Code Section Group

Health and Safety Code - HSC


  ( Division 20 enacted by Stats. 1939, Ch. 60. )

CHAPTER 6.66. Oversight Costs [25269 - 25269.8]
  ( Chapter 6.66 added by Stats. 1996, Ch. 576, Sec. 3. )


The Legislature hereby finds and declares all of the following:

(a)  To enhance cooperation between the department and the regulated community, and to reduce the state’s costs associated with the oversight of cleanup efforts, the costs of the associated cost recovery program and the corresponding costs to the responsible parties involved, the oversight program should be administered in an efficient, responsible, and accountable manner.

(b)  According to information provided to the Legislature, the department has collected more than seventy-one million dollars ($71,000,000) since the cost recovery effort was begun in the early 1980s and there is approximately seventy million dollars ($70,000,000) to eighty million dollars ($80,000,000) in outstanding receivables for disputed site cleanup oversight costs. The information provided to the Legislature indicates that potentially responsible parties have complained that the department’s oversight costs have been unpredictable, unsubstantiated, and exceedingly high.

(c)  Disputes with potentially responsible parties over the reasonableness of oversight costs have been a major factor in the difficulty that the department has experienced in conducting cost recovery. Disputes of that kind substantially increase the cost of state operations and the cost of doing business for the private sector, leading to extended negotiations and litigation. The redirection of resources by both parties in attempting to resolve those differences most likely inhibit cleanup efforts and affect the ability of the parties to work together cooperatively, thereby exacerbating the costs associated with the cleanups. Disputes would be reduced by clarifying current law by providing definitions of direct and indirect oversight costs. Further, these high costs affect the competitiveness of California businesses in national and global business environments.

(Added by Stats. 1996, Ch. 576, Sec. 3. Effective January 1, 1997.)


For purposes of this chapter, the following terms have the following meaning:

(a)  “Department” means the Department of Toxic Substances Control.

(b)  “Direct oversight costs” means the costs to the department of overseeing a cleanup action, pursuant to the authority specified in subdivision (a) of Section 25269.2, that can be specifically attributed to a particular cost objective, including, but not limited to, sites, facilities, and activities.

(c)  “Indirect oversight costs” means the costs to the department of activity that is of a common or joint purpose benefiting more than one cost objective and not readily assignable to a single case objective.

(d)  “Pro rata” means the general administrative costs expended by central service agencies to provide centralized services to state agencies, as defined in the State Administrative Manual.

(Amended by Stats. 2014, Ch. 71, Sec. 91. (SB 1304) Effective January 1, 2015.)


(a) The department shall comply with this chapter when recovering oversight costs for corrective action pursuant to Chapter 6.5 (commencing with Section 25100), for removal or remedial action pursuant to Chapter 6.8 (commencing with Section 25300), and for response actions pursuant to former Chapter 6.85 (commencing with Section 25396).

(b) The department shall develop a concise statement of its cost recovery policies and billing procedures, including dispute resolution procedures and availability of program guidance and policies, and distribute the statement to all responsible parties.

(Amended by Stats. 2012, Ch. 39, Sec. 59. (SB 1018) Effective June 27, 2012.)


The department shall take the following actions with regard to the tracking of indirect oversight costs:

(a)  Ensure that pro rata costs are allocated appropriately to all departmental activities, so that the department’s program will only bear these pro rata costs in proportion to the benefits received by potentially responsible parties.

(b)  Routinely include operating expenses in the indirect oversight costs and allocate those expenses using processes that ensure that the department’s program only bears indirect oversight costs in proportion to the benefits received by potentially responsible parties.

(c)  Exclude, from indirect oversight costs, the costs of grant development and administration, fee administration, contract development and administration, and public and governmental inquiries.

(Added by Stats. 1996, Ch. 576, Sec. 3. Effective January 1, 1997.)


