Amended in Senate April 23, 2013

Amended in Senate April 16, 2013

Senate Bill No. 763

Introduced by Senator Fuller

February 22, 2013

An act to amend Sections 25284.1, 25299.51, 25299.102, 25299.103, 25299.104, 25299.105, 25299.106, begin insert 25299.107, end insert and 25299.109 begin delete , end delete of, to repeal Sections 25299.111, 25299.113, and 25299.117 of, and to repeal and add Section 25299.110 of, the Health and Safety Code, relating to underground storage tanks, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 763, as amended, Fuller. State Water Resources Control Board: underground storage tanks.

(1) Existing law provides for the regulation of underground storage tanks by the State Water Resources Control Board. Existing law, until January 1, 2016, requires the board to conduct a loan and grant program to assist small businesses in upgrading, replacing, or removing tanks meeting applicable local, state, or federal standards (UST upgrade program). Under existing law, the interest rate for loans is set at the rate earned by the Surplus Money Investment Fund at the time of the loan commitment. Existing law establishes the Petroleum Underground Storage Tank Financing Account (financing account) and, upon appropriation by the Legislature, requires moneys in the account to be used by the board to make loans and grants for purposes of the UST upgrade program. Existing law requires interest earned from the investment of the moneys in the account to be deposited into a subaccount, available upon appropriation by the Legislature for administrative expenses of the board. Existing law requires the board annually to make available not more than 33% of the available funds from the account for the purposes of providing grants.

This bill would extend the loan and grant program indefinitely and revise loan eligibility and grant award requirements. The bill would require the board to annually make available not more than 15% of the available funds from the account for the purposes of providing grants. The bill would set the interest rate for loans at the rate equal to 1⁄2 of the most recent general obligation rate obtained by the office of the Treasurer at the time of commitment. The bill would instead require interest earned from moneys in the financing account to be deposited into that account and would eliminate the subaccount. The bill would require loan fees and various other moneys received in the implementation of the loan and grant program to be deposited into the financing account. The bill would specify that moneys in the financing account are permitted to be used, in addition to making loans and grants, to service loans, to recover defaulted loan moneys, to protect the state’s position as a lender creditor, and for administration costs, as specified. begin insert The bill would additionally authorize the board to provide grants and loans for the purposes of compliance with performance standards for the control of gasoline vapor emissions during gasoline marketing operations. end insert

(2) Existing law establishes the Underground Storage Tank Cleanup Fund in the State Treasury and requires specified moneys to be deposited into the fund begin insert , including charges imposed upon owners of underground storage tanks end insert . Under existing law, moneys in the fund may be expended by the board, upon appropriation by the Legislature, for begin insert various end insert purposes begin delete of end delete begin insert , including for end insert the Barry Keene Underground Storage Tank Cleanup Trust Fund Act of 1989 begin insert and for transfer to the financing account end insert .

This bill would transfer $8,000,000 begin insert of a specified portion of those charges end insert from the fund to the financing account and appropriate these funds for the purpose of making grants and loans and administering specific provisions, as prescribed.

(3) This bill would also make technical, nonsubstantive changes to various provisions.

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

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

SECTION 1.  

Section 25284.1 of the Health and Safety Code
is amended to read:

25284.1.  

(a) The board shall take all of the following actions
with regard to the prevention of unauthorized releases from
petroleum underground storage tanks:

(1) On or before June 1, 2000, initiate a field-based research
program to quantify the probability and environmental significance
of releases from underground storage tank systems meeting the
1998 upgrade requirements specified in Section 25284, as that
section read on January 1, 2002. The research program shall do
all of the following:

(A) Seek to identify the source and causes of releases and any
deficiencies in leak detection systems.

(B) Include single-walled, double-walled, and hybrid tank
systems, and avoid bias towards known leaking underground
storage tank systems by including a statistically valid sample of
all operating underground storage tank systems.

(C) Include peer review.

(2) Complete the research program on or before June 1, 2002.

(3) Use the results of the research program to develop
appropriate changes in design, construction, monitoring, operation,
and maintenance requirements for tank systems.

