ASSEMBLY THIRD READING

ATR Bill Id:AB 755

Author:(Holden)

As Amended Ver:May 16, 2019

2/3 vote

SUMMARY:

This bill increases the California tire fee, from $1.75 to $3.25, and directs the additional revenue to the Storm Water Permit Compliance Fund (Fund) to be continuously appropriated to the State Water Board (SWRCB) for grants for municipal stormwater projects that mitigate pollution from tires.

Major Provisions

1. Increases the California tire fee from $1.75 to $3.25 and directs the increase to the Fund.
2. Specifies that the Fund be continuously appropriated to SWRCB as follows:
   1. Competitive grants to fund projects and programs for municipal separate stormwater system permit compliance requirements that prevent or remediate pollutants, including zinc, caused by tires in the state. Specifies that priority be given to applicants with zinc levels that exceed the total maximum daily loads (TMDLs).
   2. An annual audit of the Fund to be submitted to SWRCB and posted on its website.

COMMENTS:

In order to comply with federal and state permitting requirements, California communities are tasked with reducing the amount of zinc in stormwater. According to the California Stormwater Quality Association report, Zinc Sources in California Urban Runoff, tires are a "major source" of zinc in urban runoff, along with outdoor zinc surfaces, other vehicle-related items like brake pads and wheel weights, zinc pesticides, and industrial sources. Nearly all rubber products contain zinc oxide, which accelerates the vulcanization (i.e., makes the rubber more durable). A typical passenger tire contains about 100 grams of zinc oxide. Other zinc compounds may also be used in passenger tires. As a car is driven, abrasion creates small rubber particles called "tire wear debris." The debris is ground into the pavement as vehicles drive over the road surface. Eventually, they are lifted into the air or washed off the road surface by rain. Whichever route it takes, this debris generally settles into roadside soils, with the greatest concentration occurring within 6 meters of the road, but measurable levels exist up to 30 meters away. Recycled tires products can also contain zinc compounds. Shredded tires and crumb rubber products manufactured from recycled tires, including playground surfacing and rubberized asphalt concrete, can contribute to zinc runoff.

An October 2014 report on stormwater funding options prepared for the California Contract Cities Association and the League of California Cities, Los Angeles Division identifies a "per tire" zinc control fee to fund local government costs associated with mitigating zinc pollution. This bill is consistent with this recommendation.

According to the Author:

The state as a whole, especially Southern California, continues to be seriously affected by the drought. In response, major investments in water infrastructure have been made to capture stormwater and remove contaminants for broad use. Stormwater runoff and pollution are common causes to the high cost of water infrastructure, as sophisticated systems are required to test and treat for potential pollutants. Among other metals and biological contaminants, one common pollutant to stormwater is zinc. A report of the status of water quality funding made note that zinc is a high-level water quality threat to the current collection of stormwater.

The [Fund] will offer competitive grants for statewide and regional projects and programs that address the effect of metals and contaminants in water. To raise revenue for the Fund, this bill will add $1.50 to the California tire fee, increasing the fee to $3.25 per tire. No more than 6% of the revenue deposited in the Fun may be used for overhead.

Arguments in Support:

Supporters of the bill state that it increases the California tire fee by a modest $1.50 to raise revenue to fund projects and programs for municipal separate storm sewer permit compliance requirements that would limit zinc pollutants caused by tires or other sources. When a vehicle is driven, the rubber tire tread slowly wears off and mixes with other materials, like pavement debris and soils, which eventually are washed into storm drains. This is becoming a high-level water quality threat to the current collection of stormwater.

Arguments in Opposition:

Opponents of the bill state that they do not understand the focus on tires, since they contain a minimal amount of zinc in order accelerate the vulcanization. Many outdoor metal surfaces made with galvanized steel and coated with liquid zinc also contribute zinc pollutants into storm-water runoff. New fees and taxes for storm-water projects should be shared fairly among all the zinc surfaces and products that cause pollutants to enter storm runoff. Most troublesome with the proposal is that this tax will fall hardest on those with the least ability to pay, namely low-income individuals and hard-working families. AB 755 institutes a "regressive" tax that, combined with the current tire fee, will increase the cost of a set of new tires by $13.00.

