Senate Bill No. 574

Introduced by Senator Nielsen

February 22, 2013

An act to amend Section 25299.57 of the Health and Safety Code, relating to underground storage tanks.

LEGISLATIVE COUNSEL’S DIGEST

SB 574, as introduced, Nielsen. Underground storage tanks: corrective action.

Under existing law, 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. The money in the fund may be expended by the State Water Resources Control Board, 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 who take corrective action to clean up unauthorized releases from those tanks and the payment of claims for certain third party injuries and damages. Existing law requires the board 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 underground storage tank 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 would additionally impose, as a requirement for that reimbursement, that the subject tank has been removed. The bill would also require the board 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 underground storage tank that has been removed, the site 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 owns the property and is required to perform corrective action pursuant to those provisions because of additionally discovered contamination, if the person who carried out the earlier and completed corrective action did not apply for reimbursement, as prescribed.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 25299.57 of the Health and Safety Code
is amended to read:

25299.57.  

(a) If the board makes the determination specified
in subdivision (d), the board may only pay for the costs of a
corrective action that exceed the level of financial responsibility
required to be obtained pursuant to Section 25299.32, but not more
than one million five hundred thousand dollars ($1,500,000) for
each occurrence. In the case of an owner or operator who, as of
January 1, 1988, was required to perform corrective action, who
initiated that corrective action in accordance with Division 7
(commencing with Section 13000) of the Water Code or Chapter
6.7 (commencing with Section 25280), and who is undertaking
the corrective action in compliance with waste discharge
requirements or other orders issued pursuant to Division 7
(commencing with Section 13000) of the Water Code or Chapter
6.7 (commencing with Section 25280), the owner or operator may
apply to the board for satisfaction of a claim filed pursuant to this
article. The board shall notify claimants applying for satisfaction
of claims from the fund of eligibility for reimbursement in a prompt
and timely manner and that a letter of credit or commitment that
will obligate funds for reimbursement shall follow the notice of
eligibility as soon thereafter as possible.

(b) (1) For claims eligible for reimbursement pursuant to
subdivision (c) of Section 25299.55, the claimant shall submit the
actual cost of corrective action to the board, which shall either
approve or disapprove the costs incurred as reasonable and
necessary. At least 15 days before the board proposes to disapprove
the reimbursement of corrective action costs that have been
incurred on the grounds that the costs were unreasonable or
unnecessary, the board shall issue a notice advising the claimant
and the lead agency of the proposed disallowance, to allow review
and comment.

(2) The board shall not reject any actual costs of corrective
action in a claim solely on the basis that the invoices submitted
fail to sufficiently detail the actual costs incurred, if all of the
following apply:

(A) Auxiliary documentation is provided that documents to the
board’s satisfaction that the invoice is for necessary corrective
action work.

(B) The costs of corrective action work in the claim are
reasonably commensurate with similar corrective action work
performed during the same time period covered by the invoice for
which reimbursement is sought.

(C) The invoices include a brief description of the work
performed, the date that the work was performed, the vendor, and
the amount.

(c) (1) For claims eligible for prepayment pursuant to
subdivision (c) of Section 25299.55, the claimant shall submit the
estimated cost of the corrective action to the board, which shall
approve or disapprove the reasonableness of the cost estimate.

(2) If the claim is for reimbursement of costs incurred pursuant
to a performance-based contract, Article 6.5 (commencing with
Section 25299.64) shall apply to that claim.

(d) Except as provided in subdivision (j), a claim specified in
subdivision (a) may be paid if the board makes all of the following
findings:

(1) There has been an unauthorized release of petroleum into
the environment from an underground storage tank.

(2) The claimant is required to undertake or contract for
corrective action pursuant to Section 25296.10, under the federal
act, or under Section 6973 of Title 42 of the United States Code,
or, as of January 1, 1988, the claimant has initiated corrective
action in accordance with Division 7 (commencing with Section
13000) of the Water Code.

(3) The claimant has complied with Section 25299.31.

