BILL ANALYSIS Ó
AB 2794
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Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Luis Alejo, Chair
AB 2794
(Santiago) - As Amended April 5, 2016
SUBJECT: Hazardous waste: facilities permitting: fees
SUMMARY: Increases statutorily specified flat fee options for a
person applying for a new permit, a permit for post closure, a
renewal of an existing permit, or a class 2 or class 3 permit
modification and states that the flat fees are base rates for
the 1997 calendar year.
EXISTING LAW:
1) Establishes the intent of the Legislature that the
Secretary for the California Environmental Protection
Agency (CalEPA) shall convene a task force to review the
California Department of Toxic Substances Control's (DTSC)
hazardous waste fee structure and make recommendations on a
new fee system by January 1, 1997. (SB 1222, Calderon,
Chapter 638, Statutes of 1995)
2) Establishes an Environmental Fee on organizations
including corporations, limited liability companies,
limited partnerships, limited liability partnerships,
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general partnerships, and sole proprietorships that
generate, store, or conduct activities in this state
related to hazardous materials. (Health & Safety Code (H&S)
§ 25205.6)
3) Requires any person who applies for a new hazardous
waste facilities permit, a hazardous waste facilities
permit for post closure, a renewal of an existing hazardous
waste facilities permit, a modification of an existing
hazardous waste facilities permit or grant of interim
status, a variance, or a waste classification determination
to reimburse DTSC for the costs incurred by DTSC for
processing the application. (H&S § 25205.7(a)(1))
4) Authorizes a person applying for a new permit, a permit
for post closure, a renewal of an existing permit, or a
class 2 or class 3 permit modification to choose whether to
reimburse DTSC's costs with either a reimbursement
agreement with DTSC, or a flat fee delineated in statute.
(H&S § 25205.7(d))
5) Requires the fees established at a base rate for the
1997 calendar year to be annually adjusted to reflect
increases or decreases in the cost of living, during the
prior fiscal year, as measured by the Consumer Price Index
issued by the Department of Industrial Relations. (H&S §
25205.7. (d)(1)(J)(3))
6) Establishes within DTSC an independent review panel
(IRP), comprising of three members, to review and make
recommendations regarding improvements to DTSC's
permitting, enforcement, public outreach, and fiscal
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management. Requires the IRP to review and make
recommendations regarding improvements to DTSC's
permitting, and to report to the Governor and the
Legislature on permitting backlogs. (H&S § 57014(a) and
(f))
FISCAL EFFECT: Unknown.
COMMENTS:
Need for the bill: According to the author, "The flat fee
payment amounts outlined in Health and Safety Code § 25205.7(d)
were last revised in 1997 by SB 660 (Sher) and have not kept
pace with inflation (from 1997-2016, cumulative inflation is
47.7%). As an example, one provision in this code section
provides for a flat fee of $104,187; in 2016 dollars this
amounts to $153,918.28.
DTSC is unable to obtain full cost recovery when hazardous waste
permit applicants utilize this outdated flat fee structure. AB
2794 increases these flat fees, ensuring DTSC is better able to
recover costs associated with its permit decisions."
History of DTSC fee reform: An Environmental Fee was established
in 1989 by Senate Bill (SB) 475 (Chapter 269, Statutes of 1989)
to provide DTSC with a broad-based revenue source to supplement
the fees it was already receiving from businesses that generate,
store, transport or dispose of hazardous waste.
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Prior to 1998, the Environmental Fee was used to fund both
hazardous waste management and site mitigation program
activities. In 1995, SB 1222 (Calderon, Chapter 638, Statutes of
1995) required the Secretary for CalEPA to convene a task force
to review DTSC's hazardous waste fee structure and make
recommendations on a new fee system by January 1, 1997. The Fee
Reform Task Force was composed of representatives from regulated
businesses, general industry, labor unions, the Legislature, and
environmental organizations. The Task Force concluded that
DTSC's regulatory costs should be funded from fees on regulated
industries and that DTSC's site mitigation costs should be
funded from the parties responsible for contaminating the sites.
In 1997, SB 660 (Sher, Chapter 870, Statutes of 1997) enacted
the Environmental Cleanup and Fee Reform Act of 1997 and
implemented many of the recommendations made by the Fee Reform
Task Force mandated by SB 1222. Effective January 1, 1998, SB
660 eliminated certain fees and restructured the Generator Fee,
Disposal Fee, Facility Fee and the Environmental Fee. In
addition, the fees for a preliminary endangerment assessment for
site mitigation, extremely hazardous waste, border zone property
assessment, waste classification, variance, and class I
modifications were eliminated; variances, waste classifications,
and preliminary endangerment assessments became cost
reimbursement activities.
