Tighter Restrictions on Chemicals Worry Businesses

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California regulators have their sights set on two chemicals commonly used in industry, sparking concerns from manufacturers and other businesses about new burdens to their bottom lines.

The state Office of Environmental Health Hazard Assessment is considering limits on hexavalent chromium, a chemical compound used in electroplating processes, and to make pigments and dyes for the textile industry. Hexavalent chromium was the chemical at the center of the case made famous by the “Erin Brockovich” movie, which was about legal action over groundwater contamination.

The initial draft to set a “public health goal” for hexavalent chromium is not due out until mid-March, but rumors are circulating in manufacturing circles that the concentration limit for the chemical in water discharges would be set at 60 parts per 1 trillion. This goal would then be used by the state Department of Public Health when it sets limits for the chemical.

The current federal standard for hexavalent chromium concentrations is 100 parts per 1 billion; the rumored limit for the state would be less than 1/1,000 of that amount.

“Concern is building within the manufacturing community, especially those whose operations currently or previously used chromium in any manner, of the potential ramifications of such a low public health goal,” the California Manufacturers and Technology Association stated in a recent bulletin to its members.

Sam Delson, spokesman for the hazard assessment office, said that once the Department of Public Health reviews this goal, it must consider technical and economic feasibility.

The office is also considering the addition of methanol to the list of toxic and cancer-causing chemicals covered by Proposition 65, which requires all users of listed chemicals to post warning notices.

Methanol is used as a fuel additive for gasoline sold in California; it also has some applications as an industrial solvent.

The hazard assessment office sent out a notice Jan. 2 to solicit input on whether to add methanol to the list. The deadline is March 4.

The listing process is expected to take several more months. If methanol is added to the list, users of the chemical would have one year before the Proposition 65 warning requirements would take effect.

For more information, go to the Office of Environmental Health Hazard Assessment’s Web site at oehha.ca.gov.


Chasing Taxes

Higher penalties for under-reporting corporate taxes by $1 million or more will kick in May 31 under a state law passed in October that targets an estimated 300 or so corporations.

SBX1 28 raises penalties to 20 percent of the understatement amount. State tax collectors at the Franchise Tax Board said this could bring in $1.5 billion a year from the penalties and the incentive to pay taxes in full.

State business lobbyists say the new law is unfair because it will force companies to pay amounts in dispute in order to avoid the steep penalty, which will hurt their business.

“The penalty essentially forces companies to overpay their taxes by May 31 to include amounts reasonably in dispute, in order to ensure they do not incur a 20 percent penalty if the dispute is decided against them,” said Kris Kristoffersen, lobbyist with the California Chamber of Commerce.

The penalties also apply in cases where companies have underestimated their taxes, so they will have to try to interpret the tax code in a manner that will avoid any possible under-reporting. Kristoffersen said this means they will have to do extra accounting and could overpay.

These “defensive overpayments” may ultimately be refunded two or three years down the road once the disputes are resolved, but that won’t help the companies’ bottom lines in this recession year, Kristoffersen said.


Lower fees

California Insurance Commissioner Steve Poizner recently announced that he is lowering all fees charged by the Department of Insurance by 6 percent, effective July 1. Most of the fees are paid by the insurance companies, agents and brokers that the agency regulates.

The fee reductions, which Poizner estimates would total about $10 million, are part of a 10 percent Department of Insurance budget reduction that Poizner is implementing. The cuts are both on the revenue and expense sides.

“This is great news for the thousands of small businesses and individuals who pay these fees,” Poizner said.

Poizner is running for the Republican nomination for governor next year, and lowering fees on business is popular in GOP circles.


Staff reporter Howard Fine can be reached at [email protected] or at (323) 549-5225, ext. 227.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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