BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 763| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 763 Author: Fuller (R) Amended: 4/23/13 Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE : 9-0, 5/1/13 AYES: Hill, Gaines, Calderon, Corbett, Fuller, Hancock, Jackson, Leno, Pavley SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13 AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg SUBJECT : State Water Resources Control Board: underground storage tanks SOURCE : State Water Resources Control Board DIGEST : This bill deletes the sunset date of the Replacing, Removing, or Upgrading Underground Storage Tanks Program (RUST Program) and revises loan eligibility and grant award requirements. Consolidates two accounts that fund the RUST Program and makes an $8 million appropriation from the Underground Storage Tank Cleanup Fund (USTCF) to the RUST Program for grants and loans. ANALYSIS : Existing law: 1. Provides for the regulation of underground storage tanks CONTINUED SB 763 Page 2 (USTs) by the State Water Resources Control Board (SWRCB). 2. Requires, until January 1, 2016, 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 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 (PUSTFA) and, upon appropriation by the Legislature, requires moneys in the account to be used by SWRCB 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 SWRCB. 6. Requires SWRCB annually to make available not more than 33% of the available funds from the account for the purposes of providing grants through the RUST program. 7. Establishes the UST Cleanup Fund in the State Treasury and requires specified moneys to be deposited into the fund. Monies in the fund may be expended by SWRCB, 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 CONTINUED SB 763 Page 3 the time of commitment. 4. Requires interest earned from monies in the financing account to be deposited into that account and eliminates the existing subaccount. 5. Requires loan fees and various other monies received in the implementation of the loan and grant program to be deposited into the account. 6. Specifies that monies in the account are permitted to be used, in addition to making loans and grants, to service loans, to recover defaulted loan monies, 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. Background 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 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, CONTINUED SB 763 Page 4 under-dispenser containment boxes/pans, electronic monitoring systems, and enhanced vapor recovery systems and conduct enhanced leak detection tests. 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. FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: One-time appropriation of $8 million from the USTCF (special) to fund the RUST Program. Increased revenues of approximately $1.1 million over five years to the PUSTFA (special) from increased investment interest and increased loan rates. One-time increase of $2.7 million into the RUST Account from PUSTFA. On-going increased annual expenditures of approximately $400,000 from the RUST Account for administrative costs that are currently funded by the PUSTFA. SUPPORT : (Verified 5/23/13) State Water Resources Control Board (source) CONTINUED SB 763 Page 5 California Independent Oil Marketers Association California Service Station and Auto Repair Association CORE Environmental Reform, Inc. ARGUMENTS IN SUPPORT : According to the author's office, this bill proposes to delete the sunset date of the RUST program and makes various changes to the program to improve its effectiveness and efficiency, and ensures its long-term viability. Extending the program and increasing its efficiency enables 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. RM:d 5/24/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED