BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 274|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 274
Author: Committee on Environmental Safety and Toxic Materials
Amended: 6/24/15 in Senate
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 6/17/15
AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 78-0, 4/23/15 (Consent) - See last page for
vote
SUBJECT: Oversight costs: uncollectible accounts
SOURCE: Author
DIGEST: This bill allows, until January 1, 2019, the Department
of Toxic Substances Control (DTSC) to not pursue and write off
an uncollectible account, as defined.
ANALYSIS:
Existing law:
1)Authorizes, under the Carpenter-Presley-Tanner Hazardous
Substance Account Act, the DTSC to take or oversee removal and
remedial actions related to the release of hazardous
substances.
AB 274
Page 2
2)Requires any costs incurred by the DTSC or a regional board to
be recoverable from the liable person or persons, and requires
the amount of any response action costs that may be recovered
to include interest on any amount paid.
3)Requires the DTSC to review all current outstanding
receivables and make an appropriate adjustment for estimated
uncollectible amounts, consistent with current accounting
practices and recognizing the present value of future
collection, and authorizes the DTSC to write off or write down
those receivable amounts.
4)Authorizes the DTSC to consider whether to enter into a
contract with a private collection agency to collect
substantially past-due accounts, and for longer term
receivables consider whether credit arrangements should be
made with banks or other institutions willing to assist in
financing a potentially responsible party's obligation for
remediation.
This bill allows, until January 1, 2019, the DTSC to not pursue
and write off an uncollectible account, as defined.
Specifically, this bill defines an uncollectible account as an
oversight cost that meets the following conditions:
1)The cost was incurred by the 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 the DTSC to pursue the oversight cost
exceeds the cost itself.
Background
1)State Audit Report: On August 7, 2014, the Bureau of State
Audits (BSA) released a report on the DTSC's cost recovery.
The BSA found long-standing shortcomings resulting in millions
of dollars in unbilled and uncollected cleanup costs dating
AB 274
Page 3
back to 1987.
According to the 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.
2)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.
Comments
1) Purpose of Bill. According to the author, authorizing the
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.
According to the DTSC, the initial cost to send a collection
letter is roughly $72.70. The cost to conduct a responsible
party search, on average, is $7,800. Therefore, the 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.
Prior/Related Legislation
In addition to this bill, the Assembly Committee on
Environmental Safety and Toxic Materials (ESTM) has introduced
the following bills to address the shortcomings found in the BSA
report:
AB 274
Page 4
AB 273 (ESTM) modifies provisions relating to the DTSC's
authority to require corrective actions under hazardous waste
control laws.
AB 275 (ESTM) revises the DTSC's statute of limitation for
cost recovery.
AB 276 (ESTM) allows the DTSC to request financial information
from specified entities who claim inability to pay.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified7/7/15)
California League of Conservation Voters
Environment California
Environmental Working Group
Natural Resources Defense Council
OPPOSITION: (Verified7/7/15)
None received
ASSEMBLY FLOOR: 78-0, 4/23/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
AB 274
Page 5
Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Campos, Salas
Prepared by:Rachel Machi Wagoner / E.Q. / (916) 651-4108
7/9/15 9:05:16
**** END ****