BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 574 (Nielsen) - Underground storage tanks: corrective action.
Amended: April 17, 2013 Policy Vote: EQ 9-0
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Marie Liu
SUSPENSE FILE.
Bill Summary: SB 574 would expand the exception for the
requirement that only the current or past owner of a petroleum
underground storage tank can apply for reimbursement of cleanup
costs related to a release from that tank.
Fiscal Impact: Unknown, but likely in the hundreds of thousands
of dollars to low millions of dollars, of new cost pressures to
the Underground Storage Tank Cleanup Fund (USTCF) (Special Fund)
beginning in FY 2012-13.
Background: Under the Barry Keen Underground Storage Tank
Cleanup Trust Fund Act of 1989, every owner of an underground
storage tank is required to pay a storage fee for each gallon of
petroleum placed in the tank. Currently the fee is two cents for
every gallon of petroleum placed in a UST, but this fee is
scheduled to drop to 1.4 cents per gallon on January 1, 2014.
The fees are deposited in the Underground Storage Tank Cleanup
Fund (USTCF).
The money in the fund may be expended by the State Water
Resources Control Board (SWRCB), upon appropriation by the
Legislature, for various purposes, including the payment of
claims up to $1.5 million per occurrence to aid owners and
operators of petroleum underground storage tanks (USTs) to take
corrective action to clean up unauthorized releases from those
tanks and payment of claims for certain third party injuries and
damages.
In order to submit a claim to the USTCF, the claimant must be
the current or past owner or operator of the UST from which the
unauthorized release has occurred. There is one existing
exception to this criterion- a person who acquired a property
that was previously the subject of a completed corrective action
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may file a claim to fund further corrective action of
additionally discovered contamination from the same release,
only if the person who performed the earlier corrective action
filed for a claim. The amount of the new claim cannot exceed the
maximum claim amount less the previous claim.
Proposed Law: This bill would allow an owner of property that
was previously the subject of a completed corrective action
including tank removal, to file a claim to fund further
corrective action from the same release even if:
The previous tank owner who performed the earlier
corrective action did not file a claim to the USTCF,
The current property owner is the owner of an UST, and
The current property owner is current on fees and
permits for the existing UST on the property.
This bill would only become operative if the Legislature
approves an extension of the 0.6 cent increase on the petroleum
storage fee beyond January 1, 2014.
Staff Comments: This bill would modestly expand the UST
ownership exemption in a manner that would apply to only a few
clean-up situations. In fact, the SWRCB is only aware of one
existing situation that would meet the expanded eligibility
criteria set in this bill. The SWRCB estimates that they have
seen approximately 10 or less claims that would fit the expanded
exception criteria of the bill since the inception of the
program.
According to the SWRCB, the average clean-up claim to complete a
corrective action is approximately $486,000 though a claim may
be as high as $1.5 million. Thus, staff believes that this bill
would likely add cost pressures to the USTCF of at least
$486,000 for one claim, but potentially up to several million if
two or more large claims are filed.
Staff notes that there currently are insufficient funds in the
USTCF to pay for all the eligible claims even without the
expansion in this bill. As an illustration, in the last fiscal
year, the SWRCB approved $22 million in claims beyond available
funding. These unpaid claims are to be paid with any additional
surplus monies in the current fiscal year. The existing
temporary 0.6 cent per gallon increase on the petroleum storage
fee, put in place by AB 291 (Wieckowski) Chapter 579/2011, is
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helping offset a large portion of the funding deficiency,
however this fee increase is set to expire on January 1, 2014,
before the backlog in eligible claims is eliminated. AB 282
(Wieckowski) in the current legislative session would extend the
0.6 cent increase for another two years until January 1, 2016.
Recommended Amendments: Clarify that the exemption requirement
that the property owner be an owner of a UST, is requiring the
property owner to be an owner of a UST that is unrelated to the
newly discovered contamination.