BILL ANALYSIS
AB 274
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: AB 274
AUTHOR: Portantino
AMENDED: June 26, 2009
FISCAL: Yes HEARING DATE: July 6, 2009
URGENCY: No CONSULTANT: Caroll
Mortensen
SUBJECT : LANDFILL CLOSURE PLANS: POSTCLOSURE TRUST
FUND
SUMMARY :
Existing law :
1)Under the California Integrated Waste Management Act of
1989, requires an operator of a solid waste facility to pay
a quarterly fee (tipping fee) to the Board of Equalization
(BOE) in an amount established by the Integrated Waste
Management Board (IWMB) sufficient to generate revenues
equivalent to the approved budget for that fiscal year,
including a prudent reserve. The fee cannot exceed $1.40
per ton. Revenue from the fees must be deposited in the
Integrated Waste Management Account. (Public Resources Code
48000).
2) Requires owners and operators of solid waste landfills to
plan and provide funds to properly close a facility
(closure) and manage the site after closure (postclosure).
(43500 et seq.).
3) Required the IWMB to, by January 1, 2008:
a) Study and define the conditions that potentially
affect solid waste landfills, including technologies and
engineering controls designed to mitigate potential
risks, in order to identify potential long-term threats
to public health and safety and the environment.
b) Study various financial assurance mechanisms that
would protect the state from long-term postclosure and
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corrective action costs in the event that a landfill
owner or operator fails to meet its legal obligations to
fund postclosure maintenance or corrective action during
the postclosure period. (43050).
4)Required the IWMB by July 1, 2009, to adopt regulations and
develop recommendations for needed legislation to implement
the findings of the study in #2 above. (43050).
This bill :
1) Prohibits an owner or operator of a closed solid waste
landfill that is subject to closure and postclosure
maintenance plan from selling or offering for sale any
portion of a closed waste management unit unless the
intended purchaser provides evidence to the satisfaction of
the IWMB their ability to meet financial assurance
requirements.
2) Declares Legislative intent regarding closure of solid
waste landfills including a statement that, since the
creation of a Trust Fund will greatly reduce the impacts of
defaults in the postclosure period, that owners and
operators that participate in the Trust Fund be subject to
differing financial assurance requirements for postclosure
maintenance than those owners or operators that do not
participate in the Trust Fund.
3) Creates the State Solid Waste Postclosure Trust Fund in the
State Treasury that is funded by a voluntary $0.12 per ton
fee on solid waste disposed in California.
4) Creates a system of requirements for owners and operators
to 'opt in' to payment of the fee and states that once they
elect to pay in to the fund, they may not 'opt out' to
begin on January 1, 2011.
5) Requires operators of multiple landfills that are operating
on July 1, 2010 to maintain evidence of financial ability
and are required to include all of the operator's operating
landfills in the letter of participation.
6) States that the new fee shall not be operative after July
1, 2010 unless the IWMB receives on or before July 1, 2010,
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letters of participation in the Trust Fund from landfill
operators representing at least 50 percent of the total
annual waste disposal volume in 2009.
7) Sets parameters for expenditures by the IWMB of moneys in
the Trust Fund including that the money in the Trust Fund
may only be used to pay for corrective action and
postclosure activities that have not been performed by the
operator of a solid waste landfill participating in Trust
Fund, and only upon a determination by the IWMB that all of
the following conditions are met:
a) The solid waste landfill owner or operator has failed
to comply with a final order issued by the IWMB.
b) The financial assurance mechanisms are inadequate to
fund necessary compliance activities.
c) The solid waste landfill was operating pursuant to a
valid solid waste facilities permit on or after January
1, 1988, when the state's requirements for solid waste
landfill financial assurances went into effect and is
required to have financial assurances.
d) The IWMB has used and exhausted the financial
assurance mechanism provided by the public operator.
8) Authorizes the IWMB to adopt regulations, if necessary,
setting forth additional criteria for making expenditures
from the Trust Fund.
