BILL ANALYSIS
AB 96
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 96 (Ruskin) - As Amended: April 21, 2009
Policy Committee: Environmental
Safety Vote: 6-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
Provides $8 million for grants and loans to help owners of
specified gas stations meet the Enhanced Vapor Recovery (EVR)
regulations adopted by the Air Resources Board (ARB).
Specifically, this bill:
1) Transfers $8 million from the administration subaccount
of the Petroleum Underground Storage Tank (PUST) Financing
Account to the grants and loans subaccount for use in the
Replacement of Underground Storage Tanks (RUST) program.
2) Specifies that the monies transferred may be issued as
grants and loans and makes them available during the
2008-09 and 2009-10 fiscal years.
3) Removes current RUST program requirement that grant and
loan applicants have owned, prior to 1997, the property for
which the grant or loan is being sought.
4) Extends the sunset date for the RUST program from
January 1, 2011, to January 1, 2016.
5) Declares the bill an urgency measure.
FISCAL EFFECT
1) The bill transfers $8 million from the administration
subaccount of the PUST Financing Account to the grants and
loans subaccount of the RUST program and makes that money
available for grants (1/3 of funding) and loans (2/3 of
funding) to owners of smaller gas stations for EVR
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compliance.
2) The bill extends the RUST program by five years, at an
administrative cost of approximately $600,000 a year.
COMMENTS
1) Rationale. Despite a nine-year lead time, ARB reports
that only 41 percent of the approximately 11,000 gas
stations affected by its EVR regulation have installed the
necessary vapor recovery equipment. Many of the stations
that have not undergone upgrades are smaller, independently
owned stations with very slim profit margins. Owners of
these stations complain that they simply cannot afford to
make the upgrades required by the EVR regulation.
According to the State Water Resources Control Board (Water
Board), there is an $11.2 million balance in the
administration subaccount of the PUST Financing Account,
which exceeds the Water Board's costs to administer the
underground storage tank program by about $8 million.
Because EVR upgrades are an eligible use of RUST program
monies, the bill's author believes that the "surplus" money
in administrative subaccount could be better used to help
smaller station owners comply with the EVR regulation.
2) Current law .
a) Requires, per ARB's EVR regulation, that by April 1,
2009, California gas stations to install equipment to
reduce gasoline vapor emissions that contribute to the
formation of smog. The ARB adopted the EVR regulation in
March of 2000. The EVR regulation applies to
approximately 11,000 gas stations throughout the state.
Stations in counties that have attained federal ozone
standards are not required to comply with the regulation,
while stations in counties with populations under 100,000
and not classified as nonattainment for ozone have until
April 1, 2011 to comply.
b) Authorizes the Water Board to make grants and loans
to small business owners from the PUST Financing Account
for the upgrade, replacement, or removal of underground
storage tanks to meet local, state, or federal standards.
These grants and loans are known as the RUST program,
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which expires January 1, 2011. Current law limits direct
grants to no more than 33 % of RUST program funding, and
loans and grants range from $3,000 to $50,000. Compliance
with the EVR regulation is eligible for RUST program
funding.
c) Specifies that all interest and other earnings from
investments of monies in the PUST Financing Account be
placed into a subaccount, to fund the administration of
the underground storage tank program.
1) Related legislation.
a) SB 507 (Cox, 2009) would delay ARB's EVR regulatory
deadline until April 1, 2011. The bill is scheduled to be
heard in the Senate Environmental Quality Committee on
April 27.
b) Chapter 702, Statutes of 2008 (SB 155, Cox) extended
the deadline for compliance with ARB's EVR regulation to
April 1, 2011 for certain low-volume stations in counties
with populations under 100,000 that have not been
classified as nonattainment for ozone.
1) Grants versus loans. Existing statute specifies that
grants make up no more than 33 percent of RUST program
funding, with the remainder coming from loans. This bill,
as amended follows those existing program guidelines,
thereby resolving at least some of the station owners'
purported inability to finance the required upgrades while
recouping the costs of loans for future use.
2) What's the Urgency? This author contends that the state
needs to make the funds authorized in the bill available to
smaller gas station owners as soon as possible to help
those small business owners comply with an impending
regulatory deadline. However, that deadline-April 1,
2009-has already past.
According to the California Air Pollution Control Officers
Association (CAPCOA), the approximately 3,500 gas stations
that failed to make the required EVR upgrades continue to
operate. CAPCOA acknowledges that many station owners chose
to bear the trouble and expense of EVR upgrades before the
regulatory deadline. Out of fairness to those compliant
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station owners, and in recognition of the health effects
associated with noncompliant gas pumps, CAPCOA confirms
that gas station owners who have failed to make the
upgrades will face minor fines-ranging from $33 to $66 per
day. However, CAPCOA assures that only those owners who
have failed to demonstrate their intention to comply with
the EVR regulations will face "significant penalties."
Nonetheless, the current economic situation makes it
difficult, or, in some cases, impossible, for some station
owners to afford the EVR upgrades or to acquire the
necessary financing. The funding proposed by this bill
could help some of the least economically able of those
station owners to make the EVR upgrades, thereby avoiding
mounting fines and harm to public health.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081