BILL ANALYSIS Ó AB 1933 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator S. Joseph Simitian, Chairman 2011-2012 Regular Session BILL NO: AB 1933 AUTHOR: Gordon AMENDED: As Introduced FISCAL: Yes HEARING DATE: May 14, 2012 URGENCY: No CONSULTANT: Peter Cowan SUBJECT : BEVERAGE CONTAINERS: ENFORCEMENT SUMMARY : Existing law , under the California Beverage Container Recycling and Litter Reduction Act (the Act): 1)Establishes refund value and redemption payments for beverage containers and requires a distributor to pay a redemption payment for every beverage container sold or offered for sale in the state to the Department of Resources Recycling and Recovery (DRRR), which is required to deposit those payments into the California Beverage Container Recycling Fund (Fund). The money in the Fund is continuously appropriated for the payment of refund values and processing fees. (Public Resources Code §14500 et seq.). 2)Authorizes funding for specified purposes to increase beverage container recycling, including payments to cities and counties. (§14581). 3)Requires any person importing more than 100 pounds of aluminum, bimetal, or plastic beverage container material, or 1000 pounds of glass beverage container material, into California to report the material to DRRR and to provide an opportunity for inspection. (§14596). This bill : 1) Reduces the threshold for reporting the imported beverage container material from 100 pounds to 25 pounds for aluminum, bimetal or plastic beverage container material, AB 1933 Page 2 and from 1000 pounds to 250 pounds for glass beverage container material. 2) Requires that any person required to report the importation of beverage container material to DRRR additionally provide documentation of the source and destination of the material. COMMENTS : 1) Purpose . According to the author "California's bottle and can recycling law has been found to be the most cost effective program of its kind in the country, and no recycling policy or program in the state is achieving better results. However, the very incentives that have spurred high rates of recycling have also inspired entrepreneurial criminals?ƯAB 1933] will help create deterrents on importers trying to illegally redeem out of state beverage containers in California by creating a paper trail and requiring documentation of the source and destination of the material." 2) Background on the Act . The Act is designed to provide consumers with a financial incentive for recycling and to make recycling convenient to consumers. The centerpiece of the Act 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 DRRR. 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. 3) Container fraud . The extent of illegal redemption of out-of-state containers is unknown. However, in 2010, 31 people were arrested in an enforcement action involving the Department of Justice and DRRR. Three separate fraud rings coordinated the importation of millions of cans and bottles from Arizona and Nevada for redemption of the CRV. AB 1933 Page 3 According to the Attorney General, the rings stole more than $3.5 million. Neither Arizona nor Nevada has beverage container redemption programs. In the summer of 2011, DRRR, in coordination with the California Department of Food and Agriculture (CDFA), initiated a "no-cost" pilot program to survey and document vehicles importing out-of-state beverage container material into California through all 16 CDFA Border Protection Stations. During the first 60 calendar days of the pilot program, the information gathered indicated that over 2,500 vehicles (including 378 rental trucks filled to capacity) imported out-of-state beverage container material through these stations. Based on the survey data referenced above, DRRR states that a conservative estimate of fraud exposure to the Fund is $7 million annually. AB 1933 would reduce the redemption value of beverage container material that could be imported into California without notifying DRRR from a maximum of approximately $150 to a maximum of less than $50. 4) Support concerns . According to the California Grocers Association, AB 1933 will reduce fraud which will increase stability in the Fund, helping recyclers stay in business. SOURCE : Californians Against Waste SUPPORT : California Grocers Association OPPOSITION : None on file.