BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 275


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          Date of Hearing:  March 24, 2015


           ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS


                                    Alejo, Chair


          AB  
            275 (Committee on Environmental Safety and Toxic Materials) - As  
                            Introduced  February 11, 2015


          SUBJECT:  Hazardous substances:  liability recovery actions.


          SUMMARY:  Revises the California Department of Toxic Substances  
          Control's (DTSC) statute of limitations on cost recovery.   
          Specifically, this bill:  


          1)Revises the state's statute of limitations on the recovery of  
            the costs of removal or remedial actions to allow DTSC to  
            recover costs within three years after the completion of a  
            removal or remedial action has been certified by DTSC or  
            within six years of the initiation of a removal or remedial  
            process action, whichever date is later;

          2)Deletes the requirement that the Toxic Substances Control  
            Account (TSCA) shall pay any portion of the judgment in excess  
            of the aggregate amount of costs or expenditures apportioned  
            to responsible parties; and

          3)Deletes reference to Health & Safety Code (H&S) § 25356.6,  
            which was repealed by Chapter 39 of Statutes of 2012 (Senate  
            Bill 1018). 

          EXISTING LAW:  


          1)Establishes DTSC to protect California against threats to  








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            public health and degradation to the environment and to  
            restore properties degraded by past environmental  
            contamination, and requires DTSC to regulate management of  
            hazardous wastes, clean up existing contamination, and prevent  
            pollution by working with businesses to reduce their hazardous  
            waste and use of toxic materials.  (H&S § 25360.1, et seq.)

          2)Requires DTSC to commence recovery of the costs of removal or  
            remedial action or related administrative costs within three  
            years after completion of the removal or remedial action has  
            been certified by the department.  (H&S § 25360.4)

          3)Requires any party found liable for any costs or expenditures  
            recoverable, who establishes by a preponderance of the  
            evidence that only a portion of those costs or expenditures  
            are attributable to that party's actions, shall be required to  
            pay only for that portion.  (H&S § 25363)

          4)Pursuant to the Carpenter-Presley-Tanner Hazardous Substance  
            Account Act, makes available adequate funds in order to permit  
            the State of California to assure payment of its 
            10% share of the costs mandated under federal Superfund  
          requirements, Section 104(c)(3) of 
            the federal act (42 U.S.C. Sec. 9604(c)(3)).  (H&S § 25301)

          5)Establishes the TSCA (H&S Sec. 25173.6), allows the DTSC  
            director to expend federal funds in the TSCA consistent with  
            the requirements specified in Section 114 of the federal  
            Comprehensive Environmental Response, Compensation, and  
            Liability Act (CERCLA) of 1980 (42 U.S.C. Sec. 9614) (H&S §  
            25173.6(d)), and defines the Toxic Substances Control Account  
            as the "State Account."  (H&S § 25324)

          6)Establishes the Site Remediation Account (SRA), to be funded  
            by money transferred from the TSCA, and may be expended by  
            DTSC for direct site  remediation costs consistent with the  
            requirements of Section 114(c) of the federal act (42 U.S.C.  
            Sec. 9614(c)).  (H&S § 25337)

          7)Establishes CERCLA. (42 U.S.C. § 9601 et seq.)

          FISCAL EFFECT:  Unknown. 








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          COMMENTS:  


           State Audit Report  :  On August 7, 2014, the Bureau of State  
          Audits (BSA) released a report on DTSC's cost recovery.  The BSA  
          found that long-standing shortcomings with DTSC's recovery of  
          costs have resulted in millions of dollars in unbilled and  
          billed but uncollected cleanup costs dating back to 1987. 


          DTSC may not be able to recover all of its outstanding costs due  
          to several factors, including when the federal and state  
          statutes of limitations for cost recovery have expired on  
          projects. DTSC's preliminary determinations indicated that the  
          statute of limitations had expired for 76 projects with a total  
          of $13.4 million in outstanding costs, which DTSC may not  
          recover.


          According to the BSA, "under federal law, an initial action to  
          recover costs from responsible parties must commence within  
          three years of completing removal activities, or within six  
          years of beginning the implementation of remedial activities.   
          Similarly, state law requires the initiation of a cost recovery  
          action within three years of [DTSC] certifying the completion of  
          a cleanup activity.  According to a [DTSC] attorney, for the  
          purposes of recovering costs, [DTSC] can file an action against  
          a responsible party under federal law, state law, or upon a  
          provision in a contract.  Therefore, she explained, if the  
          statute of limitations has expired for one, [DTSC] may still  
          pursue cost recovery under the other two if they have not  
          expired."


           Orphan funding  :  According to DTSC, "Both US EPA and DTSC have  
          identified sites which represent an immediate threat to public  
          health and environment and/or for which no viable responsible  
          parties have been identified to address these projects.  US  
          EPA's list is referred to as the Federal Superfund List and the  
          DTSC's list is referred to as the State Orphan's list. 








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          "Annually, DTSC's budget contains a line item that covers  
          cleanup activities for both Federal Superfund match and State  
          Orphan sites.  For FY 12/13 roughly $9.2 million was allocated.   
          Each year the amount increases slightly.  Federal regulations  
          require that the State must provide a 10% match for the  
          construction of final remedy and initial operation and  
          maintenance costs.  After a specific time period, then the State  
          must assumed 100% of the costs to operate that system.  This  
          same funding allocation covers the State Orphan sites as well.


          "It is anticipated that within the next 2-3 years, the amount of  
          money needed to cover our Federal Superfund match obligations  
          and State's orphan funding needs will be more than what is  
          currently appropriated annually."





           Need for the bill  :  Under state law, the state's TSCA is  
          required to pay any portion of the judgment in excess of the  
          amount of the apportioned costs to responsible parties.  That  
          means DTSC's general fund, which is used for cleanup, is then  
          used to partially cover costs that responsible party(ies), under  
          federal law, are compelled to pay.  When cost recovery is  
          pursued in state court, it puts the burden on TSCA to help fund  
          the judgment, which puts taxpayers on the hook to partially fund  
          the cleanup and creates an unnecessary cost burden on the  
          state's already underfunded accounts for toxic waste site  
          cleanup. 


          The requirement that taxpayer dollars support cleanup costs is  
          inconsistent with federal law. Under CERCLA, there is no federal  
          taxpayer funding required or available to support the judgment.   
          Therefore, DTSC currently pursues many, perhaps most of its cost  
          recovery cases through federal court under CERCLA.










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          Though DTSC tends to pursue cost recovery under CERCLA more  
          often, the state's statute of limitations would be more  
          desirable to use to pursue cost recovery if the state's  
          responsibility to pay were eliminated. 


          With these changes to the state's statute of limitations, DTSC  
          will be more apt to pursue cases through state court under state  
          law.  While many cases will likely continue to be pursued under  
          CERCLA, having more flexibility to seek cost recovery through  
          state court will allow the department to pursue more cases more  
          expeditiously and have a greater success rate recovering its  
          costs before statutes of limitations expire.  


          REGISTERED SUPPORT / OPPOSITION:


          Support




          Natural Resources Defense Council


          Opposition


          None on file.


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
















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