The budget proposes expenditures of $74.2 million from various funds (primarily special funds) for support of CIWMB. This is a reduction of $2.2 million, or 2.9 percent, from estimated 1997-98 expenditures. Major budget adjustments include a reduction of $3.7 million in the tire recycling program (mainly reflecting a one-time increase in 1997-98 due to available revenues) and an increase of $1.5 million for a pollution prevention and education program for the Lake Tahoe Basin.
Current Law Regarding State Agency Recycling. Under current law, each state agency is required to initiate activities for the collection, separation, and recycling of "recyclable materials." State law specifies the types of materials that must be included in recycling programs in certain parts of the state. The CIWMB administers the state agency recycling program--known as "Project Recycle"--and is required to approve recycling programs and recycling contracts at each state agency. State agencies are required to report annually to the board on their recycled amounts. To a large degree, it is left to the board's discretion as to the location and content of recycling programs at the site-specific level. In the current year, CIWMB estimates its expenditures for Project Recycle at about $800,000.
Under current law, local governments are required to develop and implement plans to divert 25 and 50 percent of waste from landfills by 1995 and 2000, respectively. Since state facilities generate waste and are located in local jurisdictions, they have a role in helping local governments meet these diversion requirements. In some local jurisdictions, state facilities are among the major contributors to the waste stream. If these facilities do not divert their waste from landfills by recycling, they may significantly hinder a local government in meeting the diversion requirements, potentially subjecting the local government to civil penalties.
For the state as a whole, local governments collectively are on track to meet the statutory goal of 50 percent diversion by 2000. According to the board, the statewide diversion rate was 30 percent as of the end of 1996. State agencies are not themselves mandated to meet particular diversion levels. The board, however, has set the same 25 and 50 percent diversion rates that apply to local governments as program goals for Project Recycle. To the extent that state agencies do not participate fully in recycling efforts in a local jurisdiction, they may impede that jurisdiction's ability to meet the statutory goal of 50 percent diversion by 2000.
Data Are Not Comprehensive. Our review shows that it is difficult to accurately determine the total amount of waste that has been recycled by state facilities. This is because the data relied on by the board to estimate recycled amounts are not comprehensive. One reason for this is that, in spite of statutory and State Administrative Manual provisions requiring periodic reporting to the board on recycled amounts, it appears that many state facilities either do not report at all, or fail to report completely regarding all materials recycled.
State Facility Recycled Amounts Appear to Fall Far Below Statewide Average. Using the data made available by the board, we have developed a rough approximation of the statewide recycled amounts and diversion rates for state agencies, as shown in Figure 22.
As the figure shows, the number of state facility sites with recycling programs and the amount recycled by these facilities have increased steadily since 1991 (the year a Governor's Executive Order regarding state agency recycling went into effect). However, we estimate that currently less than 20 percent of state facility sites have recycling programs. Furthermore, we estimate the diversion rates to vary from a low of 0.3 percent in 1991 to a high of 5.8 percent in 1997. These rates are far below the 25 percent diversion rate that the board set for Project Recycle to meet by 1995 and that the Legislature set for local governments to meet by 1995.
|Estimated State Facility Recycled Amounts|
|1991 Through 1997|
|1991||150||2,500||0.3 to 0.5%|
|1992||480||10,677||1.2 to 1.9|
|1993||560||15,469||1.7 to 2.8|
|1994||737||23,184||2.6 to 4.2|
|1995||927||25,450||2.9 to 4.6|
|1996||1,086||28,345||3.2 to 5.2|
|1997||1,111||32,000||3.6 to 5.8|
|aCalculated using the CIWMB's range of estimates of waste generated by state facilities--not including state parks--of 550,000 to 893,000 tons. This level of waste generation represents between 1 percent and 2 percent of the total annual waste stream in California, currently about 47 million tons.|
Can State Agencies Do Better? Our review finds that much of the increase in state agency recycling is due to state facilities approaching the board for assistance in setting up a recycling program. In such cases, the board provides valuable technical assistance, including evaluating the feasibility of the proposed program and recommending recycling contractors. However, over the past several years, the board has not initiated any proposals to broaden the program and improve program effectiveness. We think that the board ought to be more proactive by identifying and assisting state facilities in maximizing their recycling efforts and identifying the barriers that are limiting implementation of recycling programs at state facilities.
