BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 440
                                                                       

                      SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Jerry Hill, Chair
                              2013-2014 Regular Session
                                           
           BILL NO:    AB 440
           AUTHOR:     Gatto
           AMENDED:    May 24, 2013
           FISCAL:     Yes               HEARING DATE:     July 3, 2013
           URGENCY:    No                CONSULTANT:       Rachel Machi
                                                               Wagoner  
           
           SUBJECT  :    HAZARDOUS SUBSTANCES:  RELEASES: LOCAL AGENCY  
                          CLEANUP OR REMEDY

            SUMMARY  :    
           
            Existing law  :

             1)   Dissolved redevelopment agencies (RDAs) and community  
                development agencies (CDAs), as of February 1, 2012, and  
                provides for the designation of a successor agency, as  
                defined, to resolve the final matters of the agencies and  
                to dispose of assets and properties in accordance with  
                certain procedures.



           2) Under the Polanco Redevelopment Act (the Polanco Act) which  
              was part of the Community Redevelopment Law (CRL), assisted  
              redevelopment agencies in responding to brownfield  
              properties in their redevelopment areas.  It prescribed  
              processes for redevelopment agencies to follow when  
              remediating a hazardous substance release in a  
              redevelopment project area.  It also provided specified  
              immunity from liability for sites cleaned up under a  
              cleanup plan approved by the Department of Toxic Substances  
              Control (DTSC) or a Regional Water Quality Control Board  
              (RWQCB).   It provided limited liability protections for  
              RDAs and future purchasers of properties remediated under  
              the Polanco Act.
            This bill  :  Authorizes local government agencies to remedy or  
           remove a release of hazardous substances within the boundaries  
           of the local agency.  Specifically this bill:









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           1)Allows counties, cities, or housing authorities to undertake  
             cleanup of a contaminated property if there is no  
             responsible party for the property, the responsible party  
             fails to agree within 60 days of request to clean up the  
             property, or, having agreed, fails to follow through in an  
             appropriate and timely manner.

           2)Requires that hazardous waste cleanups carried out by local  
             agencies must be conducted under guidelines or remedial  
             action plans approved by DTSC, the regional water quality  
             control board, or designated local agencies;

           3)Provides that, if a local agency completes the cleanup of a  
             property in accordance with an approved remedial action  
             plan, the agency is immune from further liability for the  
             hazardous substance release that was the subject of the  
             cleanup.

           4)Provides that the immunity from further liability also  
             extends to any person who enters into an agreement with the  
             local agency to develop the property, to persons who  
             subsequently acquire the property, and to persons who  
             financed the redevelopment activities.

           5)Authorizes local agencies to recover cleanup costs from the  
             responsible party or parties for the property.

           6)Provides for a public participation process when local  
             governments are developing a clean-up plan.  The public  
             participation process shall include:

              a)   An opportunity for the public and other government  
                agencies to participate in the decision making process  
                for the removal or remedial action and the consideration  
                of those comments before submitting a clean-up plan for  
                approval;

              b)   A public notice 30 days before submitting a clean-up  
                plan to state or local agencies for approval;

              c)   A public meeting, if requested; and










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              d)   The local agency shall consider the issue of  
                environmental justice for communities impacted by a  
                proposed removal or remedial action.

           7)Provides that local agencies shall reimburse the RWQCB or  
             DTSC for the cost incurred in reviewing or approving a  
             cleanup plan submitted by a local agency.

           8)States that the Legislature declares that this chapter is  
             the policy successor to the Polanco Redevelopment Act.

            COMMENTS  :

            1)Purpose of Bill  .  According to the author, "There is no  
             clear statutory authority for redevelopment successor  
             agencies to compel brownfield clean up.  Redevelopment  
             Agencies used to exercise Polanco Act powers to clean up and  
             redevelop brownfields.  Despite the Legislature's effort to  
             pass some blanket bills which transferred all development  
             powers of RDAs to local government or local housing  
             authorities, it is the opinion of Legislative Counsel,  
             CalEPA, and private developers that this does not obviously  
             extend to Polanco Act powers.  Additionally, even if local  
             authorities somehow did retain the right to utilize Polanco  
             Act powers, under the law as written they would only be able  
             to exercise those powers within redevelopment areas, which  
             will be phased out of existence with the end of RDA's.  The  
             Polanco Act powers need to be saved, and the areas where  
             they may be used must be redefined."


              2)   Background  .  In 1945, the California Legislature  
                enacted the Community Redevelopment Act to assist local  
                governments in eliminating blight through development,  
                reconstruction, and rehabilitation of residential,  
                commercial, industrial, and retail districts.  The Act  
                gave cities and counties the authority to establish  
                RDAs.




