BILL ANALYSIS Ó AB 2891 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2891 (Committee on Environmental Safety and Toxic Materials) As Amended August 19, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |79-0 |(May 05, 2016) |SENATE: |26-13 |(August 23, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- (vote not relevant) ---------------------------------------------------------------------- | | | | | | | | | | | | |COMMITTEE VOTE: | 5-0 | (August 25, |RECOMMENDATION: |concur | | | |2016) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ---------------------------------------------------------------------- (E.S. & T.M.) Original Committee Reference: E.S. & T.M. SUMMARY: Eliminates statutory formulas that inform how much the annual Budget Act appropriates to the Department of Toxic AB 2891 Page 2 Substances Control (DTSC) for federal Superfund site and state-only orphan site cleanup and operations and maintenance (O&M) costs. Requires DTSC to estimate the funding needed to meet the state's obligation at those sites for cleanup and O&M and revises the state's statutory intent to provide funding suitable to meet the state's financial obligation under federal law. The Senate amendments delete the Assembly version of the bill, and instead: 1)Delete 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 replace 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)Require 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. Require the estimate to include projected budget-year and two 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. 3)Delete 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). AS PASSED BY THE ASSEMBLY, this bill authorized the Department of Resources, Recycling and Recovery to consult with the State Water Resources Control Board and when preparing guidelines and state policy to guide the efforts of local agencies when providing household hazardous waste collection, recycling, and AB 2891 Page 3 disposal programs. 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 United States Environmental Protection Agency (US EPA) and California were given power to seek out those parties responsible for any hazardous waste release and recovery 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 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 minimum, a 10% match for design and implementation of remediation, or cleanup federal Superfund sites. Ultimately, California is also required to cover 100% of the long-term 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 AB 2891 Page 4 for both types of sites are unknown or are unwilling or unable to pay for cleanup. The US EPA estimates that there are between 96,000 and 212,000 contaminated sites in California. DTSC has a database of approximately 9,800 known 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. 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. With today's funding levels, 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 that exceed the available funding. 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 doesn't have enough funding to address all Superfund and state-identified orphan site cleanup, some sites get lower priority, therefore leaving communities to live with the contamination for years on end. Legislative Analyst's Office (LAO): The Assembly Environmental AB 2891 Page 5 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 annual combined California costs for remediation and O&M 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 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. AB 2891 Page 6 Analysis Prepared by: Paige Brokaw/ E.S. & T.M. / (916) 319-3965 FN: 0004947