In order that the Legislature can evaluate actions necessary to facilitate state agency recycling, we recommend adoption of the following supplemental report language:
By December 1, 1998, the California Integrated Waste Management Board shall report to the Chairs of the Joint Legislative Budget Committee and the Senate and Assembly fiscal and policy committees on:
Recycling Market Development Zone Loan Program. The RMDZ loan program was established by Chapter 1543, Statutes of 1990 (SB 2310, Bergeson). The program provides low-interest loans to recycling-based businesses in 40 designated market development zones covering about two-thirds of the state. These loans cannot exceed $1 million and cannot fund more than 50 percent of project costs. The program has been funded by an annual loan of $5 million from the Integrated Waste Management Account to the Recycling Market Development Revolving Loan Account. The goal of the RMDZ program is to develop uses for recycled goods. Without markets for these goods, recycling will not serve its purpose of diverting waste from landfills.
Costs to Administer Program. Figure 23 summarizes the expenditures of the RMDZ program since its inception in 1991-92 through 1996-97.
As shown in the figure, from 1991-92 through 1996-97, the program expended $5.1 million to initiate and service 55 loans totaling $22.7 million. This translates to administrative costs of about 23 percent of the loan volume. These include costs for staff to market the program, help structure potential recycling-based businesses, and write the loans. These also include legal costs to develop the loan documents, financial consultant costs to evaluate financing alternatives and assist in negotiations with borrowers, loan servicing costs to disburse and monitor the loans, and collection costs.
|RMDZ Loan Program
Administration Versus Loan Amounts
|1991-92 Through 1996-97
|RMDZ loans (55 loans)||$22,675.8|
|Administrative costs as percentage of loan amounts||22.6%|
|aIncludes staff positions, departmental overhead, pro rata, students, and training.|
External Audit of RMDZ Program. In 1997, an audit of the RMDZ program was conducted by a private consultant at the board's direction. The purpose of the audit was to help identify the program's strengths, weaknesses, constraints, and opportunities. The audit found that:
Making the RMDZ Program More Effective. As discussed below, we find that the board is taking steps to address a number of the issues identified in the audit. Some of the board's actions may lower administrative costs. Others, while not reducing costs, should result in a more effective use of the program's resources.
First, as authorized by Chapter 672, Statutes of 1997 (SB 1066, Sher), the board is planning to participate in other state and federal lending programs so that the RMDZ program's financial contribution can raise or "leverage" other public and private funds for a project. For example, the board is negotiating with the California Pollution Control Financing Authority to provide RMDZ funds which, along with the authority's funds, would serve as a guarantee for commercial loans to higher risk recycling businesses.
Second, the board has begun contracting for loan closing and servicing activities. The board believes that this will lower administrative costs significantly and free up board staff to focus on marketing the program. The board has decided not to contract for loan origination and underwriting services--which account for much of the board's administrative costs. We think that the board is unlikely to reduce expenditures appreciably by contracting for these services. This is because outside contractors are unlikely to have the board's technical expertise which is needed to assist a loan applicant in structuring its business so that it can be eligible for a loan.
In order to keep the Legislature informed of the steps that the board is taking to make the RMDZ program more effective and to lower administrative costs, we recommend that the Legislature adopt the following supplemental report language:
By December 1, 1998, the California Integrated Waste Management Board shall report to the Chairs of the Joint Legislative Budget Committee and the Senate and Assembly fiscal and policy committees on:
This information would enable the Legislature to identify any further actions needed to make the RMDZ program more effective.
