BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1933|
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THIRD READING
Bill No: AB 1933
Author: Gordon (D)
Amended: 8/24/12 in Senate
Vote: 27 - Urgency
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 6-0, 5/14/12
AYES: Simitian, Blakeslee, Hancock, Kehoe, Lowenthal,
Pavley
NO VOTE RECORDED: Strickland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE APPROPRIATIONS COMMITTEE : 6-0, 8/23/12
AYES: Kehoe, Walters, Alquist, Lieu, Price, Steinberg
NO VOTE RECORDED: Dutton
ASSEMBLY FLOOR : 74-0, 4/26/12 (Consent) - See last page
for vote
SUBJECT : Beverage containers
SOURCE : Californians Against Waste
DIGEST : This bill increases the stringency of
requirements for the importation of beverage container
material. Specifically, this bill (1) decreases, from 100
pounds to 25 pounds of aluminum, bimetal or plastic, or
from 1,000 pounds to 250 pounds of glass beverage container
material, the weight above which a person importing
beverage container material into the state must report the
CONTINUED
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importation to Department of Resources Recycling and
Recovery (CalRecycle), and (2) specifies that such person
must provide to CalRecycle documentation on the source of
the material and an opportunity for inspection.
Senate Floor Amendments of 8/24/12 (1) require that
handling fees paid to certified recycling centers not be
less than the handling fee in effect on July 1, 2011 until
March 1, 2013, rather than June 30, 2014; (2) strike
cost-of-living adjustment provisions; and (3) authorize the
CalRecycle to update the methodology and scrap values used
to calculate the handling fee, if it finds the existing fee
does not accurately represent the actual cost incurred by
certified recycling centers.
Senate Floor Amendments of 8/21/12 (1) require that until
June 30, 2014 handling fees paid to certified recycling
centers not be less than the handling fee in effect on July
1, 2011; (2) require any vehicle entering the state
containing more than the specified thresholds of empty
beverage containers pass through the nearest plant
quarantine inspection station and make the second
conviction for the violation of this requirement a
misdemeanor; and (3) add an urgency clause.
ANALYSIS : The existing California Beverage Container
Recycling and Litter Reduction Act (Act) requires a
distributor of specified beverage containers to pay a
redemption payment to the CalRecycle, for each beverage
container, as defined, sold or transferred, for deposit in
the California Beverage Container Recycling Fund. From the
Fund, CalRecycle is continuously appropriated the amount
necessary to pay handling fees to provide an incentive for
the redemption of empty beverage containers in convenience
zones. CalRecycle is required to pay a handling fee in an
amount determined by subtracting the amount of the
statewide average per-container cost to redeem beverage
containers incurred by a certified recycler that does not
receive a handling fee from the statewide average
per-container cost incurred by recycling centers that
receive handling fees, based on a survey CalRecycle is
required to conduct at least once every two years to
determine the actual cost for the redemption of beverage
containers.
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Existing law requires any person importing more than a 100
pounds of aluminum, bimetal, or plastic beverage container
material, or more than 1,000 pounds of glass beverage
container material, into the state to report the material
and to provide an opportunity for inspection and prohibits
any person from falsifying documents required pursuant to
the Act or the regulations adopted by CalRecycle. A
violation of the Act is a crime.
This bill decreases the amount of materials for which a
person is required to report to the CalRecycle to 25 pounds
of empty aluminum, bimetal, or plastic beverage container
material, or more than 250 pounds of empty glass beverage
container material, and additionally requires the person to
provide CalRecycle with certain documentation regarding
those materials.
This bill requires a vehicle entering the state that
contains more than 25 pounds of empty beverage container
material to pass through the nearest plant quarantine
inspection station and obtain proof of inspection from the
CalRecycle. This bill authorizes CalRecycle to enter into
an interagency agreement with the Department of Food and
Agriculture (DFA) to implement this requirement.
