BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2398| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2398 Author: John A. Perez (D) Amended: 8/27/10 in Senate Vote: 21 SENATE ENV. QUALITY COMMITTEE : 5-2, 6/28/10 AYES: Simitian, Corbett, Hancock, Lowenthal, Pavley NOES: Runner, Strickland SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10 AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee NOES: Ashburn, Emmerson, Walters, Wyland ASSEMBLY FLOOR : 49-27, 6/2/10 - See last page for vote SUBJECT : Product stewardship: carpet SOURCE : Author DIGEST : This bill requires carpet manufacturers to implement stewardship programs to increase the recycling rate of carpet in the state. This bill requires an assessment per unit of carpet sold in the state to pay for the costs of the stewardship plans. Senate Floor Amendments of 8/20/10 (1) define terms used in the new Chapter added by the bill, (2) extend the time that the Carpet American Recovery Effort organization will be the stewardship organization for the industry from January 2013 until April 2015, (3) clarify the penalty provisions, CONTINUED AB 2398 Page 2 (4) clarify the process for the establishment and assessment of the fee to implement the new Chapter, (5) provide an exclusion to anti-trust provisions for certain activities undertaken by the stewardship organization, (6) require the Department of General Services to ensure that end-of-life carpet removed from state buildings is properly managed in accordance with the Chapter, and (7) make other technical and clarifying changes. ANALYSIS : Existing law: 1. Establishes procedures and requirements for the purchase of recycled content items such as paper by state agencies. (Section 12209 of the Public Contract Code [PCC]) 2. Establishes procedures for the procurement by state agencies of environmentally preferable products, as defined, including providing state agencies with information and assistance regarding environmentally preferable purchasing including, but not limited to, the development, to the extent fiscally feasible, of an environmentally preferable purchasing best practices manual for state purchasing employees. (PCC Section 12400 et seq.) This bill: 1. Requires, by September 30, 2011, a manufacturer of carpets sold in this state, individually or through a carpet stewardship organization, to submit a carpet stewardship plan to the Department of Resources Recycling and Recover (DRRR), to include specified elements, including a funding mechanism that provides sufficient funding to carry out the plan, including administrative, operational, and capital costs of the plan. 2. Requires the funding mechanism to establish and provide for, on and after January 1, 2013, a carpet stewardship assessment to be added to the purchase price per unit of carpet sold in the state by a manufacturer to a CONTINUED AB 2398 Page 3 California retailer or wholesaler or otherwise sold for use in the state and requires each retailer and wholesaler to add the assessment to the purchase price of all carpet sold in the state. 3. Requires, until April 1, 2015, the Carpet America Recovery Effort (CARE), a third-party nonprofit stewardship organization, to serve as the carpet stewardship organization and allows, on and after April 1, 2015, a carpet stewardship organization appointed by one or more manufacturers, to submit a plan. 4. Requires, as of July 1, 2011, until January 1, establish and provide for, on and after January 1, 2013, a carpet stewardship assessment to be added to the purchase price per unit of carpet sold in the state by that manufacturer. Requires the assessment to be remitted on a quarterly basis, as appropriate, to CARE or allows the manufacturer to retain that assessment. 5. Requires these revenues to be spent by CARE or by an individual manufacturer, prior to approval of its carpet stewardship plan, only to implement early action measures that are consistent to achieve measurable improvements in the landfill diversion and recycling of postconsumer carpet. 6. Requires DRRR to, among other things, within 60 days after receiving a plan, to review and determine whether the plan complies with the bill's requirements and notify the submitter of its decision. Specifies that any plan not approved by March 31, 2012, is out of compliance until determined to be complete by the DRRR. 7. Provides that a manufacturer, wholesaler, or retailer, on and after April 1, 2012, that offers carpet for sale or promotional purposes without an approved plan for that carpet is not in compliance with the act's requirements. 8. Requires DRRR, by July 1, 2012, and not later than January 1 and July 1 annually thereafter, to post a notice on its Internet Web site listing manufacturers that are in compliance with the bill's requirements. CONTINUED AB 2398 Page 4 Requires a wholesaler or retailer that distributes or sells carpets to monitor the DRRR's Internet Web site to determine if the sale of a manufacturer's carpet is in compliance. 9. Requires the carpet stewardship organization to demonstrate to DRRR that it has achieved continuous meaningful improvement in the rates of recycling and diversion and other specified goals in order to be in compliance. 