BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1149
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          Date of Hearing:  April 25, 2011

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Wesley Chesbro, Chair
                 AB 1149 (Gordon) - As Introduced:  February 18, 2011
           
          SUBJECT  :  Beverage containers:  recycling and litter reduction:  
          funds

           SUMMARY  :  Extends for five years CalRecycle's plastic market 
          development program, which provides Bottle Bill funds to support 
          recyclers and manufacturers using empty plastic beverage 
          containers.

           EXISTING LAW  , the Beverage Container Recycling and Litter 
          Reduction Act (Bottle Bill):

          1)Establishes refund value and redemption payments for beverage 
            containers. 

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

          3)Requires DRRR to review the status of the Fund every three 
            months to ensure that funds are adequate to make expenditures 
            according the Bottle Bill and make specified determinations. 

          4)Authorizes funding for specified purposes to increase beverage 
            container recycling, including up to $10 million annually for 
            market development payments for empty plastic beverage 
            containers until January 1, 2012.

           THIS BILL  extends the plastic market development program and 
          funding authority from January 1, 2012 to January 1, 2017 and 
          requires CalRecycle to consider specified factors when setting 
          payment amounts.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :









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          The Bottle Bill is designed to provide consumers with a 
          financial incentive for recycling and to make recycling 
          convenient to consumers so that the beverage container component 
          of the solid waste stream will decrease.  The centerpiece of the 
          Bottle Bill is the California Redemption Value (CRV).  Consumers 
          pay a deposit, the CRV, on each beverage container they 
          purchase.  Retailers collect the CRV from consumers when they 
          buy beverages.  The dealer retains a small percentage of the 
          deposit for administration and remits the remainder to the 
          distributor, who also retains a small portion for administration 
          before remitting the balance to the Department.  When consumers 
          return their empty beverage containers to a recycler (or donate 
          them to a curbside or other program), the deposit is paid back 
          as a refund.  

          For many years, surpluses have accumulated in the Fund as a 
          result of unredeemed deposits.  Among other purposes, the 
          surplus funds have been used, per statute, to fund various 
          programs to reduce litter, increase recycling and promote used 
          of recycled materials, including the plastic market developments 
          program.  Surplus funds have also been loaned to the General 
          Fund in prior Budget Acts.

          In May 2009, CalRecycle notified the Legislature that the Fund 
          was facing a $160 million shortfall by the end of the 09-10 
          Fiscal Year and initiated an 85% proportional reduction for all 
          expenditures except CRV payments to consumers.  In October 2009, 
          the department increased this reduction to 100%.  These deep 
          cuts damaged the state's recycling infrastructure and directly 
          contributed to the loss of at least 500 jobs statewide.  In 
          order to temporarily alleviate this funding shortfall, the 
          Legislature passed AB 8X 7 (Budget Committee) in March 2010, 
          which provided a one-time influx of $100 million dollars and 
          temporary suspended multiple grant programs to provide funding 
          through 2010.  According to CalRecycle's most recent report on 
          the Fund (April 8, 2011):

             In general terms, the Recycling Fund Condition Summary 
             indicates that the Fund will be solvent as long as expected 
             loan repayments to the Recycling Fund continue.  The 
             Recycling Fund Balance is not projected to reach a level that 
             would require proportionate reduction in FY2010-11 or 
             FY2011-2012.  However, assessment is entirely dependent upon 
             continued repayment of historic loans made from the Recycling 
             Fund.  The Governor's proposed FY2011-2012 Budget includes 








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             General Fund loan repayments of $98M in FY2010-2011 (of 
             which, $68M has already been transferred to the Recycling 
             Fund) and $88M in FY2011-2012.  It also includes repayments 
             of approximately $21M in each of those fiscal years for loans 
             made from the Recycling Fund to the Air Resources Board.  If 
             those loan repayments-beyond the $68M already repaid in the 
             current year-are not made in FY2010-2011 and FY2011-2012, 
             CalRecycle will need to revisit the question of proportionate 
             reduction for the FY2011-2012 period.

          The plastic market development program uses surplus redemption 
          funds from the Fund to make payments of up to $150 per ton to 
          California-based processors and manufacturers that recycle and 
          utilize post-consumer plastic beverage containers.  In 2007-09, 
          the total amount of funds authorized was $5 million.  For 2010 
          and 2011, the legislature increased this payment authority to 
          $10 million annually.  This bill would continue the $10 million 
          annual allocation until 2017.

          According to the author:

             While California's plastic market development program has 
             succeeded in increasing California processing and use of 
             recycled plastic in-state, California continues to export in 
             excess of 90% of plastic collected for recycling.  In 2010, 
             Californians collected more than 250,000 tons of PET and HDPE 
             plastic beverage containers for recycling, with all but 
             25,000 tons exported overseas (primarily to China) for 
             processing and manufacturing. 

             Existing California-based manufacturers of products and 
             packaging could be utilizing this material, reducing 
             pollution and waste, and increase jobs and economic 
             opportunity in California.  The program is needed to continue 
             building California's recycling infrastructure.

             Currently, there are six California companies doing plastic 
             processing, and about a dozen CA manufacturers that can use 
             recycled plastic. Together, these companies are employing 
             about 750 people, whose jobs are supported by the current 
             program. Should the program sunset, a portion of these jobs 
             could be at risk.

           REGISTERED SUPPORT / OPPOSITION  :









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           Support 
           
          California Nevada Soft Drink Association
          California State Association of Counties
          California Resource Recovery Association
          Californians Against Waste
          CarbonLITE Industries
          City and County of San Francisco
          Earthbound Farm
          Epic Plastics
          Peninsula Packaging Company
          Regional Council of Rural Counties
           
          Opposition 
           
          None on file
           

          Analysis Prepared by  :  Lawrence Lingbloom / NAT. RES. / (916) 
          319-2092