On October 17, 2024, the California Department of Toxic Substances Control (DTSC) held a workshop discussing proposed draft emergency regulations that would broadly affect all “handlers” of hazardous waste in the state with few exemptions. These regulations are meant to provide greater clarity to DTSC’s new Generation and Handling Fee (G&H Fee), its relatively new flat-rate-per-ton hazardous waste fee, replacing DTSC’s prior four-tiered fee structure.
Since adopting this new fee structure, DTSC has experienced significant revenue shortfalls—the G&H Fee only generated $43 million out of the original estimate of $81 million from 2022–23. While the causes of this revenue shortfall are debated, lack of clarity among hazardous waste handlers regarding the applicability of the G&H Fee to their businesses is often cited as a primary issue with this new fee structure. For example, the misapplication of G&H Fee exemptions, such as the inconsistently applied exemption for certain waste collected by governments, is believed to have caused approximately 1/3 of the total shortfall. Although DTSC has managed to offset that shortfall with loans from the 2023–24 Budget Act, DTSC expects to incur annual deficits of $40–50 million, which will continue to grow absent major reforms to the G&H Fee program.
In tandem with the state’s 2024-25 budget process, amendments were made to the G&H Fee statutes via SB 156 which require DTSC to adopt emergency regulations to increase fee collection and provide clarity to the G&H Fee’s statutory exemptions (see Health and Safety Code § 25205.5.3). As of this writing, DTSC is still in the rulemaking stage, but the agency has released proposed regulatory text focused on the following issues:
- Expanded annual reporting requirements for “handlers”
- Narrowed exemptions from the G&H Fee
- Imposed a new exemption review process
- Introduced new penalties against noncompliance
These draft regulations, if adopted by DTSC, will significantly impact a substantial portion of businesses operating in California. DTSC’s current draft definition of “handlers” broadly includes any person or entity that either has an active hazardous waste ID number or interacts with hazardous waste in California, including any business that generates hazardous waste. All handlers will need to complete an annual questionnaire on their operations relating to hazardous waste unless the handler has an ID number registered for a site on federally recognized tribal land or is a household occupant only generating household hazardous waste. The proposed reporting requirements differ for those handlers exempt from the G&H fee and, as currently proposed, the requirements seem confusing and potentially onerous for even businesses who only generate a modest amount of hazardous waste. Further, these reporting requirements will be enforced by a complex penalty system that assesses fines per ID number for each reporting violation with different amounts for different types of violations (with the highest penalty capped at $70,000 per violation for fraud).
DTSC is also considering enacting a G&H Fee exemption review process, under which DTSC would review exemptions and confirm validity (via supporting records) in coordination with generators. In turn, generators claiming exemptions would be subject to broad waste-related recordkeeping requirements for three years from the last day of the calendar year in which the hazardous waste was generated.
The deadline for submitting comments or feedback on DTSC’s emergency regulations is November 1, 2024.