(4) On or before January 1, 2001, adopt regulations to do all of
the following:

(A) (i) Require underground storage tank owners, operators,
service technicians, installers, and inspectors to meet minimum
industry-established training standards and require tank facilities
to be operated in a manner consistent with industry-established
best management practices.

(ii) The board shall implement an outreach effort to educate
small business owners or operators on the importance of the
regulations adopted pursuant to this subparagraph.

(B) (i) Except as provided in clauses (ii) and (iii), require testing
of the secondary containment components, including
under-dispenser and pump turbine containment components, upon
initial installation of a secondary containment component and
periodically thereafter, to ensure that the system is capable of
containing releases from the primary containment until a release
is detected and cleaned up. The board shall consult with the
petroleum industry and local government to assess the appropriate
test or tests that would comply with this subparagraph.

(ii) Secondary containment components that are part of an
emergency generator tank system may be tested using enhanced
leak detection, if the test is performed at the frequency specified
by the board for testing of secondary containment pursuant to
Section 2644.1 of Title 23 of the California Code of Regulations.
If the results of the enhanced leak detection test indicate that any
component of the emergency generator tank system is leaking
liquid or vapor, the owner or operator shall take appropriate actions
to correct the leakage, and the owner or operator shall retest the
system using enhanced leak detection until the system is no longer
leaking liquid or vapor.

(iii) Any tank or piping that is part of an emergency generator
tank system and located within a structure as described in paragraph
(2) of subdivision (a) of Section 25283.5 is exempt from the
secondary containment testing required by clause (i), if the owner
or operator conducts visual inspections of tank or piping each time
the tank system is operated, but no less than monthly, and maintains
a log of inspection results for review by the local agency. This
clause is not applicable if the board adopts regulations pursuant
to Section 25299.3 that address the design, construction, upgrade,
and monitoring of unburied tanks that are part of an emergency
generator tank system.

(C) Require annual testing of release detection sensors and
alarms, including under-dispenser and pump turbine containment
sensors and alarms. The board shall consult with the petroleum
industry and local government to assess the appropriate test or
tests that would comply with this subparagraph.

(5) (A) Require an owner or operator of an underground storage
tank installed after July 1, 1987, if a tank is located within 1,000
feet of a public drinking water well, as identified pursuant to the
state GIS mapping database, to have the underground storage tank
system fitted, on or before July 1, 2001, with under-dispenser
containment or a spill containment or control system that is
approved by the board as capable of containing any accidental
release.

(B) Require all underground storage tanks installed after January
1, 2000, to have the tank system fitted with under-dispenser
containment or a spill containment or control system to meet the
requirements of subparagraph (A).

(C) Require an owner or operator of an underground storage
tank that is not otherwise subject to subparagraph (A), and not
subject to subparagraph (B), to have the underground storage tank
system fitted to meet the requirements of subparagraph (A), on or
before December 31, 2003.

(D) On and after January 1, 2002, no person shall install, repair,
maintain, or calibrate monitoring equipment for an underground
storage tank unless that person satisfies both of the following
requirements:

(i) The person has fulfilled training standards identified by the
board in regulations adopted pursuant to this section.

(ii) The person possesses a tank testing license issued by the
board pursuant to Section 25284.4, or a Class “A” General
Engineering Contractor License, C-10 Electrical Contractor
License, C-34 Pipeline Contractor License, C-36 Plumbing
Contractor License, or C-61 (D40) Limited Specialty Service
Station Equipment and Maintenance Contractor License issued by
the Contractors’ State License Board.

(E) Loans and grants for the installation of under-dispenser
containment or a spill containment or control system shall be made
available pursuant to Chapter 6.76 (commencing with Section
begin delete 25299.10) end delete begin insert 25299.100) end insert .

(6) Convene a panel of local agency and regional board
representatives to review existing enforcement authority and
procedures and to advise the board of any changes that are needed
to enable local agencies to take adequate enforcement action against
owners and operators of noncompliant underground storage tank
facilities. The panel shall make its recommendations to the board
on or before September 30, 2001. Based on the recommendations
of the panel, the board shall also establish effective enforcement
procedures in cases involving fraud.

