To: Board of Supervisors
From: Dr. Grant Colfax, Health Services Director
Report Title: Hearing to Consider Adoption of Revised Fees for the Contra Costa County Health Services Department, Environmental Health Division, Small Water System Program
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
1. RECEIVE staff presentation regarding the increase of two regulatory fees charged by the Contra Costa County Health Services Department, Environmental Health Division (“EH Division”), Small Water System Program (“SWS Program”), based on a fee study;
2. OPEN a public hearing regarding the adoption of the attached Resolution, to increase regulatory fees charged by the EH Division, SWS Program, effective October 7, 2025, for Local Small Water System (2-4 connections) and State Small Water System (5-14 connections);
3. RECEIVE oral and written testimony, public comments, and any objections to the resolution; and CLOSE the public hearing; CONSIDER staff’s presentation, all testimony, public comments, objections, the staff report, Appendix A.6 of the NBS “Contra Costa County Health Services, Environmental Health Division Fee Study,” dated June 6, 2025, (Attachment 1), and all other testimony and materials presented to the Board prior to the close of the public hearing;
4. ADOPT Resolution, (Attachment 2) increasing SWS Program regulatory fees charged by the EH Division, effective October 7, 2025, for Local Small Water System (2-4 connections) and State Small Water System (5-14 connections); and
5. DIRECT the Health Services Director, or designee, to terminate the Contra Costa County Local Primacy Delegation Agreement with sufficient statutory notice so that the Agency’s regulatory authority terminates no later than February 28, 2026, returning the regulatory oversight of the delegated small public water systems back to the State Water Resources Control Board.
FISCAL IMPACT:
Revenue from the increased Environmental Health Division Fees will recover the division’s reasonable costs to administer its non-public Small Water System Program, including staff costs and overhead expenses connected with those programs. There will be no impact to the General Fund.
BACKGROUND:
Regulation of Public Small Water Systems
California has operated a public Drinking Water Protection Program since 1915. Beginning in 1976, the California drinking water program has been conducted under an agreement with the United States Environmental Protection Agency (“US EPA”) that delegates primacy to the State. The State Water Resources Control Board (“State Water Board”) is responsible for regulating approximately 7,500 public water systems that provide drinking water to over 98 percent of California’s population. A “public water system” is 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 an average of at least 25 individuals daily at least 60 days out of the year. (Cal. Health & Saf. Code, § 116275, subd. (h).)
California Health and Safety Code sections 116270-116762.60 authorize the State Water Board to conduct ongoing surveillance and inspections of public water systems, to issue operational permits to the systems, to ensure water quality monitoring is conducted, and to take enforcement actions when violations occur. These include public water systems that supply small communities, as well as systems that supply restaurants, hotels, parks, schools, businesses, and similar “non-communities”.
Until 1992, local health agencies and the state shared responsibility for regulating and permitting public small water systems (“SWSs”). Chapter 1248, Statutes of 1992 (“AB 2995”), required the state to take over the regulation of these systems. This law is now codified as California Health and Safety Code (“HSC”) section 116270 et seq. Section 116565 establishes annual fees to be paid by SWSs. Section 116330 creates a process that allows the state to enter into delegation agreements with local health jurisdictions, making them responsible for regulating the SWSs. These agreements are termed Local Primacy Agency (“LPA”) delegation agreements and allow the counties to regulate SWSs with between 2 and 199 service connections. Contra Costa County entered into its first LPA delegation agreement in 1993. The County’s most recent LPA delegation agreement became effective on November 30, 2013 (“Attachment 3”) and was later amended by the State Water Board in January 2017 (“Attachment 4”). As of January 24, 2025, California has delegated primacy to 26 counties. The State Water Board regulates all public water systems in the remaining 32 counties, as well as those SWSs serving between 200 and 1,000 service connections in the LPA delegated counties.
Local Primacy Agency Delegation Agreement for 75 Public Small Water Systems
In Contra Costa County, there are currently 75 public SWSs delegated to the LPA with permits issued by the Contra Costa County Health Services Department, Environmental Health Division (“EH Division”). The public water systems delegated to the LPA are divided into the following categories and also defined by HSC section 116275:
• Community Water System (“CWS”): A public water system that serves at least 15 service connections used by yearlong residents or serves at 25 yearlong residents of the area served by the system. Examples of CWSs are rural mobile home parks, apartments, condominiums, and large residential subdivisions. CWSs account for 28 out of the 75 SWSs delegated to and regulated by the LPA.
• Transient, Non-community Water System (“TNCWS”): A public noncommunity water system that does not regularly serve at least 25 of the same persons over six months per year. Examples of TNCWSs are rural gas stations, restaurants, campgrounds, marinas, and churches. TNCWSs account for 42 out of the 75 SWSs delegated to and regulated by the LPA.