(4) (A) Except as provided in subparagraphs (B), (C), and (F),
the claimant has complied with the permit requirements of Chapter
6.7 (commencing with Section 25280). A claimant shall obtain a
permit required by subdivision (a) of Section 25284 for the
underground storage tank that is the subject of the claim when the
claimant becomes subject to subdivision (a) of Section 25284 or
when the applicable local agency begins issuing permits pursuant
to subdivision (a) of Section 25284, whichever occurs later.

(B) A claimant who acquires real property on which an
underground storage tank is situated and, despite the exercise of
reasonable diligence, was unaware of the existence of the
underground storage tank when the real property was acquired,
has obtained a permit required by subdivision (a) of Section 25284
for the underground storage tank that is the subject of the claim
within a reasonable period, not to exceed one year, from when the
claimant should have become aware of the existence of the
underground storage tank, or when the applicable local agency
began issuing permits pursuant to Section 25284, whichever occurs
later.

(C) All claimants who file their claim on or after January 1,
2008, and who do not obtain a permit required by subdivision (a)
of Section 25284 in accordance with subparagraph (A) or (B) may
seek a waiver of the requirement to obtain a permit. The board
shall waive the provisions of subparagraphs (A) and (B) as a
condition for payment from the fund if the board finds all of the
following:

(i) The claimant was unaware of the permit requirement, and
upon becoming aware of the permit requirement, the claimant
complies with either subdivision (a) of Section 25284 or Section
25298 and the regulations adopted to implement those sections
within a reasonable period, not to exceed one year, from when the
claimant became aware of the permit requirement.

(ii) Prior to submittal of the application to the fund, the claimant
has complied with Section 25299.31 and has obtained and paid
for all permits currently required by this paragraph.

(iii) Prior to submittal of the application to the fund, the claimant
has paid all fees, interest, and penalties imposed pursuant to Article
5 (commencing with Section 25299.40) of this chapter and Part
26 (commencing with Section 50101) of Division 2 of the Revenue
and Taxation Code for the underground storage tank that is the
subject of the claim.

(D) (i) A claimant exempted pursuant to subparagraph (C) and
who has complied, on or before December 22, 1998, either with
subdivision (a) of Section 25284 or Section 25298 and the
regulations adopted to implement those sections, shall obtain a
level of financial responsibility twice as great as the amount that
the claimant is otherwise required to obtain pursuant to subdivision
(a) of Section 25299.32, but not less than ten thousand dollars
($10,000). All other claimants exempted pursuant to subparagraph
(C) shall obtain a level of financial responsibility that is four times
as great as the amount that the claimant is otherwise required to
obtain pursuant to subdivision (a) of Section 25299.32, but not
less than twenty thousand dollars ($20,000).

(ii) The board may waive the requirements of clause (i) if the
claimant can demonstrate that the conditions specified in clauses
(i) to (iii), inclusive, of subparagraph (C) were satisfied prior to
the causing of any contamination. That demonstration may be
made through a certification issued by the permitting agency based
on a site evaluation and tank tests at the time of permit application
or in any other manner acceptable to the board.

(E) All claimants who file a claim before January 1, 2008, and
who are not eligible for a waiver of the permit requirements
pursuant to applicable statutes or regulations in effect on the date
of the filing of the claim may resubmit a new claim pursuant to
subparagraph (C) on or after January 1, 2008. The board shall rank
all claims resubmitted pursuant to subparagraph (C) lower than
all claims filed before January 1, 2008, within their respective
priority classes specified in subdivision (b) of Section 25299.52.

(F) The board shall waive the provisions of subparagraph (A)
as a condition for payment from the fund for a claimant who filed
his or her claim on or after January 1, 2008, and before July 1,
2009, but is not eligible for a waiver of the permit requirement
pursuant to the regulations adopted by the board in effect on the
date of the filing of the claim, and who did not obtain or apply for
a permit required by subdivision (a) of Section 25284, if the board
finds all of the following:

(i) The claim is filed pursuant to paragraph (2) of subdivision
(h) of Section 25299.54 and the claim otherwise satisfies the
eligibility requirements of that paragraph.

(ii) The claimant became the owner or de facto owner of an
underground storage tank prior to December 22, 1998.

(iii) The claimant did not, and does not, operate the underground
storage tank.

