BILL ANALYSIS Ó
SB 763
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Date of Hearing: August 14, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 763 (Fuller) - As Amended: August 19, 2013
Policy Committee: Environmental
Safety and Toxic Materials Vote: 6-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill extends the January 1, 2016 sunset of the Replacing,
Removing, or Upgrading Underground Storage Tanks Program (RUST
Program) until January 1, 2022, revises loan eligibility and
grant award requirements and transfers funds. Specifically,
this bill:
1)Transfers $8 million from the Underground Storage Tank
Clean-Up Fund (USTCF) to the Petroleum Underground Storage
Tank Financing Account (RUST Account).
2)Changes the interest rate for RUST loans from the Surplus
Money Investment Fund (SMIF) rate to one-half of the General
Obligation Bond rate. The SMIF rate is currently 0.247
percent; half of the current G.O. Bond rate is 1.90 percent.
3)Reduces the cap on RUST funds that may be used for grants from
33% to 25%.
4)Deletes the Petroleum Financing Collection Account (PUSTFA)
and the administrative subaccount and transfers expenditures
and revenues to the RUST Account.
5)Expands eligibility by removing the requirement to only fund
applicants who cannot obtain a loan from a private
institution, the California Pollution Control Financing
Authority, or any other government board.
6)Deletes the provision that allows SWRCB to prioritize RUST
grants based on demonstrated financial hardship if grant
requests exceed available funding.
SB 763
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FISCAL EFFECT
1)One-time transfer of $8 million from the USTCF to finance RUST
loans and grants.
2)Increased revenues of approximately $1 million over five years
to the RUST Account from increased investment interest and
increased loan rates.
3)One-time transfer of approximately $3 million in unexpended
funds into the RUST Account from PUSTFA and the administrative
subaccount.
COMMENTS
1)Purpose. According to SWRCB, this bill will improve the
efficiency and sustainability of the RUST program. Without
this bill, SWRCB estimates the RUST program will only be able
to fund about $3 million annually in grants and loans over the
next three years. By extending the sunset date and
transferring money into the program, the bill will improve the
long-term viability of the program.
SWRCB has identified a number of problems with current program
requirements that this bill addresses.
2)Background. The Barry Keen Underground Storage Tank Cleanup
Trust Fund Act of 1989 requires every owner of an underground
storage tank to pay a storage fee for each gallon of petroleum
placed in the tank. The fees are deposited in the Underground
Storage Tank Cleanup Fund (USTCF), which may be used to pay
for abatement and oversight costs of unauthorized releases of
hazardous substances from underground storage tanks. Funds
may also be transferred from the USTCF the RUST Account.
By transferring $8 million from the USTCF to the RUST account,
this bill may increase the amount of time that low priority
projects must wait for funding. However, the RUST program is
preventative and will reduce future underground storage tank
leaks.
SB 763
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3)Rust Program. Under the RUST Program, the SWRCB provides
low-interest loans and grants to small businesses (such as gas
stations) to assist in upgrading, removing, or replacing USTs
to meet applicable local, state, or federal standards. The
RUST Program is intended to be financed as a revolving fund
where revenues generated from principal and interest payments
on existing loans, along with user fees, are used to fund new
loans and grants and administer the program. The intent of
the RUST Program is to prevent contamination.
RUST loans are available to companies with fewer than 500
employees and may range from $10,000 to $750,000. 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.
Although the demand for RUST grants annually exceeds the
amount of available funding, the SWRCB has never exercised the
authority to develop a priority ranking system based on
demonstrated financial need and instead, the SWRCB runs the
program on a first-come, first-served basis.
According to the SWRCB, all eligible applicants are able to
demonstrate economic hardship. SWRCB currently runs the
program on a first-come, first-served basis.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081