BILL ANALYSIS
AB 96
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: AB 96
AUTHOR: Ruskin
AMENDED: April 21, 2009
FISCAL: Yes HEARING DATE: May 20, 2009
URGENCY: Yes CONSULTANT: Caroll
Mortensen
SUBJECT : GASOLINE VAPOR RECOVERY SYSTEMS: REPLACEMENT OF
UNDERGROUND STORAGE TANKS PROGRAM
SUMMARY :
Existing law :
1) Establishes a grant and loan program to replace, remove or
upgrade underground storage tanks (RUST) at the State Water
Resources Control Board (SWRCB). (Health and Safety Code
25299.100 et seq.).
2) Establishes criteria for the grants that, among other
things, limit awards to small businesses, as defined,
including those with less than 20 employees and who sell
less than 900,000 gallons of gasoline annually and limit
the grant award to $50,000 (25299.105).
3) Establishes loan criteria that, among other things, limit
the award of loans to businesses with fewer than 500
employees and with a maximum loan amount of $750,000
(25299.102).
4) Requires Air Resources Board (ARB) to adopt procedures for
determining the compliance of any system designed for the
control of gasoline vapor emissions during gasoline
marketing operations, including storage and transfer
operations, with performance standards to achieve or
maintain any applicable ambient air quality standard. ARB
must also adopt standards to ensure that gasoline vapor
control systems do not cause excessive gasoline liquid
spillage and excessive evaporative emissions under certain
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conditions. (41954).
5) Prohibits ARB from requiring a gasoline dispensing facility
(GDF) to undergo an Enhanced Vapor Recovery (EVR) Phase II
upgrade until April 1, 2011, under certain conditions
(e.g., annual gasoline throughput of 240,000 gallons or
less; operates in a county with a population less than
100,000; operates in a basin not classified as
nonattainment for ozone). (41964).
This bill :
1)Transfers $8 million from the administration subaccount of
the Petroleum Underground Storage Tank Financing Account to
the grants and loans subaccount for use in the 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)Deletes the 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)Contains an urgency clause.
COMMENTS :
1) Purpose of Bill . According to the author, many small GDF
owners have had difficulty complying with the EVR Phase II
requirements due to a crunched credit market and because
the least expensive EVR system was not certified by ARB
until October 2008. This measure provides a funding source
to assist those GDF operators.
2) Background on RUST Program . The SWRCB operates the RUST
program to assist small, independent gas retailers, who
cannot otherwise afford the expense associated with
required tank and related equipment (including EVR)
upgrades and/or removal, to remain in business. The RUST
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program helps protect California's drinking water from
contaminants and ensures that necessary fuel supplies,
particularly in rural areas, are maintained.
During fiscal year 2006-2007, the RUST Program received 25
loan applications totaling $5,379,124. Of those
applications, 24 loans were approved totaling $5,359,124,
with an average loan amount of $223,297. During the same
year, 70 grant applications were received totaling
$3,285,889. Of those applications, 49 grants were approved
totaling $2,285,889, with an average grant amount of
$46,651.
The grants are awarded based upon review of a complete
application. The applicant is notified and may begin work
and/or purchase equipment. Then the applicant submits
receipts and is reimbursed for the actual cost of the
project. Grant funds can not be used for work that has
been completed before the application was submitted.
The RUST loan and grant program was initially funded
through the SWRCB's Underground Storage Tank Clean-up Fund.
It currently maintains its balance from loan principal and
interest payments. There is an $11.2 million balance in
the administration subaccount that exceeds SWRCB's costs to
administer the program by about $8 million. This is the
funding that is earmarked by this bill. The RUST program
is currently set to sunset in 2011, this bill extends that
sunset until 2016.
3) Background on EVR . Current law provides that a vapor
recovery system "consists of a vapor gathering system
capable of collecting hydrocarbon vapors and gases
discharged and a vapor disposal system capable of
processing such hydrocarbon vapors and gases so as to
prevent their emission into the atmosphere . . ."
According to the ARB in February 2000, vapor recovery
systems have been used in California to control emissions
for over twenty years, and "feasibility of the first vapor
recovery systems was studied at the district level,
particularly in the San Diego and Bay Area districts, in
the early 1970s." The ARB has been required since 1975 to
adopt procedures for determining compliance of a system
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with performance standards to achieve or maintain any
applicable ambient air quality standard (#4 of "Existing
Law").
Since each gasoline transfer leads to displaced vapors, vapor
recovery is used throughout the gasoline marketing chain.
Phase I vapor recovery includes filling of the cargo tank
at the loading rack of a refinery terminal or bulk plant,
as well as transfer from the cargo tank to the GDF. Phase
II vapor recovery controls emissions from gasoline transfer
at the GDF to vehicles.
ARB adopted EVR regulations in March 2000 for about 11,000
GDFs to reduce gasoline vapor emissions with upgraded
equipment by April 1, 2009. ARB certified the first
acceptable system to meet the requirements April 1, 2005.
Two additional systems were certified after that: one in
November 2007 and another in October 2008. According to
ARB all three systems are in the same equipment and
installation cost range for service stations, and the
typical cost for equipment and installation is about
$50,000.
