BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 55
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          Date of Hearing:   August 19, 2009

                                Kevin De Leon, Chair

                     SB 55 (Corbett) - As Amended:  May 20, 2009 

          Policy Committee:                              Natural  

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No


          This bill deletes the definition of redemption rate and removes  
          the requirement that the Department of Conservation (DOC)  
          periodically calculate and report the redemption rate for  
          various types of beverage containers as part of its beverage  
          container recycling program.

           FISCAL EFFECT  

          Negligible costs.


           1)Rationale.   According to the author, the requirement that DOC  
            calculate and report on redemption rates is a holdover related  
            to now defunct aspects of the beverage container recycling  
            program.  The author contends the provisions creating the  
            requirement are obsolete and confuse the public and interested  
            parties who monitor the program's activity.

           2)Background.   The DOC's Division of Recycling (DOR) administers  
            the Beverage Container Recycling Program, commonly referred to  
            as the Bottle Bill program. This program was created 20 years  
            ago by Chapter 1290, Statutes of 1986 (AB 2020, Margolin). The  
            program encourages the voluntary recycling of most beverage  
            containers by guaranteeing a minimum payment (California  
            Redemption Value [CRV]) for each container returned to  
            certified recyclers. Beverages are subject to the CRV (and the  
            flow of payments under the program, discussed below) based on  
            the content of the container, not the container material.


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            Funding for the program flows through the Beverage Container  
            Recycling Fund, which DOR administers. The program involves  
            the flow of beverage containers and payments between several  
            sets of parties, and generally operates as follows:

              a)   Distributors and Retailers  . For each beverage container  
               subject to the CRV that they sell to retailers,  
               distributors make redemption payments that are deposited  
               into the recycling fund. The cost to distributors of the  
               redemption payments is typically passed on to retailers.

              b)   Retailers and Consumers.  Beverage retailers sell  
               beverages directly to consumers, collecting the CRV from  
               consumers for each applicable beverage container sold.

              c)   Consumers and Recyclers.  Consumers redeem empty  
               recyclable beverage containers with recyclers, from whom  
               they recoup the cost of the CRV they paid at the time of  

              d)   Recyclers/Processors and Manufacturers  . Recyclers sell  
               the recyclable materials to processors in exchange for the  
               scrap value of the material and for the CRV. Processors,  
               who are reimbursed from the recycling fund for these CRV  
               pass-throughs, then collect, sort, clean, and consolidate  
               the recyclable materials and sell them to container  
               manufacturers or other end users who make new bottles,  
               cans, and other products from these materials.

            In establishing the Bottle Bill program, the Legislature set a  
            statutory recycling goal of 80 percent. DOC is required to  
            determine and report on beverage container redemption and  
            recycling rates every six months.  Recently, the recycling  
            rate topped 75 percent.   

           3)Recycling Rate, Not Redemption Rate, Is the Measure of  
            Program's Success.   To calculate the redemption rate, DOC,  
            pursuant to existing law, considers containers subject to the  


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            Bottle Bill that have been returned for recycling, as well as  
            containers not subject to the Bottle Bill program that have  
            been returned for recycling.  In contrast, DOC calculates the  
            recycling rate by considering only beverage containers subject  
            to the Bottle Bill that have been returned for recycling.  In  
            this way, the recycling rate is an accurate measure of Bottle  
            Bill activity, whereas the redemption rate is not.

            Previously, the Bottle Bill program included automatic  
            increases in the CRV payout triggered by redemption rates. The  
            goal of the redemption rate trigger was to encourage beverage  
            container manufactures, who also functioned as monopoly food  
            and beverage container recyclers, to recycle containers not  
            subject to the CRV.  Since the Bottle Bill program began, the  
            beverage container recycling industry has diversified, and the  
            redemption-rate triggers are no longer needed.  Accordingly,  
            there is no longer a programmatic justification for DOC to  
            calculate redemption rates.

           4)Support  .  The Sierra Club is the only registered support for  
            the current version of the bill.  There is no registered  

           Analysis Prepared by  :    Jay Dickenson / APPR. / (916) 319-2081