BILL ANALYSIS Ó SB 763 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Jerry Hill, Chair 2013-2014 Regular Session BILL NO: SB 763 AUTHOR: Fuller AMENDED: April 23, 2013 FISCAL: Yes HEARING DATE: May 1, 2013 URGENCY: No CONSULTANT: Rachel Machi Wagoner SUMMARY : STATE WATER RESOURCES CONTROL BOARD: UNDERGROUND STORAGE TANKS Existing law : 1) Provides for the regulation of underground storage tanks (USTs) by the State Water Resources Control Board (SWRCB). 2) Until January 1, 2016, requires SWRCB to conduct a loan and grant program to assist small businesses in upgrading, replacing, or removing tanks meeting applicable local, state, or federal standards through the Replacing, Removing, or Upgrading Underground Storage Tanks Program (RUST program). 3) Requires that the interest rate for loans given through the RUST program be set at the rate earned by the Surplus Money Investment Fund at the time of the loan commitment. 4) Establishes the Petroleum Underground Storage Tank Financing Account (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 RUST program. 5) 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. 6) Requires the board annually to make available not more than 33% of the available funds from the account for the SB 763 Page 2 purposes of providing grants through the RUST program. 7) Establishes the Underground Storage Tank Cleanup Fund (UST Cleanup Fund) in the State Treasury and requires specified moneys to be deposited into the fund. Moneys in the fund may be expended by the board, upon appropriation by the Legislature, for purposes of the Barry Keene Underground Storage Tank Cleanup Trust Fund Act of 1989. This bill : 1) Extends the RUST loan and grant program indefinitely and revises loan eligibility and grant award requirements. 2) Requires SWRCB to annually make available not more than 15% of the available funds from the account for the purposes of providing grants. 3) Sets the interest rate for loans given through the RUST program at the rate equal to half of the most recent general obligation rate obtained by the office of the Treasurer at the time of commitment. 4) Requires interest earned from moneys in the financing account to be deposited into that account and eliminates the existing subaccount. 5) Requires loan fees and various other moneys received in the implementation of the loan and grant program to be deposited into the account. 6) Specifies that moneys in the 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. 7) Transfers $8,000,000 from the UST Cleanup Fund to the financing account and appropriates these funds for the purpose of making grants and loans through the RUST program and administering specific provisions, as prescribed. SB 763 Page 3 COMMENTS : 1) Purpose of Bill . According to the author, SB 763 proposes to delete the sunset date of the RUST program and make various changes to the program to improve its effectiveness and efficiency, and ensure its long-term viability. Extending the program and increasing its efficiency would enable the SWRCB to continue to help small businesses upgrade, remove, or replace their USTs to meet regulatory requirements, thereby continuing to help protect public health and the environment. 2) RUST program . Federal and state laws require every owner and operator of a petroleum UST to maintain financial responsibility to pay for any damages arising from their tank operations. The UST Cleanup Fund Act was created by the California Legislature to provide a means for petroleum UST owners and operators to meet the federal and state requirements and pay for the cleanup of contaminated soil and groundwater when a leak is discovered. The UST Cleanup Fund is administered by SWRCB. In addition, SWRCB's Division of Financial Assistance offers direct grants and loans to assist small gas station owners and operators to comply with Underground Storage Tank (UST) regulatory requirements through the RUST program. This program is available for upgrades, not costs associated with remediation after a leak, with the intent of helping to prevent contamination from ever occurring. RUST grants are given to small businesses that are independently owned and operated with less than 20 employees. The grants range from $3,000 to $50,000. RUST grant funds may be used to finance up to 100% of the costs necessary to upgrade USTs by installing containment sumps, double-walled piping, dispensers, under-dispenser containment boxes/pans, electronic monitoring systems, and enhanced vapor recovery systems and conduct enhanced leak detection tests. SB 763 Page 4 RUST loans are given to companies that have fewer than 500 full or part-time employees and may range from $10,000 to $750,000. RUST loans may be used to finance up to 100% of the costs necessary to upgrade, remove, or replace USTs, 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 Health and Safety Code Sections 25284.1 and 25292.4. Typical eligible costs are replacing USTs, installing containment sumps, double-walled piping, dispensers, under-dispenser containment boxes/pans, electronic monitoring systems, and enhanced vapor recovery systems, and conducting enhanced leak detection tests. SOURCE : State Water Resources Control Board SUPPORT : None on file OPPOSITION : None on file