Those areas of the state with additional time to apply
include: a) GDFs located in counties that are in air
districts currently in attainment for the state ozone
standard where EVR is not required (Del Norte, Humboldt,
Lake, Mendocino, and Trinity counties) (17 Cal. Code Regs.
94011); b) GDFs located in air basins not designated
nonattainment for ozone with lower gasoline throughput in
counties with a population less than 100,000 with an April
1, 2011, EVR deadline (Alpine, Lassen, Modoc, Plumas, and
Sierra counties) (Health and Safety Code 41964); and c)
GDFs located in air districts designated nonattainment for
ozone effective 2007 with an EVR July 1, 2011, deadline
(Northern Sonoma, San Luis Obispo, and Siskiyou counties)
(17 Cal. Code Regs. 94011).
According to ARB, the EVR regulations, when fully implemented,
will result in the removal of 25 tons of smog-forming and
toxic emissions statewide - which is equivalent to removing
1,000,000 cars from the road. In the South Coast AQMD,
about 16.7 tons of smog-forming volatile organic compounds
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(VOCs) are released into the air each day from gasoline
dispensing - more than three times the amount from all
seven major refineries in the South Coast region.
4) Equity Issues . With the relatively high compliance rates
listed above, it is clear that many GDF owners have
expended the resources necessary to comply with the EVR
Phase II regulations. While some upgrades have been funded
with RUST funds, the vast majority were completed with GDF
owner/operator resources. The RUST fund is an appropriate
mechanism to fund these upgrades for the smaller GDF
operators; however those funds should not be used to
provide relief to those GDF operators that did not take the
appropriate steps to comply with the EVR regulations before
the April 1, 2009 deadline. Issues of equity have been
part of the debate over the other related legislation (See
#7 below) and concerns have been expressed by those GDF
operators that followed the law and came into compliance
being put at a competitive disadvantage by those that did
not make the investment. Amendments are needed to address
the issue of equity.
5) RUST Program Status . Currently SWRCB has eligible
applications for RUST funds for EVR Phase II upgrades but
are on hold because of lack of funds. This bill would
provide an additional $8 million to fund those
applications. The bill, as currently drafted, is
consistent with the RUST program allocations of 33% for
grants and 66% for loans. An earlier version of the bill
had the $8 million allocation being distributed entirely as
grants. In order to give SWRCB the flexibility to apply
the $8 million as equitably as possible, it might be
prudent to allow SWRCB to determine the ratio of grants to
loans for the allocation made by this bill, but retaining
the current ratios for the existing RUST program. Also, it
is clear in current statute that RUST applicants must be in
compliance with existing underground storage tank laws.
For consistency, since these funds are used for EVR
compliance as well, it should be clarified that RUST
applicants must also be in compliance with related air
quality rules, such as EVR, as well.
6) Related legislation . SB 155 (Cox) Chapter 702, Statutes of
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2008, extended the deadline to April 1, 2011, for smaller
GDFs meeting certain requirements in a basin not classified
as nonattainment for ozone (this is the provision that SB
507 amends to extend the deadline to April 1, 2010, for
other GDFs).
SB 507 (Cox) prohibits ARB from requiring a GDF that does
not meet all the requirements of that provision from
undergoing an EVR Phase II upgrade until April 1, 2010.
The Committee will hear this bill on May 20, 2009.
AB 453 (Garrick) prohibits an APCD from imposing fines
exceeding $1,000 on a GDF for failure to meet the April 1,
2009, EVR Phase II upgrade if: a) the GDF completes the
upgrade before June 30, 2009; or b) the GDF has applied for
a permit from the APCD on or before April 1, 2009, to
complete the upgrade, and the GDF has entered into a
compliance agreement with the APCD on or before June 30,
2009. AB 453 includes other provisions relating to these
penalties and sunsets January 1, 2010. The Assembly
Natural Resources Committee approved AB 453 May 4, 2009
(5-1).
SCR 38 (Wright) requests an enforcement delay for the EVR
Phase II requirements until October 2010. SCR 38 was
referred to the Environmental Quality Committee May 13,
2009.
7)Amendments Needed . Amendments are needed to address the
issues related to equity and to ensure that RUST funds are
available to eligible applicants and not to those delayed
efforts to comply with the EVR rules. (See #4 and #5
above). The bill should be amended to:
a) Provide discretion to SWRCB to determine the ratio of
grants to loans to ensure program needs are met.
b) Limit the use of the $8 million redirection to just
those applicants that have taken the appropriate steps
with their respective air pollution control district and
have a pending RUST application at the SWRCB.
c) Within the existing RUST program, clarify that
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applicants be in compliance with related air quality
rules, such as EVR, as well as underground storage tank
rules.
d) Add a definition of EVR Phase II regulations for
clarification.
SOURCE : Assemblymember Ruskin and California
Independent Oil Marketers Association
SUPPORT : American Lung Association
Ben Lomond Gas Station
California Air Pollution Control Officers
Association
Churn Creek Chevron
Clean Power Campaign
Coalition for Clean Air
Downtown Car Wash
Friends of the Earth
Fullerton 76 Station
Trini's Beacon Station
Union of Concerned Scientists
Valley Improvement Company
OPPOSITION : None on file