State Water Resources Control Board Gets New Tools To Fight Fraud On Underground Storage Tank Cleanup Fund

Senate Bill No. 445 ("SB 445"), signed into law by California Governor Brown late last year, makes several significant changes to the Barry Keene Underground Storage Tank Cleanup Trust Fund Act of 1989 ("The Fund Act"). The Fund Act created a fund (the "Fund") that provides eligible owners and operators of petroleum underground storage tanks the means to meet federal and state financial responsibility requirements and pay for the costs of cleanup of petroleum releases. Significantly, SB 445 has given the State Water Resources Control Board (the "Water Board") a whole host of new enforcement tools to target those suspected of defrauding the Fund.

Important Changes to the Law

The new law extends the Fund's operations for an additional ten years. Provisions of the Fund Act that were scheduled to be repealed on January 1, 2016, will now continue in effect until January 1, 2026.

The bill makes several changes to the Fund Act, including requiring that owners and operators of single-walled underground storage tanks permanently close those tanks by December 31, 2025. The law also lowers the maximum amount that the Water Board will pay for corrective action on a site from $1,500,000 to $1,000,000.

Perhaps most significantly, the changes to the Fund Act reflect a significant focus on targeting suspected Fund fraud. Fund fraud typically arises in two ways: a claimant submits a false or fraudulent claim as part of a request for reimbursement, or as part of the Fund's investigation of the legitimacy of the claim, perhaps by conducting an audit, the claimant obstructs the audit by refusing to provide documents the claimant is required to provide or provides false documents.

The new provisions of the Fund Act include new, streamlined procedures for prosecuting claimants who are suspected both of obstructing justice during a Fund audit, and suspected of defrauding the Fund in connection with the submission of a request for reimbursement. In addition, the new law arms the Water Board with new penalties that may be imposed on claimants found guilty of those violations.

Generally speaking, the Water Board now has three different venues in which to seek redress for misconduct in connection with the Fund's operations instead of two: have the Attorney General's Office file criminal charges in a criminal court, have the Attorney General's Office file a civil complaint, or have the Water Board file an administrative complaint in front of an administrative law...