BILL ANALYSIS                                                                                                                                                                                                    

                                                                 SB 55

                        Senator S. Joseph Simitian, Chairman
                              2009-2010 Regular Session
           BILL NO:    SB 55
           AUTHOR:     Corbett
           AMENDED:    As Introduced
           FISCAL:     Yes               HEARING DATE:     April 20, 2009
           URGENCY:    No                CONSULTANT:       Caroll  
                       REDUCTION ACT

            SUMMARY  :    
            Existing law  , under the California Beverage Container  
           Recycling and Litter Reduction Act (Act) (Public Resources  
           Code Section 14500, et al.):

           1) Requires every beverage container, as defined, sold or  
              offered for sale in this state to have a minimum refund  

           2) Requires a distributor to pay a redemption payment for  
              every beverage container sold or offered for sale in the  
              state to the Department of Conservation (DOC) and DOC is  
              required to deposit those amounts in the California  
              Beverage Container Recycling Fund (fund).  The money in the  
              fund is continuously appropriated to DOC for the payment of  
              refund values and processing fees. 

           3) Defines "beverage' to include, among other things, beer and  
              other malt beverages, wine and distilled spirit coolers,  
              carbonated mineral and soda waters, noncarbonated fruit  
              drinks, and vegetable juices, in liquid form that are  
              intended for human consumption.

           4) Excludes from the definition of 'beverage', among other  
              things, vegetable drinks in beverage containers of more  
              than 16 ounces, milk, medical food, and any product sold in  
              a container that is not an aluminum beverage container, a  
              glass container, a plastic beverage container, or a bimetal  


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           5) Defines "Beverage manufacturer" as any person who bottles,  
              cans, or otherwise fills beverage containers, or imports  
              filled beverage containers, for sale to distributors,  
              dealers, or consumers.

           6) Defines "Processor" as any person, including a scrap  
              dealer, certified by the department who purchases empty  
              aluminum beverage containers, bimetal beverage containers,  
              glass beverage containers, plastic beverage containers, or  
              any other beverage containers, including any one or more of  
              those beverage containers, which have a refund value  
              established pursuant to this division, from recycling  
              centers in this state for recycling, or, if the container  
              is not recyclable, not for recycling, and who cancels, or  
              who certifies to the department in a form prescribed by the  
              department the cancellation of, the refund value of these  
              empty beverage containers by processing empty beverage  
              containers, in any manner which the department may  
              prescribe.  However, the department shall not take any  
              action regulating scrap dealers or recycling centers who  
              are processors or recycling centers unless authorized by  
              and pursuant to the goals of Act.

           7) Defines "Recycler" as a recycling center, dropoff or  
              collection program, or curbside program.

           8) Requires DOC to calculate a processing fee and a processing  
              payment for each beverage container with a specified scrap  
              value.  The processing fee is required to be paid by  
              beverage manufacturers for each beverage container sold or  
              transferred to a dealer. 

           9) Requires DOC to establish reporting periods of six months  
              each for redemption rates and recycling rates for beverage  
              containers and requires them to determine the redemption  
              rates and recycling rates for those beverage containers for  
              each reporting period and to issue a report on those  

           10)         Authorizes funding for specified purposes to  
              increase beverage container recycling (see  


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       or page 7 for  
              California Beverage Container Recycling and Litter  
              Reduction Act flow chart).
           This bill  :  

           1) Redefines the term "beverage" to include vegetable, nut,  
              grain, or soy drinks.

           2) Deletes the exclusion from the term "beverage," for a  
              product that is not sold in aluminum, glass, plastic, or  
              bimetal container, thus including aseptic and paperboard  
              type beverage containers that hold more than 7 fluid  

           3) Adds a definition of "product manufacturer".

           4) Increases processing fees for container types with low  
              recycling rates (e.g. from 45% to less than 30%).