(b) On or before July 1, 2001, the Contractors’ State License
Board, in consultation with the board, the petroleum industry, air
pollution control districts, air quality management districts, and
local government, shall review its requirements for petroleum
underground storage tank system installation and removal
contractors and make changes, where appropriate, to ensure these
contractors are qualified.

SEC. 2.  

Section 25299.51 of the Health and Safety Code is
amended to read:

25299.51.  

The board may expend the money in the fund for
all the following purposes:

(a) In addition to the purposes specified in subdivisions (c), (d),
and (e), for the costs of implementing this chapter and for
implementing Section 25296.10 for a tank that is subject to this
chapter.

(b) To pay for the administrative costs of the State Board of
Equalization in collecting the fee imposed by Article 5
(commencing with Section 25299.40).

(c) To pay for the reasonable and necessary costs of corrective
action pursuant to Section 25299.36, up to one million five hundred
thousand dollars ($1,500,000) per occurrence. The Legislature
may appropriate the money in the fund for expenditure by the
board, without regard to fiscal year, for prompt action in response
to any unauthorized release.

(d) To pay for the costs of an agreement for the abatement of,
and oversight of the abatement of, an unauthorized release of
hazardous substances from underground storage tanks, by a local
agency, as authorized by Section 25297.1 or by any other provision
of law, except that, for the purpose of expenditure of these funds,
only underground storage tanks, as defined in Section 25299.24,
shall be the subject of the agreement.

(e) To pay for the costs of cleanup and oversight of unauthorized
releases at abandoned tank sites. The board shall not expend more
than 25 percent of the total amount of money collected and
deposited in the fund annually for the purposes of this subdivision
and subdivision (h).

(f) To pay claims pursuant to Section 25299.57.

(g) To pay, upon order of the Controller, for refunds pursuant
to Part 26 (commencing with Section 50101) of Division 2 of the
Revenue and Taxation Code.

(h) To pay for the reasonable and necessary costs of corrective
action pursuant to subdivision (f) of Section 25296.10, in response
to an unauthorized release from an underground storage tank
subject to this chapter.

(i) To pay claims pursuant to Section 25299.58.

(j) To pay for expenditures by the board associated with
discovering violations of, and enforcing, or assisting in the
enforcement of, the requirements of Chapter 6.7 (commencing
with Section 25280) with regard to petroleum underground storage
tanks.

(k) For transfer to the Petroleum Underground Storage Tank
Financing Account, for purposes of Chapter 6.76 (commencing
with Section 25299.100).

SEC. 3.  

Section 25299.102 of the Health and Safety Code is
amended to read:

25299.102.  

The board shall only make loan funds available to
loan applicants that meet all of the following eligibility
requirements:

(a) The loan applicant is a small business, either as defined in
Section 632 of Title 15 of the United States Code, and in the federal
regulations adopted to implement that section, as specified in Part
121 (commencing with Section 121.101) of Chapter 1 of Title 13
of the Code of Federal Regulations, or employs fewer than 500
full-time and part-time employees, is independently owned and
operated, and is not dominant in its field of operation. In either
case, the principal office of the small business shall be domiciled
in the state, and the officers of the small business shall be domiciled
in this state. The board shall give priority to awarding loans to
small businesses that meet the definition of small business specified
in subdivision (d) of Section 14837 of the Government Code.

(b) The loan applicant owns or operates a project tank.

(c) The loan applicant demonstrates the ability to repay the loan,
and the availability of adequate collateral to secure the loan.

(d) All tanks owned and operated by the loan applicant are
subject to compliance with Chapter 6.7 (commencing with Section
25280), and the regulations adopted pursuant to that chapter.

(e) The loan applicant has complied, or will comply, with the
financial responsibility requirements specified in Section 25299.31
and the regulations adopted pursuant to this section.

SEC. 4.  

Section 25299.103 of the Health and Safety Code is
amended to read:

25299.103.  

(a) A complete loan application shall include all
of the following:

(1) Evidence of eligibility.

(2) An environmental audit, as specified in Section 5260 of Title
10 of the California Code of Regulations.

(3) Financial and legal documents necessary to demonstrate the
applicant’s ability to repay and provide collateral for the loan. The
board shall develop a standard list of documents required of all
applicants, and may also request from individual applicants
additional financial and legal documents not provided on this list.

