By James Ciampa, Lagerlof, Senecal, Gosney & Kruse, LLP
Last year, the California Legislature passed, and Governor Brown signed into law, SB 998 – the Water Shutoff Protection Act (the “Act”), found at Health and Safety Code Sections 116900 et seq. SB 998 changes the requirements and procedures for the discontinuation (i.e., termination) of water service to a residence. Those new requirements and procedures are summarized below.
APPLICATION OF THE ACT
There are three aspects of the Act that are important regarding how it applies. First, the Act applies only to the newly defined “urban and community water systems.” The Act defines “urban and community water system” as a public water system that supplies water to more than 200 service connections. Thus, the Act does not apply to water systems with less than 200 connections.
Secondly, the Act applies only to the termination of residential water service. Thus, a water supplier may have different service termination procedures for a commercial or non-residential service. Lastly, the Act applies only to termination of service for non-payment and does not apply to terminations for other reasons, such as unauthorized water use or for violation of a supplier’s rules and regulations. Thus, a service disconnection that is not related to non-payment need not comply with the Act’s requirements.
COMPLIANCE DATES
The Act distinguishes between water suppliers regulated by the Public Utilities Commission and non-PUC entities with respect to when compliance with its requirements starts. For urban water suppliers (i.e., those who serve more than 3,000 service connections) and any PUC-regulated systems, they must comply with the Act on and after February 1, 2020. Urban and community water systems not regulated by the PUC, and with less than 3,000 service connections, must comply with the Act on and after April 1, 2020.
SERVICE DISCONTINUATION POLICY
The Act requires every urban and community water system to have a written policy on discontinuation of residential water service for non-payment. That policy must be available on the water supplier’s website or, if the supplier does not have a website, must be provided to customers on request. The policy must be in the five languages, in addition to English, listed in Civil Code Section 1632 (Spanish, Chinese, Korean, Vietnamese and Tagalog), and in any other language spoken by at least 10% of the people residing the system’s service area. The policy must include the following components:
(1) a plan for deferred or reduced payments; (2) alternative payment schedules; (3) a formal mechanism for a customer to contest or appeal a bill; and (4) a telephone number for a customer to discuss options to avoid discontinuation of service due to non-payment.
However, the policy should include additional details regarding implementation of the Act, including when an account is due (e.g., on issuance of the bill), which will start the 60-day clock for the termination of service, a detailed description of the supplier’s alternative payment arrangements, a formal appeals or bill review process, and the manner in which the water supplier will provide the required notices.
DISCONTINUATION PROCESS – NOTICE
The most significant change the Act makes is imposing a 60-day waiting period before an urban and community water system can discontinue water service. The Act provides that residential water service cannot be discontinued for non-payment until the account has been delinquent for at least 60 days. The Act does not specify when that delinquency period begins to run, so that is an issue a water supplier should address in its service termination policy.
The Act requires notice of the potential termination of service be given to the customer named on the account at least seven (7) business days before the possible termination of service. The notice can be given by telephone or in writing. If the notice is given by telephone, the water supplier must: (a) offer to provide the customer the supplier’s written policy on discontinuation of water service; and (b) offer to discuss options to avoid discontinuing water service, including alternative payment schedules, deferred payments, minimum payments, amortization and bill review and appeal.
If the notice is given in writing, the notice must be mailed to the customer at the residence’s address, but if the customer’s address is not the address of the property to which the service is provided, the notice must also be sent to the property’s address, addressed to “Occupant.” The notice must include the following:
1. Customer’s name and address;
2. Amount of delinquency;
3. Date by which payment or arrangement for payment is required to avoid discontinuation of service;
4. Description of the process to apply for an extension of time to pay the amount owing;
5. Description of the procedure to petition for review and appeal of the bill in giving rise to the delinquency; and
6. Description of the procedure by which the customer can request a deferred, amortized, reduced or alternative payment schedule.
PROHIBITIONS ON DISCONTINUATION OF SERVICE
There are two scenarios that would prohibit the discontinuation of service for non-payment. First, if the customer appeals its water bill to the water supplier or to any other administrative or legal body, the supplier cannot discontinue service while that appeal is pending. Secondly, the water supplier cannot discontinue residential water service if all of the following conditions are met:
1. Health Conditions – the customer or tenant of the customer submits certification of a primary care provider that discontinuation of water service would, to any resident at the property, (i) be life threatening, or (ii) pose a serious threat to a resident’s health and safety.
2. Financial Inability – the customer demonstrates he or she is financially unable to pay for water service within the water system’s normal billing cycle. The customer is deemed “financially unable to pay” if any member of the customer’s household is: (i) a current recipient of the following benefits: CalWORKS, CalFresh, general assistance, Medi-Cal, SSI/State Supplementary Payment Program or California Special Supplemental Nutrition Program for Women, Infants and Children; or (ii) the customer declares the household’s annual income is less than 200% of the federal poverty level. The Act does not require the customer to show any proof relating to that income declaration!
