BILL ANALYSIS Ó
AB 2891
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Date of Hearing: August 25, 2016
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Luis Alejo, Chair
AB 2891
(Committee on Environmental Safety and Toxic Materials) - As
Amended August 19, 2016
SUBJECT: Hazardous waste: funding
SUMMARY: Revises the annual appropriation requirements for
funding federal hazardous waste cleanup requirements.
Specifically, this bill:
1) Deletes legislative intent that not less than $6,750,000
be appropriated in the annual Budget Act each year to the
Site Remediation Account (SRA) for direct site remediation
costs, and replaces it with intent to appropriate an amount
sufficient to cover the estimated costs identified by DTSC
that is not less than $10.75 million.
2) Requires DTSC, at the same time as the Governor's
January 10 Budget, and annually thereafter, to report to
the Legislature an estimate of the funding needed to meet
the state's obligation at federal Superfund orphan sites
and at state-only orphan sites. 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
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remediation, and any other related orphan site costs.
3) Deletes a requirement that DTSC report to the
Legislature a determination that the state's obligation
under the federal Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) will exceed
$3,300,000 in any fiscal year (FY).
EXISTING LAW:
1) Establishes CERCLA to provide a Federal "Superfund" to
clean up uncontrolled or abandoned hazardous-waste sites as
well as accidents, spills, and other emergency releases of
pollutants and contaminants into the environment. (42
U.S.C. § 9601, et seq.)
2) Makes available, pursuant to the
Carpenter-Presley-Tanner Hazardous Substance Account Act,
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. (Health & Safety Code
(H&S) § 25301)
3) Establishes the Toxic Substances Control Account (TSCA)
(H&S Sec. 25173.6), and allows the DTSC director to expend
federal funds in the TSCA consistent with the requirements
specified in Section 114 of CERCLA (42 U.S.C. Sec. 9614)
(H&S § 25173.6(d)), and defines TSCA as the "State
Account." (H&S § 25324)
4) Establishes the 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
CERCLA. (H&S § 25337)
5) Establishes, pursuant to the Johnston-Filante Hazardous
Substance Cleanup Bond Act of 1984, the Orphan Share
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Reimbursement Trust Fund to pay specified costs and claims
relating to response actions at hazardous substance release
sites under circumstances in which the share of liability
for those costs is attributable to the activities of
persons who are defunct or insolvent. (H&S § 25390, et
seq.)
FISCAL EFFECT: According to the Senate Appropriations
Committee, enactment of this bill could result in cost pressures
in the millions of dollars to appropriate funds necessary to
meet demonstrated need.
COMMENTS:
Funding Superfund cleanup: 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.
According to DTSC, both the US EPA and DTSC have identified
sites which represent 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 California sites are
known as state-only 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, at a
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minimum, a 10% match for design and implementation of
remediation, or cleanup. Ultimately, California is also required
to cover 100% of the long-term operation and maintenance (O&M)
costs for NPL sites where no viable responsible party has been
identified. State-only 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.
Funding for NPL sites was previously paid for from the State
Superfund Bond Act passed in 1984, which authorized $100 million
in bonds. By 1997, all of the bond funding was spent or
encumbered. Since then, the SRA has funded DTSC's work at sites
on the NPL and at State orphan sites.
The US EPA estimates that there are between 96,000 and 212,000
contaminated sites in California. DTSC has identified
approximately 9,800 contaminated sites statewide.
Short on funding: 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,
"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."
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 oversight
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obligations. In fact, by FY 2020-2021, there is a concern that
no SRA funds will be available for state-only orphan sites,
even though those sites impact groundwater or release toxic
vapors from underground contamination into occupied
buildings."
DTSC has estimated the demand for funding for state-only orphan
sites to be between $15 million to $20 million annually in FY
2015-16 through FY 2020-21. However, based on US EPA's estimates
of the state's increasing financial obligations for NPL sites
beginning in federal FY 2016-17, the state will have
significantly less available for state-only orphan sites in
future years.
Due to federal obligations, the state's share of remedial phase
and O&M costs at NPL orphan sites takes priority over state-only
orphan site funding. Funding for state-only orphan sites is
generally available only to the extent that there are funds
available in the SRA after meeting federal obligations, and the
state is not obligated to pay any state-only orphan site costs.
In some years, this means that federal orphan sites can "crowd
out" state-only orphan sites for the limited amount of SRA
funds.
The unfortunate reality is that when DTSC does not have enough
funding to address all NPL and state-identified orphan site
cleanup, some sites get lower priority, therefore leaving some
communities to live with the contamination for years on end.
Background on current statutory funding formula: SB 1222
(Calderon, Chapter 638, Statutes of 1995) established the
Hazardous Waste Fee Reform Task Force to evaluate DTSC's fee
system and make recommendations about how it should be improved
and stabilized. The task force met for one year and published
its report in January of 1995.
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The Hazardous Waste Fee Reform Task Force report found that the
annual costs of addressing NPL and state-only orphan sites
include staff costs, investigation and cleanup, as well as long
term O&M costs. It also found that these costs are somewhat
volatile because responsible parties for some orphan sites may
be discovered and/or forced to pay cleanup costs, while other
sites that are being funded by responsible parties may become
future orphan sites if the responsible party(ies) become
recalcitrant or insolvent. In addition, new orphan sites
continue to be discovered. Furthermore, the report underscored
that there were unmet needs for funding for cleanup of
contaminated sites, specifically for the state match for NPL
sites and for state-only orphan site funding.