9) States that no liability or obligation is imposed on the
state and the IWMB shall not incur any obligation beyond
the extent to which money is expended from the Trust Fund.
10)Requires the IWMB, to the maximum extent feasible, recover
from the landfill operator the amount of money expended
from the Trust Fund, including a reasonable amount for any
contract administration costs of the board and an amount
equal to the interest that would have been earned on the
expended funds as the result of the operator's failure to
comply with the final order issued by the IWMB.
11)Authorizes the amount of any cost incurred by the IWMB
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pursuant to this section is recoverable from the landfill
operator in a civil action brought by the Attorney General.
12)Authorizes the IWMB to impose a lien on the operator's
assets or real property as an additional remedy to recover
funds from the operator for expenditures from the Trust
Fund.
13)Requires the IWMB, on or before January 1, 2014, and every
two years thereafter, to report to the Legislature on
expenditures from Trust Fund, the status of cost recovery
actions, and any recommended statutory changes that are
required to ensure adequate resources are available to
carry out the purposes of the State Solid Waste Postclosure
Trust Fund.
14)Allows operators participating in the Trust Fund to only be
required to demonstrate financial assurance for corrective
actions relating to the reasonable and foreseeable
potential migration of landfill gas, exclusive of the
corrective action requirements of the regional water
quality control boards, unless the IWMB determines, with
technical input from an independent third-party engineering
firm, that specific site conditions indicate that
additional specific corrective actions are required at the
site.
15)Allows, after 15 years of completed postclosure
maintenance, operators participating in the Trust Fund,
with IWMB approval, to reduce the term of financial
assurance in five-year increments down to a minimum of five
years if all of the following requirements are met:
a) The operator has not been issued an enforcement order
during the prior five-year period.
b) The operator has performed enhanced monitoring
activities in conformance with the postclosure
maintenance plan and applicable board regulations and
has performed appropriate maintenance and corrective
action based on the monitoring.
c) The operator demonstrates the remaining financial
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assurance mechanism is adequate to cover all reasonably
expected costs to be incurred until the completion of
the postclosure maintenance period.
COMMENTS :
1)Purpose of Bill . According to the author, AB 274 would
prohibit the owner or operator of a closed solid waste
landfill from selling any portion of a closed waste
management unit unless the IWMB determines that the
purchaser is able to comply with the state's stringent
financial assurance requirements.
Additionally, the bill will establish the Solid Waste
Postclosure Trust Fund and allow operators to voluntarily
opt in to a $0.12 per ton fee. The fee collected would
provide a safety net to mitigate potential environmental
impacts of postclosure solid waste landfills, according to
provisions in the bill.
2)Closure/Postclosure . This is an area of solid waste
management that is coming to the forefront as some of the
largest landfills in the state are getting close to capacity
and their closure is imminent. Thus, much activity is
occurring in this subject area. For background, closure and
postclosure refer to the process during which a landfill or
disposal site or a portion thereof, is no longer receiving
waste and is being prepared for postclosure maintenance
according to an approved plan and construction schedule.
When a site is closed, it has ceased accepting waste and has
been closed in accordance with applicable statutes,
regulations, and local ordinances in effect at the time.
Closure and postclosure maintenance plans ensure that
landfill closure and postclosure maintenance and the
eventual reuse of disposal sites will conform to state
performance standards and minimum substantive requirements.
Approved closure and postclosure maintenance plans are a
prerequisite of a facility's operating permit. The owner
and operator of the disposal site, or landfill, are
responsible for developing and implementing the plans.
The operator must also provide demonstrations of financial
responsibility for both closure and postclosure maintenance.
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Closure and postclosure plans are required for all solid
waste disposal sites operating after January 1, 1988. They
are subject to the review and approval of the enforcement
agency, the regional water quality control board (RWQCB),
and the IWMB.