              In 1951, the Legislature superseded the Community  









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              Redevelopment Act with the California Redevelopment Law  
              (CRL), Chapter 710, Statutes of 1951, which codified in  
              California Constitution, Article XVI, Section 16, and the  
              Health and Safety Code, beginning with Section 33000, CRL  
              provided funding from local property taxes to promote the  
              redevelopment of blighted areas.  CRL enabled local  
              government entities to create redevelopment agencies to  
              develop a plan and provide the initial funding to launch  
              revitalization of identified areas in order to encourage  
              and attract private sector investment that otherwise  
              wouldn't occur.




              The CRL also established the authority for tax increment  
              financing (TIF), which is a public financing method to  
              subsidize redevelopment, infrastructure, and other  
              community-improvement projects.  TIF used future increases  
              in property taxes to subsidize current improvements, which  
              are projected to create the conditions for the increases. 


               


              In 1976, the California Legislature required that at least  
              20% of the tax increment revenue from redevelopment  
              project areas be used to increase, improve, and preserve  
              the supply of housing for very low, low, and moderate  
              income households.




              AB 3193 (Polanco), Chapter 1113, Statutes of 1990, as part  
              of the Community Redevelopment Act, was enacted to assist  
              redevelopment agencies in responding to brownfield  
              properties in their redevelopment areas.  It prescribes  
              processes for redevelopment agencies to follow when  
              cleaning up a hazardous substance release in a  
              redevelopment project area.  It also provides specified  
              immunity from liability for sites cleaned up under a  









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              cleanup plan approved by DTSC or a RWQCB. 

              AB 1290 (Isenberg), Chapter 942, Statutes of 1993, known  
              as the "Community Redevelopment Law Reform Act of 1993,"  
              revised the CRL to address alleged abuses, and added  
              restrictions on redevelopment activities, including  
              limiting them predominately to urban areas.





              Citing a significant State General Fund deficit, Governor  
              Brown's 2011-12 budget proposed eliminating RDAs and  
              returning billions of dollars of property tax revenues to  
              schools, cities, and counties to fund core services.  




              On June 28, 2011, the Governor approved two bills, AB1X 26  
              (Blumenfield), Chapter 5, Statutes of 2011, and AB1X  
              27(Blumenfield), Chapter 5, Statutes of 2011, which amended  
              the CRL.  AB1X 26 was the "dissolution" bill, which set  
              November 1, 2012 as the date to dissolve all RDAs.  The  
              companion legislation AB1X 27, the "reinstatement" bill,  
              allowed cities to keep their agencies in place by  
              committing to substantial "community remittances" to be  
              paid to the State. 

              In July 2011, a lawsuit was filed challenging the  
              constitutionality of both AB1X 26 and AB1X 27. The  
              California Supreme Court accepted the case and issued a  
              stay under which agencies remained in place but in the  
              suspended state pending a decision by the Court.

              On December 29, 2011, the California Supreme Court  
              issued its decision: it upheld AB1X 26, which eliminates  
              redevelopment agencies, but struck down AB1X 27, which  
              would have allowed cities to agree to community  
              remittance payments to keep their agencies in place.  As  
              a result, under the schedule set by the California  
              Supreme Court, AB1X 26 provides that cities may create  









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              successor agencies and could continue to implement  
              "enforceable obligations" which were in place prior to  
              the suspension-existing contracts, bonds, leases,  
              etc.-and take title to all of the former redevelopment  
              agencies' housing and other assets.  







              On June 27, 2012, the Governor approved AB 1484  
              (Assembly Committee on Budget) Chapter 26, Statutes of  
              2012, making some significant clarifications and  
              procedural changes in AB1X 26, the redevelopment  
              dissolution law. 






              3)   Purpose of the Polanco Act  .  In 1990 the California  
                Legislature recognized the benefit to cleaning up  
                brownfield properties located within redevelopment areas  
                in California where it was a struggle to address economic  
                and social deterioration and blight caused by properties  
                where contamination was present.  The private sector was  
                reluctant to invest because the costs associated with  
                cleaning up brownfields outweighed the potential gain.   
                RDAs served as the catalyst for remediating these sites.   
                The Polanco Act was enacted in the CRL to provide RDAs  
                with tools to compel remediation of sites within  
                designated redevelopment areas and provided the RDA  
                limited immunity from liability as a responsible party  
                from future remediation of contamination found.

