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

          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  


                                                                     SB 763

          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  

           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  



                                                                     SB 763

             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  

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

           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  



                                                                     SB 763

          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  



                                                                     SB 763

           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  

          RM:d  9/12/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****