BILL ANALYSIS
AB 1906
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1906 (Lowenthal)
As Amended August 26, 2004
2/3 vote
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|ASSEMBLY: |56-19|(May 25, 2004) |SENATE: |25-9 |(August 27, |
| | | | | |2004) |
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Original Committee Reference: E.S. & T.M.
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, and appropriates
$10 million a year for fiscal years 2005 through 2007 to the
Underground Storage Tank Petroleum Contamination Orphan Site
Cleanup Subaccount (OS Subaccount) in the Underground Storage
Tank Cleanup Fund (USTCF).
The Senate amendments maintain the Assembly version of this bill
and:
1)Establish the OS Subaccount in USTCF.
2)Appropriate $10 million per year to the OS Subaccount for
three years.
3)Authorizes the use of the funds in the OS Subaccount for the
costs of response actions to remediate petroleum
contamination, including contamination by a refined petroleum
product or a petroleum derivative, if:
a) The petroleum contamination is the principal source of
contamination at the site;
b) The source of the contamination is, or was, UST; and,
c) A financially responsible party has not been identified
to pay for remediation at the site.
4)Sunset the provisions transferring the funds to the OS
Subaccount on January 1, 2008, at which point any remaining
funds in the OS Subaccount is transferred back to the USTCF.
AB 1906
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EXISTING LAW establishes USTCF in the State Treasury and
authorizes the money in USTCF to be used to pay claims for
cleanup of leaks from petroleum underground storage tanks
(PUSTs). USTCF 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
(SWRCB) of the costs of corrective action. This program sunsets
on December 31, 2010.
AS PASSED BY THE ASSEMBLY , this bill:
1)Increased the fee paid per gallon of petroleum stored in an
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)Made 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 USTCF.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis:
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 $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
SWRBC costs,
SF* *Underground Storage Tank Cleanup Fund (USTF)
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 USTCF, will not be guaranteed that their valid
AB 1906
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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;
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 USTCF.
5)The current fees ($0.012 per gallon) generates approximately
$195 million annually. Under the current fee structure, USTCF
will not be able to pay all of the pending claims. The
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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: 0009004