BILL ANALYSIS SB 402 Page 1 Date of Hearing: September 11, 2009 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Nancy Skinner, Chair SB 402 (Wolk) - As Amended: September 4, 2009 SENATE VOTE : Vote not relevant SUBJECT : Recycling: beverage containers: redemption payments. SUMMARY : This bill addresses the insolvency in the Bottle Bill by expanding the program, closing the loophole for large juice containers, moving the threshold for the 10 cent CRV from 24 ounces to 20 ounces, accelerating the CRV payment to the Department of Conservation (DOC) from 90 to 60 days. This bill also authorizes DOC to reduce the number of unserved supermarket-based recycling centers. EXISTING LAW , pursuant to the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill): 1)Requires every beverage container, as defined, sold or offered for sale in this state to have a minimum refund value and requires a distributor to pay a redemption payment for every beverage container sold or offered for sale in the state to DOC, which 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. 2)Defines "beverage" to include, among other things, soda, 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. 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 container. 3)Requires DOC to establish reporting periods of six months each for redemption rates and recycling rates for beverage containers and requires them to determine and report the redemption rates and recycling rates for those beverage SB 402 Page 2 containers for each reporting period. THIS BILL : 1) States legislative intent that projects under contract with DOC be fully completed for the $35 million in market development grants awarded during the 2008/2009 fiscal year for which partial or complete encumbrance of funds has taken place by September 1, 2009. 2) Regarding the definition of "beverage" effective April 1, 2010: a) Redefines the term "beverage" to include vegetable, nut, grain, or soy drinks; b) 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; and c) Exempts beverages in a flexible foil, plastic pouch, or aseptic container that hold than 7 fluid ounces or less. 3) Adds a definition of "paper beverage container" that means a paperboard carton, gable-top, aseptic, poly-coated paperboard, or other beverage container made primarily of paper. 4) Adds a definition of "unserved convenience zone" to mean a convenience zone where this is not an operating certified recycling center or other locations that meet the requirements of the Act. 5) Changes the threshold for the 10 cent CRV payment paid by the distributor and the refund value from containers that hold 20 ounces or more. 6) Requires beverage distributors to make the CRV payment no later than the last day of the 2nd month following the sale of the beverages instead of the 3rd month. 7) Establishes, for calendar years 2010 and 2011, the processing payment for paper beverage containers at $135 per ton and the processing fee equivalent to 35% of $135 per ton. 8) Increases the amount for grants funds to certified community SB 402 Page 3 conservation corps for beverage container litter reduction programs and recycling programs from $15 million to $19 million. 9) Suspend, for the 2009-10 fiscal year, expenditures for grants for beverage container recycling and litter reduction programs and a statewide public education and information campaign aimed at promoting increased recycling of beverage containers. 10) Prohibits DOC from reducing expenditures for handling fees and conservation corps grants for the 2009-10 and 2010-11 fiscal years. 11)Provides assistance and incentives to reduce the number of zones not serviced by a certified recycling center. 12)Deletes obsolete provisions and make conforming changes. FISCAL EFFECT : Unknown COMMENTS : 1)Purpose of the bill : According to the author, current law provides consumers with a recycling incentive of 5 cents on most beverage containers (10 cents on containers 24 ounces and larger. Over the last two decades, this program has stimulated recycling levels in the 60-80 percent range. However, as a result of increased recycling and general fund loans, there are insufficient funds available in the Beverage Container Recycling Fund to pay ongoing costs of the recycling infrastructure. This bill contains provision to rectify those issues. AB 983 intends to balance program funding and expenditures by: a) Suspending and/or eliminating outdated/unnecessary program expenditures; b) Closing container exemption loopholes; increasing recycling incentives on higher cost/larger containers; and, c) Accelerating the timeframe for beverage distributor CRV payments. SB 402 Page 4 2)Amendments . Several amendments are needed to clarify intent of several provisions, to adjust funding, and to ensure effective implementation. Those include: a) Temporarily lock in processing payments and fees for glass. b) Providing assurance to recyclers that they will not be penalized if they can not find markets for the new paperboard containers. c) Including language for a retroactive provision requiring DOC to reimburse costs of the proportional reduction on January 1, 2010. d) Removing the proportional reduction exemption for the convenience zone recyclers. e) Removing a provision relating to DOC's administrative funding. f) Extending the implementation date for the new container types two months, from April 1 to July 1, 2010. g) Clarifying funding for the conservation corps and protecting the one-time augmentation of $8.25 million provided in this year's Budget Act from a proportional reduction. h) Clarifying that distributors are not required to remit the CRV to the DOC if they have not yet received the payment. i) Clarifying that $20 million in unencumbered funds currently held by the DOC may be expended to close the shortfall. j) Adjust funding in various market development programs to maximize market development efficiencies and effectiveness. SB 402 Page 5 REGISTERED SUPPORT / OPPOSITION : Support Anheuser-Busch Companies, Inc. California Bottled Water Association CalCoast California Refuse Recycling Council California Small Brewers Association California State Association of Counties Crown Imports Cities of Napa and San Jose ECO2 Plastic, Inc. Ecoplast Heineken USA League of California Cities Merlin Plastics Miller Coors NexCycle Peninsula Packaging Co. Peninsual Plastics Recycling, Inc. Regional Council of Rural Counties SF Environment Strategic Material, Inc. Talco Plastic, Inc. Tri-City Economic Development Corporation Urban Counties Caucus UrbanOre Waste Management, Inc. Opposition California League of Food Processors Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916) 319-2092