BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 445| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED SB 445 Page 2 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. CONTINUED SB 445 Page 3 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: CONTINUED SB 445 Page 4 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 CONTINUED SB 445 Page 5 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. CONTINUED SB 445 Page 6 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 **** END **** CONTINUED