(iv) Within three years after becoming the owner or de facto
owner of the underground storage tank but not after December 22,
1998, the claimant caused the underground storage tank to be
removed and closed in accordance with applicable law, and
commenced no later than December 22, 1998, to perform corrective
action pursuant to Section 25296.10 of this code or pursuant to
Division 7 (commencing with Section 13000) of the Water Code.

(G) The board shall rank all claims submitted pursuant to
subparagraph (F) in their respective priority classes specified in
subdivision (b) of Section 25299.52 in the order in which the claims
are received by the board, but subsequent to any claim filed on a
previous date in each of those priority classes.

(H) For purposes of clauses (ii) and (iv) of subparagraph (F),
“de facto owner of an underground storage tank” means a person
who purchases or otherwise acquires real property, as defined in
subparagraph (D) of paragraph (5) of subdivision (h) of Section
25299.54, and has actual possession of, and control over, an
underground storage tank that has been abandoned by its previous
owner.

(5) The board has approved either the costs incurred for the
corrective action pursuant to subdivision (b) or the estimated costs
for corrective action pursuant to subdivision (c).

(6) The claimant has paid all fees, interest, and penalties imposed
pursuant to Article 5 (commencing with Section 29299.40) and
Part 26 (commencing with Section 50101) of Division 2 of the
Revenue and Taxation Code for the underground storage tank that
is the subject of the claim.

(e) The board shall provide the claimant, whose cost estimate
has been approved, a letter of commitment authorizing payment
of the costs from the fund.

(f) The claimant may submit a request for partial payment to
cover the costs of corrective action performed in stages, as
approved by the board.

(g) (1) A claimant who submits a claim for payment to the
board shall submit multiple bids for prospective costs as prescribed
in regulations adopted by the board pursuant to Section 25299.77.

(2) A claimant who submits a claim to the board for the payment
of professional engineering and geologic work shall submit
multiple proposals and fee estimates, as required by the regulations
adopted by the board pursuant to Section 25299.77. The claimant’s
selection of the provider of these services is not required to be
based on the lowest estimated fee, if the fee estimate conforms
with the range of acceptable costs established by the board.

(3) A claimant who submits a claim for payment to the board
for remediation construction contracting work shall submit multiple
bids, as required in the regulations adopted by the board pursuant
to Section 25299.77.

(4) Paragraphs (1), (2), and (3) do not apply to a tank owned or
operated by a public agency if the prospective costs are for private
professional services within the meaning of Chapter 10
(commencing with Section 4525) of Division 5 of Title 1 of the
Government Code and those services are procured in accordance
with the requirements of that chapter.

(h) The board shall provide, upon the request of a claimant,
assistance to the claimant in the selection of contractors retained
by the claimant to conduct reimbursable work related to corrective
actions. The board shall develop a summary of expected costs for
common corrective actions. This summary of expected costs may
be used by claimants as a guide in the selection and supervision
of consultants and contractors.

(i) (1) To the extent funding is available, the board shall pay,
within 60 days from the date of receipt of an invoice of
expenditures, all costs specified in the work plan developed
pursuant to Section 25296.10, and all costs that are otherwise
necessary to comply with an order issued by a local, state, or
federal agency.

(2) If corrective action costs, third-party compensation costs,
or regulatory technical assistance costs submitted by a claimant
are approved for reimbursement by the board but funding is not
available for payment to the claimant at the time of approval, the
board shall reimburse carrying costs incurred by the claimant after
November 7, 2008, but before June 30, 2010, subject to all of the
following limitations:

(A) The reimbursement for carrying costs shall not exceed the
carrying costs actually incurred by the claimant from the date the
corrective action costs, third-party compensation costs, or
regulatory technical assistance costs are approved for payment by
the board until the date that a check for the reimbursement request
is issued by the Controller.

(B) The reimbursement for carrying costs shall not exceed an
amount equivalent to a maximum annual percentage rate of 7
percent as applied to the amount approved for reimbursement and
for the period calculated pursuant to subparagraph (A).

(C) The board shall not reimburse carrying costs that amount
to less than one hundred dollars ($100) per reimbursement request.

