BILL ANALYSIS Ó
SB 445
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: SB 445
AUTHOR: Hill
AMENDED: August 22, 2014
FISCAL: Yes HEARING DATE: August 28, 2014
URGENCY: Yes CONSULTANT: Rachel Machi
Wagoner
SUBJECT : UNDERGROUND STORAGE TANKS: CORRECTIVE ACTION
SUMMARY :
Existing law , under the Barry Keene Underground Storage Tank
Cleanup Trust Fund Act of 1989, every owner of an underground
storage tank is required to pay a storage fee for each gallon of
petroleum placed in the tank. The fees are required to be
deposited in the Underground Storage Tank Cleanup Fund (USTCF).
The money in the USTCF may be expended by the State Water
Resources Control Board (SWRCB), upon appropriation by the
Legislature, for various purposes, including the payment of
claims of up to $1,500,000 per occurrence, as defined, to aid
owners and operators of petroleum underground storage tanks
(USTs) who take corrective action to clean up unauthorized
releases from those tanks and the payment of claims for certain
third party injuries and damages. SWRCB is required to pay a
claim for the costs of corrective action to a person who owns
property on which is located a release from a petroleum UST that
has been the subject of a corrective action, and for which
additional corrective action is required because of additionally
discovered contamination from the previous release, if the person
who carried out the earlier and completed corrective action was
eligible for, and applied for, reimbursement pursuant to
specified provisions, only to the extent that the amount of
reimbursement for the earlier corrective action did not exceed
the amount of $1,500,000.
This bill : Extends the current State Water Resources Control
Board (SWRCB) program for the cleanup of Underground Storage
Tanks (USTs) from 2016 to 2026. Specifically, this bill :
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1)Authorizes a $0.02 per gallon fee on petroleum products until
2026 to extend the current SWRCB program for the cleanup of
USTs pursuant to the Barry Keene Underground Storage Tank
Cleanup Act (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 a UST must demonstrate that they will meet the financial
responsibility requirements of state and federal laws with an
alternative to the existing USTCF. Beginning on January 1,
2019, UST owners or operators must meet existing federal and
state financial assurance requirements without relying on the
USTCF.
4)Authorizes the SWRCB to impose administrative civil liability
on persons who make fraudulent claims and misrepresentations to
the USTCF.
5)Bars claimants and consultants convicted of fraud against the
USTCF from further participation in the USTCF.
6)Authorizes the SWRCB to recover the costs associated with
investigating and prosecuting fraud cases against the USTCF
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 USTCF 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 SWRCB 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;
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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.
10) Establishes an Expedited Claim Account within the USTCF to
include alternative claims processing procedures and annual
funding for individual claims, and expedited review of
claims.
11) Transfers $100 million from the USTCF to the Expedited Claim
Account.
12) Requires the SWRCB 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 USTCF.
13) Allows an owner of property that was previously the subject
of a completed corrective action, including tank removal, to
file a claim to USTCF for further corrective action from the
same release if:
a) The previous tank owner who performed the earlier
corrective action did not file a claim to the USTCF;
b) The current property owner is the owner of a UST, and is
current on fees and permits for the existing UST on the
property; and
14) Requires the completion of a review by the SWRCB on other
ways to prioritize Underground Storage Tank Cleanup, category
B claimants.
15) Provides grants for the Replacing, Removing, or Upgrading
Underground Storage Tanks (RUST) Program up to $140,000 for
removal and replacement of a Single Wall Tank at a public
fueling station that is at least 15 miles from the next
station to try to prevent adverse impacts of the single wall
tank removal requirements on small rural communities.
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16) Allows the USTCF claimants to demonstrate that they have
complied with existing statutory requirements that they have
paid their USTCF fees in order to qualify for the funding
from the USTCF by providing a signed statement in cases where
Board of Equalization agrees that they have paid fees, but
does not have sufficient data to determine whether the fees
paid were for petroleum stored in a specific tank that has
leaked.
17)Provides double jointing language to avoid chaptering out
with SB 1458 (Environmental Quality Committee) of the
current legislative session.