              4)   Expansive authority and liability protection to local  
                governments  .  AB 440 replicates the authority and  
                protections provided under the Polanco Act, however with  
                several key differences:  










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             a)    Applies those authorities and protections to all cities  
                and counties rather    
                  than within the limitations of an RDA and does so for  
                 any property within  the jurisdiction of a city or  
                 county.

              b)    Allows local agencies to designate another local  
                 agency to do oversight of 
                    cleanups within their own jurisdictions.

              c)     Requires state oversight agencies to provide general  
                 guidelines for remediation.

              d)     Creates a new chapter pertaining to liability relief  
                 outside of the CRL.

              e)     The Polanco Act requires that the plan and schedule  
                 have been found by  the overseeing agency to be  
                 consistent, to the maximum extent possible, with the  
                 priorities, guidelines, criteria, and regulations  
                 contained in the National Contingency Plan. This bill  
                 only requires that the plan and schedule are consistent  
                 with the  intended use of the property  .

              5)   Out of context  .  Within the context of the CRL and the  
                Polanco Act, the liability protections and authorities to  
                require a property to be remediated were inherently  
                limited to properties that were within a defined RDA and  
                were subject to the many limitations that applied to that  
                RDA's activities under the CRL and the Polanco Act (i.e.,  
                the sites were "blighted" pursuant to Article XVI of the  
                California Constitution and the obstacles to addressing  
                the blight prevented the private sector from investing  
                without the assistance of the RDA, including financial  
                assistance).  The limitations of the CRL together with the  
                Polanco Act limitations were put in place to protect the  
                public interest and protect against potential misuse by a  
                local government.  
               
               By removing the controlling limitations of the CRL and the  
              Polanco Act and applying it more broadly, AB 440 gives local  
              officials far greater authority than they had before RDAs'  
              dissolution.  The narrow rules that made sense in the  









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              context of RDA law are not appropriate in all cases for all  
              city or county remediation projects.  Additionally, AB 440  
              removes the context of the CRL entirely by creating a new  
              chapter rather than amending the Polanco Act.  So while  
              there is a section within the bill that states: 
               
                  The Legislature finds and declares that this chapter  
                 is the policy successor to the Polanco Redevelopment  
                 Act (Article 12.5 (commencing with Section 33459) of  
                 Part 1 of Chapter 4 of Division 24) and shall be  
                 interpreted and implemented consistent with that act.  
                 It is further the intent of the Legislature that any  
                 judicial construction or interpretation of the Polanco  
                 Redevelopment Act also apply to this chapter.

              by creating a new chapter, the bill loses the context the  
              CRL and the limitations that applied from that act and the  
              Polanco Act together.

              6)   How clean is clean?  What are the risks after a cleanup  
                is complete  ?  The intended land use defines how a cleanup  
                will be done and what will be contained within a cleanup  
                or remedial action plan is determined by that land use,  
                regulatory standards, types of contamination and  
                anticipated exposure, cleanup costs, State Lands statutes  
                and residential acceptance.  There is not a set standard  
                for every contaminant for every situation.  If the  
                proposed use is residential, the cleanup or remedial  
                action plan will be more stringent than if it is a parking  
                lot.  However, it is unlikely that the remedial action  
                plan will require the full removal of every possible  
                contaminant because cleanups are complicated and  
                expensive.  Remedial action plans mitigate risk, but they  
                do not necessarily completely remove it.  The hazard to  
                public health is not completely gone when a site is  
                remediated.  For instance, on many sites a cement cap is  
                put over contamination because that adequately protects  
                from the exposure pathway of the contaminant for the  
                intended land use.  The caps have to be maintained and  
                monitored into the future to prevent exposure.  

               Transfer of risk  .  The Polanco Act has led to many  
              successful cleanups of blighted sites across the state,  









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              however, with or without the liability protections provided  
              under the Polanco Act, there are also sites that have been  
              remediated that, even with all best efforts and compliance  
              with a cleanup or remedial action plan, lingering  
              contamination has led to harm to residents or environmental  
              hazards that need to be addressed.  If a city or county or  
              future developer is not a responsible party (as would be  
              provided under this bill), the residents will be left to  
              address the contamination themselves.  This bill may remove  
              liability, but it does not remove potential risk - it  
              transfers it.

              By providing liability protections to any property within  
              the local agencies' jurisdiction this bill provides that  
              current and future owners of one of these properties would  
              not be responsible for further remediation, even if the  
              property was found to be making inhabitants or future  
              purchasers of the property sick, as long as they complied  
              with the cleanup or remedial action plan.  If there is no  
              longer a previous responsible party available for the  
              property, then there is no way to compel the developer or  
              local government to conduct future remediation of the  
              contamination.  

              While it is laudable to create incentives for cleaning up  
              contaminated property, liability immunity applied this  
              broadly creates serious potential health risks for future  
              inhabitants or users of the property.  This type of  
              liability relief should be very limited to minimize this  
              risk.  

