The 2022-23 Budget: Department of Toxic Substances Control Reform Implementation

The 2022-23 Budget: Department of Toxic Substances Control Reform Implementation JANUARY 2022 Summary. In this post, we provide a description DTSC Supported by Two Special Funds. and analysis of the Governor’s 2022-23 budget The department’s ongoing operations are primarily proposals to spend the additional revenues the supported by the Hazardous Waste Control Department of Toxic Substances Control (DTSC) Account (HWCA) and the Toxic Substances is expected to receive from last year’s governance Control Account (TSCA). HWCA largely supports and fiscal reform. Overall, we find that the proposals the Hazardous Waste Management Program. The are consistent with the information the Legislature account is sustained by regulatory fees charged used as the basis for approving DTSC’s governance to hazardous waste generators, waste disposal and fiscal reform. However, we recommend the entities, and other facilities that handle hazardous Legislature continue to conduct oversight of the waste. TSCA largely supports the Site Mitigation programmatic expansions being proposed and to and Restoration Program and the Safer Consumer revisit staffing levels in future years. Products Program. The account is primarily funded by a broad-based tax charged to businesses that Background contribute to hazardous waste. DTSC Is Responsible for Protecting Department Recently Underwent Significant California From Toxic Substances. DTSC is Governance and Fiscal Reform. Budget trailer charged with protecting the people of California legislation as part of the 2021-22 budget package, and the environment from the harmful effects of Chapter 73 of 2021 (SB 158, Committee on Budget toxic substances. DTSC administers the following and Fiscal Review), restructured and increased major programs: the charges that support HWCA and TSCA. The • Hazardous Waste Management Program. resulting revenues provided from the changes are The department regulates the generation, intended to (1) solve the longstanding structural storage, transportation, and disposal deficits in HWCA and TSCA, (2) support a new of hazardous waste through permitting, Board of Environmental Safety (discussed below), compliance monitoring, and enforcement (3) support programmatic expansions that address of noncompliance. high-priority programs and activities, and (4) build sufficient reserves in both accounts. Beginning in • Site Mitigation and Restoration Program. 2022-23, these reforms are estimated to increase DTSC implements the state’s laws regarding revenues in HWCA by $46.3 million ($22.5 million the identification, assessment, and cleanup to address the account’s structural deficit and of sites contaminated by toxic substances. $23.8 million for programmatic expansions) The department also monitors long-term and increase revenues in TSCA by $53.1 million operations and maintenance activities at sites ($11.5 million to address the account’s structural where cleanup is complete. deficit and $41.6 million for programmatic • Safer Consumer Products Program. This expansions). (Since the state would not begin to program identifies and prioritizes chemicals receive revenues until 2022-23—due to the timing of concern in consumer products, evaluates of how charges for both accounts are collected— alternatives, and specifies regulatory the 2021-22 budget provided one-time General responses to reduce chemicals of concern Fund resources of $29 million and $11.5 million in products. 2022-23 Budget Series 1 to HWCA and TSCA, respectively, to keep the Governor’s Proposal accounts solvent and to advance high-priority Proposes Total of $510 Million for DTSC. programmatic expansions a year early.) To inform The Governor’s 2022-23 budget proposes a total the 2021-22 budget decisions, DTSC provided of $510 million from various funds to support the Legislature with an expenditure plan that DTSC. The proposed amount reflects a decrease of stated the programs and activities the department $355 million, or 41 percent, compared to projected intended to augment with the additional revenues current-year expenditures. The year-to-year from HWCA and TSCA. However, the department change largely reflects some one-time funds still needs statutory authorization to use all of the the department received in 2021-22 that additional funds in 2022-23. are not sustained at the same levels in the Senate Bill 158 also established the Board 2022-23 proposal, including the $300 million to of Environmental Safety within the department. address brownfields as well as funding related to The five-member board is responsible for hearing the Exide facility. hazardous waste permit appeals and providing Provides