BILL ANALYSIS
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THIRD READING
Bill No: AB 1906
Author: Lowenthal (D)
Amended: 8/26/04 in Senate
Vote: 21
SENATE ENV. QUALITY COMMITTEE : 6-0, 6/28/04
AYES: Sher, Chesbro, Figueroa, Kuehl, McPherson, Romero
NO VOTE RECORDED: Morrow
SENATE APPROPRIATIONS COMMITTEE : 8-3, 8/26/04
AYES: Alpert, Bowen, Burton, Karnette, Machado, Murray,
Poochigian, Speier
NOES: Battin, Aanestad, Ashburn
NO VOTE RECORDED: Escutia, Johnson
ASSEMBLY FLOOR : 56-19, 5/25/04 - See last page for vote
SUBJECT : Underground storage tank cleanup: fee increase
SOURCE : Southland Corporation (7-Eleven Stores)
DIGEST : This bill increases the petroleum storage fee
from $0.012 per gallon to $0.013 per gallon beginning
January 1, 2005, and to $0.014 per gallon beginning January
1, 2006. The bill also establishes the Underground Storage
Tank Petroleum Contamination Orphan Site Cleanup Subaccount
and requires $10 million to be annually transferred from
the Underground Storage Tank Cleanup Fund into the account
for calendar years 2005-07 for costs to remediate petroleum
contamination at specified sites.
CONTINUED
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ANALYSIS : Existing law, under the Barry Keene
Underground Storage Tank Cleanup Act of 1989:
1. Establishes the Underground Storage Tank Cleanup Fund
for the deposit of fees collected pursuant to Section
25299.43. (Section 25299.50 Health and Safety Code.)
2. Authorizes expenditures from the Fund for purposes
consistent with the chapter, specifically the clean up
of unauthorized releases from underground storage tanks.
3. Establishes a fee of 1.2 mils per gallon of motor
vehicle fuel that the owner of an underground storage
tank must pay for each gallon of petroleum that is
stored in an underground tank.
4. Directs the Water Board to adopt a ranking system to
prioritize the payment of claims made against the Fund
as follows:
A. A Class A claim is a residential tank owner.
B. A Class B claim is a small business as defined in
Section 14837(d) of the Government Code or a
governmental agency or a nonprofit organization that
receives total annual revenues of not more than $7
million.
C. A Class C claim is a business that employs fewer
than 500 employees, that is independently owned and
operated and is not dominant in its field of
operation, or a governmental agency or a nonprofit
organization that employs 500 employees.
D. A Class D claim is any other eligible claimant
(e.g. large oil company or other corporate entity,
local government etc.).
5. Requires that claims are paid according to the priority
assigned to each class and not according to when it was
filed. Class A claims are paid first and a newer Class
A claim is paid before a claim in any other class even
though it might have been filed first.
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6. "Sunsets" the program in the year 2010.
This bill:
1. Increases the storage fee for a gallon of petroleum
stored in an underground storage tank $.001 (one mil)
effective January 1, 2005 and an additional $.001 (one
mil) effective January 1, 2006.
2. Establishes the Underground Storage Tank Petroleum
Contamination Orphan Site Cleanup Subaccount in the
Underground Storage Tank Cleanup Fund and requires $10
million to be annually transferred, for calendar years
2005, 2006, and 2007, from the fund to the subaccount,
for expenditure upon appropriation by the Legislature,
for the costs of response actions to remediate the harm
caused by a petroleum contamination if all of the
following conditions are met:
A. The petroleum contamination is the principal
source of contamination at the site.
B. The source of the petroleum contamination is, or
was, an underground storage tank.
C. A financially responsible party has not been
identified to pay for remediation at the site.
3. Sunsets the provisions January 1, 2008.
4. Makes findings that:
A. If the storage fee is not increased the Fund would
not be sufficient to pay all the eligible claimants
under the Program before it sunsets in 2010.
B. Class D claimants would be disproportionately
effected if the fee were not increased and would
loose the opportunity to have claims.