FISCAL COMMENTS:

1. Increased revenues of approximately $55 million per year (Stormwater Permit Compliance Fund).
2. State Water Board administrative costs are capped at 3% of annual revenue. (Stormwater Permit Compliance Fund).
3. Minor reimbursable costs, likely of $50,000 annually, for the Department of Tax and Fee Administration to collect the fee (Stormwater Permit Compliance Fund).

VOTES:

ASM NATURAL RESOURCES: 8-3-0

YES: Friedman, Chau, Eggman, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Flora, Mathis, Melendez

ASM ENVIRONMENTAL SAFETY AND TOXIC MATERIALS: 6-3-0

YES: Quirk, Kalra, Bauer-Kahan, Cristina Garcia, Holden, Muratsuchi

NO: Melendez, Dahle, Mathis

ASM APPROPRIATIONS: 11-6-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte, Petrie-Norris

ABS, ABST OR NV: Maienschein

UPDATED:

VERSION: May 16, 2019

CONSULTANT: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0000894

Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 755

Author:(Holden) – As Introduced Ver:February 19, 2019

Urgency: Yes State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill increases the California tire fee, from $1.75 to $3.25, and directs the additional revenue to the Storm Water Permit Compliance Fund (Fund) to be continuously appropriated to the State Water Board for grants for municipal stormwater projects that mitigate zinc pollution from tires.

FISCAL EFFECT:

1. Increased revenues of approximately $55 million per year (Stormwater Permit Compliance Fund).
2. State Water Board administrative costs are capped at 3% of annual revenue. (Stormwater Permit Compliance Fund).
3. Minor reimbursable costs, likely of $50,000 annually, for the Department of Tax and Fee Administration to collect the fee (Stormwater Permit Compliance Fund).

COMMENTS:

1. Purpose. According to the author, “Stormwater runoff and pollution are common causes to the high cost of water infrastructure, as sophisticated systems are required to test and treat for potential pollutants.”

This bill adds $1.50 to the tire fee to create funds to offer competitive grants for statewide and regional projects and programs to prevent or remediate zinc pollutants in stormwater.

1. Background. In order to comply with federal and state permitting requirements, California communities are tasked with reducing the amount of zinc in stormwater. According to the California Stormwater Quality Association report, “Zinc Sources in California Urban Runoff”, tires are a "major source" of zinc in urban runoff, along with outdoor zinc surfaces, other vehicle-related items like brake pads and wheel weights, zinc pesticides, and industrial sources.

In January 2014, in the midst of the state's ongoing four-year drought, Governor Jerry Brown released the California Water Action Plan that called for multiple-benefit stormwater management solutions. To accomplish this, the State Water Board and regional boards have been working cooperatively with local agencies to encourage multiple benefit stormwater projects to achieve regulatory compliance and supplemental water supplies.

Proposition 1, approved by the voters on November 4, 2014, authorized $200 million to The State Water Board to provide matching grants to public agencies, nonprofit organizations, public utilities, state and federally recognized Indian tribes, and mutual water companies for multi-benefit stormwater projects. Despite the Proposition 1 funding, local governments need assistance to comply with stormwater requirements. Many jurisdictions in Southern California are struggling to comply with new standards and new permit requirements. While Proposition 1 offered limited funds to help, the cost remains prohibitive.

1. Tire Fee. The California Tire Recycling Act requires CalRecycle to manage and regulate waste tires within the state and requires the collection of a tire fee on each new tire purchased in the state. Of the $1.75 fee per tire, $1 is deposited into the Tire Recycling Management Fund for oversight, enforcement and market development grants related to waste tire management and recycling. The remaining $0.75 is deposited into the Air Pollution Control Fund for programs that mitigate or remediate air pollution caused by tires.

This bill increases the fee to a total of $3.25 per tire.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 9, 2019

ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS

Bill Quirk, Chair

ABPCA Bill Id:AB 755 (

Author:Holden) – As Introduced Ver:February 19, 2019

SUBJECT: California tire fee: Stormwater Permit Compliance Fund

SUMMARY: Increases the California tire fee from $1.75 to $3.25 per tire, and directs the additional revenue to be available for grants for municipal stormwater projects that mitigate zinc pollution from tires. Specifically, this bill:

1) Increases the California tire fee from $1.75 to $3.25 per tire: directs the additional revenue to the Stormwater Permit Compliance Fund (Fund), to be administered by the California Water Resources Control Board (State Water Board); and, requires the State Water Board to provide grants for municipal stormwater projects that mitigate zinc pollution from tires.

2) Directs the money from the tire fee as follows: seventy-five cents ($0.75) to the Air Pollution Control Fund, one dollar ($1.00) to the California Tire Recycling Management Fund, and one dollar and fifty cents ($1.50) to the Stormwater Permit Compliance Fund.

3) Authorizes the State Water Board to use funds in the Stormwater Permit Compliance Fund for competitive grants to fund projects and programs for a municipal storm sewer system compliance requirement that would prevent or remediate zinc pollutants caused by tires.

4) Increases, beginning on January 1, 2024, the California tire fee from $0.75 to $2.25 per tire: directs the additional revenue to the Fund, to be administered by the State Water Board; and, requires the State Water Board to provide grants for municipal stormwater projects that mitigate zinc pollution from tires.

5) Provides that this is an urgency in order to help grant recipients achieve municipal storm sewer system permit compliance requirements that would prevent or remediate zinc pollutants caused by tires at the earliest possible time.

EXISTING LAW:

1) Enacts the "California tire fee" and requires a person who purchases a new tire to pay a California tire fee of one dollar and seventy-five cents ($1.75) per tire and reduces the tire fee to seventy-five cents ($0.75) per tire beginning on January 1, 2024. (Public Resources Code (PRC) § 42885)

2) Authorizes the Department of Resources, Recycling, and Recovery (CalRecycle) to award grants, subsides, rebates, and loans, from the tire fee, to businesses or other enterprises and public entities that result in reduced landfill disposal of used whole tires and reduced illegal disposal or stockpiling of used whole tires. (PRC § 42872)

3) Pursuant to the Porter-Cologne Water Quality Control Act, prohibits the discharge of pollutants to surface waters unless the discharger obtains a permit from the State Water Board. (Water Code (WC) § 1300 et seq.)

4) Requires the State Water Board to establish an online resource center that addresses measures available for municipalities to comply with municipal stormwater permit requirements. (WC § 13383.9)

5) Establishes the federal Clean Water Act to regulate discharges of pollutants into the waters of the United States and regulate quality standards for surface waters. (33 United States Code (U.S.C.) §1251 et seq.)

6) Establishes the national pollutant discharge elimination system (NPDES) permit program to prescribe waste discharge requirements which, among other things, regulate the discharge of pollutants in storm water, including municipal storm water systems. (33 U.S.C. § 1251 et seq.)

FISCAL EFFECT: Unknown.

COMMENTS:

Need for the bill: According to the author, "The removal of contaminants, including zinc, from stormwater is an urgent issue for a number of cities throughout California. For example, in Los Angeles County it is estimated it will cost approximately $20 billion for compliance with stormwater permits and to upgrade infrastructure and implement stormwater capture and contaminant removal technology.

AB 755 would increase the California tire fee by a modest $1.50 per tire to help cities fund clean-up projects to reduce and eliminate zinc found in stormwater runoff. Zinc is among several dozen heavy metals and other contaminants that are considered high-level water quality threats throughout areas in California. Elevated zinc concentrations in runoff must be addressed to achieve Clean Water Act compliance in many California urban areas.

AB 755 offers a much-needed funding tool to offset the costs of zinc remediation. It is estimated that the permit compliance fund would raise approximately $50 million annually, which would be invested in the State’s communities to reduce and eliminate zinc as a public health and environmental threat."

Stormwater: Stormwater is runoff from rain or snow melt that runs off surfaces such as rooftops, paved streets, highways, or parking lots carrying with it pollutants such as oil, pesticides, herbicides, sediment, trash, bacteria, and metals. The runoff can then drain directly into a local stream, lake, or bay. Often, the runoff drains into storm drains untreated which eventually flows into a local body of water. Both the United States Environmental Protection Agency (US EPA) and the Regional Water Quality Control Boards (Regional Water Board) have determined that stormwater and urban runoff are significant sources of water pollution that can threaten aquatic life and public health. However, stormwater may also act as a resource and recharge to groundwater when properly managed.