(a)  The department shall establish rates for indirect oversight costs that are specific to each program and shall review and update the indirect cost rates based upon increases or decreases in the amounts of grants received by the department, department reorganizations, and other relevant factors, but not less than once every six months, based upon the previous 12 months of expenditure data. The department shall apply the indirect oversight cost rates prospectively and shall not make retroactive adjustments in those rates.

(b)  The department shall review the department’s cost recovery policies at least once every two years.

(Added by Stats. 1996, Ch. 576, Sec. 3. Effective January 1, 1997.)


The department shall take the following actions with regard to the department’s relationship with the parties who are performing the investigation and cleanup of the hazardous substance release site or taking a hazardous waste corrective action or response action:

(a)  Adopt procedures to improve communication, facilitate the exchange of ideas, eliminate surprises, and allow better financial planning by the department and potentially responsible parties, including a meet and confer process which includes, but is not limited to, all of the following:

(1)  An estimate of the cost of site remediation by the department for the next phase of the site remediation activity, including a list of estimated personnel labor rates.

(2)  An estimate of the total hours that the department expects the department staff to incur in the next phase of the site mitigation process, to the extent that the department can project its time and costs in advance. That estimate shall include the projected hours of the project manager, and the costs of public participation, legal counsel, and technical consultations.

(3)  A discussion of the schedule for the remediation action, including a thorough review of the services that the department expects to provide, deliverables, timeframes, expectations of both parties, a process for status reporting by both parties, systematic billing at least once every three months by the department, and an agreement on how the work plan will be modified, and how the costs will be estimated.

(b)  Develop a concise statement of its cost recovery policies and billing procedures, including dispute resolution procedures and the availability of program guidance and policies, which shall be distributed to all potentially responsible parties before any site remediation commences, as part of the meet and confer process.

(c)  Review all informal guidance documents for the cost recovery program, including fee bulletins, management memos, policies, and procedures, and review and update those documents, as appropriate.

(d)  Establish a procedure, when there is a change of project manager for a remediation action, to provide for a detailed status briefing to identify the highlights of past work and identify the current areas of agreement and disagreement among the parties.

(Added by Stats. 1996, Ch. 576, Sec. 3. Effective January 1, 1997.)


The department shall adopt a billing system for oversight costs which meets all of the following criteria:

(a)  Invoices shall be issued within 60 days to the extent practicable, with appropriate incentives for prompt payment. In no event shall invoices be issued less frequently than on a quarterly basis.

(b)  Invoices shall be mailed to the correct person for the potentially responsible party.

(c)  Sufficient detail shall be included with each invoice, so that the potentially responsible party can relate the items on the invoice to the benefits received, and additional details, including daily timesheet personnel data, shall be made readily available.

(d)  Invoices shall be supplemented with statements of any changes in rates and a detailed justification for any such changes.

(e)  Invoices shall be reviewed for accuracy and appropriateness by a member of the department staff who has direct knowledge of the remediation action.

(f)  Invoices shall be reasonably consistent with expectations regarding costs, benefits, and outcomes developed during the meet and confer process specified in subdivision (a) of Section 25269.5, if the department’s knowledge of site conditions or other factors which may substantially impact the department’s costs associated with the site, have not changed significantly since the last conference.

(g)  A process for the timely review and settlement of any outstanding accounts shall be developed and implemented.

(Added by Stats. 1996, Ch. 576, Sec. 3. Effective January 1, 1997.)


The department shall take all of the following actions with regard to uncollectible accounts:

(a)  Review all current outstanding receivables and make an appropriate adjustment for estimated uncollectible amounts, consistent with current accounting practices and recognizing the present value of future collection. The department may, if warranted, write off or write down those receivable amounts.

(b)  Maintain and report an analysis of outstanding receivables and other control analyses.

(c)  Consider whether to enter into a contract with a private collection agency to collect substantially past-due accounts and, for longer term receivables, consider whether credit arrangements should be made with banks or other institutions willing to assist in financing a potentially responsible party’s obligation for remediation.

(Added by Stats. 1996, Ch. 576, Sec. 3. Effective January 1, 1997.)

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