(4) An explanation of the reasons why the project tank is not in
compliance with applicable local, state, or federal standards, and
evidence that tanks not included in the list of project tanks are
currently in compliance with applicable local, state, or federal
standards.

(5) A detailed cost estimate of the tasks that are required to be
completed in order for the project tanks to comply with applicable
local, state, or federal standards.

(6) Any other information that the board determines to be
necessary to include in an application form.

(b) Notwithstanding paragraph (4) of subdivision (a), the board
may not refuse to grant a loan to an applicant solely because the
applicant has failed to obtain a permit pursuant to the requirements
of Chapter 6.7 (commencing with Section 25280).

SEC. 5.  

Section 25299.104 of the Health and Safety Code is
amended to read:

25299.104.  

(a) The minimum amount that the board may loan
an applicant is ten thousand dollars ($10,000), and the maximum
amount that the board may loan an applicant is seven hundred fifty
thousand dollars ($750,000).

(b) The term of the loan shall be for a maximum of 20 years if
secured by real property, and for 10 years if not secured by real
property. The interest rate for loans shall be set at the rate equal
to one-half of the most recent general obligation bond rate obtained
by the office of the Treasurer at the time of the loan commitment.

(c) Loan funds may be used to finance up to 100 percent of the
costs necessary to upgrade, remove, or replace project tanks,
including corrective actions, to meet applicable local, state, or
federal standards, including, but not limited to, any design,
construction, monitoring, operation, or maintenance requirements
adopted pursuant to Sections 25284.1 begin delete and end delete begin insert , end insert 25292.4 begin insert , and 41954 end insert .

(d) The board may charge a loan fee to loan applicants of up to
2 percent of the requested loan amount. The loan fee shall be
deposited in the Petroleum Underground Storage Tank Financing
Account.

SEC. 6.  

Section 25299.105 of the Health and Safety Code is
amended to read:

25299.105.  

(a) The board shall make grant funds available
from the Petroleum Underground Storage Tank Financing Account
to eligible grant applicants who meet all of the following eligibility
requirements:

(1) The grant applicant is a small business, pursuant to the
following requirements:

(A) The grant applicant meets the conditions for a small business
concern as defined in Section 632 of Title 15 of the United States
Code, and in the federal regulations adopted to implement that
section, as specified in Part 121 (commencing with Section
121.101) of Chapter I of Title 13 of the Code of Federal
Regulations.

(B) The grant applicant employs fewer than 20 full-time and
part-time employees, is independently owned and operated, and
is not dominant in its field of operation.

(2) The principal office of the grant applicant is domiciled in
the state and the officers of the grant applicant are domiciled in
this state.

(3) All tanks owned and operated by the grant applicant are
subject to compliance with Chapter 6.7 (commencing with Section
25280) and the regulations adopted pursuant to that chapter.

(4) The facility where the project tank is located has sold at
retail less than 900,000 gallons of gasoline annually for each of
the two years preceding the submission of the grant application.
The number of gallons sold shall be based upon taxable sales
figures provided to the State Board of Equalization for that facility.

(5) The grant applicant owns or operates a tank that is in
compliance with all of the following:

(A) Section 41954.

(B) Any of the following:

(i) Section 25290.1.

(ii) Section 25290.2.

(iii) Section 25291.

(iv) Subdivisions (d) and (e) of Section 25292.

(C) Any regulation implementing the applicable sections
required for compliance with subparagraphs (A) and (B).

(6) The facility where the project tank is located was legally in
business retailing gasoline after January 1, 1999.

(b) Grant funds may only be used to pay the costs necessary to
comply with the requirements of Section 25284.1, 25292.4, begin delete or end delete
25292.5 begin insert , or 41954 end insert .

SEC. 7.  

Section 25299.106 of the Health and Safety Code is
amended to read:

25299.106.  

A complete grant application shall include all of
the following information:

(a) Evidence of eligibility.

(b) The board shall develop a standard list of documents required
of all applicants, and may also request from individual applicants
additional financial and legal documents not provided on this list.

(c) An explanation of the actions the applicant is required to
take to comply with the requirements of Sections 25284.1 and
25292.4 begin insert or Section 41954 end insert .