Legislative Concern About Allocation of Funds in Tire Program. At last year's budget hearings, the Legislature expressed concern about the proposed allocation of funds requested for grants, loans, and contracts in the tire recycling program. In past years, the board allocated funds among the various authorized purposes (including research, business development, and tire site cleanup) many months after the budget was passed. These late decisions reduced legislative oversight and also slowed the implementation of the tire recycling program. (Please see Analysis of the 1997-98 Budget Bill, page B-79.)
To facilitate an evaluation of the tire recycling program's budget, the Legislature adopted supplemental report language requiring the board to submit a proposed allocation of the tire recycling funds with future years' budget requests. Specifically, the supplemental report required the board to allocate funds among the various purposes for which grants, loans, and contracts can be awarded, so that the Legislature can assess the board's priorities for the tire recycling program.
Allocation Submitted Not Responsive to Legislature's Direction. At the time this analysis was prepared, the board had provided the Legislature with a proposed amount of grants, loans, and contracts to be funded from tire recycling funds. However, the board had not provided an allocation among authorized purposes for the funds, as required by the supplemental report. According to the board, it plans to finalize the proposed allocation of these funds at its April board meeting. We recommend that the board make the allocation in a timely manner, and report at budget hearings on its proposal.
The budget proposes expenditures of $48.1 million in 1998-99. Of this amount, $31.4 million is from the Department of Pesticide Regulation Fund (funded mainly by a tax on pesticide sales) and $11.4 million is from the General Fund. The proposed expenditures are about the same as estimated current-year expenditures. Major budget proposals include a continuation of $1 million for grants for research and development of reduced-risk pest management practices.
Legislative Concern About Department's Performance. In general, the department's responsibilities fall into two broad categories: (1) registration and regulation of pesticides to permit their use primarily by agriculture and (2) evaluating and reducing the risk associated with use of pesticides. At hearings on the current-year budget, the Legislature expressed concern about how well the department was meeting its statutory mandates, particularly those that relate to assessing risks of pesticides. To facilitate an evaluation of the department's performance in meeting these mandates, the Legislature adopted supplemental report language requiring the department to develop workload standards and performance measures and to submit draft and final reports to the Legislature by October 1997 and December 1997, respectively.
Legislatively Required Reports Not Submitted. However, in October, the department submitted its 1997 strategic plan to the Legislature and informed the Legislature that it would not be submitting any further reports or information pursuant to the Legislature's supplemental report requirement.
We find that submitting the department's strategic plan does not adequately respond to the Legislature's direction in the supplemental report. In particular, the performance measures found in the strategic plan do not relate specifically to legislative mandates of the department. Moreover, many of the measures in the strategic plan are of an "output" nature--such as "number of grants awarded." Measures of this type do not enable the Legislature to evaluate the department's budget based on how the department is meeting its statutory and legislative mandates, as intended by the supplemental report requirement.
Performance Measures Will Be of Value to Legislature. We think that it is important that the department provide a report that is responsive to the Legislature's direction in the supplemental report requiring performance measures. This is particularly so given the failure of the department to meet a number of statutory mandates and legislative direction.
According to the department, it faces many competing statutory mandates, and therefore, it has to develop its own priorities for its risk assessment and regulatory activities. Under such circumstances, we think that it is important for the Legislature to be apprised of the department's priorities so that it can assess whether they are consistent with the Legislature's priorities. The development of performance measures by the department that are responsive to the Legislature's direction in the supplemental report will allow the Legislature to make such an assessment.
Therefore, we recommend that the Legislature withhold action on the department's budget until the department submits a report that is responsive to the supplemental report requirement. Specifically, the report should (1) identify quantifiable performance measures for the department; and (2) specify, in support of its budget request, what amount of each performance measure it expects to achieve in 1998-99.
