BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1043
                                                                  Page 1


          ASSEMBLY THIRD READING
          AB 1043 (Chau)
          As Amended  April 16, 2013
          Majority vote 

           ENVIRONMENTAL SAFETY          7-0                    
          APPROPRIATIONS      17-0        
           
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          |Ayes:|Alejo, Dahle, Bloom,      |Ayes:|Gatto, Harkey, Bigelow,   |
          |     |Donnelly, Lowenthal,      |     |Bocanegra, Bradford, Ian  |
          |     |Stone, Ting               |     |Calderon, Campos,         |
          |     |                          |     |Donnelly, Eggman, Gomez,  |
          |     |                          |     |Hall, Ammiano, Linder,    |
          |     |                          |     |Pan, Quirk, Wagner, Weber |
           ----------------------------------------------------------------- 

           SUMMARY :  Modifies the disposition of Proposition 84 funds  
          collected from responsible parties for groundwater contamination  
          clean-up.  Specifically,  this bill  :

          1)Allows local agencies receiving grants or loans from  
            Proposition 84 from the California Department of Public Health  
            (CDPH) for groundwater projects that are able to subsequently  
            recover costs from responsible parties, to keep that money to  
            fund additional groundwater cleanup activities.

          2)In order to be eligible to the use of Proposition 84 funds  
            recovered from responsible parties, the local agency must meet  
            the following requirements:

             a)   Sites eligible for cost recovery are those authorized by  
               Federal Superfund  Comprehensive Environmental Response,  
               Compensation, and Liability Act or other federal or state  
               law;

             b)   The local agency must submit an expenditure plan to the  
               Department of Toxic Substances Control (DTSC) for its  
               review and approval; and

             c)   Funds recovered from a responsible party that are in  
               excess of the costs to conduct a project shall be remitted  
               to DTSC for deposit into the Site Remediation Account for  
               orphan groundwater contamination cleanup projects at sites.








                                                                  AB 1043
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           EXISTING LAW  :

          1)Authorizes, under Proposition 84, approved by the voters in  
            2006, the state to sell about $5.4 billion in general  
            obligation bonds for safe drinking water, water quality, and  
            water supply; flood control; natural resource protection; and  
            park improvements.

          2)Requires the CDPH, when implementing the provisions of  
            Proposition 84, to, among other things, to develop and adopt  
            guidelines and regulations, consult with other entities,  
            conduct studies, and follow certain procedures for  
            establishing a project, grant, loan or other financial  
            assistance program implementing the initiative.

          3)Requires CDPH to require repayment of Proposition 84 funds  
            from parties responsible for contamination.
           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, unknown revenue losses, potentially in the range of  
          the Prop 84 groundwater remediation program at the CDPH (bond  
          funds) offset to a limited degree by reduced administrative  
          costs to DPH.  The bill would result in minor, absorbable costs  
          to DTSC to review and approve expenditure plans.  

           COMMENTS  :
           
          Need for the bill:   According to the author, this bill is  
          needed, "to allow local agencies that have been awarded  
          Proposition 84 funds from CDPH for groundwater projects that are  
          able to subsequently recover funds from responsible parties to  
          keep the money to fund additional groundwater cleanup  
          activities.  Should local agencies be successful in recovering  
          the costs from responsible parties, this bill will save  
          significant State administrative costs and allow the local  
          agencies to use all of the recovered funds for groundwater  
          cleanup."

           San Gabriel Valley groundwater contamination:   This bill is  
          supported by the Upper San Gabriel Valley Municipal Water  
          District, which is involved in the cleanup of the superfund  
          sites in the San Gabriel Valley.  These sites include multiple  
          areas of contaminated groundwater in the 170-square mile San  
          Gabriel Valley.  The contaminated areas underlie significant  








                                                                  AB 1043
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          portions of the cities of Alhambra, Arcadia, Azusa, Baldwin  
          Park, Industry, Irwindale, El Monte, La Puente, Monrovia,  
          Rosemead, South El Monte, and West Covina.


           Proposition 84  :  Approved by the voters in 2006, Proposition 84  
          authorized $60 million to the CDPH for loans and grants for  
          projects to prevent or reduce contamination of groundwater that  
          serves as a source of drinking water for the San Gabriel Valley.  
           The CDPH requires repayment for costs that are subsequently  
          recovered from parties responsible for the contamination.

           
          Modification to Proposition 84:    When the voters approved  
          Proposition 84, the initiative included specific language  
          requiring the repayment of funds from those persons or  
          businesses that caused the toxic contamination.  The initiative  
          included Public Resources Code (PRC) Section 75025, which  
          mandates that the CDPH require repayment of subject funds.  The  
          full text of PRC Section 75025 is as follows:

               The sum of sixty million dollars ($60,000,000)  
               shall be available to the Department of Health  
               Services for the purpose of loans and grants for  
               projects to prevent or reduce contamination of  
               groundwater that serves as a source of drinking  
               water.  The Department of Health Services shall  
               require repayment for costs that are subsequently  
               recovered from parties responsible for the  
               contamination.  The Legislature may enact  
               legislation necessary to implement this section.

          While the language of Proposition 84 allows the Legislature to  
          enact legislation to implement the programs, on the other hand  
          it is not clear if the repayment requirements to the State as  
          provided in the original bond act would be met under the  
          provisions of this bill.





           Prior legislation:
           








                                                                  AB 1043
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          AB 467 (Eng) 2012:  AB 467 was similar to AB 1043 and was  
          approved by the Legislature in 2012 but vetoed by Governor  
          Brown.  In the veto message Governor Brown suggested a simpler  
          structure for addressing the issue of cost recovered funds,  
          specifically:

               I support the leveraging of all available funding by  
               ensuring that recovered funds are effectively used in  
               the jurisdictions that recover them.  Unfortunately,  
               the structure that was developed is cumbersome and  
               inefficient.  I am directing the Department of Public  
               Health and the Department of Toxic Substances Control,  
               to once again work with the Legislature to develop a  
               more streamlined way to reinvest these funds.


           

          Analysis Prepared by  :    Bob Fredenburg/ E.S. & T.M. / (916)  
          319-3965 


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