BILL ANALYSIS Ó
AB 273
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CONCURRENCE IN SENATE AMENDMENTS
AB
273 (Committee on Environmental Safety and Toxic Materials)
As Amended July 8, 2015
Majority vote
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|ASSEMBLY: | 64-9 | (April 20, |SENATE: |25-10 | (August 31, |
| | |2015) | | |2015) |
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Original Committee Reference: E.S. & T.M.
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 DTSC's costs to carry out or
oversee a corrective action with respect to the release of
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,
until June 30, 2021, as 7% per annum, and commencing July 1,
2021, establishes the interest rate as 10% per annum, and 7%
AB 273
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per annum for local governments.
4)Requires DTSC to waive the interest if the obligation is paid
within 45 days of receipt of the invoice.
The Senate amendments:
1)Restore existing law and make clarifications as it relates to
DTSC requiring a person responsible for a corrective action
with respect to a release of hazardous waste or hazardous
waste constituents into the environment to pay for DTSC's
costs incurred in overseeing or carrying out a corrective
action.
2)Establish, until June 30, 2021, the interest rate as 7% per
annum, and commencing July 1, 2021, establishes the interest
rate as 10% per annum, and 7% per annum for local governments.
3)Make technical changes to conform terminology used in Health
and Safety Code Chapters 6.5 and 6.8.
4)Change, from 60 days to 45 days, the time frame in which DTSC
must waive the interest if the monetary obligation is paid.
5)Delete the requirement that DTSC waive the interest from
accruing for up to 180 days if the liable person in receipt of
the invoice notifies DSTC of dispute over all or a portion of
the invoice.
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EXISTING LAW:
1)Requires a responsible party that is required to take
corrective action to pay for oversight of the removal or
remedial action. (Health and Safety Code (H&S) Section
25187.2)
2)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 Section
25360)
3)Subjects monetary obligations owed to DTSC to an interest rate
that is the same rate earned on investments in the Surplus
Money Investment Fund. (H&S Section 25360.1)
4)Authorizes DTSC to waive the interest if the obligation is
satisfied within 60 days from the date of invoice. (H&S
Section 25360.1)
5)Establishes an interest rate at 10% 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% 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 Section 685.010)
6)Establishes that interest on a tax or fee judgment against a
local public entity shall accrue at a rate equal to the weekly
average one year constant maturity United States Treasury
yield at the time of the judgment plus 2%, but shall not
exceed 7% per annum. (Government Code Section 970.1)
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FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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.
Analysis Prepared by:
Paige Brokaw / E.S. & T.M. / (916) 319-3965 FN:
0001257
AB 273
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