3. Alternative Payment Arrangements – the customer is willing to enter into an alternative payment arrangement consistent with the water supplier’s policy (see the next section).
ALTERNATIVE PAYMENT ARRANGEMENTS
An urban and community water system must offer a customer one of the following alternative payment arrangements: (i) amortization of the unpaid balance; (ii) participation in an alternative payment schedule; (iii) partial or full reduction of the unpaid balance, without additional charges to other ratepayers; or (iv) temporary deferral of payment. The Act does not provide any detail on what those arrangements must include, so that is another area that should be addressed in the supplier’s service termination policy.
It is important for water suppliers to understand that they will select which of the alternative payment arrangements is to be used and they will set the parameters of that option. The Act states that ordinarily the payment option to be offered should result in full payment within 12 months, but the water supplier may allow a longer repayment period to avoid undue hardship to the customer.
If the customer has entered into an alternative payment arrangement and then fails to abide by that agreed upon arrangement or fails to keep its account current, the water supplier may discontinue service no sooner than 5 business days after the supplier posts a final notice of intent to discontinue service in a prominent place at the customer’s property if either of the following has occurred: (i) the customer fails to comply with the agreed upon payment arrangement for 60 days or more; or (ii) while undertaking an agreed upon payment arrangement, the customer does not pay his or her current service charges for 60 days or more.
LOW INCOME CUSTOMERS – CAP ON RECONNECTION FEES; INTEREST WAIVER
Customers are deemed to have a household income below 200% of the federal poverty line if: (i) any member of the household is a current recipient of the following benefits: CalWORKS, CalFresh, general assistance, Medi-Cal, SSI/State Supplementary Payment Program or California Special Supplemental Nutrition Program for Women, Infants and Children; or (ii) the customer declares the household’s annual income is less than 200% of the federal poverty level. If a customer demonstrates either of those circumstances, then the urban and community water system must do both of the following:
A. Reconnection Fees – reconnection fees during normal operating hours cannot exceed $50, and reconnection fees during non-operational hours cannot exceed $150. Those fees cannot exceed the actual cost of reconnection if that cost is less than the statutory caps. Those caps may be adjusted annually for changes in the CPI beginning January 1, 2021. There is no cap on reconnection fees for customers who are not low income under the tests listed above.
B. Interest Waiver – the water system must waive interest charges on delinquent bills once every 12 months.
LANDLORD-TENANT SCENARIO
The Act uses the same concepts as were enacted in 2009 in SB 120 with respect to terminating water service to tenants. In a situation where the property is a rental property of some sort and the owner pays the water bill, if the account becomes delinquent, before service can be discontinued particular notices must be provided to the tenants at that property. For the sake of efficiency, a water supplier may want to include the required tenant language on its general service termination notice discussed above.
The Act requires that at least 10 days (but only 7 days if the property is a detached single-family dwelling) [note this notice requirement refers to calendar days and not business days as with the notices described above] prior to the possible termination of water service, the urban and community water system must make every good faith effort to inform the occupants by written notice that the water service will be terminated. The written notice must also inform the tenants that they have the right to become customers to whom the service will be billed without having to pay any of the delinquent amounts.
In order for a tenant or occupant to take over the water service account, each tenant/occupant must agree to the terms and conditions for service and meet the water supplier’s requirements and rules. However, if (a) one or more of the tenants/occupants assumes responsibility for subsequent charges to the account to the water supplier’s satisfaction, or (b) there is a physical means to selectively terminate service to those tenants/occupants who have not met the system’s requirements, then the system may make service available only to those tenants/occupants who have met the requirements.
REPORTING
An urban and community water system must report annually on its website and to the State Water Resources Control Board the number of service discontinuations for inability to pay. The Act does not provide any details regarding the timing for that that reporting. The State Water Resources Control Board must post that information on its website.
ENFORCEMENT
The Act has three prongs for enforcement. First, the State Water Resources Control Board is given the same power to enforce the Act as it has for other provisions in the California Safe Drinking Water Act. Thus, the State Water Board may issue a citation that can include penalties of up to $1,000 per day, may issue a compliance order and may recover its enforcement costs and any litigation costs. In addition to the State Water Board taking action, the California Attorney General, at the request of the State Water Board or on its own, may file a civil lawsuit to seek a temporary or permanent injunction to restrain any acts or practices that are unlawful under the Act. Lastly, the Act also provides for private citizens’ suits for violation of the Act, which could include monetary damages resulting from the wrongful termination of service and injunctive relief to require that water service is promptly restored.
CONCLUSION
The Act imposes significant new requirements on those water suppliers in California who provide water service to more than 200 service connections. The Act will require those water suppliers to adopt new policies, revise their service termination notices and procedures, and potentially revise their billing systems to ensure compliance with the new notice timing requirements. As the compliance dates of February 1, 2020 and April 1, 2020 are rapidly approaching, water suppliers to whom the Act applies should begin making the necessary changes to ensure timely compliance with the Act.
