BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 274


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          Date of Hearing:  April 15, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          274 (Committee on Environmental Safety) - As Introduced February  
          11, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:   


          SUMMARY:


          This bill allows the Department of Toxic Substance Control  
          (DTSC) to not pursue and write off an uncollectible account, as  
          defined.  Specifically, this bill defines an uncollectible  








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          account as an oversight costs that meets the following  
          conditions:


             1)   The cost was incurred by 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 DTSC to pursue the oversight cost  
               exceeds the cost itself.


          FISCAL EFFECT:


          Minor forgone revenues associated with cost recovery offset by  
          the savings associated with not pursuing collection.


          COMMENTS:


          1)Purpose.  According to DTSC, 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  
            some projects often far exceed the recoverable costs,  
            resulting in a financial loss to DTSC, and therefore to  
            taxpayers. 
            According to the author, authorizing 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.









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          2)Background.  On August 7, 2014, the Bureau of State Audits  
            (BSA) released a report on DTSC's cost recovery.  The BSA  
            found long-standing shortcomings resulting in millions of  
            dollars in unbilled and uncollected cleanup costs dating back  
            to 1987.   
            According to 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.  


          3)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.
            


          4)Related Legislation.  In addition to this bill, the Committee  
            on Environmental Safety and Toxic Materials has introduced the  
            following bills to address the shortcomings found in the BSA  
            report:



             a)   AB 273 (ESTM) modifies provisions relating to DTSC's  
               authority to require corrective actions under hazardous  
               waste control laws.



             b)   AB 275 (ESTM) revises DTSC's statute of limitation for  








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               cost recovery.



             c)   AB 276 (ESTM) allows DTSC to request financial  
               information from specified entities who claim inability to  
               pay.



            All four bills will be heard in this Committee on April 15,  
            2015


          


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