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Business Taxes Law Guide—Revision 2024
Environmental Mitigation Surcharge
Public Resources Code
Division 30. Waste Management
Part 3. State Programs
Chapter 3. Plastic Pollution Prevention and Packaging Producer Responsibility Act
Article 3. Program Administration
42064. Imposition and collection of surcharge; use of funds. (a) (1) The environmental mitigation surcharge imposed by this section shall be collected annually by the California Department of Tax and Fee Administration in accordance with the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code). For purposes of this chapter, the references in the Fee Collection Procedures Law to "fee" shall include the environmental mitigation surcharge imposed by this section, and references to "feepayer" shall include a person required to pay the environmental mitigation surcharge imposed by this section.
(2) Notwithstanding the appeal provisions in the Fee Collection Procedures Law, a determination by the department that a person is required to pay an environmental mitigation surcharge, or a determination by the department regarding the amount of that environmental mitigation surcharge, is subject to review under Section 42064.01 and is not subject to a petition for redetermination by the California Department of Tax and Fee Administration.
(3) Notwithstanding the refund provisions in the Fee Collection Procedures Law, the California Department of Tax and Fee Administration shall not accept any claim for refund that is based on the assertion that a determination by the department improperly or erroneously calculated the amount of the environmental mitigation surcharge, or incorrectly determined that the person or entity is subject to the environmental mitigation surcharge, unless that determination has been set aside by the department or a court reviewing the determination of the department.
(4) This section shall not prevent, and shall not be construed to prevent, the California Department of Tax and Fee Administration from accepting a claim for refund for an environmental mitigation surcharge or taking action on its own to correct a mistake or clerical error regarding an environmental mitigation surcharge.
(b) The annual environmental mitigation surcharge shall be due and payable 30 days from the date of assessment by the California Department of Tax and Fee Administration. Notwithstanding Article 1.1 (commencing with Section 55050) of Chapter 3 of Part 30 of Division 2 of the Revenue and Taxation Code, the environmental mitigation surcharge shall be remitted by electronic funds transfer to the California Department of Tax and Fee Administration.
(c) (1) On or before March 1, 2027, and each March 1 thereafter, the department shall annually transmit to the California Department of Tax and Fee Administration the appropriate name and address of each person who is liable for the environmental mitigation surcharge under this section and the amount of the environmental mitigation surcharge to be assessed, and at the same time shall provide to the California Department of Tax and Fee Administration a contact number for the department to be printed on the notice of determination to respond to questions about the environmental mitigation surcharge.
(2) The California Department of Tax and Fee Administration shall mail the notice of determination to each person identified by the department pursuant to paragraph (1) on or before 90 days after receipt of the information required by paragraph (1).
(d) The California Plastic Pollution Mitigation Fund is hereby established in the State Treasury. The California Plastic Pollution Mitigation Fund shall consist of all environmental mitigation surcharges, interest, penalties, and other amounts collected and paid to the California Department of Tax and Fee Administration pursuant to this section, less payments of refunds and reimbursements to the California Department of Tax and Fee Administration for expenses incurred in the administration and collection of the environmental mitigation surcharges imposed by this section.
(e) (1) Commencing in the 2027 calendar year, and annually thereafter, a PRO shall pay an environmental mitigation surcharge of five hundred million dollars ($500,000,000) each year, as assessed by the California Department of Tax and Fee Administration, and remit that amount to the California Department of Tax and Fee Administration each year to be deposited into the California Plastic Pollution Mitigation Fund.
(2) (A) The PRO may collect up to one hundred fifty million dollars ($150,000,000) from plastic resin manufacturers who sell plastic covered material to producers who are participants of the PRO.
(B) The PRO may require its participants to provide to the PRO a list of plastic resin manufacturers who sell plastic for use in covered material to the participants.
(C) If the PRO does not collect all or any of the one hundred fifty million dollars ($150,000,000) from plastic resin manufacturers, the PRO is still responsible for the total remittance specified in paragraph (2).
(f) The PRO shall establish and impose on its participants who produce plastic covered material subject to Section 42057 an environmental mitigation surcharge in the amount necessary to remit the moneys pursuant to subdivision (a) based on each producer’s market share of plastic covered material, accounting for both number of plastic components and weight.
(g) Moneys in the California Plastic Pollution Mitigation Fund shall not be expended for obligations imposed on any party by any law other than this section or to cover costs identified in a needs assessment.