Tires derived zinc stormwater pollution: According to the report, "Zinc Sources in California Urban Runoff" prepared for the California Stormwater Quality Association on April 2015, the major sources of zinc in urban runoff are outdoor zinc surfaces (including galvanized surfaces) and tire wear debris. The report states, "Elevated zinc concentrations in urban runoff must be addressed for Clean Water Act compliance in many California urban areas, particularly in the Los Angeles and San Diego regions, which have multiple Total Maximum Daily Loads (TMDLs) for zinc. Treating urban runoff to achieve compliance, while theoretically feasible, could cost billions of dollars statewide. Controlling zinc at its source is a promising alternative. For outdoor zinc surfaces, both source control and on-site treatment of concentrated runoff appear to be technically feasible. Reducing zinc from tires will pose a greater challenge, as low-zinc and zinc-free products have little market presence and tire wear debris is widely dispersed across urban environments, making it very difficult to collect…Examine the possibility of petitioning the California Department of Toxic Substances Control (DTSC) to require evaluation of zinc in tires under its Safer Consumer Products Regulations. If multiple California agencies determine that zinc reductions are necessary for Clean Water Act compliance and cannot reasonably be achieved from other sources, the potential to reduce zinc concentrations in tires should be evaluated."

Regulating stormwater: For nearly two decades, the State Water Board has regulated runoff and treatment of storm water from industrial and municipal sources in California, including storm drains, rivers, streams, lakes, wetlands, and the ocean. The federal Clean Water Act requires the State Water Board and regional water boards to regulate the discharge of storm water from a number of sources. Stormwater discharges in California are regulated through NPDES permits.

Municipal Separate Storm Sewer Systems (MS4) Permitting Program: The Municipal Storm Water Permitting Program regulates storm water discharges from MS4 permits, which are issued in two phases. Under Phase I, NPDES storm water permits were issued for medium (serving between 100,000 and 250,000 people) and large (serving 250,000 people) municipalities. Most of these permits are issued to a group of co-permittees encompassing an entire metropolitan area. These permits are reissued as the permits expire. The Phase I MS4 permits require the discharger to develop and implement a Storm Water Management Plan/Program with the goal of reducing the discharge of pollutants to the maximum extent practicable (MEP). The management programs specify what best management practices (BMPs) will be used to address certain program areas. The program areas include public education and outreach; illicit discharge detection and elimination; construction and post-construction; and, good housekeeping for municipal operations. In general, medium and large municipalities are required to conduct monitoring. Under Phase II, the State Water Board issues a General Permit for the Discharge of Storm Water from Small MS4s to provide permit coverage for smaller municipalities (population less than 100,000), including non-traditional Small MS4s, which are facilities such as military bases, public campuses, prisons, and hospital complexes. AB 755 is designed to provide a funding source for a grant program to help municipalities comply with the MS4 permit specifically dealing with stormwater.

Costs and funding options complying with the MS4 stormwater permit: The effort required to comply with the MS4 permit can be significant, as projects may be very costly and take considerable time to complete. Local jurisdictions typically incur project costs in three phases: planning, construction, and operation and maintenance. During the planning phase, local jurisdictions identify management practices that they anticipate would address the pollutant control plan set by the regional water board. During the construction phase, local jurisdictions implement their project plans, which can require significant amounts of capital to complete. Finally, during the operation and maintenance phase, local jurisdictions must conduct ongoing activities to ensure that their projects work as intended. One important component of the operation and maintenance phase is monitoring the storm water to ensure that the pollutants have been reduced. Local jurisdictions monitor pollutant levels by testing water samples. Local jurisdictions then provide those monitoring data to the regional board as evidence of their progress towards achieving pollutant limits.

Local jurisdictions have limited options for covering the costs of storm water management:

1) General fund revenue: A local jurisdiction that does not have sufficient revenue from other sources will have to supplement storm water spending with revenue from its general fund;

2) Storm water fees: Some local jurisdictions have adopted a fee structure that allows the jurisdiction to collect a fee from property owners;

3) Development fees: Local jurisdictions can charge a fee to individuals seeking services, such as building permit reviews or inspections; and,

4) Grants: Limited grant funding is available from the state through bond funds and the California Department of Transportation

Requirements in state law have limited local jurisdictions’ ability to impose storm water fees on properties within their geographic areas. Proposition 218, approved by voters in 1996, requires a majority of voters to approve property‑related fees, with the exception of sewer and water fees. Fees for sewer and water services are approved if after the local jurisdiction proposes the fee, a majority of property owners do not write in to the local jurisdiction to oppose it. However, fees for storm water management require approval by a majority of voters, a significant limit on the ability of local jurisdictions to generate revenue to help pay for it. In October 2017, Governor Brown approved legislation (SB 231, Hertzberg, Chapter 536, Statutes of 2017) that clarified Proposition 218 by defining the term sewer to include both sanitary sewers and storm water sewers. Consequently, a local jurisdiction is now able to impose or increase storm water fees if a majority of property owners do not write in to oppose the fee—a substantially lower burden than obtaining a majority vote through a ballot measure. This change will likely result in an easier process for local jurisdictions to establish these fees.

