BILL ANALYSIS
Appropriations Committee Fiscal Summary
493 (Cedillo)
Hearing Date: 1/22/04 Amended: 1/22/04 and
proposed to
be amended
Consultant: Lisa Matocq Policy Vote: EQ 5-0
Judic 5-0
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BILL SUMMARY: SB 493 would enact the California Land
Reuse and Revitalization Act to, among other things, grant
immunity to "innocent landowners" (ILs), "bona fide
prospective purchasers" (BFPs) and contiguous property
owners from contribution actions, and from additional
cleanup of a contaminated site that has been "reopened".
Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
DTSC/regional boards Unknown, potentially significant stranded
General/
additional cleanup costs
Various/Local
Oversight/review of Potentially significant costs, probably
offset General/
response actions, etc. by reimbursements from applicants
Var./Loc.
Litigation Unknown, potentially significant costs to
General/
DTSC and regional boards
Var./Loc.
STAFF COMMENTS: This bill meets the criteria for referral
to the Suspense File. Generally, federal and state laws
provide that current and previous owners of a contaminated
site are jointly and severally liable for the cleanup
costs. Thus, all parties may be held responsible for the
entire amount, regardless of fault. If a party finds
itself paying more than its fair share of the cleanup
costs, that party may bring a contribution action to
collect from other responsible parties.
Current law allows government agencies to order the cleanup
of contaminated sites, and to undertake cleanup efforts,
under certain circumstances, and to recover such costs from
responsible parties. Current law also allows government
agencies to "reopen" a cleanup action under certain
circumstances.
Current federal law also provides that if the government
incurs clean-up costs at a site where the owner qualifies
as a BFP, the government shall have a lien on the property
for the unrecovered costs. The lien remains in place until
satisfied by sale of the property or other means.
Recent changes to federal law establish affirmative
defenses against cleanup litigation to ILs, landowners,
contiguous property owners, and BFPs of superfund sites, if
they meet certain conditions. This bill would enact
similar and broader immunity provisions in state law. The
immunity provisions in this bill would essentially apply to
all contaminated properties other than state and federal
superfund sites, i.e. brownfields, underground storage
tanks, etc. Staff notes that there are more than 5,000
brownfield sites throughout the state. Cleanup costs may
range from $10,000 to hundreds of thousands of dollars or
more.
The DTSC conducts and oversees an average of 220 sites at
any given time, and completes an average of 125 per year.
DTSC also administers the Expedited Remedial Action Pilot
(ERAP) program, and the Prospective Purchaser Agreement
(PPA) program to encourage the cleanup of "brownfields" and
other sites. ERAP program benefits include: restructuring
liability based on fair and equitable standards;
eligibility for the state to pay the "orphan share" of the
cleanup costs; providing indemnification protection through
a covenant not to sue; and allowing risk-based cleanup. PPA
program benefits include: reducing the liability for
prospective brownfield purchasers; a commitment from DTSC
to not pursue enforcement against prospective purchasers
if, for example, they are not responsible for the
contamination, and there are responsible parties who are
willing to clean up the site. This bill, among other
things:
grants, subject to certain conditions, ILs, BFPs, and
contiguous property owners, as defined, immunity from
claims made by any non-governmental agency for cleanup
costs;
prohibits DTSC or a regional board from taking any action
to require an IL to conduct any response action unless
the agency does certain things;
specifies that if there are unrecovered costs incurred by
an agency at a site for which an owner of the site is not
liable as a BFP, the agency shall have a lien on the
property for such costs;
requires Cal-EPA to develop a form that shall be
completed and submitted to the agency by a party who has
immunity pursuant to the provisions of this bill;
requires Cal-EPA to annually submit a report to the
Legislature on brownfield remediations;
contains a January 1, 2010 sunset date.
If immunity is granted, and the agency must subsequently
reopen the cleanup, and no other responsible parties can be
found, there could be unknown, potentially significant,
stranded cleanup costs to DTSC and the regional boards.
In addition, there are unknown, potentially significant
costs for DTSC and the regional boards to oversee and
review response actions. These costs should be reduced by
the author proposed amendment to require "innocent" parties
to reimburse DTSC and regional boards for such costs. In
addition, there could be unknown, probably not substantial,
increased costs for DTSC and regional boards to comply with
the other conditions of the bill (such as making all
reasonable attempts to compel any necessary response action
from all other potentially responsible parties). In
addition, there are minor costs, about $10,000 annually,
for Cal-EPA to comply with the form development and
reporting requirements of the bill.
It is unclear whether the provision of the bill that
requires a "bona fide prospective purchaser" to show, "by a
preponderance of evidence", that it meets certain
conditions, could result in increased litigation costs if,
for example, there is a dispute between DTSC or a regional
board and a prospective purchaser over whether the person
actually meets the conditions in the bill.