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AB-2777 • 2026

State Water Pollution Control Revolving Fund program: loans: outdoor eating areas: water reuse.

State Water Pollution Control Revolving Fund program: loans: outdoor eating areas: water reuse.

Budget Taxes Water
Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
Committee on Environmental Safety and Toxic Materials (A) - (Assembly Members Connolly (Chair), Ellis (Vice Chair), Lee, and McKinnor)
Last action
2026-06-03
Official status
Referred to Com. on E.Q.
Effective date
Not listed

Plain English Breakdown

The bill summary does not provide specific details on how fees will be assessed or posted online for loan and grant moneys, leaving some uncertainty in these areas.

Water Pollution Control Loans and Recycled Water Use

This law changes how fees are assessed for water pollution control projects, requires loans to be made at below market interest rates, and allows incidental runoff from recycled water used for irrigation to enter outdoor eating areas of parks and open spaces.

What This Bill Does

  • Authorizes the State Water Resources Control Board to assess fees in place of annual charges for financial assistance related to water pollution control projects.
  • Requires loans made through the State Water Pollution Control Revolving Fund program to be at below market interest rates.
  • Allows incidental runoff from recycled water used for irrigation to enter outdoor eating areas of parks and open spaces when irrigated with disinfected tertiary treated recycled water that complies with specified regulations.

Who It Names or Affects

  • The State Water Pollution Control Revolving Fund program
  • State agencies, cities, counties, districts, and other political subdivisions of the state

Terms To Know

incidental runoff
Unintended amounts of water that run off from irrigation systems.
market interest rates
The standard or average interest rates charged by financial institutions for loans.

Limits and Unknowns

  • Does not specify the exact rate at which fees can be assessed.
  • Does not provide details on how loan and grant moneys will be posted online.

Bill History

  1. 2026-06-03 California Legislative Information

    Referred to Com. on E.Q.

  2. 2026-05-27 California Legislative Information

    In Senate. Read first time. To Com. on RLS. for assignment.

  3. 2026-05-26 California Legislative Information

    Read third time. Passed. Ordered to the Senate. (Ayes 75. Noes 1.)

  4. 2026-05-18 California Legislative Information

    Read second time. Ordered to third reading.

  5. 2026-05-14 California Legislative Information

    From committee: Do pass. (Ayes 14. Noes 0.) (May 14).

  6. 2026-05-06 California Legislative Information

    In committee: Set, first hearing. Referred to APPR. suspense file.

  7. 2026-04-15 California Legislative Information

    From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (April 14). Re-referred to Com. on APPR.

  8. 2026-04-06 California Legislative Information

    Re-referred to Com. on E.S & T.M.

  9. 2026-03-26 California Legislative Information

    From committee chair, with author's amendments: Amend, and re-refer to Com. on E.S & T.M. Read second time and amended.

  10. 2026-03-16 California Legislative Information

    Referred to Com. on E.S & T.M.

  11. 2026-02-25 California Legislative Information

    From printer. May be heard in committee March 27.

  12. 2026-02-24 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 2777, as amended, Committee on Environmental Safety and Toxic Materials.
State Water
Quality Control Fund: loan and grant moneys: notification.
Pollution Control Revolving Fund program: loans: outdoor eating areas: water reuse.
(1) Existing law establishes the State Water Pollution Control Revolving Fund program, pursuant to which state and federal funds are continuously appropriated from the State Water Pollution Control Revolving Fund to the State Water Resources Control Board for loans and other financial assistance for purposes related to the federal Clean Water Act. Existing law establishes the State Water Pollution Control Revolving Fund Administration Fund (administration fund) to provide funds, upon appropriation by the Legislature, to be expended by the state board for payment of the reasonable costs of administering the State Water Pollution Control Revolving Fund. Existing law authorizes the state board to assess an annual charge for financial assistance services, not to exceed 1% of the
financial assistance repayment amount and computed according to the true interest cost method, as provided, and requires those annual charges to be deposited into the administration fund. Existing law authorizes the financial service rate to be applied at any time during the term of the financial assistance and requires the rate to remain unchanged for the duration of the financial assistance. Existing law prohibits the financial assistance rate from increasing the financial assistance repayment amount after being applied. Existing law requires the state board to, at least once each fiscal year, adjust the financial assistance service rate. Existing law requires the state board to set the total amount of revenue collected each year through the annual charges at an amount that is equal as practicable to the appropriation amount set forth in the annual Budget Act.
This bill would additionally authorize the
state board to assess fees in place of an annual charge for financial assistance and would authorize the fees or annual charge to be assessed at any rate as permitted by federal law. The bill would delete the provision prohibiting the changing of the financial assistance rate during the financial assistance and the increasing of the financial assistance repayment amount. The bill would delete the requirement relating to the appropriation amount set forth in the annual Budget Act.
(2) Existing law authorizes moneys in the State Water Pollution Control Revolving Fund to be used for loans that meet specified requirements, including that the loans be made at or below market interest rates and, to the extent permitted by federal law, requiring that the combined interest and loan service rate be set at a rate not to exceed 50% of the interest rate paid by the state on the most recent sale of state general obligation bonds, as provided. Existing law
requires the combined interest and loan service rate to be 0% for certain applicants who provide matching funds.
This bill would delete the provision requiring that the combined interest and loan service rate be set at a rate not to exceed 50% of the interest rate paid by the state on the most recent sale of state general obligation bonds. The bill would require the loans to be made at below market interest rates.
(3) Existing law prohibits a person or public agency, including a state agency, city, county, city and county, district, or any other political subdivision of the state, from using water from any source of quality suitable for potable domestic use for nonpotable uses, including, among other locations, parks, if suitable recycled water is available, as provided.
Existing law provides that incidental amounts of spray, mist, or runoff are to be permitted to enter outdoor eating areas of parks and open spaces when irrigated with disinfected tertiary treated recycled water that complies with a specified regulation regarding irrigation.
This bill would instead provide that incidental runoff is to be permitted to enter outdoor eating areas of parks and open spaces when irrigated with disinfected tertiary treated recycled water that complies with a specified regulation regarding irrigation. The bill would define “incidental runoff” as unintended amounts of runoff, such as unintended, minimal overspray from sprinklers that escapes the area of intended use.
Existing law continuously appropriates certain funds from the State Water Quality Control Fund for expenditure by the State Water Resources Control Board for specified purposes.
This bill would require the state board to post on its internet website the loan and grant moneys available from the State Water Quality Control Fund.

Current Bill Text

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