Los Angeles County Measure W: In November 2018, Measure W was passed by the voters in Los Angeles County with a vote of 69.45%. Measure W enacts the Los Angeles Region's Public Health and Safe, Clean Water Program. The Measure establishes a parcel tax of 2.5 cents per square foot of impermeable area, exempting low-income seniors, raising approximately $300,000,000 annually for programs/projects that improve/protect water quality; capture rain/stormwater to increase safe drinking water supplies and prepare for future drought; and, protect public health and marine life by reducing pollution, trash, and toxins/plastics entering Los Angeles County waterways/bays/beaches. It has been estimated that the cost of complying with stormwater MS4 permits in Los Angeles County will be approximately $20 billion. It is important to note that the funding from Measure W is not just for stormwater projects.

Proposition 1 Water Bond: The Water Quality, Supply, and Infrastructure Improvement Act of 2014, also known as Proposition 1 (AB 1471, Rendon, Chapter 188, Statutes of 2014), approved by the voters on November 4, 2014, authorized $200 million to the State Water Board for providing matching grants to public agencies, nonprofit organizations, public utilities, state and federally recognized Indian tribes, and mutual water companies for multi-benefit storm water projects.

Why additional resources are still needed: Despite the Proposition 1 funding, and the $300 million a year from LA County, local governments need more assistance to comply with storm water requirements. Many jurisdictions in Southern California are struggling to comply with new standards and upcoming enforcement of MS4 permits. While Proposition 1 offered limited funds to help, the cost challenges remain. With a projected cost within Los Angeles County of $20 billion, it will take approximately 30 years of the County's Measure W just to get almost halfway there. AB 755 will provide millions of dollars per year in grant assistance for municipalities to be able to comply with their stormwater permits.

Arguments in support: According to the the Los Angeles County Division of the League of California Cities (Division) representing 86 cities in the County, "The Division supports AB 755, an urgency measure that creates the Stormwater Permit Compliance Fund to offer competitive grants for statewide and regional programs that address the effects of metals and contaminants in stormwater runoff. AB 755 increases the California tire fee by a modest $1.50 to raise revenue to fund projects and programs for Municipal Separate Storm Sewer System Permit (MS4) compliance requirements that would limit zinc pollutants caused by tires or other sources. When a vehicle is driven, the rubber tire tread slowly wears off and mixes with other materials, like pavement debris and soils, which eventually are washed into storm drains. This is becoming a high-level water quality threat to the current collection of stormwater. Under the 2012 MS4 permit adopted by the Los Angeles Regional Water Quality Control Board, cities in Los Angeles County must meet the strongest water quality guidelines in the country. Estimates of the total capital costs to comply with the permit exceed $20 billion to upgrade infrastructure and implement stormwater capture technology. AB 755 offers a much-needed funding tool to offset the costs of zinc pollutants and invests resources into local and regional projects that benefit the state’s water quality and supply."

Arguments against: According to a group of organizations including the California Tire Dealers Association, "we are writing to respectfully oppose AB 755, which would increase the current California tire fee from $1.75 to $3.25. The additional revenue would go to municipal storm-water projects that prevent or remediate zinc pollutants. We recognize the threat to aquatic life and public health by storm-water runoff from rain that runs off surfaces such as rooftops, street signs, lights, benches, paved streets, highways, etc carrying with it pollutants such as oil, pesticides, herbicides, sediment, trash, bacteria and metals which then can drain untreated directly into a local stream, lake or bay. We do not understand why the focus is on tires; when they contain a minimal amount of zinc in order accelerate the vulcanization (making rubber durable). Many outdoor metal surfaces made with galvanized steel and coated with liquid zinc for corrosion protection (e.g. street signs, lights, benches, etc) also contribute zinc pollutants into the storm-water runoff. Zinc is contained in countless consumer products. Any new fees and taxes for storm-water projects should be shared fairly among all the zinc surfaces/products that cause pollutants to enter storm runoff. Most troublesome with the proposal is that this tax will fall hardest on those with the least ability to pay, namely low-income individuals and hard-working families. AB 755 institutes a "regressive" tax that, combined with the current tire fee, will increase the cost of a set of new tires by $13.00. Tire retailers have countless stories of potential customers delaying tire purchases when they find out the cost of new tires and the add-on fees (the current $1.75 fee and disposal fee). They have watched low-income consumers deciding to defer their tire purchases and simply drive away on dangerous balding tires. The bill is only going to worsen the problem and fails to share the tax burden fairly. Finally, we believe that other sources of revenue should be considered for storm-water projects including local funding and state Prop 1 Water Bond, not just a tire tax."