• Non-transient, Non-community Water System (“NTNCWS”): A public water system that is not a community water system and that regularly serves at least 25 of the same persons over six months per year. Examples of NTNCWSs are rural schools, office and industrial buildings, and businesses that have their own water systems. NTNCWSs account for 5 out of the 75 SWSs delegated to and regulated by the LPA.
The EH Division as the LPA is authorized to collect fees to recover the costs of regulating these public SWSs. At the June 24, 2025 Board of Supervisors meeting, the Board adopted fee updates for many EH Division programs but elected to revisit the SWS Program fee updates at a later date (“Resolution 2025-225”). As explained in the “Contra Costa County Health Services, Environmental Health Division Fee Study,” dated June 6, 2025, (“Attachment 1”), current EH Division SWS Program permit fees collected by the County are inadequate. Current fees only provide funding of $75,423 for the public SWS Program expenses but a funding of $244,751 is necessary to recover full costs of the public SWS program. Accordingly, there is a $169,328 deficit to the LPA.
A significant increase to the EH Division permit fees is necessary to recover the full cost (salaries, benefits, overhead, etc.) of the LPA Program. Given the aforementioned $195,162 deficit, proposed fee increases range from 161% to 357%, depending on the fee category. Currently, many of the EH Division public SWS permit fees are higher than the State Water Board fees for comparable fee categories (see table below).
|
Permit Type |
Unit |
Capacity |
Current Fees |
Proposed Fees |
Percent Change |
SWB Fees |
# of Active SWSs |
|
Small Water System Annual Permit Fee Comparisons |
|
Community ground water system |
connections |
15-24 |
$1,392 |
$3,867 |
178% |
$677 |
10 |
|
Community ground water system |
connections |
25-99 |
$1,392 |
$3,631 |
161% |
$677-1121 |
12 |
|
Community ground water system with treatment |
connections |
25-99 |
$1,392 |
$4,368 |
214% |
$677-1121 |
1 |
|
Community ground water system |
connections |
100-199 |
$1,740 |
$4,697 |
170% |
$1132-2253 |
5 |
|
Non-transient, non-community groundwater system |
|
|
$1,215 |
$4,058 |
234% |
$862-2256 |
3 |
|
Non-transient, non-community groundwater system w/ treatment |
|
|
$1,392 |
$4,180 |
200% |
$862-2256 |
2 |
|
Transient, non-community surface water system |
|
|
$1,392 |
$5,728 |
311% |
$1,509 |
2 |
|
Transient, non-community transient groundwater system |
|
|
$510 |
$2,329 |
357% |
$1,509 |
35 |
|
Transient, non-community groundwater system w/ treatment |
|
|
$870 |
$2,509 |
188% |
$1,509 |
5 |
However, in all permit categories, the proposed permit fees charged by the County will be significantly more than the permit fees adopted by the State Water Board. Many State Water Board regulated SWS permit fees are based on the number of service connections. Similar to the County, the fees collected by the State are used to support the activities related to SWSs regulated by the State. These fees are not used to support LPA counties.
In 2020, LPA counties were hopeful about the proposed Assembly Bill (“AB”) 2296, authorizing LPA counties to elect to participate in a funding stabilization program, administered by the State Water Board, to fund regulatory oversight of SWSs. Despite the California Association of Environmental Health Administrators’ (“CAEHA”) and Rural County Representatives of California’s (“RCRC”) efforts, AB 2296 was vetoed. The Governor's Veto Message indicated that “this bill would authorize LPA counties to elect to participate in a funding stabilization program, administered by the State Water Board, to fund regulatory oversight of small public drinking water systems. The goal of stabilizing the funding that is needed to assist LPAs with providing proper regulatory oversight of small water systems is laudable and fits into the state's overarching goal of achieving clean drinking water for every Californian. However, to the extent that LPA counties choose to participate in the new funding stabilization program authorized by the bill, the State Water Board would need to raise fees to cover the costs of the program. If participation among LPAs is high, the total funding needed from the Safe Drinking Water Account to administer the funding stabilization program would almost certainly exceed the statutory funding cap, and as a result, the State Water Board would be unable to implement the program.”
Therefore, any fee increase implemented by the County would further exacerbate the disparity between what the County would charge and what the State charges for regulatory oversight of SWSs. Some of our SWSs are serving disadvantaged communities and during the formal 60-day public comment period earlier this year, the public stated that increasing their permit fees will affect their already scarce operating and maintenance funds, making it difficult to comply with current and new requirements.
