BILL ANALYSIS Ó SB 820 Page 1 Date of Hearing: June 21, 2016 ASSEMBLY COMMITTEE ON JUDICIARY Mark Stone, Chair SB 820 (Hertzberg) - As Amended April 12, 2016 PROPOSED CONSENT SENATE VOTE: 38-0 SUBJECT: Hazardous materials: California Land Reuse and Revitalization Act of 2004 KEY ISSUE: Should the sunset date for the California land REUse and Revitalization Act be extended until January 1, 2027, and should an immunity provision in the existing act be changed accordingly? SYNOPSIS This bill extends the sunset date for the California Land Reuse and Revitalization Act (CLRRA) from January 1, 2017, to January 1, 2027, and makes a corresponding change in the operative date of a limited immunity provision. CLRRA was originally enacted in 2004 to provide greater incentives to clean up and develop "brownfields," the term used to describe properties that remain unused and undeveloped because of actual or potential hazardous SB 820 Page 2 waste contamination. Because the costs and potential liabilities associated with cleaning up and developing such properties act as a barrier to revitalization and development of these parcels, CLRRA creates incentives for development by providing innocent landowners or bona fide purchasers - that is, owners who did not cause the condition or only acquired the property later - with immunity from liability for certain agency response costs or other damages caused by a release of hazardous materials. To qualify for this immunity the bona purchaser or innocent owner must meet certain conditions, including entering into an agreement with an oversight agency, fully cooperating with the agency, and performing other actions related to the cleanup effort. By most accounts, CLRRA has been fairly successful in cleaning up and developing otherwise contaminated and idle properties. However, CLRRA is due to sunset on January 1, 2017. This bill will extend the sunset to January 1, 2027, and make a corresponding change that allows, as does existing law, a qualified bona fide purchaser or innocent owner to continue enjoying immunity after the expiration of CLRRA, so long as he or she continues to comply with its requirements and conditions. The bill is supported by several California cities and associations representing a range of builders, developers, and business property owners. There is no opposition to this bill. SUMMARY: Extends the sunset date for the California Land Reuse and Revitalization Act (CLRRA) until January 1, 2027, and makes a conforming change to provide that a person who qualifies for immunity under the act before January 1, 2027, continues to have that immunity on and after January 1, 2027, if the person continues to be in compliance with the requirements of CLRRA. EXISTING LAW: 1) Establishes, under the federal Comprehensive Environmental Cleanup, Response and Liability Act, also known as the SB 820 Page 3 "Superfund," programs that authorize public agencies to order owners of contaminated property to conduct cleanups of these properties, generally with public oversight, cooperation, and assistance. (42 U.S.C. Section 9601 et seq.) 2) Provides, under CLRRA, a qualified bona fide purchaser, innocent landowner, or contiguous property owner who did not cause the hazardous material contamination on the subject property with immunity from liability for agency response costs or any other damages caused by the contamination. In order to qualify for the immunity, the bona fide purchaser, innocent landowner, or contiguous property owner must perform a number of specified tasks related to the cleanup, including, among other things, entering into an agreement with an oversight agency and providing full cooperation, assistance, and access to the agency or person authorized to conduct the cleanup response action. However, the bona fide purchaser, innocent landowner, or contiguous property owner is not immune from liability for his or her own wrongful acts, permit violations, or new releases of hazardous materials that are caused by the bona fide purchaser, innocent landowner, or contiguous property owner. (Health & Safety Code Section 25395.60 et seq., especially Sections 25395.80-25395.92.) FISCAL EFFECT: As currently in print this bill is keyed fiscal. COMMENTS: The California Land Reuse and Revitalization Act (CLRRA) was enacted in 2004 to promote the cleanup and development of so-called "brownfields" - that is, properties that remain idle, unused, and undeveloped because of actual or potential hazardous material contamination. According to most informed observers, one of the primary reasons that these properties remain idle and undeveloped is due to the costs and potential liabilities associated with cleaning up and developing such properties. CLRRA, therefore, created incentives for development by granting bona fide purchasers or innocent SB 820 Page 4 landowners with immunity from liability for claims for certain response costs or other damages caused by a release of hazardous materials. To qualify for this immunity the bona purchaser or innocent owner must meet certain conditions, including entering into an agreement with an oversight agency, fully cooperating with the agency in all phases and aspects of the cleanup project, and performing any other actions required by the agreement. Existing law also provides that any owner who qualified for this immunity before the CLRRA expiration - January 1, 2017, under existing law - would continue to enjoy that immunity after the expiration date so long as the qualified owner continued to comply with all of the requirements of CLRRA. As the several letters of support for this bill attest, CLRRA has allowed many cities in California to partner with private developers to turn once idle and blighted parcels into new development projects that no longer pose a threat to public safety and contribute billions of dollars of revenue to local governments statewide. In order to keep reaping these benefits, this bill would extend the current sunset date for CLRRA from January 1, 2017, to January 1, 2027. It would make a corresponding change in the continuing immunity provision, so that owners who qualified for immunity before January 1, 2027, would continue to have immunity after that date for a continuing project, so long as they continue to comply with the requirements of CLRRA. It is important to stress that neither existing law, nor this bill, provides immunity for owners who commit criminal acts, violate permit restrictions, or cause new releases of hazardous materials. If the program is so successful, why not remove rather than extend the sunset? Historically, this committee has taken the position that sunsets should not be repeatedly extended. A sunset is generally added to a legislatively-mandated program so that any consequences of the program - especially unintended consequences - may be re-evaluated by the Legislature after a SB 820 Page 5 certain period of time. If it turns out that the legislation fails to address the problem or leads to unwanted results, then the legislation is allowed to expire by the terms of the sunset clause. If it turns out that the legislation successfully addressed the problem, then the sunset clause is deleted and the legislation becomes permanent. As originally introduced, this bill proposed to remove the sunset and make CLRRA permanent. However, the bill was amended to extend rather than delete the sunset in the Senate Environmental Quality Committee. The committee analysis described its reasoning as follows: Remove or extend the Sunset? There are many virtues to legislative program sunsets, including the opportunity for the Legislature to revisit the performance and value of such programs. To date, there is only a limited basis for evaluating the performance of CLRRA and most of the projects have been completed in the last year or so. The long-term consequences of CLRRA, especially with regard to the state's potential liability for chemical contamination, suggest that it is prudent to periodically review the success of these remediation projects. ARGUMENTS IN SUPPORT: According to the author, since "buyers of brownfield sites may be liable for contamination they had no role in, these hazardous sites can sit dormant for years and decades. This not only contributes to urban blight, but poses several environmental and health risks for surrounding communities. By extending [the Act], SB 820 preserves a great tool for transforming polluted properties to become productive uses of space adding economic value to blighted communities while reducing environmental and health risks." Several associations representing builders and developers support this bill for substantially the same reasons. These arguments are reinforced by letters of support from several California cities describing specific examples of successful brownfield cleanup projects in their respective communities. SB 820 Page 6 REGISTERED SUPPORT / OPPOSITION: Support Bay Area Council Brown & Winters California Association for Local Economic Development California Business Properties Association California Council for Environmental and Economic Balance California Infill Builders California Main Street Alliance Center for Creative Land Recycling City of Carson City of Chula Vista City of Redding Civil Justice Association of California SB 820 Page 7 League of California Cities Los Angeles Neighborhood Land Trust Opposition None on file Analysis Prepared by:Thomas Clark / JUD. / (916) 319-2334