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 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 763 Author: Fuller (R), et al. Amended: 9/11/13 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 SENATE FLOOR : 39-0, 5/28/13 AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Fuller, Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen, Padilla, Pavley, Price, Roth, Steinberg, Torres, Walters, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Vacancy ASSEMBLY FLOOR : Not available SUBJECT : State Water Resources Control Board: underground storage tanks SOURCE : State Water Resources Control Board DIGEST : This bill extends the sunset date on the Replacing, Removing, and Upgrading Tanks (RUST) Program, changes the CONTINUED SB 763 Page 2 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 (PUSTFA) to finance RUST loans and grants. Assembly Amendments extend the operation of the loan and grant program until January 1, 2022, except as specified with regard to certain authority. ANALYSIS : Existing law: 1. Provides for the regulation of 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 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. This bill: 1. Extends from January 1, 2016, to January 1, 2022, the sunset date on the RUST Program which authorizes the SWRCB to make CONTINUED SB 763 Page 3 loans and grants to small businesses to replace, remove, and upgrade underground storage tanks. 2. Removes the restriction on the SWRCB 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 SWRCB, when the total amount of grant requests exceed the amount in the 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 PUSTFA. 6. Transfers $8 million from the fees collected in the USTCF to the PUSTFA, 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. 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 CONTINUED SB 763 Page 4 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, 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 Assembly Appropriations Committee: One-time transfer of $8 million from the USTCF to finance RUST loans and grants. Increased revenue of approximately $1 million over five years to the RUST Account from increased investment interest and increased loan rates. One-time transfer of approximately $3 million in unexpended funds into the RUST Account from PUSTFA and the administrative subaccount. CONTINUED SB 763 Page 5 SUPPORT : (Verified 9/6/13) State Water Resources Control Board (source) 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 9/12/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED