BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 763
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          SENATE THIRD READING
          SB 763 (Fuller)
          As Amended  August 19, 2013
          Majority vote 

           SENATE VOTE  :39-0  
           
           ENVIRONMENTAL SAFETY          6-0                    
          APPROPRIATIONS      17-0        
           
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          |Ayes:|Alejo, Dahle, Bloom,      |Ayes:|Gatto, Harkey, Bigelow,   |
          |     |Lowenthal, Stone, Ting    |     |Bocanegra, Bradford, Ian  |
          |     |                          |     |Calderon, Campos,         |
          |     |                          |     |Donnelly, Eggman, Gomez,  |
          |     |                          |     |Hall, Holden, Linder,     |
          |     |                          |     |Pan, Quirk, Wagner, Weber |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Extends the sunset date on the Replacing, Removing,  
          and Upgrading Tanks (RUST) Program, changes the interest rate on  
          RUST loans, reduces the share of funds that may be used for RUST  
          grants, and transfers $8 million from the Underground Storage  
          Tank Cleanup Fund (USTCF) to the Petroleum Underground Storage  
          Tank Financing Account to finance RUST loans and grants.   
          Specifically,  this bill  :

          1)Extends from January 1, 2016, to January 1, 2022, the sunset  
            date on the RUST Program which authorizes the State Water  
            Resources Control Board (State Water Board) to make loans and  
            grants to small businesses to replace, remove, and upgrade  
            underground storage tanks.

          2)Removes the restriction on the State Water Board from making a  
            RUST loan only to those applicants who cannot obtain a loan  
            from a private institution, the California Pollution Control  
            Financing Authority, or any other governmental board. 

          3)Sets the interest rate for RUST loans at one-half of the most  
            recent General Obligation Bond rate obtained by the Office of  
            the State Treasurer at the time of the loan commitment.

          4)Removes the authority of the State Water Board, when the total  








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            amount of grant requests exceed the amount in the Petroleum  
            Underground Storage Tank Financing Account (PUSTFA), to adopt  
            a priority ranking list to award grants based on the  
            demonstrated financial hardship of the eligible grant  
            applicant or the impact on the local community.

          5)Reduces from 33% to 25% the maximum share of RUST grants that  
            can be awarded from the Petroleum Underground Storage Tank  
            Financing Account.

          6)Transfers $8 million from the fees collected in the  
            Underground Storage Tank Cleanup Fund to the Petroleum  
            Underground Storage Tank Financing Account, and appropriates  
            this sum for RUST loans and grants.

          7)Repeals the Petroleum Financing Collection Account in the  
            California Economic Development Grant and Loan Fund.


           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1)One-time transfer of $8 million from the USTCF to finance RUST  
            loans and grants.

          2)Increased revenue 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)According to the author and the State Water Board, the  
            purposes of this measure are to improve the efficiency and  
            sustainability of the RUST Program.  Extending the program and  
            increasing its efficiency would enable the State Water Board  
            to help more small businesses remove, replace, or upgrade  
            their underground storage tanks to meet regulatory  
            requirements, thereby helping to protect public health and the  
            environment.









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          2)Underground storage tanks (UST) and their components have the  
            potential of leaking gasoline, diesel fuels, fuel additives  
            and other hazardous substances into the soil and groundwater,  
            presenting a risk to public health and the environment.  The  
            cost of replacing, removing, or upgrading these tanks can be  
            significant.  Federal and state laws require owners of a  
            petroleum UST to maintain financial responsibility to pay for  
            the damages arising from their tank operations.    

          3)Under the RUST Program, the State Water Board provides  
            low-interest loans and grants to small businesses (such as gas  
            stations) to assist them in upgrading, removing, or replacing  
            their USTs to meet applicable local, state, or federal  
            standards and to conduct corrective actions.  

          RUST loans are available to companies with fewer than 500  
            employees and the loans may range from $10,000 to $750,000.   
            The interest rate is the current rate earned by the Surplus  
            Money Investment Fund (approximately one-fourth of 1%).   
            During Fiscal Year 2011-12, the RUST Program approved 10  
            loans, awarding a total of $2.1 million (for an average loan  
            amount of $210,023).  These 10 loans made it possible to  
            replace or upgrade 26 project tanks.  In contrast, during  
            Fiscal Year 2008-09, the RUST Program approved 29 loans,  
            awarding a total of $4.7 million, which made it possible to  
            replace or upgrade 87 project tanks.

          RUST grants are given to small businesses that are independently  
            owned and operated with less than 20 employees, and the grants  
            range from $3,000 to $50,000.  During Fiscal Year 2011-12, the  
            RUST Program approved 31 grants (averaging $46,000 per grant),  
            awarding a total of $1.4 million in grants, which made it  
            possible to remove or upgrade 69 project tanks.  In contrast,  
            during Fiscal Year 2009-10, the RUST Program approved 179  
            grants, awarding $7.3 million in grants, which made it  
            possible to replace, remove, or upgrade 466 project tanks.


           Analysis Prepared by  :    Manny Hernandez / E.S. & T.M. / (916)  
          319-3965                                          FN: 0002097












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