COMMENTS :
1)Referral to the Committee pursuant to Senate Rule 29.10 . SB
445 was originally introduced by Senator Price on February 21,
2013, as a measure prohibiting pharmacies from advertising the
sale of controlled substances. The subject matter was heard by
the Senate Committee on Business, Professions and Economic
Development and passed out of the Senate on May 6, 2013 on a
vote of 25-9.
On August 5, 2013 the Assembly amendments changed the author to
Senator Hill and the subject changed to revenue bond financing of
prison construction.
Assembly amendments taken on January 8, 2014 changed the subject
to underground storage tanks. The measure passed the Assembly on
August 26, 2014 by a vote of 64-8.
Consistent with Senate Rule 29.10, the Senate Rules Committee has
referred the amended bill to the Senate Environmental Quality
Committee for a hearing owing to the Assembly amendments.
2)Purpose of the Bill . 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. SB 445 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
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legacy of past practices that poses a threat to public health
and the environment. This bill provides new direction for the
state to tackle the legacy issue of single-walled tanks still
in use and begin to address groundwater contamination from a
wider range of toxic chemicals."
3)Background . The Barry Keene Underground Storage Tank Cleanup
Fund Act of 1989 established USTCF. The mission of USTCF is to
contribute to the protection of California's water quality,
public health, and safety, through: Establishing an alternative
mechanism to meet federal financial responsibility requirements
for owners and operators of USTs; reimbursing eligible
corrective action costs incurred for the cleanup of pollution
resulting from the unauthorized release of petroleum from USTs.
The USTCF benefits a large number of small businesses and
individuals by providing reimbursement for expenses
associated with the cleanup of leaking petroleum USTs.
USTCF also provides money to the nine regional water quality
control boards (regional water boards) and local regulatory
agencies to abate emergency situations or to undertake
corrective action at abandoned sites that pose a threat to
human health, safety, and the environment, as a result of a
UST petroleum release.
The regional water boards, County Local Oversight Program
agencies (LOP Agencies), and other local agencies direct
corrective action to clean up soil and groundwater
contamination at petroleum UST sites that have had
unauthorized releases. USTCF also supports other special
accounts authorized by the Legislature.
USTCF's revenues are generated by a storage fee for every
gallon of petroleum product placed into a UST. The State
Board of Equalization (BOE) collects the fee quarterly from
owners of active USTs. USTCF statutes set forth a claim
priority system based on specified claimant characteristics
relating to the claimant's ability to pay. There are four
priorities:
Class A: is reserved for residential tank
owners.
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Class B: is reserved for small California
businesses, governmental agencies, and nonprofit
organizations with gross receipts and employees
below a specified maximum.
Class C: is for certain California
businesses, governmental agencies, and nonprofit
organizations not meeting the criteria for Class B,
but who have less than 500 employees.
Class D: is given to all other eligible
claimants.
Since the USTCF's inception, roughly 20,100 claims have been
filed for reimbursement of costs for contaminant cleanup,
and approximately $3.4 billion has been paid to claimants.
Approximately 9,200 claims have been reimbursed and closed
out over the life of the USTCF, and costs at another 2,300
active claims are currently being paid.
The remaining 4,700 claims are waiting to begin receiving
reimbursement.
The rate of new claims is on a declining trend, with less
than 100 claim applications filed in fiscal year 2013-14.
This decline is due to stricter underground storage tank
designs that provide better environmental protection, thus
resulting in less petroleum leaks to clean up. Most new
underground storage tank claims are primarily
newly-discovered old leaks, not new leaks from current
underground storage tanks.
Of all the roughly 20,100 claims, contaminant cleanups have
been completed at over 12,500 sites where contaminants have
been investigated, monitored, and removed to a level
protective of health, safety, and the environment, allowing
the property to continue in its current use or return to
productive use to the benefit of the community. Of the
claims that have not yet begun receiving reimbursement for
cleanup, approximately 3,400 have completed contaminant
cleanup.
In recent years, program expenditures have exceeded
revenues, in part due to poor program oversight by SWRCB
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and in part due to unforeseen cost increases to clean up
contaminated sites. Based on the results of a recent
program audit, SWRCB 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. SWRCB believes that
recent program improvements should also reduce demand for
future funding.
The law establishing USTCF is scheduled to sunset on January
1, 2016.
