BILL ANALYSIS �
AB 467
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 467 (Eng) - As Amended: March 31, 2011
Policy Committee: Environmental
Safety and Toxic Materials Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill modifies the provisions of Proposition 84 to allow an
entity that receives Proposition 84 bond funds from the
Department of Public Health (DPH) for groundwater cleanup
capital costs and that later recovers costs for groundwater
cleanup from a responsible party, to keep that money to fund
additional groundwater cleanup. This changes current law, which
requires such a grantee to use monies obtained from a
responsible party to repay any Proposition 84 awards.
FISCAL EFFECT
1)Potential redirection of funds, possibly in the millions of
dollars, to certain local groundwater cleanup projects, and
away from the DPH or the State Treasury. (Proposition 84 bond
funds.)
2)Potential litigation costs of an unknown amount, but possibly
in the hundreds of thousands of dollars, to defend the
provisions of this bill, should they be challenged. (GF.)
COMMENTS
1)Rationale. The author is motivated by the desire to clean up
groundwater in the San Gabrielle Valley area, which serves as
drinking water for the area and is heavily contaminated with
industrial pollutants. The author expresses the desire to
keep more monies local to fund local cleanup of groundwater.
The author contends this bill will fulfill the intent of
Proposition 84-groundwater cleanup-while avoiding delays in
groundwater cleanup that could occur if DPH reawards funds
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received from parties responsible for groundwater cleanup
and/or if such funds were put to another purpose.
2)Background . Proposition 84 (The Safe Drinking Water, Water
Quality and Supply, Flood Control, River and Coastal
Protection Bond Act of 2006) authorized the state to sell $5.4
billion in general obligation bonds for safe drinking water,
water quality, and water supply; flood control; natural
resource protection; and park improvements. Included in those
funds is $60 million in grants and loans for projects to
prevent or reduce contamination of groundwater that serves as
a source of drinking water. Proposition 84 designates DPH as
the administrator of the $60 million.
3)Bill Predetermines Use of Proposition 84 Funds. Consistent
with the provisions of Proposition 84, DPH awards grants to
entities involved in the cleanup of groundwater used as
drinking water. The DPH awards are competitive, meaning DPH
evaluates various applicants for funding based upon criteria
established by the department consistent with existing law and
state policy.
In some cases, an entity that receives Proposition 84 funding
from DPH may subsequently secure money from a party
responsible for the groundwater contamination. To date, no
such money has been collected by a recipient of DPH
Proposition 84 funds. Nonetheless, under the provisions of
Proposition 84, DPH is to require repayment of Proposition 84
costs subsequently recovered from a party responsible for the
contamination.
There is disagreement over how to interpret the bond act's
repayment provision. Legislative Counsel informally opines
that "repayment" presumably means that funds recovered from a
responsible party would be returned to DPH. DPH, however,
concludes recovered funds would need to be repaid to the State
Treasury. Either way, the funds would be available to state
government for some other use, be it additional groundwater
cleanup, repayment of borrowed funds, or some other allowable
purpose.
This bill supplants the state's role in determining the use of
funds recovered from responsible parties. In effect, the bill
predetermines that the entity most deserving of the next
dollar of Proposition 84 funds is a previous grantee that
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happened to receive monies from a responsible party.
4)Bill Could Get Groundwater Cleaned More Quickly and Correct
Disincentive. The author and supporters, in calling for
monies received from responsible parties to be used locally
for further groundwater cleanup, tacitly accept the bill's
removal of the state's role in determining how to expend funds
recovered from responsible parties. These proponents note,
however, that DPH would retain its role in overseeing a
grantee's groundwater cleanup activities. These proponents
contend that depositing recovered money with DPH or in the
State Treasury would divert Proposition 84 funds from their
intended purpose-the cleanup of groundwater-at least for a
time and possibly forever.
Recovery of pollution costs from responsible parties may take
years. And those costs may be recovered in dribs and drabs,
proponents contend. Recovered and subsequently repaid
groundwater cleanup funds may stay with DPH for a lengthy time
before being re-awarded for groundwater cleanup, assuming they
are dedicated to that use. Better to let the money stay in
the hands of entities working to cleanup groundwater,
proponents argue. Proponents also note that DPH is several
years overdue in adopting regulations governing the repayment
of costs recovered from responsible parties.
In addition, this bill might work to correct a disincentive
that results from Proposition 84's provisions. That is, a
grantee might have little reason to pursue money from a party
responsible for groundwater contamination if the grantee knows
it will have to send such money to DPH or the State Treasury.
Therefore, this bill might encourage grantees to seek money
from responsible parties so that money could be used locally
for additional groundwater cleanup.
5)Bill Says It's Consistent with Proposition 84, but Counsel
Says It Might Not Be. This bill allows Proposition 84
grantees to retain monies recovered from parties responsible
for groundwater contamination. The bill declares itself
consistent with Proposition 84, section 75025. That section
of the bond act reads, in part, "DPH shall require repayment
for costs that are subsequently recovered from parties
responsible for the contamination."
In addition, Proposition 84 explicitly provides the
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Legislature with authority to "enact legislation necessary to
implement the bond act." Such authority, however, is
generally understood to be limited to legislative actions
consistent with the provisions of the bond act.
The author's office provided to the committee a letter from
Legislative Counsel that addresses the bill's legality. While
the author's office describes counsel's opinion as ambiguous,
it seems counsel's opinion is, if not definitive, rather
pointed: the proposed measure may constitute an amendment of
the initiative bond act and, as such, would require the
approval of the electors.
While the bond measure language leaves room for
interpretation, it seems a stretch, to conclude that retention
of funds is equivalent to repayment. Proponents counter that
it is the Legislature's role to provide clarity in
implementation of a bond act when its provisions fail to
provide adequate direction for implementation.
6)Support. This bill is supported by the San Gabriel Basin
Water Quality Authority and the Upper San Gabriel Valley
Municipal Water District.
7)There is no registered opposition to this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081