BILL ANALYSIS Ó
AB 274
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CONCURRENCE IN SENATE AMENDMENTS
AB
274 (Committee on Environmental Safety and Toxic Materials)
As Amended August 19, 2015
Majority vote
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|ASSEMBLY: | 78-0 | (April 23, |SENATE: |40-0 | (August 31, |
| | |2015) | | |2015) |
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Original Committee Reference: E.S. & T.M.
SUMMARY: Authorizes the Department of Toxic Substances Control
(DTSC) to not pursue specified uncollected invoices.
Specifically, this bill:
1)Finds and declares that DTSC should prioritize its cost
recovery efforts to make the most efficient use of its
resources available for that activity.
2)Finds and declares that it is not cost effective or
practicable to seek recovery of an uncollectible account
consistent with a determination by DTSC.
3)Defines "uncollectible account" as an a response action,
corrective action, or oversight costs, including accrued
interest, incurred by DTSC that meets the following
conditions:
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a) The response action, corrective action, or oversight
costs were incurred by DTSC on or after July 1, 1987, but
not later than December 31, 2013, while carrying out or
overseeing a response or corrective action;
b) The response action, corrective action, or oversight
costs are not more than $5,000;
c) DSTC will not incur further response action, corrective
action, or oversight costs related to the site for which
the costs were incurred; and,
4)States DTSC is not required to pursue an uncollectible account
and may write off or write down that uncollectible account.
5)Sunsets the provisions of this bill on January 1, 2019.
The Senate amendments:
1)Make technical changes to conform terminology used in Health
and Safety Code Chapters 6.5 and 6.8.
2)Delete the condition that DTSC's estimated cost to pursue the
oversight costs exceeds the value of the oversight costs.
3)Add a sunset date.
EXISTING LAW:
1)Requires any costs incurred by 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. (Health and Safety
Code (H&S) Section 25360)
2)Requires DTSC to review all current outstanding receivables
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and make an appropriate adjustment for estimated uncollectible
amounts, consistent with current accounting practices and
recognizing the present value of future collection, and
authorizes DTSC to write off or write down those receivable
amounts. (H&S Section 25269.8)
3)Authorizes 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. (H&S Section
25269.8)
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.
As of March 2014, DTSC had 1,661 projects totaling almost $194
million in outstanding costs, of which nearly $142 million was
unbilled and almost $52 million was billed but uncollected.
These outstanding costs were incurred between July 1987 and
December 2013.
Need for this bill: 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.
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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 those projects often far exceed the
recoverable costs, resulting in a financial loss to DTSC, and
therefore to taxpayers.
Authorizing DTSC to cut its losses on low-dollar uncollected
projects valued at less than $5,000 would enable the department
to more expeditiously get through the backlog of outstanding
costs and free up resources to address larger, higher priority
cleanup costs.
One-time fix: This bill is a one-time fix to allow DTSC to dig
out of its backlog of uncollected bills. This bill specifically
states that the covered uncollectible bills, as defined, are
only those costs accrued between July 1, 1987, and December 31,
2013. The authorization in this bill shall not be applied to
any oversight costs accrued after January 1, 2014, and sunsets
on January 1, 2019.
Analysis Prepared by:
Paige Brokaw / E.S. & T.M. / (916) 319-3965 FN:
0001483