BILL ANALYSIS                                                                                                                                                                                                    



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        (  Without Reference to File  )

        SENATE THIRD READING
        SB 763 (Fuller)
        As Amended  September 11, 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  








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          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  
          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  








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          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.

        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.









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


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