Related legislation:

1) AB 1180 (Holden, Chapter 617, Statutes of 2017) California tire fee: Stormwater Permit Compliance Fund. As it was heard before the ESTM Committee, would have increased the California tire fee from $1.75 to $3.25, and would have directed the additional revenue to be available for grants for municipal stormwater projects that mitigate zinc pollution from tires. This bill was later amended to authorize the Los Angeles County Flood Control District to levy a special tax to manage stormwater.

2) AB 509 (Frazier, 2017). Would have established the Tire Recycling Incentive Program Act to provide incentives for tire recycling activities in California. Would have established a new tire regulatory fee, set by CalRecycle, to cover its regulatory costs associated with waste and used tire management. This bill was held on the suspense file in the Senate Appropriations Committee.

3) SB 1260 (Allen, Chapter 153, Statutes of 2016). Requires the State Water Board to make information available online for compliance with municipal storm water permit requirements.

4) AJR 44 (Holden, Resolution Chapter 145, Statutes of 2016). Urges the federal government to provide greater financial support for local agencies implementing a federal mandate to improve storm water quality, including, but not limited to, by passing legislation strengthening the Clean Water State Revolving Fund and creating new grant programs to assist in funding storm water projects.

REGISTERED SUPPORT / OPPOSITION:

Support

SAN GABRIEL VALLEY COUNCIL OF GOVERNMENTS (SPONSOR)

LOS ANGELES COUNTY DIVISION, LEAGUE OF CALIFORNIA CITIES
UPPER SAN GABRIEL VALLEY MUNICIPAL WATER DISTRICT

Opposition

AUTO CARE ASSOCIATION
AUTOMOTIVE SERVICE COUNCILS OF CALIFORNIA
CALIFORNIA AUTOBODY ASSOCIATION
CALIFORNIA AUTOMOTIVE BUSINESS COALITION
CALIFORNIA CHAMBER OF COMMERCE
CALIFORNIA TIRE DEALERS ASSOCIATION
CAWA
INDEPENDENT AUTOMOTIVE PROFESSIONALS
SPECIALTY EQUIPMENT MARKET ASSOCIATION (SEMA)
U.S. TIRE MANUFACTURERS ASSOCIATION

Analysis Prepared by: Josh Tooker / E.S. & T.M. /

Date of Hearing: March 25, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 755 (

Author:Holden) – As Introduced Ver:February 19, 2019

SUBJECT: California tire fee: Stormwater Permit Compliance Fund

SUMMARY: Increases the California tire fee from $1.75 to $3.25 and directs the additional revenue to the Stormwater Permit Compliance Fund (Fund), which is continuously appropriated to provide grants for municipal stormwater projects that mitigate zinc pollution.

EXISTING LAW:

1. Pursuant to the California Integrated Waste Management Act of 1989, establishes a state policy goal that 75% of solid waste generated be diverted from landfill disposal by 2020.
2. Establishes the California Tire Recycling Act, which:
   1. Requires a person who purchases a new tire to pay a California tire fee of $1.75 for each new tire purchased in the state. One dollar of the tire fee is deposited into the Tire Recycling Fund for oversight, enforcement, and market development grants relating to waste tire management and recycling. The remaining $0.75 is deposited into the Air Pollution Control Fund for programs and projects that mitigate or remediate air pollution caused by tires.
      
   2. Reduces the fee on January 1, 2024 to $0.75 per tire, to be deposited into the Tire Recycling Fund.
      
   3. Authorizes CalRecycle to award grants, loans, subsidies, and rebates and pay incentives for various purposes related to reducing landfill disposal of waste tires.
      