As for cost figures, the report stated that DTSC staff and
support costs for an adequate state-only orphan site cleanup
program were estimated to be roughly $0.6 million per year. In
1997, the report found that $2.l million per year would be
needed in contract dollars. Total projected annual cost were
$2.7 million per year for state-only orphan sites. The report
also found that DTSC support costs for NPL sites was estimated
to be approximately $0.6 million per year, while state match
dollars would range from $2.7 million to $10.9 million per year
with total costs estimated to range from $3.3 million to $l1.5
million. These figures are clearly lower than today's estimated
costs, which is important to note because these figures appear
to have informed subsequent legislation that codified today's
statutory formula for funding Superfund and state-only orphan
sites cleanup.
It was SB 660 (Sher, Chapter 870, Statutes of 1997) that
implemented many of the Hazardous Waste Fee Reform Task Force
report's recommendations and restructured the Environment Fee,
among other fee revenue sources.
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As it relates to Superfund and state-only orphan site funding,
SB 660 established flat budget amounts, as informed by the
Hazardous Waste Fee Reform Task Force report, for Superfund
cleanup, which AB 2891 is proposing to change. Specifically, SB
660 codified intent that a minimum -- $6,750,000 - be
appropriated to the SRA for estimated costs to cleanup
state-orphan sites and Superfund sites (H&S § 25173.7 (a)(1)),
and allowed that amount to be adjusted for the cost of living,
as measured by the Consumer Price Index (H&S § 25173.7 (b)(1)).
SB 660 also codified a requirement that DTSC shall report to the
Legislature whenever its Superfund costs exceed $3.3 million
(H&S § 25205.6 (g)(3)). Paradoxically, that same code section
essentially establishes a ceiling on what can be appropriated
for cleanup costs by saying the Legislature can increase fees to
support Superfund costs in excess of $3.3 million, but stated
DTSC cannot specify fee rates that increase revenues in excess
of $8.2 million.
The SRA funding formula binds future legislatures from
appropriating funding based on programmatic demands. Based upon
US EPA projections, the formulaic approach in statute will not
provide sufficient funding to meet the state's NPL orphan site
cost obligations in some future years. Also, the formula does
not take into account the variability in the state's obligations
for remediation and O&M costs at NPL sites or the corresponding
effect on funding available to clean up state-only orphan sites.
As a result, the funding available to pay for state-only orphan
site remediation and O&M is likely to vary widely in future
years and in some years will be crowded out entirely.
AB 2891 would strike those codified budget formulas and replace
them with a required report from DTSC estimating annual costs.
AB 2891
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Increasing the minimum: The bill increases, from $6.75 million
to $10.75 million, the intended statutory minimum the
Legislature should appropriate DSTC for cleanup. It is important
to note that this bill changes the legislative intent for the
minimum the Legislature should appropriate DTSC for site
remediation, therefore not making an appropriation.
The bill would change that intent to reflect current inflation
and the current appropriation to DTSC (per the FY 2016/2017
Budget Act), which is $10.5 million.
This bill does not increase taxes: It is important to note that
neither the bill, nor the subsequent report, would increase the
fees reformed by SB 660. The bill would require DTSC to report
annual estimates to the Legislature and the Governor to inform
the Governor's January budget. The Governor, and, ultimately,
the Legislature, will determine what appropriation to provide
for Superfund and state-only orphan site cleanup based on that
report. Current statute states that the fees in H&S § 25205.6
(c) can only be increased annually based on inflation (H&S §
25205.6 (f)). Therefore, any significant increase (or any
increase above the adjusted amount) would still have to be
approved by the Legislature, which would require a 2/3 vote.
Legislative Analyst's Office (LAO): The Assembly Environmental
Safety & Toxic Materials Committee requested the LAO to complete
a review of DTSC's federal requirements and cost share
obligations under CERCLA as it relates to Superfund cleanup; the
anticipated resource demand for Superfund site cleanup and the
gap between resource need and resource availability; and,
programmatic and/or policy changes that could be made at DTSC to
better manage the growing cleanup demand.
The LAO found that the combined annual California costs for
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remediation and O&M at federal NPL sites are projected to range
from $2.2 million to $17.3 million between FYs 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 O&M first, which means
state-designated orphan sites are second priority. Given the
estimated increases in future state costs for NPL sites,
California will have significantly less available in the SRA for
state-orphan sites, and may end up with no funds for state
orphan site cleanup.
To address the projected demand for increased state spending 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. This bill would
codify those recommendations while maintaining a statutory
minimum of $10.75 million to reflect current inflation and the
current appropriation to DTSC, which is $10.5 million.
Senate amendments: This bill was substantially amended in the
Senate and the Assembly-approved version of this bill was
deleted. This bill, as amended in the Senate, is inconsistent
with Assembly actions and the provisions of this bill, as
amended in the Senate, have not been heard in an Assembly policy
committee.
REGISTERED SUPPORT / OPPOSITION:
Support
AB 2891
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None on file.
Opposition
None on file.
Analysis Prepared by:Paige Brokaw / E.S. & T.M. / (916) 319-3965