BILL ANALYSIS Ó
AB 273
Page 1
Date of Hearing: April 15, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
273 (Committee on Environmental Safety) - As Introduced February
11, 2015
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Urgency: No State Mandated Local Program: NoReimbursable:
SUMMARY:
This bill modifies provisions relating to the Department of
Toxic Substance Control's (DTSC) authority to require corrective
actions under hazardous waste control laws. Specifically, this
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bill:
1)Requires a person to pay for the oversight of any corrective
action required under hazardous waste laws.
2)Authorizes the Attorney General to recover costs incurred with
regard to carrying out or overseeing a removal action,
remedial action or a coercive action.
3)Changes the interest rate on monetary obligations owed to DTSC
from the earned investment rate established in the Surplus
Money Investment Fund to a 10 percent per annum rate or 7
percent per annum for local governments.
4)Requires rather than allows 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
180 days upon notification from the liable person disputing
all or a portion of the invoice.
FISCAL EFFECT:
1)Potential increased revenues to the Toxic Substance Control
Account (TSCA) of up to $3 million. This figure assumes the
10 percent interest is applied and received from all
outstanding invoices as well as increased cost recovery.
2)Minor and absorbable costs to DTSC for updating billing
documents and procedures (TSCA).
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3)No significant costs for the Attorney General to implement
cost recovery procedures.
COMMENTS:
1)Rational. On August 7, 2014, the Bureau of State Audits (BSA)
released a report on DTSC's cost recovery. The BSA found
long-standing shortcomings resulting in millions of dollars in
unbilled and uncollected cleanup costs dating back to 1987.
Existing law requires DTSC 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). For the quarter ending June 30, 2013, the SMIF
interest rate was 0.246 percent. This low interest rate
provides 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. This bill is consistent with that
recommendation.
2)Lower rates for Local Government. Existing law establishes
different interest rates for local governments and sets an
interest rate for local governments only for interest on tax
or fee judgments. Article XV of the California Constitution
provides that the 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
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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 local government interest rate established in this bill is
consistent with this determination.
3)Related Legislation. In addition to this bill, the Committee
on Environmental Safety and Toxic Materials has introduced the
following bills to address the shortcomings found in the BSA
report:
a) AB 274 (ESTM) allows DTSC to not expend resources to
pursue an uncollectible account, as defined.
b) AB 275 (ESTM) revises DTSC's statute of limitation for
cost recovery.
c) AB 276 (ESTM) allows DTSC to request financial
information from specified entities who claim inability to
pay.
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All four bills will be heard in this Committee on April 15,
2015
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081