BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2891 (Committee on Environmental Safety and Toxic Materials)  
          - Hazardous waste:  funding
          
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          |Version: May 25, 2016           |Policy Vote: E.Q. 7 - 0         |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Narisha Bonakdar    |
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          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  SB 2891 revises the annual appropriation requirements  
          for funding federal hazardous waste cleanup requirements.  

          Fiscal  
          Impact:  Cost pressures in the millions of dollars to  
          appropriate funds necessary to meet demonstrated need. (See  
          staff comments)

       Background:1)  
          Superfund.  The federal Comprehensive Environmental Response,  
          Compensation, and Liability Act (CERCLA), also known as  
          Superfund, was enacted to address the problem of remediating  
          abandoned hazardous waste sites.  Through CERCLA, the US  
          Environmental Protection Agency (US EPA) and California were  
          given power to seek out those parties responsible for any  
          hazardous waste release and recover costs from financially  
          viable individuals and companies once cleanup is completed.

          According to the Department of Toxic Substances Control (DTSC),  
          both the US EPA and DTSC have identified sites which represent  







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          an immediate threat to public health and the environment and/or  
          for which no viable responsible parties have been identified to  
          address these projects.  These are known as National Priorities  
          List (NPL) sites and State orphan sites, respectively.

          The state's Site Remediation Account (SRA) funds DTSC's work at  
          sites on the NPL and at state orphan sites.  Sites on the NPL,  
          also known as the federal Superfund list, are the nation's worst  
          hazardous substances sites and pose a significant threat to the  
          environment and public health. 

          Under federal law, the state is required to provide a match of  
          at least 10% for design and implementation of remediation, or  
          cleanup. Ultimately, California is also required to cover 100%  
          of the long-term operation and maintenance for NPL sites where  
          no viable responsible party has been identified. State orphan  
          sites are not on the NPL, but also are contaminated by hazardous  
          substances that pose an environmental or public health threat;  
          the responsible parties for both types of sites are unknown or  
          are unwilling or unable to pay for cleanup. 

          The Legislative Analysts' Office Report on California Superfund  
          Site Cost Obligations.  At the request of the Assembly  
          Environmental Safety & Toxic Materials Committee, the  
          Legislative Analyst Office (LAO) reviewed DTSC's cost share  
          obligations under CERCLA; the gap between anticipated resource  
          demand and availability for Superfund site cleanup; and  
          programmatic and/or policy changes that could be made at DTSC to  
          better manage the growing cleanup demand. 

          The LAO found that annual combined California costs for  
          remediation and operations and maintenance at federal NPL sites  
          are projected to range from $2.2 million to $17.3 million  
          between Fiscal Years 2015-2016 and 2020-2021.  The funds in the  
          SRA to support these costs are projected to grow over this  
          period from $10.6 million to $12 million.  Under federal  
          regulation, California is required to pay its share of the NPL  
          site cleanup and operations and maintenance before using funds  
          for state-designated orphan sites. Given the estimated lack of  
          resources and requirement that the state prioritize NPL sites  
          for funding, California may end up with no funds for state  
          orphan site cleanup. 

          Proposed Law:  








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            This bill: 

          1.Revises the annual appropriation requirements for funding  
            federal hazardous waste cleanup requirements.  
          2.Deletes legislative intent that not less than $6,750,000 be  
            appropriated in the annual Budget Act each year to the Site  
            Remediation Account for direct site remediation costs and  
            replaces with intent to appropriate an amount sufficient to  
            cover the estimated costs identified by the DTSC. 
          3.Requires DTSC, at the same time as the Governor's January 10  
            Budget, and annually thereafter, to report to the Legislative  
            budget committees an estimate of the funding needed to meet  
            the state's obligation at federal Superfund orphan sites and  
            at state-only orphan sites.  
          4.Requires the estimate to include projected budget-year and  
            out-year costs for new and ongoing operations and maintenance  
            budget obligations at federal Superfund sites, and new and  
            ongoing remediation, and any other related orphan site costs. 
          5.Deletes a requirement that DTSC report to the Legislature a  
            determination that the state's obligation under CERCLA will  
            exceed $3,300,000 in any fiscal year.

          Staff  
          Comments:  

          Purpose of Bill.  According to the author, US EPA estimates  
          between 96,000 and 212,000 contaminated sites in California.  
          DTSC has identified approximately 9,800 contaminated sites  
          statewide. 

          The author states that DTSC's Independent Review Panel (IRP)  
          reported in its January 28, 2016 report that there are projected  
          shortfalls in DTSC's SRA for funding orphan and Superfund site  
          cleanup. The report states, "The DTSC currently spends  
          approximately $10 million per year from the SRA for both: a)  
          California's operations and maintenance oversight obligations at  
          federal Superfund NPL sites, and b) California orphan site  
          clean-ups where there is no responsible party to pay for  
          clean-up."

          According to the author, "the IRP is concerned that this $10  
          million annual allocation in the SRA is insufficient, since the  
          State's NPL obligations are projected to grow as more sites are  
          turned over to California to assume operations and maintenance  








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          oversight obligations.  In fact, by Fiscal Year 2020-2021, there  
          is a concern that no SRA funds will be available for orphan  
          sites, even though those sites impact groundwater or release  
          toxic vapors from underground contamination into occupied  
          buildings."
          
          The author states, "to address the projected demand on state  
          resources to meet the state's financial obligations at Superfund  
          and state-only orphan sites, the LAO recommends the Legislature  
          require DTSC to prepare an annual estimate of its funding  
          demand, and adopt legislation to move away from a statutory  
          funding formula to an annual appropriation as part of the state  
          budget process, among other recommendations.  AB 2891 would  
          codify those recommendations." 

          Staff notes that this bill changes DTSC current "funding  
          formula" for SRA allocation to cleanup NPL and state orphan  
          sites. That is, the current statutory floor and ceiling will be  
          removed and instead replaced with an annual report outlining  
          DTSC's estimated costs that must be considered throughout the  
          annual budget process.  While no requirement for funding or  
          specific appropriation is made in this bill. It is likely  
          intended to ensure sufficient funds are appropriated for site  
          cleanup. 



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