BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 445
          Author:   Hill (D)
          Amended:  8/22/14
          Vote:     27 - Urgency


           ASSEMBLY FLOOR  :  64-8, 8/26/14 - See last page for vote


           SUBJECT  :    Underground storage tanks:  hazardous substances:   
          petroleum

           SOURCE  :     Author


           DIGEST  :    This bill extends the current State Water Resources  
          Control Board (State Water Board) program for the clean-up of  
          Underground Storage Tanks (USTs) from 2016 to 2026.

           Assembly Amendments  delete the Senate version of this bill  
          relating to pharmacies and instead add the current language.

           ANALYSIS  :    

          Existing law:

          Pursuant to the Barry Keene Underground Storage Tank Cleanup Act  
          (Act) of 1989:

          1.Establishes a base storage fee of $0.014 (14 mils) for each  
            gallon of petroleum placed in an UST.

          2.Established, until January 1, 2014, an additional storage fee  
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            of $0.006 (6 mils) for each gallon of petroleum placed in an  
            UST for a total of $0.02 per gallon.

          3.Authorizes the State Water Board to expend the monies in the  
            Underground Storage Tank Cleanup Fund (Fund), upon  
            appropriation by the Legislature, for various purposes,  
            including the payment of claims to aid owners and operators of  
            petroleum USTs who take corrective action to clean up  
            unauthorized releases from those tanks, corrective actions  
            undertaken by specified agencies, the cleanup and oversight of  
            unauthorized releases at abandoned tank sites, and grants to  
            small businesses to retrofit certain hazardous substance USTs.

          4.Requires, pursuant to United States Environmental Protection  
            Agency regulations, owners and/or operators of USTs to  
            demonstrate through insurance coverage or other acceptable  
            mechanisms that they can pay for cleanup and third-party  
            damages resulting from leaks that may occur from their USTs.

          This bill:

          1.Authorizes a $0.02 per gallon fee on petroleum products until  
            2026 to extend the current State Water Board program for the  
            clean-up of USTs pursuant to the Act of 1989.

          2.Requires owners and operators of single-walled USTs to  
            permanently close their single-wall tanks by December 31,  
            2025.

          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 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 State Water Board to impose administrative  
            civil liability on persons who make fraudulent claims and  
            misrepresentations to the Fund.

          5.Bars claimants and consultants convicted of fraud against the  
            Fund from further participation in the Fund.


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          6.Authorizes the State Water Board to recover the costs  
            associated with investigating and prosecuting fraud cases  
            against the Fund from persons who were proven to have engaged  
            in fraud.

          7.Increases the maximum amount for replacing, removing, or  
            upgrading USTs program grants from $50,000 to $70,000.

          8.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.

          9.Dedicates $0.003 (3 mils) of the assessment for the State  
            Water Board to use for the following purposes: 

             A.   Loans and grants to assist small business UST owners and  
               operators to come into compliance with UST regulatory  
               requirements by removing, replacing, or upgrading USTs,  
               including complying with the phase out of single-wall  
               tanks; 

             B.   Deposit into the Site Cleanup Subaccount for the  
               investigation and remediation of contaminated sites with no  
               viable responsible party; and

             C.   Provides additional funding, as needed, to the School  
               District Account to reimburse school districts for their  
               costs associated with cleaning up leaking USTs.

          1.Establishes an Expedited Claim Account within the Fund to  
            include alternative claims processing procedures and annual  
            funding for individual claims, and expedited review of claims.

          2.Transfers $100 million from the Fund to the Expedited Claim  
            Account.

          3.Requires the State Water Board to initiate a study of the cost  
            effectiveness of issuing revenue bond to generate proceeds to  
            be used to expedite the payment of clean up by the Fund.

          4.Allows an owner of property that was previously the subject of  
            a completed corrective action including tank removal, to file  
            a claim to fund further corrective action from the same  
            release even if:

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             A.   The previous tank owner who performed the earlier  
               corrective action did not file a claim to the Fund; and

             B.   The current property owner is the owner of an UST, and  
               is current on fees and permits for the existing UST on the  
               property.