This bill provides that an operator of a vehicle that
contains more than 25 pounds of empty beverage container
material is in violation of the Act if the operator fails
to stop at, or willfully avoids, a plant quarantine
inspection station, as specified. This bill provides that
a second or subsequent violation of this requirement within
three years of a prior conviction is punishable as a
misdemeanor.
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
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small portion for administration before remitting the
balance to CalRecycle. 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.
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 CalRecycle. Three separate fraud
rings coordinated the importation of millions of cans and
bottles from Arizona and Nevada for redemption of the CRV.
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, CalRecycle, in coordination with the
DFA, initiated a "no-cost" pilot program to survey and
document vehicles importing out-of-state beverage container
material into California through all 16 DFA 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, CalRecycle states that a conservative
estimate of fraud exposure to the Fund is $7 million
annually. This bill reduces the redemption value of
beverage container material that could be imported into
California without notifying CalRecycle from a maximum of
approximately $150 to a maximum of less than $50.
Comments
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?ÝAB 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
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the material."
Support concerns . According to the California Grocers
Association, this bill will reduce fraud which will
increase stability in the Fund, helping recyclers stay in
business.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, there
will be negligible direct fiscal effect upon CalRecycle.
This bill will likely result in greater reporting of
importation of beverage container material to CalRecycle.
It is, therefore, reasonable to assume the bill will
increase CalRecycle's inspection workload. CalRecycle,
however, does not anticipate an increase in workload
resulting from this bill because it currently lacks
staffing at or near border checkpoints at which the
inspections would occur. In addition, CalRecycle reports
it lacks the regulatory authority to enforce the reporting
standards required by this bill.
CalRecycle is in the initial phases of developing
regulations that, if adopted by CalRecycle, would provide
it the authority to enforce the reporting requirements. In
addition, CalRecycle has submitted a budget change proposal
that would authorize an interagency agreement with the DFA
to require DFA to conduct border inspections of beverage
container imports. CalRecycle would use the data gathered
from the DFA inspections to build a case for prosecution of
fraudulent activity by the Attorney General.
SUPPORT : (Verified 8/27/12)
Californians Against Waste (source)
California Grocers Association
California Retailers Association
Earthwize Recycling
Nexcycle
rePlanet
ARGUMENTS IN SUPPORT : Proponents state:
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CalRecycle announced a reduction (13%) in Handling Fees
effective July 1, while at the same time commodity have
dropped precipitously. Under the current per-container
Handling Fee study/formula, the industry has endured a
total reduction of 57% over the past four years, based
upon a formula that bears no relationship to current
operating costs. Further, the proposed reduction is
inconsistent with the department's most recent cost
calculations, which reflect cost increases for the three
primary materials surveyed (glass, PET and HDPE). The
reduction also fails to reflect the most recent
across-the-board drop in scrap values that are not
forecast to improve through the remainder of the year -
perhaps longer.
The current reduction in handling fees is unwarranted,
further squeezing operating margins that are resulting
in increasing numbers of closed centers and hardships to
multiple stakeholders. More specifically, without the
passage of AB 1933 with the handling fee language, the
industry anticipates:
Continued and increasing number of CZ Redemption
Center closures
Lay-offs inclusive of CZ operators, drivers,
processors & administrative & support personnel
Inconvenience and service impact to consumers
seeking to redeem CRV
Increase in grocery stores redeeming containers
in-store
Increase in costs associated with the entire
redemption process
Reduction/suspension of capital investment
related to CZ centers & equipment
We have been working with CalRecycle Director Caroll
Mortensen over the last few months in an attempt to
pursue an administrative fix. And while she is
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supportive of addressing the problem, she did not feel
she had the authority to do it administratively and
urged us to pursue the fix legislatively.
ASSEMBLY FLOOR : 74-0, 4/26/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Hall, Hayashi, Roger Hernández, Hill, Huber,
Hueso, Huffman, Jeffries, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Silva, Skinner,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Cedillo, Furutani, Halderman, Harkey,
Jones, Smyth
DLW:k 8/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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