10.Requires each manufacturer of carpet sold in the state, individually or through a carpet stewardship organization, to prepare and submit to DRRR an annual report describing the activities carried out pursuant to the carpet stewardship plan. 11.Requires a manufacturer or carpet stewardship organization submitting a carpet stewardship plan to pay the DRRR an annual administrative fee when submitting the plan for review and approval, as determined by DRRR. Also requires DRRR to identify the direct development or regulatory costs incurred prior to the submittal of carpet stewardship plans and to establish a fee in an amount adequate to cover those costs, to be paid by a carpet stewardship organization that submits a carpet stewardship plan. 12.Provides for the imposition of administrative civil penalties upon a person who violates the bill and would provide that the manufacturer or carpet stewardship organization whose plan is not approved by DRRR by March 31, 2012, is subject to those penalties until the plan is approved. 13.Establishes the Carpet Stewardship Account in the Integrated Waste Management Fund and requires the fees collected to be deposited in that account, for expenditure by DRRR, upon appropriation by the Legislature, to cover DRRR's cost to implement the bill's provisions. Establishes the Carpet Stewardship Penalty Subaccount in the Integrated Waste Management Fund and requires that the civil penalties collected pursuant to the bill's provisions be deposited in that CONTINUED AB 2398 Page 5 subaccount, for expenditure, upon appropriation by the Legislature, to cover DRRR's costs to implement the bill's provisions. 14.Requires DRRR and the Department of General Services (DGS) to complete a study, by January 1, 2014, that examines the specifications for carpet purchases by the state, as provided in the NSF/ANSI 140-2007 Standard, Platinum Level, and to submit the study to the Governor and the Legislature, including recommendations for any appropriate changes to that standard. 15.Provides that certain actions of a carpet stewardship organization or its members are not violations of the Cartwright Act or certain provisions regulating unfair business practices or unfair competition. 16.Requires DGS to revise relevant procurement rules to ensure that postconsumer carpet that is removed from state buildings is managed in a manner consistent with the purposes of the bill. 17. Requires the Department of Toxic Substances Control (DTSC) to fully consider the measures taken by the carpet industry pursuant to the program established by the bill, and the results of those measures, when considering whether to include carpet in DTSC's chemicals of concern product registry, as specified. Comments According to DRRR's "2008 Statewide Waste Characterization Study," an estimated 1.3 million tons of carpet is disposed in California landfills annually, comprising 3.2 percent of all solid waste. Carpet can be recycled and can be manufactured using recycled-content. According to the United States Environmental Protection Agency, barriers to effective recycling include the lack of an established infrastructure for the collection and processing of waste carpet, especially from residential sources. Department of General Services (DGS) platinum/gold standard . The California Gold Sustainable Carpet Standard (standard) was developed through a collaborative effort by CONTINUED AB 2398 Page 6 members of California's Environmentally Preferable Purchasing (EPP) Task Force, and was adopted by the Department of General Services by State Administrative Manual (SAM) Management Memo 06-08, on May 15, 2006. This action placed a requirement into the SAM for all state carpet purchases to meet the standard. The standard was based on the Draft American National Standard for Trial Use, NSF 140 Sustainable Carpet Assessment Standard (Draft Standard), developed as part of the ongoing efforts of a number of interested parties to document and improve the sustainability profile of carpet and rug products using established and/or advanced scientific principles, practices, materials and standards. Stakeholders involved in developing the Draft Standard included carpet and rug manufacturers, end users such as interior design professionals, state agencies responsible for environmentally preferable product procurement practices, academics and non-governmental organizations. The standard takes the NSF-140 national standard further by adding 14 additional prerequisites in areas important to California and a full 100 percent audit by a third party certification organization, as well as at least 52 credits overall from all categories. California Platinum certification requires all prerequisites and at least 71 credits overall from all categories. Additionally, California Gold only recognizes and accepts products that meet these highest two levels - California Gold and California Platinum. The additional prerequisites added include requirements such as: 1. Carpet must contain at least 10 percent postconsumer content. 