Department Should Account for Expenditures on Programmatic Basis. The department's budget currently displays expenditures only by function. Specifically, expenditures are allocated to one of the department's three divisions, each consisting of three branches. However, while many of the department's programs cut across division and branch lines, the department only monitors its expenditures and displays its budget on the division/branch level. This type of display does not relate the department's workload to its statutory requirements. Therefore, the Legislature is unable to identify the department's actual and proposed expenditures to meet statutory requirements, such as mandates to conduct risk assessments and monitor groundwater contamination. Without this information, the Legislature is unable to evaluate how the department's budget proposal addresses performance measures developed to hold the department accountable for meeting statutory requirements.
In order for the Legislature to be able to evaluate the department's requests in future years, based on how well they would meet statutory requirements, we recommend that the Legislature adopt the following supplemental language directing the department to account for its expenditures on a programmatic basis that relates expenditures to statutory requirements.
In order for the Legislature to evaluate the Department of Pesticide Regulation's priorities and performance in meeting various statutory requirements, it is the intent of the Legislature that the department, as part of its 1999-00 and future years' budget requests, prepare its budget on a programmatic basis that enables the identification of expenditures to meet various statutory requirements.
The board carries out its water quality responsibilities by (1) establishing wastewater discharge policies; (2) implementing programs to ensure that the waters of the state are not contaminated by underground or aboveground tanks; and (3) administering state and federal loans and grants to local governments for the construction of wastewater treatment, water reclamation, and storm drainage facilities. Nine regional water quality control boards establish waste discharge requirements and carry out water pollution control programs in accordance with state board policies. The regional boards are funded by the state board and are under the state board's oversight.
The board's water rights responsibilities involve issuing and reviewing permits and licenses to applicants who wish to take water from the state's streams, rivers, and lakes.
The budget proposes expenditures of $480.3 million from various funds for support of SWRCB in 1998-99. This amount is a decrease of about $39.8 million, or 7.6 percent, from estimated current-year expenditures. Most of the decrease reflects a one-time expenditure of $48 million in the current year of prior-year appropriations from the Underground Storage Tank Cleanup Fund. Other major budget proposals include (1) $57 million from Proposition 204 bond funds for grants and loans to local governments for various water quality projects, (2) an increase of $1.3 million for monitoring and pollution control of coastal waters, (3) $931,000 to implement the Governor's Watershed Management Initiative, and (4) an increase of $900,000 for enforcement. The budget also proposes to continue funding the Bay Protection and Toxic Cleanup Program at $2.7 million, mainly from the Waste Discharge Permit Fund, instead of from the Bay Protection and Toxic Cleanup (BPTC) Fund, because the BPTC fee sunsetted January 1, 1998.
The budget proposes $931,000 from the Public Resources Account for watershed coordinator positions at each regional board. These staff would help implement five- to seven-year existing watershed management workplans of the regional boards. These workplans include identifying and assessing major water quality problems in each region (including from polluted runoff, or "nonpoint sources"), targeting resources to the watersheds with the most significant problems, developing an implementation strategy, and evaluating the results. By taking a broad-based approach, SWRCB expects these positions would help to better coordinate the board's activities (such as permitting, monitoring, planning, and nonpoint source pollution control) and target resources more effectively, particularly in addressing nonpoint source pollution. We think the proposal is warranted and recommend approval.
It is the responsibility of the board to advise the Legislature on the extent of water quality problems in the state and on estimated funding needs to meet state and federal water quality objectives. The Legislature requires this information in order to set its priorities among water quality protection and other needs, and to determine an appropriate funding level for water quality protection. This information is particularly important this year as the Legislature will be evaluating various bond proposals in 1998, including a $1.3 billion water management bond proposed by the administration, to address water quality issues.
As discussed below, the type of information currently provided by the board to the Legislature is deficient. In part, this is because the board's activities thus far have focused mainly on point source pollution.
