BILL ANALYSIS Ó
AB 274
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Date of Hearing: April 15, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
274 (Committee on Environmental Safety) - As Introduced February
11, 2015
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Urgency: No State Mandated Local Program: NoReimbursable:
SUMMARY:
This bill allows the Department of Toxic Substance Control
(DTSC) to not pursue and write off an uncollectible account, as
defined. Specifically, this bill defines an uncollectible
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account as an oversight costs that meets the following
conditions:
1) The cost was incurred by DTSC on or after July 1, 1987
and prior to December 31, 2013, while overseeing an action.
2) The amount of the uncollectible cost is not more than
$5,000.
3) The estimated cost for DTSC to pursue the oversight cost
exceeds the cost itself.
FISCAL EFFECT:
Minor forgone revenues associated with cost recovery offset by
the savings associated with not pursuing collection.
COMMENTS:
1)Purpose. According to DTSC, the initial cost to send a
collection letter is roughly $72.70. The cost to conduct a
responsible party search costs, on average, is $7,800.
Therefore, DTSC's costs to identify a responsible party for
some projects often far exceed the recoverable costs,
resulting in a financial loss to DTSC, and therefore to
taxpayers.
According to the author, authorizing DTSC to cut its losses on
low-dollar uncollected projects valued at less than $5,000
will assist with the backlog of outstanding costs and free-up
resources to address larger, higher priority cleanup cost
recoveries.
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2)Background. 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.
According to DTSC, efforts to address the backlog have led to
a reduction in the number of sites without payment from 2,700
to fewer than 1,600 (40% reduction), and a reduction in the
amount of outstanding costs by more than $24 million, which
includes settlements paid, cash collected, and data cleanup.
Of the remaining outstanding costs, there are 865 projects, or
about $1 million worth of projects valued at less than $5,000
each. Of that, 235 projects have bills less than $500, and 61
projects billed at less than $25.
3)One-time Fix. This bill provides a one-time fix and
specifically only applies to uncollectible bills for costs
accrued between July 1, 1987, and December 31, 2013. The
authorization in this bill will not apply to any oversight
costs accrued after January 1, 2014.
4)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 273 (ESTM) modifies provisions relating to DTSC's
authority to require corrective actions under hazardous
waste control laws.
b) AB 275 (ESTM) revises DTSC's statute of limitation for
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cost recovery.
c) AB 276 (ESTM) allows DTSC to request financial
information from specified entities who claim inability to
pay.
All four bills will be heard in this Committee on April 15,
2015
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081