Funding for DTSC to Significantly strategic guidance to the department. The board Expand Activities. The Governor’s budget includes also has the authority to set charge levels for multiple proposals requesting authorization to HWCA and TSCA in future years beginning in use the additional revenues that HWCA and 2023-24. Specifically, the board will set charges TSCA received from the restructured and increased annually to align revenues from both accounts charges. As shown in Figure 1, the funding to the amount of expenditures authorized by the would be used to support various programmatic Legislature through the annual budget act. expansions to fully implement the reforms initiated Legislature Provided Considerable New in 2021-22. As discussed earlier, some of these Funding for DTSC to Address Brownfields. activities began in 2021-22 using one-time General In addition to the above fiscal and governance Fund, but would switch to HWCA and TSCA reforms, the 2021-22 budget package provided beginning in 2022-23. The new proposals request DTSC with one-time General Fund of $300 million $16.1 million in additional spending from HWCA and to address brownfields—properties underutilized $33.4 million in additional spending from TSCA, in due to the presence or potential presence of order to support 260 additional ongoing positions. hazardous contaminants. Most of the funding was All of the funding and positions are proposed on an allocated for (1) DTSC to investigate and clean ongoing basis. up brownfields with contracted assistance and Major requests from HWCA include funding (2) a new grant program—Equitable Community to improve inspections of hazardous waste Revitalization Grant (ECRG) Program—to provide generators and to enhance criminal enforcement funding to municipalities, nonprofits, tribes, and investigations. The most significant proposals to other governmental agencies for brownfield be funded from TSCA include funding to administer investigations, cleanups, and community-wide brownfield cleanups (discussed more below) and assessments. The 2021-22 budget package also expand the Safer Consumer Products Program. provided an additional $100 million in 2022-23 and Provides Resources to Support Brownfield in 2023-24 to continue these activities. A portion of Cleanups. Consistent with SB 158, the Governor’s the $300 million provided in 2021-22 is being used budget includes an additional $100 million in to support the staff needed to begin implementing General Fund to support brownfield cleanups. the above activities, with the expected revenue As shown in Figure 1, the budget proposes increases in TSCA anticipated to cover staff costs $12.9 million from TSCA in 2022-23 to hire starting in 2022-23. 73.5 ongoing positions to help administer this cleanup workload—together with the workload associated with the $300 million provided in the current year and the additional $100 million in 2023-24. The Governor proposes increasing 2022-23 Budget Series 2 these staffing resources to $13.9 million and Recommendations 79.5 positions in 2023-24 and on an ongoing Approve DTSC Reform Implementation basis as cleanup projects and grants ramp up. Proposals. We recommend the Legislature adopt These positions would implement and oversee the Governor’s DTSC reform implementation investigation and cleanup contracts at brownfield proposals, given that they align with the expenditure sites and administer the ECRG Program. plan provided to the Legislature last year and are consistent with the assumptions upon which Assessment the HWCA and TSCA funding increases were Proposals Consistent With Department’s based. Approving these proposals will provide Intended Expenditure Plan. Overall, we find that the department with additional resources that will the Governor’s budget aligns with the expenditure better enable DTSC to enforce hazardous waste plan provided to the Legislature last year. laws and clean up contaminated sites. Specifically, the proposed activities, associated Monitor Implementation of Program number of new staff, and corresponding costs Expansions and Brownfield Cleanups. are generally consistent with the information We recommend the Legislature use future the Legislature used as the basis for approving budget hearings to conduct oversight on how HWCA and TSCA increases. the department is implementing these significant Need for New Cleanup Staff Will Diminish programmatic expansions. In addition to solving in Future Years Absent Additional Program the structural deficits within HWCA and TSCA, the Funding. As noted above, the Governor’s budget Legislature enacted the reform measures to ensure includes ongoing funding from TSCA for staff to administer the new $500 million brownfields