Two Major Types of Water Pollution. Water pollution includes "point source" pollution and "nonpoint source" pollution. Point source pollution involves the discharge of an identifiable amount of waste directly into water bodies by identifiable entities. Nonpoint source pollution, or polluted runoff, is created when water picks up contaminants from pesticide use, mining, logging, and a multitude of other sources and deposits them in water bodies. The extent to which nonpoint sources individually degrade water quality cannot be easily quantified, and technologies to control nonpoint source pollution are not well developed.
Board Activities Focus Mainly on Point Source Pollution. Because of the large number of nonpoint source dischargers, it would be cost-prohibitive for the board to issue permits to these dischargers. As a consequence, the board has focused its resources on the point source dischargers, who are issued permits (which prescribe discharge limits and treatment processes) and whose discharges are monitored.
To address the nonpoint source pollution problem, the board has relied mainly on voluntary compliance by nonpoint source dischargers using best management practices developed by the board. Accordingly, relatively few resources of the board have been spent to identify and control nonpoint source pollution. For example, the budget proposes $8.3 million of mainly federal funds--about 1.6 percent of the board's budget--for the board's nonpoint source program. And, of the $2.9 billion in water bonds issued since 1970, only about $10 million has been spent specifically to address nonpoint source pollution. However, according to the board, nonpoint source pollution is a major cause of degradation of the state's waters.
Needs Assessment Identifies Only Small Part of Problem Relating to Point Source Pollution. Currently, the Department of Finance (DOF) prepares an annual report that projects for a ten-year period the state's potential need for capital outlay, deferred maintenance, and local assistance for capital improvements. The purpose of the report is to identify the state's capital outlay needs. While SWRCB does not have a capital outlay budget, about one-third of its current budget is for local assistance for capital improvements, such as wastewater treatment facility construction. As a result, the board provides its estimates of ten-year funding needs for local capital improvements to DOF for inclusion in the DOF report.
We find that the board's estimate of local needs in the report is deficient because (1) it is based on an assessment of only a small portion of the water quality problem and (2) it is constrained by an estimate of funding that the board expects to be available to address the problem. Specifically, the estimate is based on a survey of the needs of only public wastewater treatment facilities (point sources) to meet federal clean water requirements over a 20-year period. However, sewage treatment accounts for only about 20 percent of water pollution. In addition, the board revises downwards the estimates from the survey by reflecting only the funds the board projects local agencies will be requesting during the ten-year (state reporting) period to finance their projects. This approach underestimates the needs of public wastewater treatment facilities to meet water quality standards because the estimate would exclude the needs of those facilities that choose not to meet the standards.
Relatively Little Information on Nonpoint Source Pollution Problem. The board has yet to identify the extent of the nonpoint source problem and what needs to be done, including capital improvements, to meet state and federal water quality objectives.
As discussed above, we think that the proposed watershed management coordinators will help to identify the major cases of water quality degradation related to nonpoint sources. This would provide information that would enable an estimation of funding needs for a range of strategies to correct these problems.
Recommend Adoption of Supplemental Report Language. In order that the Legislature is provided with information on an ongoing basis that enables it to set funding priorities relative to water quality protection, we recommend that the Legislature adopt the following supplemental report language:
Capital Outlay and Infrastructure Needs. The State Water Resources Control Board, as part of its 1999-00 and future years' budget requests, shall report to the Legislature on its capital outlay and infrastructure funding needs. The board's estimates of these needs should be comprehensive to enable the Legislature to assess funding needs to meet state and federal water quality objectives. Therefore, the board shall not limit its estimate solely to the projected demand for funds from local agencies or projected funding to be made available to the board. And, the board shall include estimates, to the extent feasible, of capital outlay and infrastructure needs relating to both point and nonpoint source pollution.
