BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 1249 (Hill) - Hazardous waste: shredder waste Amended: April 22, 2014 Policy Vote: EQ 5-1 Urgency: No Mandate: Yes (see staff comment) Hearing Date: May 12, 2014 Consultant: Marie Liu This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1249 would authorize the Department of Toxic Substances Control (DTSC) to adopt regulations on management standards for metal shredding facilities, metal shredder residue, or treated metal shredder residue. This bill would authorize DTSC to establish a fee that is sufficient to reimburse specified costs. Fiscal Impact: Likely initial annual costs of at least $300,000 from the Hazardous Waste Control Account (special) for two years to DTSC to conduct the required analysis, prepare the required finding, and potentially develop regulations. Likely ongoing annual costs of up to $200,000 from the Hazardous Waste Control Account (special) to DTSC for regulation of metal shredding facilities. Unknown fee revenue to the Hazardous Waste Control Account (special) either from fees under existing hazardous waste law or under new regulations for metal shredding facilities. Unknown costs and revenues, possibly in the hundreds of thousands of dollars, from the Waste Discharge Permit Fund (special) to the State Water Resources Control Board (SWRCB) related to the permitting of landfills that accept designated waste or metal shredding residue. Background: The California Hazardous Waste Control Act of 1972 (HWCA/act) directs DTSC to regulate the handling, processing, and disposal of hazardous and extremely hazardous waste to protect the public, livestock, and wildlife from hazards to health and safety. Under the act, facilities that treat, store, handle, and/or dispose of hazardous waste are required to be permitted by the DTSC. The hazardous waste facility permit specifies specific requirements for the facility to ensure safe SB 1249 (Hill) Page 1 operation. The act also implements federal tracking requirements for the handling and transportation of hazardous waste from generation to ultimate disposition. DTSC activities under this act are funded by fees. The Integrated Waste Management Act requires materials that require special handling to be removed from major appliances and vehicles in which they are contained before crushing for transport or transferring to a baler or shredder for recycling. Between 1986 and 1992, the Department of Health Services Toxic Substances Control Division (predecessor to DTSC) issued conditional nonhazardous waste classifications (also referred to as "f letters") to seven metal shredder facilities in California who treated their metal shredder waste (MSW) by encapsulating the MSW into cement pellets. Under these f letters, once treated, the MSW can be disposed of as nonhazardous waste. Treated MSW often is used as alternative daily cover at landfills. F letters remain in effect indefinitely unless revoked by DTSC. Six of these metal shredding facilities remain active. As part of its Metal Recycling Initiative, DTSC has discovered two additional smaller or mobile shredders that do not have permits or an f letter. Proposed Law: This bill would authorize DTSC to adopt regulations that establish management standards for metal shredding facilities, MSW, and treated MSW if DTSC takes specified actions, including to: Prepare an analysis regarding the types and amounts of hazardous waste involved in metal shredding, the potential hazards to human health or safety or to the environment, the complexity of the activity and necessary training for operators, the chemical or physical hazards of metal shredding, and the type of accidents that may occur, and the hazards that the activity poses to nearby land uses. Preliminary and final analyses shall be made available to the public according to specified deadlines, all of which precede the adoption of regulations. Make a specific finding regarding the proposed regulations or the existing requirements based on the analysis, before DTSC issues its notice proposing the adoption of the regulations. Consider MSW and treated MSW as hazardous, unless the analysis finds that such a classification is not necessary SB 1249 (Hill) Page 2 in order to protect human health or safety or the environment. Require MSW, if classified as nonhazardous under the regulations, to be disposed of in a composite-lined portion of a solid waste landfill that is regulated by waste discharge requirements by the SWRCB for discharges of designated waste, MSW, or treated MSW. DTSC's authority to develop regulations would sunset on January 1, 2017; however any regulations adopted before January 1, 2017 may be revised at a later date This bill would invalidate all "f letters" issued before January 1, 2014 on January 1, 2017. This bill would authorize DTSC to collect an annual fee from all metal shredding facilities subject to the Hazardous Waste Control Act that is sufficient to reimburse the department's costs related to specified activities. Staff Comments: Staff notes that there are basically three potential scenarios that could occur should this bill become law: (1) DTSC does not attempt to develop regulations so that when the f letters are rescinded in 2017, all MSW would be treated as hazardous waste; (2) DTSC conducts the analysis required by the bill and determines that MSW should be treated as hazardous waste under the HWCA; or (3) DTSC conducts the analysis and determines that it is appropriate to adopt regulations that would allow MSW or treated MSW to be disposed of as not hazardous. Staff believes that scenario 1 is unlikely as DTSC has already undertaken actions to study MSW for the purpose of properly regulating its disposal. Under scenario 2, DTSC would incur onetime costs of approximately $300,000 annually for two years for two additional PYs to conduct the required analysis. Upon DTSC's determination that the MSW and treated MSW should be treated as a hazardous waste, metal shredding facilities would then have to be permitted and regulated as a hazardous waste generator under the HWCA. The workload increase to issue and enforce these permits would depend on the number of facilities that choose to continue to operate in California. Staff believes that an increase to SB 1249 (Hill) Page 3 DTSC's ongoing cost under this scenario would likely be modest. There are existing fees associated with the HWCA that should cover any increases in ongoing costs. Under scenario 3, DTSC would incur the onetime costs to conduct the required analysis plus costs to develop the regulations. Additionally, if DTSC decides to develop regulations to consider treated MSW as not hazardous, it would be a discretionary action subject to CEQA. Complying with CEQA would likely add significant unknown costs. Thus, initial costs under this bill would be at least $300,000 annually for two years. Once regulations were developed, DTSC would anticipate approximately $200,000 in ongoing costs plus additional unknown analytical costs necessary for enforcement. These ongoing costs are likely to be more than ongoing costs under scenario 2, therefore likely ongoing costs for this bill is no more than $200,000 annually. Additionally under scenario 3, this bill would require that MSW be disposed of in a composite-lined landfill that is regulated by waste discharge requirements for discharges of designated waste, MSW, or treated MSW. According to the SWRCB, there are no landfills currently permitted for discharges of designated waste or untreated MSW, though there are landfills that can receive treated waste. Should DTSC's regulations result in the need for SWRCB to permit additional landfills, SWRCB is likely to incur costs in the hundreds of thousands of dollars, depending on the number of affected landfills, if any, which is unknown. These costs would at least be partly recovered through permit fees assessed by the SWRCB. This bill allows DTSC to establish a new annual fee that is sufficient to cover the cost of specified activities in regards to MSW. The author's intent in this section is to allow full fee recovery in all the discussed scenarios. However, staff notes that if DTSC decides to regulate MSW as a hazardous waste (scenario 1 and 2), DTSC's existing hazardous regulations and related fee authority would apply and no new fee authority would be needed. Thus, staff recommends that new fee authority only needs to apply if DTSC adopts new regulations for MSW (scenario 3). Additionally, staff recommends that in order to fully capture all costs associated with the development and implementation of regulations regarding metal shredding facilities and activities, the bill should allow DTSC to establish a fee that is sufficient, but does not exceed, the SB 1249 (Hill) Page 4 costs of implementing Section 25150.9 and Section 25150.9.1 (which are added by this bill) rather than a specified list of activities. Staff also recommends that the bill explicitly allow DTSC to recover the cost of any activities related to this bill that are taken before the adoption of the fee schedule. This bill is a state-mandated local program as it creates a new crime. However, this is not a reimbursable state mandate.