           5) Adds a provision to require DOC to establish a supplemental  
              processing payment that would be paid to a processor that  
              would be passed to the recycler for glass as well as PET  
              and HDPE plastic containers.

           6) Deletes the provisions that require DOC to establish  
              reporting periods for redemption rates and that require  
              them to determine redemption rates for specified types of  
              beverage containers and deletes the definition of  
              redemption rate.  

           7) Increases the amount available for grants for litter  
              reduction and recycling programs to community conservation  
              corps as described from $15 million to $17.5 million  

           8) Increases the total amount available for payments cities  
              and counties for litter reduction and recycling programs  
              from $10.5 million to $15 million annually; increases the  
              payments from $5000 to $7500 for cities and from $10,000 to  
              $15,000 for counties.

           9) Adds to the list of eligible projects under the grants to  


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              support market development efforts, 

              a)    Projects that upgrade or retrofit existing beverage  
                 container recycling and processing facilities
              b)    Construction of new facilities that process or  
                 recycled beverage containers, including aseptic  
              c)    Payments to California manufacturers that utilize  
                 material from the new containers proposed to be added  
                 through this bill. 

           10)         Deletes obsolete provisions. 

           11)         Makes conforming changes to other definitions, for  
              purposes of the Act.

           12)Makes extensive findings and declarations related to  

           COMMENTS  :

            1) Purpose of Bill  .  According to the author, this bill would  
              expand the Beverage Container Recycling Program to cover  
              beverages it currently covers regardless of size or  
              container types with few exceptions.  Currently, glass,  
              metal and plastic beverage containers are the only  
              container types in the program.  This bill will put other  
              container types in the program, such as paper.  It will  
              also reform the market development grant program to help  
              aseptic containers be recycled and create green jobs.  In  
              addition, the bill provides assistance to our local  
              conservation corps, recyclers and local government  
              recycling programs

            2) New Containers: Aseptic and Paper Containers  .  This bill  
              proposes to add a new packaging group to the Act commonly  
              known as "aseptic containers".  These are composite,  
              layered containers that are mainly paper with plastic and a  
              small amount of aluminum.  The containers are light weight  
              and have the benefit of keeping the contents fresh without  
              the refrigeration.  There are also similar paperboard  
              containers that are layered with paper and plastic, wax or  
              other impermeable material and have a folded or  


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              'gable-topped" appearance.  They are used to contain a wide  
              array of products.  However, for the purposes of this bill  
              and the Act, containers containing soy, nut, grain and  
              vegetable beverages would be included.  The bill would not  
              include the small 'juice boxes' that are popular with  
              children as most of those contain less than 7 ounces.  It  
              is estimated that there are approximately 225 million and  
              350 million aseptic containers sold in California, however  
              this includes the small "juice boxes" that are proposed as  
              part of the expansion in this measure.  Those boxes are a  
              large share of the market, thus a conservative estimate  
              might be approximately 50-60 million containers that would  
              be subject to the Act. The litter issues with these  
              containers are not well documented, especially for the  
              larger container sizes. 

              These containers can pose a recycling challenge in that  
              there are not currently many recycling opportunities.   
              However, as with other materials types that have been added  
              to the Act through the years, the purpose is to develop  
              recycling technologies and markets for those materials, or  
              switch to containers that are recyclable.   

            3) Processing Fees  .  This bill proposes increasing processing  
              fees for containers with low recycling rates to cover costs  
              to recycle.  These are fees are paid by beverage  
              manufacturers and are in proportion to the recycling rates  
              for containers.  The higher the rate, the less the  
              processing fee paid.  This bill would increase the fees for  
              containers that are being recycled at a rate less than 50%.  
               This system is designed to encourage beverage  
              manufacturers to increase recycling rates for the  
              containers that they use or switch to containers with high  
              recycling rates. 