Nonpoint Source Pollution. The State Water Resources Control Board, as part of its 1999-00 and future years' budget requests, shall report to the Legislature on: (1) major cases of water quality degradation by nonpoint source pollution dischargers identified for targeting of resources by the board's watershed management initiative, (2) the board's implementation strategies to address these cases, (3) an estimate of long-term funding needs, and (4) how the budget request addresses these needs. The report should also provide details on how the budget request relates to a clearly defined set of goals for addressing nonpoint source pollution.
Board Should Report at Budget Hearings. In order that the Legislature can assess the board's 1998-99 budget, we recommend that the board report at budget hearings on (1) how, and to what extent, the budget request addresses the nonpoint source pollution problem in order to meet state and federal water quality objectives; and (2) long-term funding needs for infrastructure and nonpoint source pollution control to meet state and federal water quality objectives.
The budget requests $135 million from various funds for support of DTSC in 1998-99. This is an increase of $8.3 million, or 7 percent, above estimated current-year expenditures. Major budget proposals include (1) $3.5 million to repay a loan made to the General Fund, (2) an increase of $2 million for direct site cleanup, and (3) $1.4 million to defend a lawsuit connected with the Casmalia Hazardous Waste Management Facility.
Funding Reform Enacted in 1997. Chapter 870, Statutes of 1997 (SB 660, Sher) makes a number of changes to the fee structure and funding of programs at DTSC. Chapter 870 incorporates a number of the recommendations of the legislatively created Fee Reform Task Force. The task force was set up in 1996 in response to the Legislature's concern that the department's fee structure was overly complex (31 separate fees), and that the funding sources available for the department's programs were unstable and inadequate to meet the needs of the department.
Specifically, Chapter 870:
Budget Implements Chapter 870. Our review shows that the department's budget implements the provisions of Chapter 870. For example, the budget proposes funding of $6,750,000 for direct site cleanup--an increase of about 40 percent over estimated current-year expenditures--and $1 million from HWCA to implement changes in the hazardous waste manifest tracking system. The budget also proposes to fund expenditures from HWCA and new TSCA according to the authorized uses of these accounts.
Department's Budget Relies Less on Unstable, Declining Revenue Sources. Prior to Chapter 870, the department relied heavily for its support on fees levied on the hazardous waste industry. The fees were based on the amount of hazardous waste generated, stored, treated, or disposed. These fees have been both difficult to project and a declining source of revenues in recent years. These revenues have declined in part because pollution prevention programs have been effective in reducing the amount of hazardous waste generated, stored, treated, or disposed, thereby reducing the activities subject to fees.
Under Chapter 870, the department relies less on fees levied on the hazardous waste industry (Chapter 870 reduced many of these fees) and more on the environmental fee which Chapter 870 increased. The environmental fee is levied on all corporations with at least 50 employees. Because the number of corporations subject to the flat fee does not vary significantly from year to year, fee revenues from this source are more predictable and provide a relatively more stable amount of funds on an ongoing basis.
As a result, there will be sufficient resources to maintain the department's 1998-99 program levels at current-year levels, and in fact provide increased funding for direct site cleanup, as called for in Chapter 870. Our review shows that the department's fee revenues will be about $6.7 million higher in the budget year as a result of Chapter 870. Absent Chapter 870, the department would likely have had to make program reductions in the budget year unless new funding sources were found.
The state is potentially liable for cleanup costs at two hazardous waste sites that could reach $750 million over many years. The litigation in these two cases will likely take many years to resolve.
The Stringfellow Liability. A 1995 federal court decision found the state liable for all of the cleanup costs at the Stringfellow Superfund Site (in Riverside County) on the basis that state agencies were negligent in issuing permits for the location of the hazardous waste disposal facility. The costs could reach $500 million over many years. The state is appealing this decision, and it is unlikely that a decision will be rendered before 1999-00. According to the Attorney General's Office, it is unlikely that the state would be absolved of all liability at Stringfellow. The state is also pursuing litigation against its insurers, and it is highly uncertain how this litigation will be resolved.
Since 1983, the department has spent about $50 million in investigations and cleanup costs at the site (some of which is potentially recoverable if the state is successful in litigation). In addition, the Attorney General has spent over $6 million to defend the state in the Stringfellow litigation. The budget requests about $11 million from the General Fund in 1998-99 to continue cleaning up the Stringfellow site and to operate a water pretreatment plant at the site.
The Casmalia Liability. Casmalia operated as a hazardous waste treatment, storage, and disposal facility in Santa Barbara County until 1989. The United States Environmental Protection Agency (US-EPA) has taken the lead to clean up this site. The US-EPA has identified parties, including a number of state agencies, that contributed to the contamination by sending large amounts of waste to Casmalia.
The 1996 budget provided $18.1 million from the General Fund to settle with US-EPA for the state's liability at Casmalia. This settlement amount was based on the assumption that the state would be responsible for only 5 percent of the cleanup costs at this site since it contributed a like portion of the total waste disposed at the site. Because a settlement was not reached in 1996-97, the 1997 budget reappropriated these funds for 1997-98. According to the department, it is unlikely that there will be a settlement on the liability issue in either 1997-98 or 1998-99. Therefore, the budget does not request funds for a settlement payment in 1998-99.
State Potentially Liable for Significant Cleanup Costs. Although the budget contains no funds to settle the state's liability for Casmalia with US-EPA, it does provide funds to defend the state against related litigation. In November 1997, a lawsuit was filed against the state by other parties that contributed to the contamination at Casmalia. The lawsuit alleges that the state is responsible for 100 percent of the cleanup costs at Casmalia because the state was negligent in enforcing both clean water laws and hazardous waste laws at this site. The US-EPA estimates that these cleanup costs could reach $250 million.
In the current year, expenditures are estimated at $657,000 to establish a litigation support team (consisting of the department, the Attorney General, and the Central Coast Regional Water Quality Control Board) to defend the state against this litigation. The budget proposes $596,000 for the Attorney General to defend the Casmalia litigation in 1998-99. In addition, the budget requests $1.4 million from the General Fund for the department to (1) provide in-house technical and legal support to develop the state's defense and (2) design and maintain an automated document storage, retrieval, and indexing system for the estimated 750,000 pages of documents in this case. A feasibility study report for this automated system has been approved by the Department of Information Technology and the Technology Investment Review Unit in the Department of Finance. We find that the expenditures proposed for 1998-99 are warranted.
Unified Program Consolidates Administration of Six Hazardous Materials Programs. As a result of Chapter 418, Statutes of 1993 (SB 1082, Calderon), six hazardous materials programs are to be consolidated and administered by a single agency in each locality--known as a Certified Unified Program Agency, or "CUPA." Previously, the six programs were administered by DTSC, the State Water Resources Control Board (SWRCB), the Office of Emergency Services (OES), the State Fire Marshal (SFM), and about 1,400 local agencies, including counties, cities, and fire departments. The DTSC is the lead state agency overseeing implementation of the CUPA program, and has received funding for this purpose from a surcharge levied on local CUPA fees in 1996-97 and the current year. The SWRCB, OES, and SFM also supervise CUPA implementation of program elements related to their programs.
We think that the CUPA program has merit. The purpose of the program is to reduce fragmentation and inefficiencies in the delivery of government programs by substantially reducing the number of separate agencies delivering these programs in a given local jurisdiction. However, as discussed below, we are concerned that the department has failed to effectively oversee the program. As a consequence, it is not clear to what extent the program's goals are being met.
Certification of CUPAs and State Oversight. Chapter 418 requires a local agency to meet certain standards in terms of expertise, staff, funding, and past performance in order to be certified as a CUPA by the Secretary for Environmental Protection (Cal-EPA). Additionally, an agency can be certified as a CUPA only if the unified program will be implemented in a coordinated, consistent manner and result in less fragmented program delivery.
