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 ----------------------------------------------------------------- |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 Page 2 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 Page 3 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 Page 4 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 FN: 0000839