1)Single-walled USTs . SB 445 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 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 SWRCB has no authority under current 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.
2)Fraud Prevention and Recovery . SB 445 provides the SWRCB with
authority to help prevent fraud in the USTCF and help recover
monetary losses to the USTCF due to fraud and misrepresentation
by:
a) Authorizing the SWRCB to impose administrative
civil liability on persons who make fraudulent claims and
misrepresentations to the USTCF;
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b) Barring claimants and consultants convicted of fraud
against the
USTCF from further participation in the USTCF; and,
c) Authorizing the SWRCB to recover the costs associated
with
investigating and prosecuting fraud cases against the USTCF
from
persons who were proven to have engaged in fraud.
3)Fiscal Impact . According to the Assembly Appropriations
Committee SB 445 will have the following fiscal impact:
a) Increased fee revenues of $79 million per year for six
years from
extending the $0.02 assessment.
b) Unknown increased costs to state agencies who own
single-walled
tanks for the removal, replacement, or permanent closure
of the tanks.
c) Unknown potential increased civil liability revenue
resulting from
increased enforcement authority.
4)Related Legislation .
SB 574 (Nielsen) expands the exception for the requirement
that only the current or past owner of a petroleum
underground storage tank can apply for reimbursement of
cleanup costs related to a release from that tank. This bill
was held on the suspense file of the Senate Appropriations
Committee.
AB 282 (Wieckowski) requires a two-year extension of the
additional $0.006 per gallon on the specified petroleum
storage fee until January 1, 2016. This bill was held on
the suspense file of the Senate Appropriations Committee.
AB 1566 (Wieckowski), Chapter 532, Statutes of 2012,
authorizes the Office of the State Fire Marshal to regulate
the Aboveground Petroleum Storage Act and makes conforming
changes to the APSA. This bill is double-jointed with AB
1701 (Wieckowski).
AB 1701 (Wieckowski), Chapter 536, Statutes of 2012,
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provided for state certification of cities and counties to
oversee the cleanup of underground storage tanks. This bill
is double-jointed with AB 1566 (Wieckowski).
AB 358 (Smyth), Chapter 571, Statutes of 2011, (1) required
the owner or operator of a UST to send specified information
to SWRCB regarding an unauthorized release of hazardous
substances in USTs to local agencies on a written or
electronic form developed by the board, (2) required each
regional board and local agency to submit a report to SWRCB
for all unauthorized releases using the board's
Internet-accessible database, (3) allowed SWRCB to adopt
regulations to specify reporting requirements to implement
the provisions of the bill, including electronic submission
requirements for these reports and requires the regulations
to be adopted as emergency regulations and exempts the
adoption of these regulations from certain requirements
regarding review by the Office of Administrative Law, (4)
allowed a person required to perform corrective action under
certain federal laws to apply to the board for payment of a
claim, and (5) changes made by this bill were contingent on
AB 291 (Wieckowski) being chaptered.
AB 291 (Wieckowski), Chapter 569, Statutes of 2011, required
a two-year extension of the additional $0.006 per gallon on
the specified petroleum storage fee until January 1, 2014.
Changes made by this bill were contingent on AB 358 (Smyth)
being chaptered.
AB 1188 (Ruskin), Chapter 649, Statutes of 2009, increased
the specified petroleum storage fee by $0.006 per gallon of
petroleum stored, between January 1, 2010, and December 31,
2011.
SB 1161 (Lowenthal), Chapter 616, Statutes of 2008, extended
the sunset date for the USTCF to January 1, 2016, changed
the definition of "tank" to include components attached to
the tank, and allocated funding to brownfield cleanups.
AB 2729 (Ruskin), Chapter 644, Statutes of 2008, as it
relates to USTs, allocated $10 million to schools and
revises the priority ranking used by SWRCB by prioritizing
large school districts, above otherwise un-ranked tank
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owners and operators to receive financial awards for claims
submitted to SWRCB for UST remediation costs.
SOURCE : Author
SUPPORT : Antea Group
California Association of Environmental Health
Administrators
California Independent Oil Marketers Association
California League of Conservation Voters
CORE Environmental, Inc.
Ryder System, Inc.
OPPOSITION : None on file