To date, 69 CUPAs have been certified covering all of the state except 15 rural counties. In its oversight role, the department will develop regulations, provide technical guidance to CUPAs, supervise and audit CUPAs to ensure implementation of the unified program, and review CUPAs' implementation of a mandated "fee accountability" program.
The CUPA Program Should Create State Savings and Lower Fee Levels. As we discussed in the Analysis of the 1996-97 Budget Bill (please see page B-31), as CUPAs become certified and responsibilities are transferred to the local level, the state's overall workload and costs ought to be lower, and local operations should become more efficient as program delivery is consolidated. This should result in lower overall fees paid by parties regulated under the CUPA program. The department concurred with this assessment and reported at budget hearings in 1996 that it expected significant savings from the CUPA program, and that it would be in a better position to assess the program's impact on state costs and fee levels once the program became fully operational in 1997.
Department Failed to Provide Assessment of Program's Impact. However, our review shows that the department has not provided an assessment of:
Deny Budget Proposal. The budget proposes $1,094,000 from TSCA and $132,000 from reimbursements for the department to continue to oversee the program in 1998-99. We think that as the lead oversight agency, a primary responsibility of DTSC is to ensure that the program is meeting the objectives set for it by the Legislature. The department's inability to provide an assessment of the program's impact suggests that it cannot provide the Legislature with such assurances. Thus, it is not serving effectively in an oversight role and the continued funding of that role is not justified and should be deleted.
Tracking System Is Important Enforcement Tool. Under current law, DTSC is required to develop a database to track the transport of hazardous waste in the state. When hazardous waste is shipped, and when such waste is received by a facility for treatment, storage or disposal, a manifest form must be sent to DTSC. A manifest tracking system serves as an important enforcement tool to identify wastes that are illegally disposed of or not managed in compliance with the state's hazardous waste management regulations.
According to the department, the existing manifest tracking system, which is based on a mainframe technology, is deficient in many respects. Problems with the system include processing delays and backlogs, the inability to correct invalid data, limited access to the data, and the lack of electronic reporting mechanisms.
Legislature Has Directed Department to Devise New Tracking System. The Legislature has expressed concerns that the department did not have a reliable manifest tracking system. In the 1997-98 Budget Act, the Legislature directed (1) the Department of Information Technology (DOIT) to give highest priority to the correction of deficiencies in the manifest tracking system and (2) DTSC to develop and issue a feasibility study by January 1, 1998 related to the development of a new hazardous waste tracking system. Finally, Chapter 870 provides that $1 million be appropriated in the 1998-99 budget to cover the department's one-time costs to implement changes to the manifest tracking system.
Department Has Not Finalized Design of New System. The department is in the process of preparing a feasibility study report (FSR) for a new manifest tracking system. The report, however, will not identify a design for the new system, but rather will propose contracting with outside technical experts to, in turn, recommend a design for the system.
Recommend That Legislature Be Notified of Chosen Design. The budget requests $1 million for the tracking system development in 1998-99, and the budget includes language to make the funds contingent on the approval of the FSR by DOIT and the Department of Finance. However, because the FSR will not provide any details on the system's design, approval of the FSR will not give the Legislature any assurance that deficiencies in the current system are adequately addressed. In order to provide the Legislature with an opportunity to review the system design, we recommend that the following alternative budget bill language be adopted to require notification of the Legislature prior to funds being made available for the new system, as follows:
Item 3960-001-0014. Of the funds appropriated in this item, $1,000,000 is appropriated pursuant to paragraph (d)(1) of Section 25205.15 of the Health and Safety Code for implementing changes to the hazardous waste manifest tracking system. Of this amount, funds may be expended to contract with an outside vendor to recommend a design for the new system. Funds may be expended to design and implement a manifest tracking system no sooner than 30 days after the department notifies the Chairperson of the Joint Legislative Budget Committee and the chairpersons of the legislative fiscal committees of (1) the chosen design and (2) the written approval by the Department of Information Technology and the Department of Finance of the design of the tracking system.