Currently, the permit fees for all public SWSs are paid through February 28, 2026, and are to be renewed March 1, 2026. If regulatory authority for the public SWSs is returned to the State by February 28, 2026, the public SWSs will not be subject to the increased fees. Accordingly, EH Division staff recommend returning the LPA program to the State, so that public SWS operators can take advantage of the lower permitting fees provided by the State Water Board and potentially benefit from opportunities to receive increased technical support and other funding opportunities. The operative LPA Delegation Agreement and HSC section 116330(c)(2) state that a local primacy delegation approved by the State Water Board shall remain in effect until the LPA provides 120-day advance written notice to the State Water Board that it no longer wishes to retain local primacy. As soon as the EH Division obtains authority from the Board to return the LPA program to the State, the EH Division will send a letter to the State to ensure that regulatory authority for public SWSs is reverted to the State by February 28, 2026.
34 Non-Public Small Water Systems Requiring Continued Regulation by Contra Costa Health
There are 34 non-public SWSs regulated under the Health Officer’s authority in Contra Costa County. Non-public SWSs are regulated strictly by counties and have less stringent requirements than community water systems. There are two categories of non-public SWSs subject to the County Health Officer’s regulatory authority: (1) State Small Water System; and (2) Local Small Water System.
A State Small Water System is defined by HSC section 116275 as a system that serves at least 5, but not more than 14, service connections and does not regularly serve drinking water to more than an average of 25 individuals daily for more than 60 days out of the year. An example includes a small subdivision.
Given the aforementioned definition of a State Small Water System and the Contra Costa County Ordinance Code section 414-4.221 definition of a SWS as a system which furnishes water for domestic purposes from 2 through 199 service connections, a Local Small Water System is interpreted as a system that serves between 2 and 4 service connections and does not regularly serve drinking water to more than an average of 25 individuals daily for more than 60 days out of the year. An example of a Local Small Water System includes 2 or three parcels sharing a water source.
As explained in the “Contra Costa County Health Services, Environmental Health Division Fee Study,” dated June 6, 2025, (“Attachment 1”), current EH Division permit fees for Local Small Water Systems and State Small Water Systems that are collected by the County are inadequate. Current fees only provide funding of $14,790 for the non-public SWS Program expenses but the fee study projected that a funding of $40,624 is necessary to recover full costs of the program.
However, if the regulatory authority for the public SWS programs is returned to the State, it will impact the ultimate cost for the non-public SWS programs because overall, less support is needed from employees to regulate a smaller number of SWSs. Accordingly, the labor cost will decrease as included in Appendix A.6. Specifically, the Department calculates the “Office Admin.” number in Appendix A.6 to decrease from 1.58 for both local small water system and state small water system to 0.25 each. Based on the calculation provided in Appendix A.6, the increased costs for Local Small Water Systems and State Small Water Systems are $474 and $910, respectively. An increase to the EH Division permit fees for these non-public SWSs is necessary to recover the full cost for regulation thereof. Accordingly, the EH Division proposes the following fees for the two non-public SWS Programs:
|
Permit Type |
Unit |
Capacity |
Current Fees |
Recommended Fees |
|
Local Small Water System |
Connections |
2-4 |
$348 |
$474 |
|
State Small Water System |
Connections |
5-14 |
$522 |
$910 |
As the regulatory authority for these non-public SWSs remains with the County Health Officer, EH Division staff recommend that the Board adopt the above-referenced recommended fees, which are also included in the attached Resolution regarding updates to the EH Division fee schedule for all non-public SWSs, effective October 7, 2025.
CONSEQUENCE OF NEGATIVE ACTION:
If the regulatory authority of public small water systems is not reverted to the State and Environmental Health Division’s current Small Water System Program fee schedule remains in place, regulated businesses, collectively, will pay less than the required necessary costs to administer this program, resulting in a significant deficit to the program. Additionally, even if the regulatory authority of public small water systems is reverted to the State but the fees for the non-public small water systems are not increased as recommended, the EH Division would not recover its reasonable costs of administering its regulatory program.
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
and for Special Districts, Agencies and Authorities Governed by the Board
body
IN THE MATTER OF ESTABLISHING AND ADJUSTING FEES FOR THE SMALL WATER SYSTEM PROGRAM CHARGED BY THE ENVIRONMENTAL HEALTH DIVISION OF THE CONTRA COSTA HEALTH SERVICES DEPARTMENT
The Contra Costa County Board of Supervisors FINDS, as follows:
A. California Health and Safety Code section 101325, Contra Costa County Ordinance Code section 413-3.204, and other applicable laws, regulations, and ordinances, authorize the County to adopt fees to recover the Health Service Department, Environmental Health Division’s (“EH Division”) costs to administer its Small Water System Program (“SWS Program”).