2. Carpet must meet the low-emission requirements of the Carpet and Rug Institute's Green Label Plus" program or Californias Section 01350 specification. 3. Carpet must not contain polybrominated diphenyl ether flame retardants. 4. Manufacturers must have completed a life cycle assessment process for the product category. 5. Manufacturers must meet CARE recycling goals. CONTINUED AB 2398 Page 7 Product stewardship/extended producer responsibility (EPR) . Product stewardship involves consumers, government agencies and product manufacturers sharing the responsibility of reducing the impact of product waste on public health, the environment, and the economy. EPR is a strategy of product stewardship to place a shared responsibility for end-of-life product management on the producers, and all entities involved in the product chain, instead of the general public; while encouraging product design changes that minimize a negative impact on human health and the environment at every stage of the product's lifecycle. This allows the costs of treatment and disposal to be incorporated into the total cost of a product. It places primary responsibility on the producer, or brand owner, who makes design and marketing decisions. It also creates a setting for markets to emerge that truly reflect the environmental impacts of a product, and to which producers and consumers respond. This bill establishes an EPR-like approach to the management of waste carpet. EPR was the adopted policy of the former Integrated Waste Management Board (IWMB) (eliminated pursuant to SB 63 [Strickland], Chapter 21, Statutes of 2009, as of January 1, 2010). The IWMB's EPR framework, developed and adopted after two years of public workshops and meetings with local governments, legislative members, retailers, and producers, was supported by the League of California Cities, California State Association of Counties, and the Regional Council of Rural Counties. This bill is consistent with that framework. Current industry product stewardship efforts . The carpet industry has attempted to address these issues through a voluntary product stewardship program. CARE is a third-party entity created in 2002 by a memorandum of understanding (MOU) between carpet producers, federal, state, and local government agencies, and non-governmental organizations. The MOU was signed by the California Integrated Waste Management Board (now DRRR) and three California carpet manufacturers. The MOU established national goals over a 10-year timeframe to increase the amount of recycling and reuse of post-consumer carpet, with CONTINUED AB 2398 Page 8 a final goal of 40 percent diversion from landfill disposal by 2012. CARE is tasked with monitoring, evaluating, and assessing progress toward the MOU's goals. While the goals of this program are laudable, the diversion numbers are not keeping pace with the goals. In 2007, the percentage of carpet recycled and diverted from landfill disposal was 4.9 and 5.3, respectively; in 2008, these percentages were 4.3 and 5.2. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Oversight of $290 $280 $280 Special* stewardship plans * Integrated Waste Management Account. Ultimately to be covered by fees. SUPPORT : (Verified 8/23/10) Association of Bay Area Governments Bentley Prince Street Carpets California Product Stewardship Council California Refuse Recycling Council California Resource Recovery Association California Retailers Association California State Association of Counties Californians Against Waste Carpet and Rug Institute City and County of San Francisco Cities of Camarillo, Eureka, Oakland, Sacramento, Torrance, Ventura, and Vernon Interface Carpets League of California Cities Los Angeles Fiber Marin County Hazardous and Solid Waste Management Joint CONTINUED AB 2398 Page 9 Powers Authority Marin Sanitary Services Natural Resources Defense Council Sierra Club California Solid Waste Association of North America StopWaste.org OPPOSITION : (Verified 8/23/10) Cal-Tax Lassen Regional Solid Waste Management Authority ARGUMENTS IN SUPPORT : Supporters generally purport an EPR approach to the management of carpet removes the financial burden of managing the end-of-life product from local governments and ratepayers and taxpayers to the producers to be included in the cost of doing business. This approach also provides an incentive to design carpet that is more environmentally friendly and more easily recycled. ARGUMENTS IN OPPOSITION : No letter on file. ASSEMBLY FLOOR : AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jones, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Skinner, Solorio, Swanson, Torlakson, Torres, Torrico, Yamada, John A. Perez NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway, Cook, DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman, Harkey, Jeffries, Knight, Logue, Miller, Nestande, Niello, Nielsen, Norby, Silva, Smyth, Tran, Villines NO VOTE RECORDED: Tom Berryhill, Lieu, Audra Strickland, Vacancy TSM:mw 8/30/10 Senate Floor Analyses CONTINUED AB 2398 Page 10 SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED