BILL ANALYSIS
Appropriations Committee Fiscal Summary
1906 (Lowenthal)
Hearing Date: 8/26/04 Amended: AI+prop. amends
Consultant: Miriam Barcellona Ingenito Policy
Vote: EQ 6-0
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BILL SUMMARY: AB 1906 would increase the storage fee for a
gallon of petroleum stored in an underground storage take
by $0.001 (one mil) effective January 1, 2005 and an
additional mil effective January 1, 2006.
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Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
BOE collection costs $111 $177
$175SF*
SWRCB/Program costs $157 $622
$717 SF*
Additional Revenues ($8,000- ($24,375-
$32,500-
$19,600) $40,000)
$40,000) SF*
Additional Claim Payments ---Balance of revenues less BOE
and--- SF*
SWRBC costs
Orphaned Cleanup $5,000 $10,000
$10,000 SF**
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*Underground Storage Tank Cleanup Fund (USTCF)
** Underground Storage Tank Petroleum Contamination Orphan
Site Cleanup Subaccount within USTCF, established in the
proposed amendments
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STAFF COMMENTS: This bill meets the criteria for referral
to the Suspense file. Existing law establishes the
Underground Storage Tank (UST) Cleanup Fund (USTCF) in
which a fee of $.012 (12 mils) per gallon of petroleum is
deposited in the USTCF. Monies in the fund are used pay
off claims according to a priority ranking. The highest
priority claimant, Class A, is given to residential tank
owners; Class B is given to small businesses, governmental
agencies, and non-profit organizations with gross receipts
below a specified maximum; Class C is given to businesses,
governmental agencies and non-profit organizations with
fewer than 500 employees; Class D is given to all other
claimants including major oil companies, large
corporations, and local governments with more than 500
employees. The current fee structure allows for the full
coverage of A, B, and C claims and 14 percent of priority D
claims. AB 1906 would increase the fee by one mil on and
after January 1, 2005 and another mil on and after January
1, 2006.
As a result of the increased revenues available to pay
additional claims under the Underground Storage Tank (UST)
cleanup program, the State Water Resources Control Board
(SWRCB) indicates that it would need an additional 9.5
position years. The Board of Equalization (BOE) has
indicated that it would incur costs for notifying fee
payers, reviewing returns, computer programming, and
developing and carrying out compliance and audit efforts to
ensure proper reporting. Under the UST program, all of
SWRCB and BOE's costs are taken from the fee revenues
before grants are awarded. STAFF NOTES that the estimated
revenues provided by SWRCB are significantly less than
those provided by BOE (reflected by the range in the Fiscal
Impact box above). If revenues are significantly higher
than SWRCB's estimate (e.g. BOE's), costs to SWRCB would
increase significantly.
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AB 1906 (Lowenthal)
According to SWRCB, average priority D claims are about
$200,000 and the fund would need to have an additional $500
million in revenues to pay off all of the remaining claims.
Based on SWRCB's estimates, 2,489 claims would remain
unpaid.
STAFF NOTES that the committee approved AB 1906 (7-2) off
our Suspense file but was returned to committee for
purposes of amendment.
The author proposes amendments to establish the Underground
Storage Tank Petroleum Contamination Orphan Site Cleanup
Subaccount within USTCF. The amendments would annually
transfer $10 million for calendar years 2005, 2006, and
2007 from the USTCF for expenditure upon appropriation by
the Legislature, for the costs of response actions to
remediate the harm caused by petroleum contamination, as
specified, at sites that do not have an identified
responsible party. The amendments specify funds that
remain in the subaccount on January 1, 2008 would revert
back to the fund. This section would sunset January 1,
2008. (These amendments are reflected in the fiscal box
above.)