BILL ANALYSIS
AB 1906
Page 1
ASSEMBLY THIRD READING
AB 1906 (Lowenthal)
As Introduced February 9, 2004
Majority vote.
ENVIRONMENTL SAFETY 7-0APPROPRIATIONS 14-5
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|Ayes:|Laird, Aghazarian, Chu, |Ayes:|Chu, Berg, Calderon, |
| |Levine, Lowenthal, | |Corbett, Firebaugh, |
| |Hancock, Leslie | |Goldberg, Leno, Nation, |
| | | |Oropeza, Pavley, |
| | | |Ridley-Thomas, Wesson, |
| | | |Wiggins, Yee |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Runner, Bates, Daucher, |
| | | |Haynes, |
| | | |Keene |
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SUMMARY : Increases the petroleum storage fee from $0.012 per
gallon to $0.013 per gallon beginning on January 1, 2005, and to
$0.014 per gallon beginning on January 1, 2006. 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 UST 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
AB 1906
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(SWRCB) of the costs of corrective action. This program sunsets
on December 31, 2010.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis:
1)Significant fee revenue increase, about $8.3 million in fiscal
year (FY) 2004-05, $25 million in FY 2005-06, and $33.3
million in FY 2006-07, and annually thereafter until the fee
sunsets on December 31, 2010. (UST Cleanup Fund.)
2)Equivalent increase in financial assistance provided to UST
owners who must clean up contamination by SWRCB through its
UST Cleanup Fund program. (UST Cleanup Fund.)
COMMENTS : The author is seeking to assure that the UST Cleanup
Program is adequately funded to pay all of the claims currently
pending before it sunsets at the end of 2010. 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. Since the program's inception, over $1.4 billion paid.
As of December 31, 2003, there are 4,608 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;
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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; and,
d) Class D: All other eligible claimants. 4,449 of the
active claims are in this category.
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.
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 PUSTs.
It is hoped that this increase will allow the Fund to pay all
of the pending claims
Analysis Prepared by : Michael Endicott / E.S. & T.M. / (916)
319-3965
FN: 0005569