3)What's closing and when? Based on the estimated closure
dates and postclosure cost estimates prepared by the IWMB
and obtained from closure/postclosure plans prepared by the
operators of each of the 282 landfills in the state a number
of significant findings are as follows:
By 2009 half of the 282 California landfills
subject to financial assurance (FA) requirements will
be closed and in the postclosure maintenance (PCM)
phase.
In the year 2021 the first California landfill
will be beyond its currently required 30-year PCM FA
demonstration.
PCM assurances for all 282 sites will peak in 2033
and then decline gradually until the end of the century
when the mega-landfills enter their PCM period.
By the middle of this century the net present
value of unassured PCM costs for all sites in PCM as
currently estimated could be more than $600 million,
growing to an accumulated unassured value of $3.2
billion by the end of this century. These values are
derived from the PCM cost estimates as they are
currently represented by the owners/operators today.
The estimates neither identify any decreases in ongoing
PCM expenses over time or any increases in the same
expenses. There is currently no methodology to predict
when or to what degree sustained reductions in the
estimated PCM expenses at closed landfills will occur.
1)Recent Activity . The IWMB has been hard at work at studying
and developing regulations as the result of a bill Assembly
Member Montanez authored, AB 2296 (Chapter 504, Statute of
2006). This bill required the IWMB on or before January 1,
2008 to:
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Conduct a study to define the conditions that
potentially affect solid waste landfills, including
technologies and engineering controls designed to
mitigate potential risks, to identify potential
long-term threats to public health and safety and the
environment.
Conduct a study on various financial assurance
mechanisms that would protect the state from long-term
postclosure maintenance and corrective action costs in
the event that a landfill owner or operator fails to
meet its legal obligations.
This bill also required the IWMB, by July 1, 2009, to adopt
regulations to address the findings of the study and provide
recommendations for necessary statutory changes to implement
the finding of the study.
At its June 16, 2009 meeting, the IWMB approved a report,
with minor edits, that recommended the establishment of a
pooled fund. (At the time of this analysis, the report was
still listed as "draft" on the IWMB's website). The report
fund is needed to address the gap of protection between the
financial assurances established with the proposed
regulations and the potential default exposure that can't be
covered through regulation. However, the proposed
regulations call for more stringent requirements than are
proposed in this bill.
1)Policy Considerations . These efforts are ongoing as the
IWMB is working on a second set of regulations that still
have not been adopted. Because the IWMB has not completed
all the work needed in this area, consideration might be
given about predetermining the function and application of
the Trust Fund proposed in this bill. While most of the
discussions in this area have pointed to the need for some
sort of fund and/or funding mechanisms related to potential
problems with landfill closure and postclosure issues, it
might be prudent to establish a fund and funding source,
such as the one proposed in this bill, and then allow the
IWMB, with input from stakeholders, to provide guidance and
structure through regulations and suggestions for statutory
change.
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2)Related Legislation . AB 2866 (Huffman), introduced in 2008,
increased the tipping fee from $1.40 per ton to $2 per ton
beginning July 1, 2009 and directs the additional funding to
be used for a variety of purposes, including establishing a
trust fund to protect the state from liability associated
with closed and abandoned solid waste disposal sites. The
author removed, consistent with the recommendation in the
committee analysis, the provisions of the bill that set
parameters and conditions regarding the trust fund as to not
predetermine the outcome of the work of the IWMB. This bill
was held in the Senate Appropriations Committee.
3)Amendments Needed . To address the issues raised in #5 above
and to be consistent with previous Committee actions on
similar legislation, the bill should be amended to:
a) Delete lines 17-38 on Page 3 and lines 1-4 on Page 4.
b) Delete lines 22-40 on Page 6 and lines 1-6 on Page 7.
4)Next Steps . Since the IWMB is moving forward in this area,
regulations are being developed, and the need for some sort
of a trust fund has been clearly established, the author may
wish to continue working with staff on this bill to develop
language that would more appropriate to guide this effort.
SOURCE : Waste Management, Inc.
SUPPORT : Recology
OPPOSITION : None on file