              7)   Questions related to local government qualifications and  
                authority  .  DTSC, SWRCB, and the RWQCBs are responsible  
                for overseeing the management, containment and remediation  
                of contamination and pollution for the State.  They have  
                on staff toxicologists and other scientists who specialize  
                in these activities on a day-to-day basis.  What local  
                agency can meet the qualifications of the State's  
                oversight agencies?  

              Additionally, can one local agency provide objective  
              oversight of another local agency's cleanup activities  
              within the same jurisdiction?









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              Without specific state oversight, how does the State prevent  
              abuse of this authority on the local level?

              This bill very broadly allows local governments the  
              authority to compel owners of sites within their  
              jurisdiction to either cleanup their property or conduct the  
              remediation themselves and then charge the owner and  
              responsible parties for the local government's activities  
              for ANY site within its jurisdiction.  Is it appropriate to  
              give local government such broad authority to force property  
              owners to take action when the contamination on the property  
              may not be causing harm and the owner may not have the  
              financial ability to fund a cleanup? 

              8)   Unintended consequences  .  Will this bill result in  
                stunting private investment in brownfields?  If a  
                developer can receive the benefits of liability protection  
                simply by developing or purchasing any property in the  
                State in which the local government conducted or caused to  
                be conducted a cleanup under the provisions of this bill,  
                then why would any developer ever purchase and develop a  
                property that was not cleaned up by a local government and  
                does
              not afford the same liability protection?


            9) Solution to the loss of CRL and Polanco Act tools  .  With  
              the loss of the RDAs in California, the Polanco Act tool  
              and protections were lost with RDAs.  As the author  
              notes, the Polanco Act was a valuable tool that led to  
              the successful remediation of many sites within  
              California and there is value in preserving this tool to  
              encourage brownfield cleanups.  However, this bill  
              broadly extends the authority and protections of the  
              Polanco Act without preserving the context in which the  
              Polanco Act worked.  



              The Senate Environmental Quality Committee considered  
              legislation early this year, SB 470 (Wright), which  
              would preserve the Polanco Act while also preserving the  









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              context of the CRL.  This more narrowly crafted  
              legislation will result in local governments being able  
              to cleanup brownfields within the jurisdictions of the  
              former RDAs without broadening the authority so  
              extensively as to potentially increase the risk to  
              public health and environmental safety.  SB 470 provides  
              a more focused solution to this issue.



            10)New economic drivers for addressing blight  .  The  
              dissolution of RDAs has left open the question about how  
              the state can help local governments moving forward  
              encourage and address those areas within communities that  
              would benefit from government interventions and incentives  
              in order to economically reinvigorate communities.   Any  
              solution should provide specifically crafted tools for the  
              needs of those communities without creating the potential  
              for misuses of overly broad allowances within statute.  
               
               To that end, the Legislature has introduced several bills  
              aimed at providing those tools.  For example, SB 1  
              (Steinberg) allows a local government to establish a  
              Sustainable Communities Investment Authority (Authority)  
              and direct tax increment revenues to that Authority in  
              order to address blight by supporting development in  
              transit priority project areas, small walkable communities,  
              and clean energy manufacturing sites.  Liability  
              protections should be considered in the context of any new  
              investment tools provided. 
                 
             11)Related legislation  .  SB 470 (Wright) allows cities and  
              counties to use some of the Community Redevelopment  
              Law's financing, property sale, and brownfield cleanup  
                                                                                powers to promote economic development, is awaiting  
              hearing in the Assembly Committee on Housing and  
              Community Development.


              SB 1335 (Pavley), of 2012, would have authorized  
              successor agencies with approval of their oversight  
              board, to retain properties that are considered  
              brownfields for the purpose of remediating the  









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              contamination in order to maximize their value.  The  
              successor agencies would use available financing, funds  
              obtained from a responsible party, existing state or  
              federal grants or any other funds at the disposal of the  
              successor agency. This measure failed in the Senate  
              Appropriations Committee.


              AB 1235 (Hernandez), of 2011, would have applied all  
              authority, rights, powers, duties, obligations, and  
              protections afforded to a redevelopment agency under the  
              Polanco Redevelopment Act to a successor agency, as  
              defined, for any property that was within a redevelopment  
              project of a redevelopment agency that has been dissolved  
              by an act of the Legislature.  The measure was amended on  
              the Senate Floor to pertain to another subject.

            
           SOURCE:         Author
            
           SUPPORT  :       California Building Industry Association
                          California Conference of Carpenters
                          California State Council of Laborers
                          City of Burbank
                          City of Chula Vista
                          City of El Centro
                          City of Huntington Beach
                          City of Lakewood
                          City of Sacramento
                          City of Vista
                          Harbor Association of Industry & Commerce
                          League of California Cities
                          League of California Cities - Los Angeles  
                          County Division
                          Natural Resources Defense Council
            
           OPPOSITION  :    None on file