cleanup Figure 1 program. While the workload for the DTSC Reform Implementation Proposals proposed staffing levels is clear in (Dollars in Millions) the near term, the need for these positions will diminish in future Proposals HWCA TSCA Positions years as the department completes Approved in 2021-22a investigation and cleanup contracts Implement Violations Scoring Procedure $3.1 — 11.0 and ECRG projects. We estimate Resource Conservation and Recovery Act 2.5 — 17.0 that the department will encumber Board of Environmental Safety 1.5 $1.5 15.0 most of the $500 million after Information technology security unit 0.6 0.6 4.0 Subtotals ($7.7) ($2.1) (47.0) five years, at which point the Governor’s 2022-23 Proposals department will start to see a Enhance hazardous waste generator inspections $2.9 — 16.0 gradual decline in workload. Criminal enforcement increase 2.3 — 14.0 Unless the Legislature provides Modernize information technology infrastructure 2.3 $3.8 24.0 comparable levels of additional Legal support for core programs 2.1 4.7 24.0 funding for annual brownfield Administrative support for core programs 1.9 3.7 37.6 investigation and cleanup contracts Hazardous waste classification 1.5 — 8.0 Increase frequency of transporter inspections 1.3 — 8.0 and/or grants in future years, the Hazardous Waste Management Plan 1.2 — 7.0 need for the proposed staffing California Environmental Quality Act review 0.3 — 2.0 levels likely will begin to gradually Office of Environmental Equity 0.3 1.0 9.0 phase out after five years. Administrative support for brownfield cleanups — 12.9 73.5 Expand Safer Consumer Products Program — 7.2 37.0 Subtotals ($16.1) ($33.4) (260.1) Totals $23.8 $35.5 307.1 a Activities funded with one-time General Fund in 2021-22. DTSC = Department of Toxic Substances Control; HWCA = Hazardous Waste Control Account; and TSCA = Toxic Substances Control Account. 2022-23 Budget Series 3 that high-priority programs and activities were Revisit Staffing Levels in Future Years. adequately funded to improve DTSC’s outcomes. We recommend that the Legislature revisit the Continued monitoring of the department’s efforts department’s staffing levels in future years to will further ensure that DTSC is meeting its mission evaluate whether the approved level of positions are and achieving the Legislature’s goals. Moreover, still needed for the same activities. In particular, we such oversight would allow the Legislature to recommend the Legislature request annual updates identify when changes—such as to staffing or beginning in 2024-25 regarding how much funding funding levels, implementation strategies, or and workload remains from the $500 million in statutory requirements—for particular activities brownfields funding to assess the degree to which might be warranted to improve desired outcomes. the 79.5 staff and associated $13.9 million are still Some examples of information the Legislature needed to administer the program. Based on its could request from the department include the assessment of the outcomes of the brownfields average time DTSC takes to make hazardous program and whether it finds merit in funding waste facility permit decisions, the number of additional rounds of contracts and grants, the additional hazardous waste transporters the Legislature could consider one of the following department is able to inspect, and the number options in future years when the $500 million is of additional product-chemical combination largely expended: investigations completed by the Safer Consumer • Provide additional funding for brownfield Products Program. cleanups and adjust TSCA funding for staffing In addition, we recommend the Legislature track levels commensurate to the new workload. major outcomes from the brownfields cleanup • Reallocate some of the TSCA funding from funding. For instance, the Legislature will want to staffing to instead be used for cleanup grants know how many sites the department was able or contracts to sustain a continued but to investigate and clean up, average time lines for down-sized program. completing projects, the number of ECRG projects • Redirect the $13.9 million in TSCA funding and funded with grants, the human and environmental the 79.5 associated staff from the brownfields benefits associated with these activities, and cleanup program to a different DTSC the communities that benefited from funding. priority activity. Such information can help inform whether the Legislature should consider providing additional funding for cleanup activities—and associated staffing, as discussed next—in the future. LAO PUBLICATIONS This post was prepared by Frank Jimenez, and reviewed by Rachel Ehlers and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 4