           Background
           
          The Act of 1989 was created by the California Legislature and is  
          administered by the State Water Board to provide a means for  
          petroleum UST owners and operators to meet the federal and state  
          requirements.  The Act also assists a large number of small  
          businesses and individuals by providing reimbursement for  
          unexpected and catastrophic expenses associated with the cleanup  
          of leaking petroleum USTs.

          Claims are paid in priority order based on criteria established  
          in statute:  "A" or first priority is given to homeowners; "B"  
          or second priority is for small business, non-profit, or small  
          local government agencies with revenue below a specified level;  
          "C" or third priority is given to parties with fewer than 500  
          employees; and "D" or lowest priority is given to all other  
          claimants, including major corporations and larger local  
          governmental agencies.

          In recent years, program expenditures have exceeded revenues in  
          part due to poor program oversight by the State Water Board, and  
          in part due to unforeseen cost increases to clean up  
          contaminated sites.  Based on the results of a recent program  
          audit, the State Water Board has made several changes to the  
          program to better manage available funding and to speed up the  
          process for completing cleanup projects.  Additionally, the  
          statute changes made over the last several years and the  
          increased revenues from AB 291 (Wieckowski, Chapter 579,  
          Statutes of 2011) offset a large portion of the program  
          deficiency.  The State Water Board believes that recent program  
          improvements should also reduce demand for future funding.

           Single-walled USTs  .  This bill requires owners and operators of  
          single-walled USTs to permanently close their single-wall tanks  
          by December 31, 2025.  Antiquated single-walled USTs and  
          components present a high risk of leaking gasoline, diesel  

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          fuels, fuel additives, and other hazardous substances into the  
          soil and groundwater, posing a threat to human health and the  
          environment.  Single-walled tank systems have a higher  
          propensity for leaking than newer tanks and without secondary  
          containment, pollutants leak directly into the soil and  
          groundwater.  This risk is heightened in areas where USTs are  
          located near drinking wells, with leaks resulting in serious  
          consequences to drinking water sources.  The State Water Board  
          has no authority under existing law to require the replacement  
          of single-walled USTs with more reliable double-walled tanks  
          designed to prevent releases from entering the environment.   
          Currently there are approximately 2,000 operating UST facilities  
          (12% of the total) that have single-walled USTs, or pipes, or  
          both.

           Prior/Related Legislation
           
          AB 282 (Wieckowski) of the current legislative session, 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.   
          AB 282 was held in the Senate Appropriations Committee.

          SB 574 (Nielsen, 2013) expands the exception for the requirement  
          that only the current or past owner of a petroleum UST can apply  
          for reimbursement of cleanup costs related to a release from  
          that tank.  SB 574 was held in the Senate Appropriations  
          Committee.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  Yes

          According to the Assembly Appropriations Committee:

           Increased fee revenues of $79 million per year for six years  
            from extending the $0.02 assessment.

           Unknown increased costs to state agencies who own  
            single-walled tanks for the removal, replacement or permanent  
            closure of the tanks.

           Unknown potential increased civil liability revenue resulting  
            from increased enforcement authority. 


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           SUPPORT  :   (Verified  8/26/14)

          California Independent Oil Marketers Association
          California League of Conservative Voters
          Consultants, Owners, Regulators and Enviro-Vendors, Inc.

           ASSEMBLY FLOOR  :  64-8, 8/26/14
          AYES:  Achadjian, Alejo, Ammiano, Bigelow, Bloom, Bocanegra,  
            Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,  
            Campos, Chau, Chesbro, Conway, Cooley, Dababneh, Daly,  
            Dickinson, Eggman, Fong, Frazier, Garcia, Gatto, Gomez,  
            Gonzalez, Gordon, Gorell, Gray, Hall, Roger Hernández, Holden,  
            Jones, Jones-Sawyer, Levine, Logue, Lowenthal, Maienschein,  
            Medina, Mullin, Nazarian, Nestande, Olsen, Pan, Perea, John A.  
            Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting,  
            Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
          NOES:  Allen, Chávez, Donnelly, Fox, Grove, Linder, Patterson,  
            Wagner
          NO VOTE RECORDED:  Dahle, Beth Gaines, Hagman, Harkey, Mansoor,  
            Melendez, Muratsuchi, Vacancy


          RM:e  8/26/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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