Comments
Background On Keene Petroleum Tank Cleanup Program . In
response to concern that a significant number of
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underground storage tanks in California were leaking, the
Legislature enacted the Barry Keene Underground Storage
Tank Cleanup Trust Fund Act of 1989 [Act]. The Act
authorizes the charge of a fee for each gallon of petroleum
stored in an underground storage tank and requires this fee
to be deposited in the Underground Storage Tank Cleanup
Fund [Fund]. The Fund was created to pay for necessary
corrective action and cleanup where other resources were
not available because it is in the best interest of both
public health and the water supply to stop the unauthorized
release of petroleum from underground storage tanks.
The Act directs the Water Board to adopt a priority system
to rank the claims and to determine the order in which
claims are paid. Under the current priority system a
residential tank owner has the highest priority and such
claims are funded immediately. (See #3 of Existing Law for
the complete prioritization system.) This priority system
reflects the policy choice that the owner of a tank who has
less resources is a greater priority for assistance because
he has less of an ability to internalize the often
unanticipated cost of cleanup and corrective action for a
leaking tank.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee (as
introduced):
Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
BOE collection costs $111 $177 $175 SF*
SWRCB/Program costs $157 $622 $717SF*
Additional Revenues ($8,000- ($24,375-($32,500-
$19,600) $40,000)
$40,000)SF*
Additional Claim
Payments -- balance of revenues less BOE and
SWRCB costs -- SF*
*Underground Storage Tank Cleanup Fund (USTF)
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NOTE: Recent amendments create the Underground Storage
Tank Petroleum Contamination Orphan Site Cleanup Subaccount
for the transfer of $10 million from the Underground
Storage Tank Cleanup Fund for purposes of remediating
petroleum contamination.
SUPPORT : (Verified 8/27/04)
Southland Corporation (7-Eleven Stores) (source)
California Grocers Association
California Retailers Association
California State Association of Counties
League of California Cities
Western States Petroleum Association
OPPOSITION : (Verified 8/27/04)
Department of Finance
ARGUMENTS IN SUPPORT : According to the sponsor,
Southland Corporation (7-Eleven Stores), a projection of
the current storage fee until the sunset date balanced
against the number and cost of outstanding Class D claims
suggests that the Fund will not be able to pay all of the
pending claims. Class D claims are the most expensive and
complex with an average cost of $200,254, and as of
February of 2004, there are 4,447 Class D claims
outstanding. The sponsor further suggests that having paid
into the Fund, as all of the other classes have, the fee
should be increased to ensure Class D claimants have the
same opportunity to have valid claims paid that claimants
in other classes have had.
ARGUMENTS IN OPPOSITION : The State Department of Finance
is opposed to this bill for the following reasons: (1)
This bill imposes additional costs and a need for
additional staff. Given the significant reductions to
departmental state operations, the Water Board and BOE
would be unable to absorb any additional duties or costs;
(2) although it is desirable to reimburse as many claimants
as possible under the UST cleanup program, the increased
fees would expand state government at a time of fiscal
constraint; (3) even if the increased fee was imposed, the
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Water Board indicates that the fee increase would not be
adequate to reimburse all approved claimants; and, (4) the
fee increase could be passed to the consumer by the owner
of the USTs in the form of higher gas prices.
ASSEMBLY FLOOR :
AYES: Aghazarian, Bates, Berg, Bermudez, Calderon,
Canciamilla, Chan, Chavez, Chu, Cohn, Corbett, Cox, Diaz,
Dutra, Dymally, Firebaugh, Garcia, Goldberg, Hancock,
Jerome Horton, Shirley Horton, Jackson, Kehoe, Koretz,
Laird, Leno, Leslie, Levine, Lieber, Liu, Longville,
Lowenthal, Maddox, Maldonado, Matthews, Montanez, Mullin,
Nakanishi, Nakano, Nation, Negrete McLeod, Oropeza,
Parra, Pavley, Richman, Ridley-Thomas, Salinas, Simitian,
Spitzer, Steinberg, Vargas, Wesson, Wiggins, Wolk, Yee,
Nunez
NOES: Benoit, Bogh, Campbell, Cogdill, Correa, Dutton,
Harman, Haynes, Houston, Keene, La Malfa, Maze, Mountjoy,
Pacheco, Plescia, Runner, Samuelian, Strickland, Wyland
NO VOTE RECORDED: Daucher, Frommer, La Suer, McCarthy,
Reyes
CP:nl 8/27/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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