Funding sources that support DTSC's hazardous waste regulatory
costs include the generator fee, disposal fee, activity fee
(facility permit activity), annual facility fee, Environmental
Protection Agency identification fee, manifest fee, and money
collected from cost recovery efforts for corrective actions. In
contrast, funding for DTSC's site cleanup and pollution
prevention activities comes from the Environmental Fee, fines
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and penalties collected from actions brought by DTSC, recovery
of DTSC's costs to oversee cleanup activity of contaminated
sites, interest and other revenue, and, until 2001, General Fund
revenue.
According to DTSC's September 2000 Department of Toxic
Substances Control
Pollution Prevention Report and 2-Year Workplan, "[o]f perhaps
more significance is the effect of SB 660. The fee structure
established at that time has resulted in disposal fees that are
consistently the lowest in DTSC's history. Between 1997 and
1998, disposal fees for RCRA wastes dropped nearly 30%. Disposal
fees for non-RCRA wastes fell 57%."
Independent Review Panel: The 2015-16 Budget Act created a
three-person IRP to oversee DTSC's permitting, enforcement, and
fiscal management. The IRP is tasked to report every 90-days for
a defined period of time on DTSC's performance, specifically
related to permitting, enforcement backlog reductions, and
meeting legislative mandates. The IRP released its first report
on January 28, 2016, and provided various recommendations on the
aforementioned categories. Among the recommendations in that
initial report include the following:
"Require that the DTSC obtain full cost recovery connected
with its Hazardous Waste Facility Permit decisions. The
DTSC reports that the DTSC's existing Health Safety Code §
25205.7(d) fee collection for permitting statute does not
ensure that it achieves full cost recovery connected with
its Hazardous Waste Facility Permit actions."
Under current law, a person who applies for a hazardous waste
facility permit, a hazardous waste permit for postclosure, a
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hazardous waste facility permit renewal, a modified permit, a
variance or a waste classification permit must reimburse DTSC
for its administrative costs incurred for reviewing the
application. That same law allows a permit applicant to either
pay a reimbursement fee or a flat fee as currently delineated in
statute (H&S § 25205.7(d)).
Unofficially, DTSC recoups about 40% of its costs when
applicants use a flat fee. Therefore, payment of a flat fee can
prevent DTSC from recouping the entirety of its incurred costs,
thus burdening taxpayers with the costs that the applicants
should be paying.
AB 2794 proposes to codify an iteration of the IRP's
recommendation by increasing the flat fees to adjust for
inflation.
Consumer Price Index (CPI): The CPI measures changes in the
price level of a market basket of consumer goods and services
purchased by households. The CPI is a statistical estimate
constructed using a sample of representative items whose prices
are collected periodically.
DTSC (via the Board of Equalization (BOE)) has the authority to
adjust most of its fees based on the Consumer Price Index (CPI),
including those permit application fees in H&S § 25205.7. Every
year, DTSC increases or decreases the fees, based on the CPI,
and annually releases an "Annual Fee Summary" to conveniently
summarize state law as it relates to fees charged by DTSC or
collected by BOE for DTSC and what the current calendar year
rate is for each fee.
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How do the rates compare? AB 2153 proposes increasing all of the
statutorily outlined fees based on today's inflation, but
retaining DTSC's authority to adjust the fees against the CPI.
