BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            AB 275
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          |Author:    |Committee on Environmental Safety and Toxic          |
          |           |Materials                                            |
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          |Version:   |5/27/2015              |Hearing      |6/17/2015       |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Rachel Machi Wagoner                                 |
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          SUBJECT:  Hazardous substances:  liability recovery actions

            ANALYSIS:
          
          Existing law:  
          
          1) Under the Carpenter-Presley-Tanner Hazardous Substance  
             Account Act, imposes liability for hazardous substances  
             removal or remedial actions and requires the Attorney General  
             to recover from the liable person, as defined, certain costs  
             incurred by the Department of Toxic Substances Control (DTSC)  
             or a California regional water quality control board  
             (regional board), upon the request of DTSC or regional board.  


          2) Authorizes, except as specified, a party found liable for any  
             costs or expenditures recoverable under the act for those  
             actions to establish, as specified, that only a portion of  
             those costs or expenditures are attributable to the party,  
             and requires the party to pay only for that portion. If each  
             party does not establish its liability, the act requires a  
             court to apportion those costs or expenditures, as specified,  
             among the defendants and the remaining portion of the  
             judgment is required to be paid from the Toxic Substances  
             Control Account (TSCA). 

          3) Authorizes the money deposited in the TSCA in the General  
             Fund to be appropriated to the DTSC for specified purposes,  
             including the payment of the costs incurred by the state for  







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             those actions. 

          This bill:  

          Revises the DTSC's statute of limitations on cost recovery.   
          Specifically:  


          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;




          2)Requires that if operation and maintenance is required as part  
            of the corrective action, the cost recovery action shall be  
            commenced by the department within three years of  
            certification of operation and maintenance. 




          3)Deletes the requirement that the TSCA shall pay any portion of  
            the judgment in excess of the aggregate amount of costs or  
            expenditures apportioned to responsible parties; and




          4)Deletes reference to Health & Safety Code §25356.6, which was  
            repealed by SB 1018 (Budget and Fiscal Review Committee,  
            Chapter 39, Statutes of 2012). 


            Background
          
          1) 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. 








          AB 275 (Committee on Environmental Safety and Toxic Materials)    
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             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."

          2) 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. 

             "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  








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             obligations and State's orphan funding needs will be more  
             than what is currently appropriated annually."
            
          Comments
          
          Purpose of Bill.  According to the author, "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 author states that "the requirement that taxpayer dollars  
          support cleanup costs is inconsistent with federal law.  Under  
          the Comprehensive Environmental Response, Compensation, and  
          Liability Act (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.  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."

          The author further states that 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."  
               
            Related/Prior Legislation  

          In addition to this bill, the Committee on Environmental Safety  
          and Toxic Materials has introduced the following bills to  
          address the shortcomings found in the BSA report:

             a)   AB 273 (ESTM) modifies provisions relating to DTSC's  








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               authority to require corrective actions under hazardous  
               waste control laws.



             b)   AB 274 (ESTM) allows DTSC to not expend resources to  
               pursue an uncollectible account, as defined.



             c)   AB 276 (ESTM) allows DTSC to request financial  
               information from specified entities who claim inability to  
               pay.


            SOURCE:          Committee on Environmental Safety and Toxic Materials
           
           SUPPORT:               

          California League of Conservation Voters
          Environment California
          Environmental Working Group
          Natural Resources Defense Council
           
           OPPOSITION:    

          None received  

           
                                          
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