BILL ANALYSIS Ó
AB 1001
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: AB 1001
AUTHOR: Gordon
AMENDED: June 25, 2013
FISCAL: Yes HEARING DATE: July 3, 2013
URGENCY: No CONSULT ANT: Rebecca
Newhouse
SUBJECT : BEVERAGE CONTAINER RECYCLING AND LITTER REDUCTION
ACT
SUMMARY :
Existing law , under the California Beverage Container
Recycling and Litter
Reduction Act (Act):
1) Defines "convenience zone" to mean either an area within a
one-half mile radius of a supermarket, or an area
designated by the Department of Resources Recycling and
Recovery (CalRecycle) at a location where there is no
supermarket but there are two or more dealers located
within a one-mile radius of each other, and meet certain
specified criteria.
2) Requires CalRecycle to certify recycling centers and adopt
regulations establishing a procedure for certification of
recycling centers. Specifies that these regulations shall
include, as a condition for certification, that if one or
more certified entities have operated at the same location
within the past five years, the recycling center must
demonstrate to CalRecycle that its operations exhibit a
pattern of compliance with the Act and its related
regulations.
3) Requires CalRecycle to adopt guidelines and methods for
paying handling fees to supermarket sites, nonprofit
convenience zone recyclers, or rural region recyclers to
provide an incentive for the redemption of empty beverage
containers in convenience zones, and adopt guidelines and
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methods specifying a procedure for the payment of these
fees.
4) Requires handling fees be paid monthly per eligible
handling fee container, in the form and manner as adopted
by CalRecycle, and specifies requirements for submitting
handling fee claims and calculating handling fees.
5) Specifies that if the eligible volume in any given month
would result in handling fee payments that exceed the
allocation of funds for the month, the higher eligible
monthly volumes shall receive handling fees for their
entire eligible monthly volume before sites with lower
eligible monthly volumes receive any handling fees.
6) Requires that CalRecycle conduct a survey on or before
January 1, 2008, and every two years thereafter to
determine the actual cost incurred for the redemption of
empty beverage containers by certified recycling centers,
and use that information to determine a statewide average
cost incurred for the redemption of empty beverage
containers at recycling centers that receive handling fees.
7) Requires CalRecycle to use the above information to
determine handling fees to be paid to eligible recycling
centers, as specified.
8) Requires CalRecycle to adjust the statewide average cost
for the redemption of empty beverage containers at
recycling centers that receive handling fees to reflect
changes in the cost of living.
9) Requires that until March 1, 2013, the per-container
handling fee not be less than the amount of the
per-container handling fee that was in effect on July 1,
2011.
10)Authorizes CalRecycle to update the methodology and scrap
values used for calculating the handling fee from the most
recent cost survey if it finds that the handling fee
resulting from the most recent cost survey does not
accurately represent the actual cost incurred for the
redemption of empty beverage containers.
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This bill :
1) Authorizes CalRecycle to waive the requirement that if one
or more certified entities have operated at the same
location within the past five years, the recycling center
demonstrate to CalRecycle that its operations exhibit a
pattern of compliance with the Act in the case that the new
operator has no relationship or affiliation with an entity
that previously operated at that location.
2) Repeals the requirement that handling fees be paid monthly,
and requires handling fee claims be filed electronically as
part of the shipping report with CalRecycle.
3) Repeals the provision that specifies that if the eligible
volume in any given month would result in handling fee
payments that exceed the allocation of funds for the month,
the higher eligible monthly volumes shall receive handling
fees for their entire eligible monthly volume before sites
with lower eligible monthly volumes receive any handling
fees.
4) Provides that after January 1, 2014, the handling fee shall
equal the following amounts at eligible supermarket sites,
nonprofit convenience zone recyclers, or rural region
recyclers:
a) $0.021 per container for the first 100,000 empty
beverage containers redeemed per month;
b) $0.005 per container for the first 100,000 empty
beverage containers redeemed per month;
c) $0.004 per container for the first 100,000 empty
beverage containers redeemed per month.
5) Authorizes CalRecycle, on and after January 1, 2016, no
more than every two years, to conduct a survey to determine
the actual cost incurred for the redemption of empty
beverage containers by certified recycling centers.
6) Repeals provisions relating to the determination, from the
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cost survey, of the statewide weighted average cost
incurred for the redemption of empty beverage containers
for the determination of handling fee amounts.
7) Authorizes CalRecycle to adjust the costs for the
redemption of empty beverage containers at recycling
centers that receive handling fees to reflect changes in
the cost of living.
8) Repeals the requirement that until March 1, 2013, the
per-container handling fee not be less than the amount of
the per-container handling fee that was in effect on July
1, 2011.
9) Repeals the authorization for CalRecycle to update the
methodology and scrap values used for calculating the
handling fee from the most recent cost survey if it finds
that the handling fee resulting from the most recent cost
survey does not accurately represent the actual cost
incurred for the redemption of empty beverage containers.
10)Authorizes CalRecycle, after January 1, 2017, to adjust the
amount of handling fees to better reflect the cost of
recycling at eligible recycling sites based on cost
surveys, and authorizes CalRecycle to establish one or more
handling fee amounts using categories based on the monthly
recycling center volume.
11)Requires that CalRecycle adjust the handling fee amounts to
reflect any higher net cost per beverage container
redemption at recycling centers receiving handling fees as
compared to the average cost per container for redemption
for recycling centers that do not receive handling fees.