B. Fees charged by the EH Division are intended to recover the reasonable regulatory costs to the County for issuing licenses and permits, performing investigations, inspections, and audits connected with the SWS Program administered by the EH Division. The amounts of the EH Division’s fees are calculated to be no more than necessary to cover the reasonable costs of the EH Division’s SWS Program, and the manner in which those costs are allocated to each fee payor bears a fair and reasonable relationship to each payor’s burdens on, or benefits received from, the EH Division’s SWS Program. (Cal. Const., art. XIII C, § 1(e).)
C. The EH Division’s operations and expenses connected with its SWS Program are intended to be financed entirely by revenues from fees imposed by the EH Division. Fees charged by the EH Division for various programs were last reviewed and adopted by the Board of Supervisors in Resolution No. 2025-225 in June 2025. However, at that time the Board elected to revisit the SWS Program fee updates at a later date. Therefore, the fees charged by the EH Division for the SWS Program have not been adjusted since the 2019 adoption of Resolution No. 2019/521. Since 2019, the EH Division’s costs to administer its SWS Program have increased. These increased costs include increases in personnel and overhead costs, as well as other expenses. Therefore, revenues from current fees are insufficient to recover the EH Division’s reasonable costs to administer its SWS Program. The fees need to be adjusted to ensure that they continue to bear a fair and reasonable relationship to the fee payors’ burdens on or benefits from the SWS Program administered by the EH Division, and to ensure the EH Division charges fees that recover the reasonable costs of administering the EH Division’s SWS Program.
D. The Division contracted with independent financial consulting firm, NBS, to conduct a review of time accounting data to develop fees that are based on fully-burdened hourly rates aligned with the Division’s regulatory activities, as more particularly described in the NBS Fee Study, dated June 6, 2025 (“Fee Study”) attached as Attachment 1 to the Staff Report in support of this Resolution. The Fee Study determined that certain regulatory fees for programs require adjustment to ensure the EH Division’s fees continue to bear a fair and reasonable relationship between the fee payors’ burdens on or benefits from the regulatory activities for which the fees are charged, and also to ensure the EH Division is able to recover its reasonable costs of performing its regulatory activities.
E. Based on the Fee Study, the Health Services Department, Environmental Health Division recommends that the Board of Supervisors direct the Department to return regulatory authority of public SWS Program to the State, and adopt the fee tables attached as Attachment A to this resolution (“Fee Schedule”) and incorporated herein, to establish fees to be charged for the EH Division’s SWS Program, including increased fees for the non-public SWS Program. The fees set forth in the Fee Schedule are calculated to recover the reasonable regulatory costs to the County for issuing licenses and permits, performing investigations, inspections, and audits connected with those regulatory activities performed by the EH Division’s SWS Program. Additionally, based on the Fee Study, the fees set forth in the Fee Schedule are no more than necessary to recover the reasonable costs of EH Division’s activities, and the manner in which those costs are allocated to payors of the fees bears a fair and reasonable relationship to each payor’s burdens on, or benefits received from, the EH Division’s activities.
F. In accordance with Government Code section 66018, the EH Division caused a hearing notice to be published twice in the East Bay Times, on September 26, 2025, and October 3, 2025, to give notice of the October 7, 2025 hearing on the adoption of the Fee Schedule for the SWS Program.
G. On October 7, 2025, the Board of Supervisors held a noticed public hearing on the EH Division’s proposed fee update for the SWS Program. The Board has considered all comments, testimony, and objections submitted verbally or in writing before the close of the public hearing. The Board of Supervisors has considered the Fee Study, the Fee Schedule, the Staff Report, staff presentation, public comments and testimony, any objections to the fees, and all other information and materials presented to the Board before the close of the public hearing.
NOW, THEREFORE, BE IT RESOLVED
end
1. The Board FINDS that the fees set forth in the Fee Schedule, attached hereto as Attachment A, (a) are calculated to recover but not exceed the reasonable regulatory costs to the EH Division for issuing licenses and permits, performing investigations, inspections, and audits in connection with the SWS Program administered by the Division, and (b) each of the fees bears a fair and reasonable relationship to each payor’s burdens on and benefits from the SWS Program administered by the EH Division. The Board further FINDS that the fees will recover the EH Division’s reasonable costs to administer its SWS Program, including the increased fees for the non-public SWS Program.
2. The Board ADOPTS the Fee Schedule, attached hereto as Attachment A, as the Fee Schedule for the EH Division’s SWS Program. The Fee Schedule attached hereto as Attachment A shall be effective as of October 7, 2025.
3. The Board AUTHORIZES the Health Services Director, or designee, to collect delinquent SWS Program permit fees, including penalties and the County’s administrative, legal, and collection costs, in accordance with Ordinance Code section 413-3.1206, and any other applicable ordinances and laws.
4. This Resolution is effective immediately upon its adoption on October 7, 2025. This Resolution supersedes and replaces the Small Water System fees established in Resolution No. 2025-225 in their entirety.