BILL ANALYSIS Ó SB 763 Page 1 SENATE THIRD READING SB 763 (Fuller) As Amended August 19, 2013 Majority vote SENATE VOTE :39-0 ENVIRONMENTAL SAFETY 6-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |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 SB 763 Page 2 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. SB 763 Page 3 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 SB 763 Page 4