COMMENTS :
1) Purpose of Bill . According to the author, AB 1001 shifts
the Beverage Container Recycling and Litter Reduction Act
from a single handling fee payment to a tiered handling fee
system to reward performance without overpaying and reduce
the incentive for fraud as well as update the existing
handling fee calculation. The author notes that, "Under the
current per-container handling fee formula, the supermarket
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recyclers have endured a total reduction of 57% over the
past four years based upon a formula that bears no
relationship to current operating costs. The current
handling fee formula structure also rewards high volume
recyclers while underpaying small volume recyclers.
Establishment of 3-tiered volume-based handing fee payment
system based on existing cost survey will create a more
equitable payments system."
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 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.
3) Handling fees . Handling fees are monthly payments made by
CalRecycle to recycling centers that meet certain
eligibility requirements. A recycler can receive a monthly
handling fee payment for each eligible container redeemed
at an eligible center. CalRecycle makes handling fee
payments to recyclers in order to provide incentives for
the convenient redemption of empty beverage containers,
with the idea being that there is an extra cost incurred by
these recyclers associated with redeeming containers at
certain locations, specifically near supermarkets and
places of beverage retail. The handling fee is based solely
on actual numbers of containers redeemed as reported on a
calendar monthly basis. To be eligible for handling fees, a
recycler must be one of the following types of recycling
centers:
a) Supermarket Site Recycling Center, where the
recycling center is located within or outside and
immediately adjacent to the entrance of, or within a
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parking lot or loading area surrounding, a supermarket
which is the focal point of a convenience zone, or a
dealer that is located within that zone, and which is
accessible to motor traffic.
b) Nonprofit Convenience Zone Recycling Center, where
the operator of the site must be a nonprofit
organization and has recycling centers which are
certified and located somewhere within a convenience
zone.
c) Rural Region Recycling Center, where the recycling
center must be located in a rural region and the
recycling center is located somewhere within a
convenience zone.
4) Handling Fee Cost Surveys . Statute requires CalReycle to
conduct a handling fee cost survey every two years of
certified recycling to determine the actual cost incurred
for the redemption of empty beverage containers by
recycling centers. This statewide average cost is used to
determine the handling fees to be paid per container to
eligible certified recycling centers. All eligible
recycling centers receive the same handling fee per
container, based on the statewide average, regardless of
the volume of beverage containers they recycle.
However, the 2012 Cost Survey notes that costs associated
with recycling decrease as the volume of recycling
increases, due to economies of scale. Therefore, a uniform
handling fee will tend to benefit recycling centers
processing the largest volumes, more than covering their
actual expenses, while not fully covering the actual costs
incurred by smaller volume recyclers.
A tiered system of handling fees based on beverage
recycling volume may be a more equitable structure in terms
of covering the actual costs of different sized recycling
centers. AB 1001 would base the handling fee on the volume
of recycled beverages at a center, decreasing the handling
fee as the recycling volumes increased.
5) Structural deficit . Deposits on covered beverage containers
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are remit to CalRecycle and deposited into the Beverage
Container Recycling Fund (BCRF). The BCRF's expenditures
fit into two primary categories: 1) CRV reimbursements to
recycler and 2) program expenses, including administration,
grant programs, education and outreach that are funded by
unredeemed CRV. Higher recycling rates reduce the amount of
unredeemed CRV to fund program expenses. The "breakeven"
recycling rate where expenditures equal revenues is about
72%. The BCRF is currently operating with a structural
deficit, but remains solvent mainly due to the repayments
of loans from BCRF to the General Fund. The restructuring
of handling fees into different tiers is not anticipated to
have any significant effect on reducing the structural
deficit of the BCRF, since the total costs associated with
handling fees is not expected to be significantly altered,
since instead of paying the average handling fee value to
all parties, the handling fee tiers
Fraud . The BCRF is currently operating at a recycling rate
of greater than 80%, but it is known that there is some
fraction of fraud within the program that artificially
elevates the recycling rate. Implementing a tiered approach
to handling fees may reduce the level of fraud within the
program, since higher volumes associated with fraudulent
activities such as redeeming beverage containers from
outside the state, will not be as lucrative. However,
because the level of fraud within the program is unclear,
it is difficult to estimate to what extent any adjustment
in handling fees could help reduce the level of fraud, and
therefore help reduce the structural deficit.
6) Where to draw the lines ? AB 1001 delineates the categories
of handling fees by specifying a handling fee of $0.021 per
container for the first 100,000 containers redeemed
monthly, a fee of $0.005 for the next 100,000 containers
redeemed and $0.004 for each additional beverage container
redeemed.
AB 1001 allows CalRecycle to adjust these handling fees
after 2017, using cost surveys and categories based on
monthly recycling center volume, to better reflect the cost
of recycling at eligible recycling sites.
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According to the sponsor, Californians Against Waste, AB
1001 handling fee payment tiers were generated from the
2010 Newpoint Cost Survey and the intent of the statute,
while keeping the proposal 'cost neutral.'
However, it is not clear that these handling fees and tiers
best represent the true cost of convenience for recycling
centers handling the specified volumes, because there is no
independent verification of these numbers, or any analysis
from CalRecycle that indicates these fees and tiers are the
most appropriate.
The committee may wish to suggest that the specific values
for the handling fees and tiers be struck from the bill, so
that the appropriate values can be determined through a
stakeholder process as the bill moves forward.
Once the bill is later amended to specify handling fee
values and volume tiers determined through the stakeholder
process, the bill should be brought back for further
evaluation by this Committee.
SOURCE : Californians Against Waste
SUPPORT : None on file
OPPOSITION : None on file