary water system construction.

The Department of Health, in conjunction with other agencies and interested parties, must provide a comprehensive report to the Legislature by December 1, 1990, on the problems with existing public water systems and the potential for more problems in the future, with alternative approaches or solutions.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Pete Butkus, Public Works Board (pro);  John Kirner, Washington Water Utilities Council (pro); Stanford Olsen, Investor-Owned Water Utilities Association (pro); Eric Slagle and Bill Lichty, DOH (pro)

HOUSE AMENDMENT: 

The sales tax exemption is removed.  A county named as a receiver is authorized to contract for management of the failing system, and the county health officer is to provide regulatory oversight.  Courts must authorize receivers to impose reasonable assessments on customers to recover the cost of improvements.  The department's report must address possible methods for financing operating costs of systems operated by receivers where customer revenue is inadequate.  Other technical and grammatical changes are made.