BILL ANALYSIS Ó AB 2794 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2794 (Santiago) - As Amended April 5, 2016 ----------------------------------------------------------------- |Policy |Environmental Safety and Toxic |Vote:|4 - 0 | |Committee: |Materials | | | | | | | | | | | | | ----------------------------------------------------------------- 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 AB 2794 Page 2 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. AB 2794 Page 3 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. AB 2794 Page 4 Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081