   4. Requires the Department of Resources Recycling and Recovery (CalRecycle) to adopt a Five Year Plan, which must be updated every two years, that establishes goals and priorities for the waste tire program.
      
   5. Defines "waste tire generator" as any person whose act or process produces any amount of waste or used tires, or causes a waste or used tire hauler to transport those waste or used tires, or otherwise causes waste or used tires to become subject to regulation.
      
3. Establishes the federal Clean Water Act to regulate discharges of pollutants into the waters of the United States and regulate quality standards for surface waters.
4. Pursuant to the Porter-Cologne Water Quality Control Act, prohibits the discharge of pollutants to surface waters unless the discharger obtains a permit from the State Water Resources Control Board (SWRCB).
5. Establishes the National Pollutant Discharge Elimination System (NPDES) permit program requiring SWRCB and the nine California regional water quality control boards (regional boards) to prescribe waste discharge requirements which, among other things, regulate the discharge of pollutants in stormwater, including municipal stormwater systems.
6. Requires SWRCB to develop a comprehensive guidance document for evaluating and measuring the effectiveness of municipal stormwater management programs and permits.

THIS BILL:

1. Establishes the Fund in the State Treasury.
   
2. Increases the California tire fee from $1.75 to $3.25 and directs the increase to the Fund.
   
3. Specifies that the Fund be continuously appropriated to SWRCB as follows:
   
   1. Competitive grants to fund projects and programs for municipal separate stormwater system permit compliance requirements that prevent or remediate zinc pollutants caused by tires in the state. Specifies that priority be given to applicants with zinc levels that exceed the total maximum daily loads (TMDLs).
      
   2. An annual audit of the Fund to be submitted to SWRCB and posted on its website.
      
4. Upon appropriation by the Legislature, specifies that up to 3% of the moneys in the Fund be awarded to SWRCB for administration, as specified.
   
5. Specifies that moneys in the Fund may not be used or borrowed for any other purpose.
   
6. Includes an urgency clause.

FISCAL EFFECT: A substantially similar bill last session, AB 1180 (Holden), had the following fiscal impact according to the Assembly Appropriations Committee:

1. Initial increased revenues are projected to be approximately $55 million per year (Stormwater Permit Compliance Fund).
2. Increased SWRCB administrative costs are capped at 3% of annual appropriation (Stormwater Permit Compliance Fund).
3. Minor costs for Cal Recycle to contract with the Board of Equalization for collection (Stormwater Permit Compliance Fund.)

COMMENTS:

1. Author's statement:

The state as a whole, especially Southern California, continues to be seriously affected by the drought. In response, major investments in water infrastructure have been made to capture stormwater and remove contaminants for broad use. Stormwater runoff and pollution are common causes to the high cost of water infrastructure, as sophisticated systems are required to test and treat for potential pollutants. Among other metals and biological contaminants, one common pollutant to stormwater is zinc. A report of the status of water quality funding made note that zinc is a high-level water quality threat to the current collection of stormwater.

The [Fund] will offer competitive grants for statewide and regional projects and programs that address the effect of metals and contaminants in water. To raise revenue for the Fund, this bill will add $1.50 to the California tire fee, increasing the fee to $3.25 per tire. No more than 6% of the revenue deposited in the Fun may be used for overhead.

1. Waste tire management. According to CalRecycle, approximately 40 million waste tires are generated in California every year. CalRecycle's diversion goal is 90%. According to the California Waste Tire Market Report: 2015, after reaching an all-time high of 92.9% waste tire diversion in 2012, the recycling rate dropped to 80.9% in 2015. Of the 44.2 million tires generated: 10.1 million were exported (for fuel or reuse); 7.6 million were recycled as crumb rubber; 1.2 million were used in civil engineering projects; 6.7 million were reused (either sold as used tires or retreaded); 8.6 million were used as tire-derived fuel in cement kilns or at co-generation facilities; 1.5 million were used as cover at landfills; and 8.5 million were disposed in landfills.

CalRecycle's "affiliated goals" to achieve its 90% diversion rate for tires are: 1) develop long-term, sustainable, and diversified market demand for California tire-derived products; 2) ensure the protection of public health, safety, and the environment while developing a safe and high-quality supply infrastructure to meet that demand; and, 3) foster information flow and technology and product development so that environmental protection and diversion goals are achieved with supply and demand in balance.