Below are the current fee rates for the calendar year January 1,
2016 through December 31, 2016, according to the December 5,
2015, Annual Fee Summary, and the base rate fees for 2016 as
proposed by AB 2794:
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| | | | | | |
|Permit |Type of |Applicant|1997 |2016 |AB 2794 |
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|Applicatio|Applicant/Acti| |Base |Rates |as |
|n |vity |Size/Type|Rates | |amended |
| | | | | |04/05/16 |
| | | | | | |
|----------+--------------+---------+---------+---------+---------|
|Hazardous |Land Disposal |Small |$104,187 |$166,596 |$153,915 |
|Waste |Facility |Facility | | | |
|Facilities| | | | | |
| Permit | |Medium | | | |
|Applicatio| |Facility |$222,183 |$355,272 |$328,231 |
|n | | | | | |
| | |Large | | | |
| | |Facility | | | |
| | | |$381,602 |$610,183 |$563,741 |
| | | | | | |
|----------+--------------+---------+---------+---------+---------|
| |Incinerator |Small |$62,762 |$100,357 |$92,718 |
| | |Facility | | | |
| | | | | | |
| | |Medium | | | |
| | |Facility |$133,060 |$212,762 |$196,570 |
| | | | | | |
| | |Large | | | |
| | |Facility | | | |
| | | |$228,458 |$365,310 |$337,501 |
| | | | | | |
|----------+--------------+---------+---------+---------+---------|
| |Storage |Small |$21,340 |$34,123 |$31,526 |
| |Facility, |Facility | | | |
| |Treatment | |$38,913 |$62,225 |$57,486 |
| |Facility, or |Medium | | | |
| |Storage and |Facility |$75,317 |$120,431 |$111,266 |
| |Treatment | | | | |
| |Facility |Large | | | |
| | |Facility | | | |
| | | | | | |
|----------+--------------+---------+---------+---------+---------|
| |Transportable |Small |$16,320 |$26,095 |$24,110 |
| |Treatment |Unit | | | |
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| |Unit | |$37,657 |$60,214 |$55,631 |
| | |Medium | | | |
| | |Unit |$75,317 |$120,431 |$111,266 |
| | | | | | |
| | |Large | | | |
| | |Unit | | | |
| | | | | | |
|----------+--------------+---------+---------+---------+---------|
| |Postclosure |Small |$10,040 |$16,055 |$14,832 |
| |Permit |Facility | | | |
| | | | | | |
| | |Medium | | | |
| | |Facility |$22,596 |$36,131 |$33,381 |
| | | | | | |
| | |Large | | | |
| | |Facility | | | |
| | | |$37,657 |$62,214 |$55,631 |
| | | | | | |
|----------+--------------+---------+---------+---------+---------|
|Standardiz|Storage |Series A |$32,052 |$51,254 |$47,350 |
|ed Permit |Facility | | | | |
|Applicatio|Treatment |Series B |$20,011 |$31,999 |$29,562 |
|n |Facility | | | | |
| |Storage and |Series C |$5,332 |$8,526 |$7,877 |
| |Treatment | | | | |
| |Facility | | | | |
| | | | | | |
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The proposed 2016 base rates in AB 2794 are in fact lower than
the current fees. While the bill could result in higher fees
once the BOE adjusts them for the CPI, it is more likely that it
will result in lower fees compared to today's rates.
Once the author understands the material impact of the proposed
fee increases in the bill, he may wish to consider amendments,
if necessary to retain the intent of the bill.
Board of Equalization (BOE): Under the current fee structure,
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all flat fees paid pursuant to H&S § 25205.7 are remitted to the
Board of Equalization (BOE). All reimbursement agreements with
DTSC are paid directly to DTSC.
When fees are remitted to the BOE, the BOE is allowed to retain
a percentage to cover its administrative costs of managing the
remittances.
According to a BOE analysis of its collection of these flat
fees, there has been an average of nine one-time, flat-rate
application billings in the last three fiscal years, with
average revenues of $333,333.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition (to a previous version of the bill)
Alhambra Chamber of Commerce
Automotive Specialty Products Alliance
California Business Properties Association
California Cement Manufacturers Environmental Coalition
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California Manufacturers and Technology Association
California Metals Coalition
Chemical Industry Council of California
Clean Harbors Environmental Services, Inc.
Consumer Specialty Products Association
Greater Fresno Area Chamber of Commerce
Industrial Environmental Association
Institute of Scrap Recycling Industries
Metal Finishing Association of Northern California
Metal Finishing Association of Southern California
North Orange County Chamber
Oxnard Chamber of Commerce
Palm Desert Area Chamber of Commerce
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Rancho Cordova Chamber of Commerce
Redondo Beach Chamber of Commerce & Visitors Bureau
Safety-Kleen, Inc.
San Diego Regional Chamber of Commerce
South Bay Association of Chambers of Commerce
Southwest California Legislative Council
Simi Valley Chamber of Commerce
Torrance Chamber of Commerce
West Coast Lumber & Building Material Association
Western Plant Health Association
Western States Petroleum Association
Analysis Prepared by:Paige Brokaw / E.S. & T.M. / (916) 319-3965
AB 2794
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