            4) Supplemental Processing Payment  .  This bill proposes an  
              additional payment to recyclers for glass and PET  
              (polyethylene terephthalate or #1) and HDPE (high density  
              polyethylene or #2) plastic containers.  These payments are  
              an attempt to assist the suffering commodity markets as  
              discussed in #6 below).

            5) Redemption Rate Calculation  .  This bill deletes provisions  


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              that require DOC to calculate and report on redemption  
              rates.  DOC is required to calculate a recycling rate the  
              commonly used ratio of materials recycled divided by  
              materials sold, which is a true indicator of program  
              activities.  The redemption rate calculation considers  
              postfilled food or drink containers (not included in the  
              Act) returned for recycling, in addition to empty beverage  
              containers (included in the Act) returned for recycling.   
              The recycling rate calculation only considers empty  
              beverage containers returned for recycling.  In this  
              respect, the redemption rate does not actually depict the  
              success of the Act because it includes material that is  
              outside of its scope. 
           6) The State of Recycling Markets  .  With the downturn in the  
              economy, there has been a parallel drop in the market for  
              recyclable materials, including materials from beverage  
              containers.  A rapid drop in recyclable commodity prices  
              happened last fall.  Much of what is reclaimed in  
              California and the nation is destined for overseas markets,  
              most notably China.  The United States exported $22 billion  
              worth of recycled materials to 152 countries in 2007.  Now  
              it is estimated the value of American recyclables has  
              decreased by 50 to 70 percent.  Many California recyclers  
              and local governments are dealing with mounting stockpiles  
              whose value in many cases continues to sink.  It has also  
              been reported that some importers have been demanding to  
              renegotiate contracts drastically downward.  In some cases,  
              they are refusing to accept shipments they already have a  
              contractual obligation to take. 

              These market challenges effects the containers subject to  
              the Act and the related payments and fees related to their  
              handling, processing and recycling.  It also points to the  
              vulnerability to changes in global markets as well as the  
              need to maintain existing and foster new recycling and  
              recycled content product markets in the US, especially  
              California.  This bill will move toward addressing those  
              concerns by make more funds available for market  
              development grants, however with the uncertainty of the  
              fund condition (see #7 below), these expansions should be  
              viewed with caution. 


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            7) Policy Considerations  .  Prioritization of Expenditures:   
              The Act has been in place since 1986 and has gone through  
              many expansions with increases in the numbers and types of  
              projects that get funded through unredeemed beverage  
              container deposits.  Currently in Section 14581 that  
              describes the allocation of unredeemed funds, there are  
              tens of millions of dollars outlined for recycling and  
              litter reduction projects that could be funded.  While  
              these projects do assist with the overall goals and  
              objectives of the Act when there is money in the fund, as  
              has been the case for many years, it could pose a problem  
              in years when the fund is low.  With the downturn in  
              recycling markets, even with the expansion proposed by the  
              bill, the fund is being depleted.  It might be appropriate  
              to determine what expenditures are essential to the  
              implementation of the Act and prioritizing the uses of the  
              fund to ensure that core responsibilities are maintained.

              Further Program Expansion:  With the expansion proposed by  
              this bill the universe of beverage containers subject to  
              the Act is becoming more inclusive.  However, there are  
              beverages such as milk, wine, and liquor that are excluded.  
               Further expansion efforts should address those beverages.   

            8) Related Legislation  .  Senator Corbett authored SB 1625 in  
              2008.  That proposed to expand the Act to include a wide  
              variety of plastic containers, including non-beverage  
              containers.  That bill was held in the Assembly Rules  

            9) Amendment Needed  .  The bill adds a definition of "product  
              manufacturer" that is not necessary, that definition should  
              be removed.

            SOURCE :        Californians Against Waste  

           SUPPORT  :       California Refuse Removal Council
                          California State Association of Counties
                          City of Fremont
                          Sierra Club California
                          Tomra Pacific, Inc.


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           OPPOSITION  :    California League of Food Processors
                          California Nevada Soft Drink Association
                          Grocery Manufacturers Association