The California tire fee is currently $1.75 per tire, of which $1 is deposited into the Tire Recycling Fund and $0.75 is deposited into the Air Pollution Control Fund. In 2024, the tire fee will decrease by $1 and the entire $0.75 will be directed to the Tire Recycling Fund.

1. Stormwater management. Stormwater is runoff from rain or snow melt that runs off surfaces and can carry with it pollutants, such as oil, pesticides, herbicides, sediment, trash, bacteria, and metals. Generally the runoff drains into storm drains, which drain untreated into local bodies of water. Both the US Environmental Protection Agency and regional boards have determined that stormwater and urban runoff are significant sources of water pollution that can threaten aquatic life and public health. However, stormwater may also act as a resource and recharge to groundwater when properly managed.

For nearly two decades, SWRCB and regional boards have regulated runoff and treatment of stormwater from industrial and municipal sources in California. The federal Clean Water Act requires SWRCB and regional boards to regulate the discharge of stormwater from a number of sources. Stormwater discharges in California are regulated through NPDES permits.

In January 2014, in the midst of the state's ongoing four-year drought, Governor Jerry Brown released the California Water Action Plan that called for multiple-benefit stormwater management solutions. To accomplish this, SWRCB and regional boards have been working cooperatively with local agencies to encourage multiple benefit stormwater projects to achieve regulatory compliance and supplemental water supplies.

SWRCB's Storm Water Resource Plan Guidelines provide guidance for entities preparing a Storm Water Resource Plan, and the Storm Water Grant Program Guidelines to assist interested applicants with obtaining grant funds for multiple-benefit stormwater projects.

The Water Quality, Supply, and Infrastructure Improvement Act of 2014, also known as Proposition 1 [AB 1471 (Rendon) Chapter 188, Statutes of 2014], approved by the voters on November 4, 2014, authorized $200 million to SWRCB to provide matching grants to public agencies, nonprofit organizations, public utilities, state and federally recognized Indian tribes, and mutual water companies for multi-benefit stormwater projects. Despite the Proposition 1 funding, local governments need assistance to comply with stormwater requirements. Many jurisdictions in Southern California are struggling to comply with new standards and new permit requirements. While Proposition 1 offered limited funds to help, the cost remains prohibitive.

1. Stormwater impacts from tires. In order to comply with federal and state permitting requirements, California communities are tasked with reducing the amount of zinc in stormwater. According to the California Stormwater Quality Association report, Zinc Sources in California Urban Runoff, tires are a "major source" of zinc in urban runoff, along with outdoor zinc surfaces, other vehicle-related items like brake pads and wheel weights, zinc pesticides, and industrial sources. Nearly all rubber products contain zinc oxide, which accelerates the vulcanization (i.e., makes the rubber more durable). A typical passenger tire contains about 100 grams of zinc oxide. Other zinc compounds may also be used in passenger tires. As a car is driven, abrasion creates small rubber particles called "tire wear debris." The debris is ground into the pavement as vehicles drive over the road surface. Eventually, they are lifted into the air or washed off the road surface by rain. Whichever route it takes, this debris generally settles into roadside soils, with the greatest concentration occurring within 6 meters of the road, but measurable levels exist up to 30 meters away. Recycled tires products can also contain zinc compounds. Shredded tires and crumb rubber products manufactured from recycled tires, including playground surfacing and rubberized asphalt concrete, can contribute to zinc runoff.
   

An October 2014 report on stormwater funding options prepared for the California Contract Cities Association and the League of California Cities, Los Angeles Division identifies a "per tire" zinc control fee to fund local government costs associated with mitigating zinc pollution. This bill is consistent with this recommendation.

1. Previous legislation. AB 1180 (2017) was substantially similar to this bill. AB 1180 was amended to authorize the Los Angeles County Flood Control District (District) to levy a special tax to manage stormwater.
2. Double referral. This bill has also been referred to the Environmental Safety and Toxic Materials Committee, which has jurisdiction over stormwater management.
3. Urgency. This bill is an urgency measure.

REGISTERED SUPPORT / OPPOSITION:

Support

San Gabriel Valley Council of Governments
Upper San Gabriel Valley Municipal Water District

Oppose

Auto Care Association
Automotive Service Councils of California
California Chamber of Commerce
California Autobody Association
California Automotive Business Coalition
California Tire Dealers Association
CAWA
Independent Automotive Professionals
U.S. Tire Manufacturers Association

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. /