(D) The board shall not reimburse carrying costs that exceed 9
percent of the total amount of costs approved for the reimbursement
to which the carrying costs apply.

(E) A claimant may submit a request for reimbursement of
carrying costs after receipt of fund reimbursement for the corrective
action costs, third-party compensation costs, or regulatory technical
assistance costs to which the carrying costs apply. Additional
carrying costs associated with a reimbursement request for carrying
costs submitted pursuant to this paragraph are not eligible for
payment.

(F) This paragraph does not apply to tank owners or operators
that are not described in paragraphs (1), (2), or (3) of subdivision
(b) of Section 25299.52.

(3) For the purposes of paragraph (2), “carrying cost” means
the interest expense incurred by a claimant to acquire money to
pay costs approved for reimbursement by the board but for which
reimbursement is delayed because funds are unavailable.

(j) (1) The board shall pay a claim of not more than three
thousand dollars ($3,000) per occurrence for regulatory technical
assistance to an owner or operator who is otherwise eligible for
reimbursement under this chapter.

(2) For the purposes of this subdivision, regulatory technical
assistance is limited to assistance from a person, other than the
claimant, in the preparation and submission of a claim to the fund.
Regulatory technical assistance does not include assistance in
connection with proceedings under Section 25296.40, 25299.39.2,
or 25299.56 or any action in court.

(k) (1) Notwithstanding any other provision of this section, the
board shall pay a claim for the costs of corrective action to a person
who owns property on which is located a release from a petroleum
underground storage tank begin delete that end delete begin insert has been removed, end insert begin insert the site end insert has been
the subject of a completed corrective action begin insert , end insert and for which
additional corrective action is required because of additionally
discovered contamination from the previous release begin delete , only if the end delete begin insert as
follows: end insert

begin insert (A) end insert begin insert   end insert begin insert If the end insert person who carried out the earlier and completed
corrective action was eligible for, and applied for, reimbursement
pursuant to subdivision (b), begin delete and end delete begin insert reimbursement for additional
corrective action shall be available end insert only to the extent that the
amount of reimbursement for the earlier corrective action did not
exceed the amount of reimbursement authorized by subdivision
(a). Reimbursement to a claimant on a reopened site shall occur
when funds are available, and reimbursement commitment shall
be made ahead of any new letters of commitment to be issued, as
of the date of the reopening of the claim, if funding has occurred
on the original claim, in which case funding shall occur at the time
it would have occurred under the original claim.

begin insert

(B) If the person who carried out the earlier and completed
corrective action did not apply for reimbursement pursuant to
subdivision (b), the person who owns the property and is required
to perform corrective action because of additionally discovered
contamination may be reimbursed for incurred corrective action
costs that are reasonable and necessary. The board shall assign
the person a priority ranking consistent with the categories
described in Section 25299.52, notwithstanding the requirement
to be an owner or operator. Reimbursement shall be limited to the
amounts described in Section 25299.59.

end insert

(2) For purposes of this subdivision, a corrective action is
completed when the local agency or regional board with
jurisdiction over the site or the board issues a closure letter pursuant
to subdivision (g) of Section 25296.10.

(l) (1) Claims for reimbursement of corrective action costs that
are received by the board more than 365 days after the date of
issuance of a closure letter issued pursuant to subdivision (g) of
Section 25296.10 or after the issuance or activation of a letter of
commitment, whichever occurs later, shall not be reimbursed unless
either of the following applies:

(A) Claims for corrective action costs are submitted to the board
pursuant to paragraph (1) of subdivision (k).

(B) The board finds that submission within the time period
specified in this paragraph was beyond the claimant’s reasonable
control, ongoing work is required for closure that will result in
submission of claims beyond that time period, or that under the
circumstances of the particular case, it would be unreasonable or
inequitable to impose the time period specified in this paragraph.

(2) This section does not limit or abrogate the rights of a
claimant in disputing reimbursement determinations or suspension
of claims.

(3) For cases that have been issued a closure letter pursuant to
subdivision (g) of Section 25296.10 prior to January 1, 2012, the
board shall notify claimants of the 365-day filing deadline specified
in paragraph (1) on or before March 31, 2012, or upon issuance
of a letter of commitment, whichever occurs later.