(d) A detailed cost estimate of the actions that are required to
be completed for the project tanks to comply with applicable local,
state, or federal standards, if applicable.

(e) Any other information that the board determines to be
necessary to include in an application form.

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 25299.107 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

25299.107.  

(a) The minimum amount that the board may grant
an applicant is three thousand dollars ($3,000), and the maximum
amount that the board may grant an applicant is fifty thousand
dollars ($50,000).

(b) Grant funds may be used to finance up to 100 percent of the
costs necessary to comply with Sections 25284.1, 25292.4, begin delete and end delete
25292.5 begin insert , and 41954 end insert .

(c) If the board received the applicant’s grant application on or
before April 1, 2009, grant funds may be used to reimburse up to
100 percent of the costs that the applicant incurred after the board
received the grant application to comply with the Enhanced Vapor
Recovery Phase II regulations.

(d) A person or entity is not eligible to receive more than fifty
thousand dollars ($50,000) in grant funds pursuant to this chapter.

begin delete SEC. 8. end delete
begin insert SEC. 9. end insert   

Section 25299.109 of the Health and Safety Code is
amended to read:

25299.109.  

(a) The Petroleum Underground Storage Tank
Financing Account is hereby created in the State Treasury. All of
the following moneys shall be deposited in the Petroleum
Underground Storage Tank Financing Account:

(1) Federal, state, and local funds transferred for deposit in the
account.

(2) Repayments of loans and interest and late fees on loans
issued pursuant to this chapter.

(3) Repayments of loans and interest and late fees on loans
issued pursuant to former Chapter 8.5 (commencing with Section
15399.10) of Part 6.7 of Division 3 of Title 2 of the Government
Code, as that chapter existed on December 31, 2003.

(4) Moneys collected pursuant to Section 25299.110 and
subdivision (d) of Section 25299.104.

(5) Repayments of loan and grant moneys paid to a loan or grant
applicant to which the applicant is not entitled.

(6) Notwithstanding Section 16305.7 of the Government Code,
all interest earned upon moneys that are deposited in the account.

(7) All unexpended moneys in a subaccount of the account that
is consolidated into the account by the act adding this paragraph.

(8) All unexpended moneys in the Petroleum Financing
Collection Account established pursuant to Section 25299.110, as
added by Section 1 of Chapter 624 of the Statutes of 2004.

(b) Upon appropriation by the Legislature, funds in the account
shall be used by the board to make loans and grants, service loans,
recover defaulted loan moneys due, protect the state’s position as
a lender creditor, and administer this chapter.

(c) The board shall annually make available not more than 15
percent of the available funds from the account for the purposes
of providing grants pursuant to this chapter.

(d) Eight million dollars ($8,000,000) is hereby transferred from
the begin insert portion of the end insert fees collected pursuant to begin insert subdivisions (a) to (e),
inclusive, of end insert Section 25299.43 in the Underground Storage Tank
Cleanup Fund, to the Petroleum Underground Storage Tank
Financing Account, and is hereby appropriated for the purposes
of making grants and loans pursuant to this chapter and
administering this chapter.

begin delete SEC. 9. end delete
begin insert SEC. 10. end insert   

Section 25299.110 of the Health and Safety Code is
repealed.

begin delete SEC. 10. end delete
begin insert SEC. 11. end insert   

Section 25299.110 is added to the Health and Safety
Code, to read:

25299.110.  

To defray the costs of the board in administering
the loan program created pursuant to this chapter, the board may
do all of the following:

(a) Impose reasonable charges on all applications and impose
the loan fee specified in subdivision (d) of Section 25299.104.

(b) Recover collection costs from the borrower or other party.

(c) Earn income on any asset recovered pursuant to a loan
default.

begin delete SEC. 11. end delete
begin insert SEC. 12. end insert   

Section 25299.111 of the Health and Safety Code is
repealed.

begin delete SEC. 12. end delete
begin insert SEC. 13. end insert   

Section 25299.113 of the Health and Safety Code is
repealed.

begin delete SEC. 13. end delete
begin insert SEC. 14. end insert   

Section 25299.117 of the Health and Safety Code is
repealed.