BILL ANALYSIS Ó
AB 273
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Date of Hearing: March 24, 2015
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Alejo, Chair
AB
273 (Committee on Environmental Safety and Toxic Materials) - As
Introduced February 11, 2015
SUBJECT: Hazardous waste and substances: corrective action:
liability.
SUMMARY: Increases the interest rate accrued on monetary
obligations owed to the California Department of Toxic
Substances Control (DTSC). Specifically, this bill:
1) Requires a person to pay for oversight of any corrective
action with respect to hazardous waste;
2) Authorizes the State Attorney General to recover costs
incurred with regard to carrying out or overseeing a removal
action, a remedial action, or a corrective action;
3) Deletes the interest rate on monetary obligations owed to
DTSC as being the same rate earned on investments in the Surplus
Money Investment Fund, and establishes the interest rate as 10
percent per annum, and 7 percent per annum for local
governments;
4) Requires DTSC to waive the interest if the obligation is paid
within 60 days of receipt of the invoice;
5) Requires DTSC to waive the interest from accruing for up to
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180 days if the liable person in receipt of the invoice notifies
DSTC of dispute over all or a portion of the invoice.
EXISTING LAW:
1)Establishes DTSC to protect California against threats to
public health and degradation to the environment, to restore
properties degraded by past environmental contamination, and
requires DTSC to regulate management of hazardous wastes,
clean up existing contamination, and prevent pollution by
working with businesses to reduce their hazardous waste and
use of toxic materials. (Health & Safety Code [H&S] §
25360.1, et seq.)
2)Requires a responsible party that is required to take
corrective action to pay for oversight of the removal or
remedial action. (H&S § 25187.2)
3)Requires DTSC or regional board that has incurred costs in
overseeing or carrying out a remedial action to recover those
costs from the responsible party, and requires those
recoverable costs to be subject to interest. (H&S § 25360)
4)Subjects monetary obligations owed to DTSC to an interest rate
that's the same rate earned on investments in the Surplus
Money Investment Fund. (H&S § 25360.1)
5)Authorizes DTSC to waive the interest if the obligation is
satisfied within 60 days from the date of invoice. (H&S §
25360.1)
6)Establishes an interest rate at 10 percent per annum on the
principal amount of a money judgment remaining unsatisfied,
and establishes the right of the Legislature to change the
rate of interest at any time to a rate of less than 10 percent
per annum, regardless of the date of entry of the judgment or
the date any obligation upon which the judgment is based was
incurred. (Code of Civil Procedure § 685.010)
7)Establishes that interest on a tax or fee judgment against a
local public entity shall accrue at a rate equal to the weekly
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average one year constant maturity United States Treasury
yield at the time of the judgment plus 2 percent, but shall
not exceed 7 percent per annum. (Government Code § 970.1)
FISCAL EFFECT: Unknown.
COMMENTS:
State Audit Report : On August 7, 2014, the Bureau of State
Audits (BSA) released a report on DTSC's cost recovery. The BSA
found that long-standing shortcomings with DTSC's recovery of
costs have resulted in millions of dollars in unbilled and
billed but uncollected cleanup costs dating back to 1987.
According to the report, "increasing the interest rate charged
on billed but delinquent unpaid amounts may improve the
timeliness of collections from responsible parties. State law
requires the department to charge interest for invoices not paid
within 60 days at a rate equal to the rate of return earned on
investments in the State's Surplus Money Investment Fund (SMIF).
However, the SMIF interest rate is substantially lower than the
interest rate charged for late payments by other state entities,
such as the California State Board of Equalization (BOE). For
example, for the quarter ending June 30, 2013, the SMIF interest
rate was 0.246 percent, while the BOE interest rate was 6
percent for the same period. As long as the SMIF interest rate
remains low, there is less incentive for responsible parties to
make payments on time."
The BSA recommended that in order to improve DTSC's efforts to
promptly recover its costs, the legislature should revise state
law to allow DTSC to use a higher interest rate assessed on late
payments.
Special treatment for local governments : State law establishes
different interest rates for local governments. California
Government Code § 970.1 sets an interest rate for local
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governments only for interest on tax or fee judgments. Article
XV of the California Constitution provides that "[t]he rate of
interest upon a judgment rendered in any court of this State
shall be set by the Legislature at not more than 10 percent per
annum. Such rate may be variable and based upon interest rates
charged by federal agencies, or economic indicators, or both.
In the absence of setting of such rate by the Legislature, the
rate of interest on any judgment rendered in any court of the
State shall be 7 percent per annum."
The California Supreme Court determined in California Federal
Savings and Loan Association v. City of Los Angeles (1995) 11
Cal.4th 342 that in the absence of the Legislature establishing
a different rate, the "applicable rate of post-judgment interest
to be paid by local public entities is 7 percent."
The interest rate imposed on local governments (aside from
judgments involving taxes or fees) is unspecified and is the 7%
specified in the Constitution.
Previous legislation : SB 812 (De León 2014), among other
provisions, proposed to require any monetary obligation owed to
DTSC to accrue interest at the same rate as the modified
adjusted rate per annum imposed for underpayments of sales and
use taxes to the state. That bill was vetoed on September 29,
2014, for reasons stated unrelated to the provision modifying
the interest rate.
REGISTERED SUPPORT / OPPOSITION:
Support
Natural Resources Defense Council
AB 273
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Opposition
None on file
Analysis Prepared by: Paige Brokaw / E.S. & T.M. / (916)
319-3965