(h) (1) For producers that are not participants of a PRO’s approved plan, the department shall determine the amount of the environmental mitigation surcharge the producer shall pay based on both the number and weight of plastic covered material the producer offers for sale, sells, distributes, or imports in or into the state.
(2) Commencing in the 2027 calendar year, and annually thereafter, a producer not in a PRO shall pay an environmental mitigation surcharge in the amount determined by the department, as assessed by the California Department of Tax and Fee Administration each year to be deposited into the California Plastic Pollution Mitigation Fund.
(i) In the 2030 calendar year, the department shall determine whether the environmental mitigation surcharge imposed pursuant to this section should be increased based on the evaluation conducted pursuant to subdivision (h) of Section 42057. If that evaluation finds a change in the overall number of plastic components or weight of plastic covered material in the state, the department shall adjust, through regulation, the amount of the environmental mitigation surcharge a PRO collects in proportion to that change. A PRO shall conform the surcharge imposed on its participant producers to the adjusted amount of the environmental mitigation surcharge established by the department.
(j) (1) Upon appropriation by the Legislature, 40 percent of the moneys in the California Plastic Pollution Mitigation Fund shall be expended by the Department of Fish and Wildlife, the Wildlife Conservation Board, the State Coastal Conservancy, the California Coastal Commission, the Ocean Protection Council, the Department of Parks and Recreation, the Natural Resources Agency, and the California Environmental Protection Agency to monitor and reduce the environmental impacts of plastics on terrestrial, aquatic, and marine life and human health, including to restore, recover, and protect the natural environment.
(2) At least 50 percent of the funds appropriated pursuant to paragraph (1) shall provide benefits to residents living in a disadvantaged or low-income community or rural area.
(3) Moneys appropriated pursuant to paragraph (1) may be used to support grants for tribes, nongovernmental organizations, community-based organizations, land trusts, and local jurisdictions.
(k) (1) Upon appropriation by the Legislature, 60 percent of the moneys in the California Plastic Pollution Mitigation Fund shall be expended by the Strategic Growth Council, the California Environmental Protection Agency, the Natural Resources Agency, and the Department of Justice to monitor and reduce the historical and current environmental justice and public health impacts of plastics, including to mitigate the historical and current impact of plastics on disadvantaged or low-income communities or rural areas.
(2) Of the moneys appropriated pursuant to paragraph (1), 75 percent shall directly and primarily benefit residents living in disadvantaged or low-income communities.
(3) Moneys appropriated pursuant to paragraph (1) may be used to support grants to local jurisdictions, tribes, nongovernmental organizations, and community-based organizations.
(l) Moneys appropriated from the California Plastic Pollution Mitigation Fund pursuant to subdivisions (j) and (k) shall be used to increase and enhance the activities described in subdivisions (j) and (k) and shall not replace or reduce allocation of any other funding for those purposes. Accordingly, General Fund or Greenhouse Gas Reduction Fund appropriations to the Department of Fish and Wildlife, the California Coastal Conservancy, the California Coastal Commission, the Wildlife Conservation Board, the Ocean Protection Council, the Department of Parks and Recreation, the Strategic Growth Council, the Department of Justice, the California Environmental Protection Agency, and the Natural Resources Agency shall not be reduced below the levels provided in the Budget Act of 2019 (Chapter 23 of Statutes of 2019).
(m) Each agency or department receiving funding under this section shall, notwithstanding Section 9795 of the Government Code, provide an annual report to the relevant budget committees of the Legislature on how the funding will be used, progress toward mitigation goals, and relevant details and outcomes from third parties who may be provided funding by the agency or department for mitigation purposes.
(n) This section shall remain in effect only until January 1, 2037, and as of that date is repealed.
