BILL ANALYSIS Ó SB 445 Page 1 Date of Hearing: July 2, 2014 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 445 (Hill) - As Amended: June 10, 2014 Policy Committee: Environmental Safety and Toxic Materials Vote: 5-1 Urgency: Yes State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill extends the current State Water Resources Control Board (SWRCB) program for the clean-up of Underground Storage Tanks (USTs) from 2016 to 2020. Specifically, this bill: 1)Authorizes a two-cent per gallon fee on petroleum products until 2020. Increases the maximum amount for replacing, removing, or upgrading USTs program grants from $50,000 to $70,000. Dedicates $0.003 (3 mils) of the assessment for the SWRC B to use for specified purposes relating to small businesses, schools, and sites without a viable responsible party. 2)Requires owners and operators of single-walled USTs to permanently close their single-wall tanks by December 31, 2020. Single-wall tanks near public drinking water wells must be closed by December 31, 2018. 3)Provides that before December 31, 2018, the owner or operator of an UST must demonstrate that they will meet the financial responsibility requirements of state and federal laws with an alternative to the existing UST clean-up fund (Fund). Beginning on January 1, 2019, UST owners or operators must meet existing federal and state financial assurance requirements without relying on the Fund. 4)Authorizes the SWRCB to impose administrative civil liability on persons who make fraudulent claims and misrepresentations to the Fund. 5)Authorizes the SWRCB to recover the costs associated with SB 445 Page 2 investigating and prosecuting fraud cases against the Fund from persons who were proven to have engaged in fraud. Bars claimants and consultants convicted of fraud against the Fund from further participation in the Fund. 6)Establishes a new Site Cleanup Subaccount in the Fund which can be used to pay for the costs of investigating and remediating sites with surface or groundwater contamination. FISCAL EFFECT 1)Increased fee revenues of $79 million per year for four years from extending the $.02 assessment 2)Unknown increased costs to state agencies who own single-walled tanks for the removal, replacement or permanent closure of the tanks. 3)Unknown potential increased civil liability revenue resulting from increased enforcement authority. COMMENTS 1)Rationale. According to the author, leaks from underground storage tanks represent an ongoing threat to California groundwater and land resources. Even a small amount of petroleum released from a leaking tank can contaminate groundwater. This bill will continue the important work that the state has done to address the threat from underground tanks and allow businesses, local agencies, and schools to clean up the legacy of past practices that poses a threat to public health and the environment. This bill also provides new direction for the state to address the issue of single-walled tanks and begin to address groundwater contamination from a wider range of toxic chemicals. 2)Background. Currently, the UST program is supported by a 1.6 cent per gallon fee collected quarterly from petroleum UST owner or operators by the State Board of Equalization. The fee currently generates about $270 million per year for claims reimbursement and disbursement. An additional storage fee six mills ($0.006) per gallon expired on January 1, 2014. SB 445 Page 3 Claims are paid in priority order based on criteria established in statute. First priority is given to homeowners, second priority to small business, non-profit or small local agencies, third priority to business with less than 500 employees, and the lowest priority is given to major corporations and larger local government agencies. 3)Related Legislation. AB 282 (Wieckowski), 2013, extends the sunset date of the Underground Storage Tank (UST) Cleanup Program from 2016 until 2018, and extends the sunset of a $0.006 surcharge on petroleum stored in an UST from 2014 until 2016. This bill was held in the Senate Appropriations Committee. Analysis Prepared by : Jennifer Galehouse / APPR. / (916) 319-2081