On May 26, 1999, Governor Gray Davis of California signed into law Senate Bill 47 ("SB 47") which reenacts and revises the Carpenter-Presley-Tanner Hazardous Substance Account Act (the "Act"), Chapter 6.8 of California's Health and Safety Code. Operational provisions of this law had sunsetted on January 1, 1999 as a result of the failure of the State Legislature to reauthorize them, including provisions governing listing of sites, authorization of the California Department of Toxic Substance Control ("DTSC" or the "Department") to issue cleanup orders, and other key aspects of the state Superfund program.
The new law repeals, reenacts, and revises the Act. It is immediately effective. What follows is a discussion of significant changes to the Act as it existed before January 1, 1999.
Liability and Cost Recovery
The new law requires DTSC to include "the largest manageable number" of potentially responsible parties ("PRP") in any cleanup order that applies to a multiple PRP site after considering certain factors, including the adequacy of the evidence of each PRP's liability, the financial viability of each PRP, and the degree to which each PRP contributed to the release of hazardous substances at the site. PRPs who have received a cleanup order may request the inclusion of other PRPs in the order. However, determinations by the Department regarding the number or identity of PRPs included in an order are not subject to judicial review. Despite the non-reviewability of these decisions, DTSC will certainly feel additional pressure to exercise its power evenhandedly.
SB 47 also requires any responsible party who must perform long-term operation and maintenance ("O/M") activities as part of a response action to demonstrate and maintain certain financial assurances. Acceptable financial assurance mechanisms include trust fund, surety bond, letter of credit, and insurance. This requirement may be waived for small businesses when they cannot qualify for any of the required financial assurance mechanisms or when they cannot afford both to provide the financial assurance and to perform the required O/M activities.
Cleanup Procedures
Provisions in the new law are both more stringent and more lenient than those they replace. On the stringent side, any health or ecological risk assessment prepared in conjunction with a response action must conform to the requirements, policies, and practices of the U.S. Environmental Protection Agency. Health risk assessments must include consideration of risks to susceptible subpopulations, possible synergistic effects among multiple hazardous substances, and additive risks posed by a hazardous substance due to exposure in air, drinking water, or other sensitive media. On the lenient side, current and reasonably foreseeable future land use conditions at the site must be taken into account in health or ecological risk assessments. This is a welcome development that may lead to the implementation of more reasonable (and realistic) remediation standards than those previously applied at some sites.
SB 47 also expands the opportunities available to the public to participate in site cleanup decisionmaking. The Department or the Regional Water Quality Control Board, whichever is overseeing a response action, must conduct a survey to determine the level of community interest in a cleanup action. Based on the results, the Department or Regional Board must provide appropriate opportunities for public involvement at key stages of the response-action process, including the health risk assessment, the site inspection, the remedial investigation, and the feasibility study. In addition, upon receipt of a petition signed by at least 50 members of a community affected by a response action or a request from the local legislative body, the Department or Regional Board must provide assistance in establishing community advisory groups. Finally, DTSC and the State Water Resources Control Board must jointly establish two community service offices by July 1, 2000, one to serve northern California and the other to serve southern California.
Orphan Shares
Orphan shares -- the share of liability for response costs that is attributable to the activities of persons who are defunct or insolvent -- are also addressed by SB 47. The new law creates the Orphan Share Reimbursement Trust Fund to be used to reimburse responsible parties who have successfully cleaned up sites and have paid the cleanup costs attributable to orphan parties. However, such reimbursements may not exceed 75% of the total cost of a cleanup, and the total amount allocated to any one site may not exceed 10% of the amount in the fund in any given year. Reimbursement is not available for sites on the federal Superfund (NPL) list or sites cleaned up or subject to a binding cleanup agreement executed before January 1, 1999. While the trust fund provision is good news, SB 47 does not contain any source of orphan funding. Instead, it provides that the provisions governing orphan shares will go into effect on the operative date of a statute that becomes operative on or after January 1, 2000 and does both of the following: (1) creates a position known as the Administrator of the Orphan Share Reimbursement Trust Fund, appointed by the Governor and subject to confirmation by the Senate; and (2) either appropriates funds to the fund, or establishes a separate revenue source, or both. In this manner, the California Legislature deferred for future discussion the thorny issue of funding reimbursement of orphan shares that had scuttled reauthorization of the Act during the last session.