California Adds Ten Years and Hundreds of Millions of Dollars to Cleanup Underground Storage Tank Sites

October 7, 2014

On September 25, 2014, Governor Brown signed Senate Bill 445 (SB 445) into law extending the state’s Underground Storage Tank Cleanup Fund (UST Cleanup Fund) for an additional 10 years.  SB 445 takes effect immediately. The extension ensures that UST sites in need of remediation will continue to have access to state funding, while also ensuring that the state can fund its outstanding obligations to UST sites that have been approved for funding, but are still awaiting Fund dollars.

The new law extends the sunset date of the UST Cleanup Fund program to January 1, 2026, and authorizes an increased fee on all petroleum products stored in USTs from $0.014 to $0.02 per gallon. For claims submitted to the Fund after December 31, 2014, the new legislation reduces the maximum authorized payment from the current $1.5 million to $1 million for all claims, including claims for EAR Account sites, Orphan Site Cleanup Fund sites, and Commingled Plume Account sites.  The program extension also guarantees that UST owners and operators can continue to rely on the Fund as a mechanism for demonstrating financial responsibility as required under state and federal law until December 31, 2024.

The new law requires owners and operators of single-walled USTs to permanently close their single-wall tanks by December 31, 2025. A portion of the assessed fee increase will be dedicated to RUST loans and grants available to small businesses for the upgrade, removal, and replacement of USTs in order to meet this new requirement. The law also establishes the new Site Cleanup Subaccount (SCSA), funded by the assessed fee, for investigating and cleaning up contaminated sites without regard to the source of the contamination, particularly where there are no viable responsible parties.

SB 445 also includes several provisions designed to respond to increased concerns of fraud in the UST Cleanup Fund program. The new law imposes civil penalties on persons who fail to or refuse to furnish information or furnishes false information and persons who make misrepresentations in claims submitted to the Fund. These penalties could be imposed civilly by the Attorney General or administratively by the State Water Resources Control Board (State Water Board). Moreover, the law makes it a crime to knowingly make or cause to be made a false statement, material misrepresentation, or false certification in support of a claim, punishable by a criminal fine, imprisonment, or both. Finally, the law provides the executive director of the State Water Board with the authority to order permanent disqualification of persons convicted or found to be civilly liable under these provisions.

In addition to the substantive changes discussed above, SB 445 also:

• Requires the State Water Board to conduct the Expedited Cleanup Pilot Project to investigate and implement methods to improve claim processing procedures to reduce the overall cost for site cleanup and time to reach closure;
• Increases the Regulatory Technical Assistance cap to $5,000 for those defined costs incurred after September 25, 2014, plus costs for electronic uploads of UST Cleanup Fund related documents; and
• Requires independent audits of the UST Cleanup Fund every 5 years.

The enactment of SB 445 is great news for owners and operators of UST sites in need of remediation funding, particularly those currently waiting for funding on priority lists. UST owners and operators should carefully review the significant changes to the UST Cleanup Fund program as they also may affect eligibility for funding and impose new requirements on claimants. For additional information or for assistance navigating the UST Cleanup Fund, please contact us.