BILL ANALYSIS
AB 1906
Page 1
Date of Hearing: March 23, 2004
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
John Laird, Chair
AB 1906 (Lowenthal) - As Introduced: February 9, 2004
SUBJECT : Hazardous materials: petroleum: underground storage
tanks: cleanup: fees.
SUMMARY : Increases the petroleum storage fee by $0.002 per
gallon of petroleum stored underground phased in over two years
beginning on January 1, 2005. Specifically, this bill :
1)Increases the fee paid per gallon of petroleum stored in an
underground storage tank (UST) by $0.001 per gallon of
petroleum stored, on and after January 1, 2005, and by an
additional $0.001 per gallon of petroleum stored, on and after
January 1, 2006.
2)Makes specific findings related to the need for the increase
in order to generate sufficient funds to pay all claimants for
cleanup of petroleum releases from USTs from the Underground
Storage Tank Cleanup Fund (fund).
EXISTING LAW establishes the fund in the State Treasury and
authorizes the money in the fund to be used to pay claims for
cleanup of leaks from petroleum underground storage tanks
(PUSTs). The fund is generated through fees by PUST operators
based on the volume of fuel stored in the tanks. After the
owner or operator of a PUST takes a corrective action in
response to a release of petroleum from the tank, he may apply
for reimbursement by the State Water Resources Control Board of
the costs of corrective action. This program sunsets on
December 31, 2010.
FISCAL EFFECT : Unknown, but according to State Board of
Equalization estimates, the increase in the fee would bring an
additional $19.6 million in 2005 and an additional $40 million
in revenues annually thereafter to the fund. Sponsors estimate
that it would raise at least $32 million more revenues annually
for the fund.
COMMENTS : The author is seeking to assure that the Underground
Storage Tank Cleanup Program is adequately funded to pay all of
the claims currently pending before it sunsets at the end of
AB 1906
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2010. Without this bill, the author feels that without these
increases, some PUST owners and operators, who have paid into
the Fund, will not be guaranteed that their valid claims will be
paid.
1)The program assists UST owners and operators with the costs to
cleanup contaminated soil and groundwater caused by leaking
petroleum tanks was established in 1989. Every owner of a
PUST must pay a fee into the fund of $0.012 for each gallon of
petroleum placed in an UST. The fee was last increased in
1997. According to the author, since the program's inception,
17,934 claims have been filed and over $1.4 billion paid. As
of December 31, 2003, there are 4,593 active claims.
2)The sponsor, 7-Eleven, contends that this is a modest fee
increase that is necessary to ensure that all claimants under
the cleanup program will have a reasonable opportunity to have
approved claims paid before the expiration of the cleanup
program, as was envisioned when the program was initially
established.
3)PUST owners and operators are reimbursed on a priority system
based on a claimant's characteristics giving priority to the
"smaller" PUST owners (Class A) because they are, in theory,
the least able to afford the cleanup. Claimants fall into the
following classes:
a) Class A: Residential Tank Owners.
b) Class B: Small businesses, governmental agencies and
nonprofit organizations with gross receipts below a
specified maximum.
c) Class C: Businesses, governmental agencies and
nonprofit organizations not meeting the criteria for Class
B.
d) Class D: All other eligible claimants.
4)New claims in a higher priority class must be processed before
claims in a lower priority class. for example, the "newest" A
Claim is paid before the "oldest" D Claim. PUST owners in
Class D, such as the sponsors, are particularly worried about
the solvency of the fund. According to the sponsor, the
average cost to close a Class D Claim, the most costly and
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complex type of claim, is approximately $200,254. As of
February 2004, there are 4,447 Class D claims that remain to
be handled.
5)The current fees ($0.012 per gallon) generates approximately
$195 million annually. Under the current fee structure, the
Fund will not be able to pay all of the pending claims. The
adjustment proposed in this bill would generate approximately
$32.5 million in additional fees annually, ultimately
increasing the fund to $227.5 million. The actual amount
collected would vary on the amount of fuel stored in the
PUSTs. It is hoped that this increase will allow the Fund to
pay all of the pending claims
REGISTERED SUPPORT / OPPOSITION :
Support
7-Eleven (Sponsor)
California Grocers Association
California Retailers Association
League of California Cities
Opposition
None on file.
Analysis Prepared by : Michael Endicott / E.S. & T.M. / (916)
319-3965