BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 275|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 275
          Author:   Committee on Environmental Safety and Toxic Materials 
          AmendedAmended:7/13/15 in Senate
          Vote:     21  

           SENATE ENVIRONMENTAL QUALITY COMMITTEE:  6-1, 6/17/15
           AYES:  Wieckowski, Bates, Hill, Jackson, Leno, Pavley
           NOES:  Gaines

          SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  63-5, 4/20/15 - See last page for vote

           SUBJECT:   Hazardous substances: liability recovery actions


          SOURCE:    Author

          DIGEST:   This bill revises the Department of Toxic Substances  
          Control's (DTSC) statute of limitations on cost recovery.  

          ANALYSIS:      
          
          Existing law:  

          1)Imposes, under the Carpenter-Presley-Tanner Hazardous  
            Substance Account Act (Act), 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 DTSC or a California  
            regional water quality control board (regional board), upon  
            the request of the DTSC or regional board. 









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          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  
            those actions. 

          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 all  
            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 DTSC or regional water quality control board  
            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.

          4)Deletes reference to Health and Safety Code Section 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. 







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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 [United  
            States Environmental Protection Agency] 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 Legislation  
          
          In addition to this bill, the Assembly Committee on  
          Environmental Safety and Toxic Materials (ESTM) has introduced  
          the following bills to address the shortcomings found in the BSA  
          report:








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          1)AB 273 (ESTM, 2015) modifies provisions relating to DTSC's  
            authority to require corrective actions under hazardous waste  
            control laws.

          2)AB 274 (ESTM, 2015) allows DTSC to not expend resources to  
            pursue an uncollectible account, as defined.

          3)AB 276 (ESTM, 2015) allows DTSC to request financial  
            information from specified entities who claim inability to  
            pay.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified7/10/15)


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


          OPPOSITION:   (Verified7/10/15)


          None received

          ASSEMBLY FLOOR:  63-5, 4/20/15
          AYES:  Alejo, Travis Allen, Bloom, Bonilla, Bonta, Brown, Burke,  
            Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer,  
            Lackey, Levine, Lopez, Low, Maienschein, Mathis, McCarty,  
            Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark  
            Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood,  
            Atkins
          NOES:  Baker, Brough, Chávez, Harper, Wagner
          NO VOTE RECORDED:  Achadjian, Bigelow, Chang, Dahle, Gallagher,  
            Grove, Kim, Linder, Mayes, Melendez, Patterson, Steinorth








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          Prepared by:Rachel Machi Wagoner / E.Q. / (916) 651-4108
          7/15/15 17:42:31


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