BILL ANALYSIS Ó AB 274 Page 1 Date of Hearing: April 15, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 274 (Committee on Environmental Safety) - As Introduced February 11, 2015 ----------------------------------------------------------------- |Policy |Environmental Safety and Toxic |Vote:|6 - 0 | |Committee: |Materials | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 AB 274 Page 2 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. AB 274 Page 3 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 AB 274 Page 4 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