History—Added by Stats. 2022, Ch. 75 (SB 54), in effect January 1, 2023. Amended by Stats. 2023, Ch. 848 (AB 1526), in effect January 1, 2024, added "environmental mitigation" before "surcharge" throughout; substituted "an" for "a" after "pay" in paragraph (2), substituted "the" for "a" after "amount of" in paragraph (3), and added paragraph (4) in subdivision (a); substituted "notice of determination" for "bill" after "printed on the", numbered former paragraph to paragraph (1), and added paragraph (2) in subdivision (c); substituted "environmental mitigation surcharges" for "fees" before "imposed" in the second sentence of subdivision (d); substituted "Commencing in the 2027 calendar year, and annually thereafter, a" for "A" before "PRO", added "an environmental mitigation surcharge of" before "five", and substituted "," for "." after "Administration" in first sentence of paragraph (1), deleted "The department shall transmit the PRO" before "and", substituted "remit that" for "address and annual surcharge" before "amount", deleted "of five million dollars ($5,000,0000)" after "amount", substituted "each year" for "pursuant" after "Administration", substituted "be deposited into the California Plastic Pollution Mitigation Fund." for "subdivision (c)" after "to" in former second sentence of paragraph (1), deleted paragraph (2) and numbered former paragraph (3)(A) to (2)(A) in subdivision (e); deleted numbering from first paragraph and deleted paragraph (2) of subdivision (f); substituted "in the" for "July 1" after "Commencing", added "calendar year" after "2027", deleted "every July 1" before "annually", added "an environmental mitigation surcharge in" after "pay", deleted "of the surcharge" after "amount" and substituted "," for "." in the first sentence of paragraph (1), substituted "as assessed by" for "The department shall transmit the producer name and address and surcharge amount to" before "the", and substituted "each year to be deposited into the California Plastic Pollution Mitigation Fund." for "pursuant to subdivision (c)." in paragraph (2) of subdivision (h); substituted "imposed" for "collected" after "surcharge" in the first sentence of subdivision (i).
42064.01. Petition for redetermination. (a) A person from whom the environmental mitigation surcharge imposed pursuant to Section 42064 is determined to be due by that section may petition for a redetermination of whether this chapter applies to that person within 30 days after service upon them of a notice of the determination. If a petition for redetermination is not filed within the 30-day period, the amount determined to be due becomes final at the expiration of the 30-day period.
(b) A petition for redetermination of the application of this section or Section 42064 shall be in writing and be sent to the department or its designee. The petition shall state the specific grounds upon which the petition is founded and include supporting documentation. The petition may be amended to state additional grounds or provide additional documentation at any time prior to the date that the department issues its order or decision with regard to the petition for redetermination.
(c) If a petition for redetermination of the application of this section or Section 42064 is filed within the 30-day period, the department shall reconsider whether the environmental mitigation surcharge is due and make a determination in writing. The department may eliminate the environmental mitigation surcharge based on a determination that this section or Section 42064 does not apply to the person who filed the petition.
(d) The department shall provide to the California Department of Tax and Fee Administration notice and the result of each petition for redetermination or claim for refund, including the filing date, reporting periods, amount of the environmental mitigation surcharge involved, and details necessary for the California Department of Tax and Fee Administration to perform refund or collection duties.
(e) If a timely petition for redetermination has been filed pursuant to subdivision (a), all legal action to collect the environmental mitigation surcharge imposed pursuant to Section 42064 shall be stayed pending the final determination of the department pursuant to subdivision (g).
(f) Notice of the determination of the department pursuant to subdivision (c) shall be served on the same date to the petitioner and the California Department of Tax and Fee Administration.
(g) The order or decision of the department upon a petition for redetermination of the environmental mitigation surcharge shall become final 30 days after service upon the petitioner of notice of the determination.
(h) The environmental mitigation surcharge imposed pursuant to Section 42064 determined to be due by the department pursuant to this section is due and payable at the time it becomes final, and if it is not paid when due and payable, the penalty imposed pursuant to Section 55086 of the Revenue and Taxation Code shall be applied.
(i) Written notice required by this section shall be served as follows:
(1) The notice shall be placed in a sealed envelope, with postage paid, addressed to the petitioner at the petitioner’s address as it appears in the records of the department. The giving of notice shall be deemed complete at the time of the deposit of the notice in a United States Post Office, or a mailbox, subpost office, substation, mail chute, or other facility regularly maintained or provided by the United States Postal Service without extension of time for any reason.
(2) In lieu of mailing, a notice may be served personally by delivering it to the person to be served and service shall be deemed complete at the time of delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.
(j) A dispute regarding the environmental mitigation surcharge imposed pursuant to Section 42064 shall be resolved pursuant to this section only.
(k) If the department determines that a person is entitled to a refund of all or part of the environmental mitigation surcharge imposed pursuant to Section 42064, the person shall make a claim to the California Department of Tax and Fee Administration pursuant to Chapter 5 (commencing with Section 55221) of Part 30 of Division 2 of the Revenue and Taxation Code.
History—Added by Stats. 2022, Ch. 75 (SB 54), in effect January 1, 2023. Amended by Stats. 2023, Ch. 848 (AB 1526), in effect January 1, 2024, added "environmental mitigation" before "surcharge" throughout; substituted "this" for "the" after "determination that" in second sentence of subdivision (c); and substituted "environmental mitigation surcharge" for "fee" after "amount of" in subdivision (d).