BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2794


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          Date of Hearing:  May 4, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2794 (Santiago) - As Amended April 5, 2016


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          |Policy       |Environmental Safety and Toxic |Vote:|4 - 0        |
          |Committee:   |Materials                      |     |             |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill increases the statutorily specified flat fee options  
          for a person applying for various hazardous waste permits or  
          modifications from the Department of Toxic Substance Control  
          (DTSC).  


          FISCAL EFFECT:


          Although the author intends this bill to raise flat fee rates,  
          the flat fee rates proposed in this bill would result in an  
          approximate 8% decrease in the fee rate. According the Board of  








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          Equalization (BOE), flat-rate application fees over the last  
          three fiscal years averaged at $333,333.  If flat-rate fees in  
          the bill were adopted, DTSC would lose on average approximately  
          $27,000 annually from permitting actions. 


          COMMENTS:


          1)Purpose.  According to the author, the flat fee payment  
            amounts outlined in existing law were last revised in 1997 by  
            SB 660 (Sher), and have not kept pace with inflation.  As an  
            example, one provision provides for a flat fee of $104,187  
            which in 2016 dollars amounts to $153,918.28.

            This bill is intended to increase flat fees to ensure DTSC is  
            better able to recover costs associated with its permit  
            decisions.

          2)Background.  The Board of Equalization (BOE) administers six  
            hazardous waste fee programs in cooperation with DTSC under  
            the Hazardous Substances Tax Law. Five of the fees are: 1) the  
            environmental fee on certain types of organizations based on  
            their use, storage, generation, or activities connected to  
            hazardous materials; 2) the facility fee imposed on the  
            storage, treatment, or disposal of hazardous waste; 3) the  
            generator fee based on the generation of hazardous waste at a  
            specific site;4) the transportable treatment unit (TTU) fee  
            imposed on a per treatment unit, not per facility; and 5) and  
            the disposal fee assessed on hazardous waste disposed of by  
            depositing on, or into, land.


            The sixth fee (activity fee) is essentially an application  
            processing fee imposed on any person that applies for a new  
            hazardous waste facilities permit, a postclosure hazardous  
            waste facilities permit, the renewal of an existing hazardous  
            waste permit, a class 2 or class 3 permit modification, or a  
            variance or waste classification determination. 








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            The applicant pays the fee either by entering into a  
            reimbursement agreement with DTSC, or paying a one-time,  
            flat-rate fee to the BOE.  The fee is non-refundable, even if  
            the application is withdrawn or the permit or the modification  
            is denied. The fee is tiered based on the permitted level of  
            the facility and the type of permit activity. 


          3)Independent Review Panel (IRP).  The 2015-16 Budget Act  
            created a three-person IRP to oversee DTSC's permitting,  
            enforcement, and fiscal management.. The IRP released its  
            first report on January 28, 2016, and provided various  
            recommendations including the need for DTSC to obtain full  
            cost recovery from permit decisions.


            It is estimated that 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. 





            The author is working on revisions to this bill to ensure the  
            flat fees are adjusted for inflation and improve cost  
            recovery.













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          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081