BILL ANALYSIS Ó AB 1846 Page 1 ASSEMBLY THIRD READING AB 1846 (Gordon) As Amended April 22, 2014 Majority vote NATURAL RESOURCES 9-0 APPROPRIATIONS 16-0 ----------------------------------------------------------------- |Ayes:|Chesbro, Grove, Bigelow, |Ayes:|Gatto, Bigelow, | | |Garcia, Muratsuchi, | |Bocanegra, Bradford, Ian | | |Patterson, Skinner, | |Calderon, Campos, Eggman, | | |Stone, Williams | |Gomez, Holden, Jones, | | | | |Linder, Pan, Quirk, | | | | |Ridley-Thomas, Wagner, | | | | |Weber | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Clarifies and strengthens the enforcement provisions under the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill). Specifically, this bill : 1)Specifies that a certified recycling center or processor shall not pay or claim any refund value, processing payment, or administrative fee on beverage containers if the center knew, or should have known, that the containers are ineligible for redemption. 2)Adds the authority for Department of Resources Recycling and Recovery (CalRecycle) to suspend or permanently revoke eligibility of a certified recycling center to receive handling fees at one or more recycling centers as one of the disciplinary actions available under the Bottle Bill. EXISTING LAW establishes the Bottle Bill, which: 1)Requires beverage containers sold in this state to have a California redemption value (CRV) of $0.05 for containers that hold fewer than 24 ounces and $0.10 for containers that hold 24 ounces or more and requires a distributor to pay a redemption payment to CalRecycle. Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees. AB 1846 Page 2 2)Defines a number of terms, including: a) "Beverage" to include 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, 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. b) "Convenience zone" to mean either an area within a one-half mile radius of a supermarket, or an area designated by 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. 3)Requires CalRecycle to: a) 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 containers for each reporting period. b) Certify recycling centers and promulgate 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 Bottle Bill and its related regulations. c) Pay 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 methods specifying a procedure for the payment of these fees. AB 1846 Page 3 d) After deducting refund values, administrative fees, and a reserve for contingencies, appropriate remaining monies to designated programs, grants, and fee payments Public Resources Code (PRC) Section 14581. 4)Prohibits a lease entered into by a dealer to contain a leasehold restriction that prohibits or results in the prohibition of the establishment of a recycling location and prohibits CalRecycle from making any payments, grants, or loans to a city, county, or city and county if that municipality has adopted or is enforcing a land use restriction that prevents the siting or operation of a certified recycling center at a supermarket site. FISCAL EFFECT : According to the Assembly Appropriations Committee, this bill has negligible costs, if any, for increased CalRecycle enforcement authority. COMMENTS : Bottle Bill background: The Bottle Bill is designed to provide consumers with a financial incentive for recycling and to make recycling convenient to consumers. The centerpiece of the Bottle Bill is the 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. California's Bottle Bill has achieved an overall recycling rate over 80 % higher than any other bottle bill program North America. According to Californians Against Waste, since its inception 25 years ago, the program has resulted in the recycling over more than 11.9 million tons of glass; three million tons of aluminum; and, more than two million tons of plastic. In addition to the diversion from landfill disposal, this recycling has avoided an estimated two million metric tons of carbon dioxide (CO2) equivalent greenhouse gas emissions over the last four years. AB 1846 Page 4 Recycling in California also results in economic benefits to the state. The Bottle Bill program has resulted in more than 10,000 jobs and over $100 million in reduced landfill disposal fees. Finding fraud: In some ways, the Bottle Bill program is a victim of its own success. According to CalRecycle, the Bottle Bill is currently operating under an approximately $100 million annual structural deficit, mainly caused by historically high recycling rates, along with mandated program payments and outstanding General Fund loans. The structural deficit means that program expenditures exceed program revenues under the current mandated expenditure and revenue structure. When the Bottle Bill does not have adequate funding, CalRecycle is required to "proportionally reduce" many of the program's expenditures evenly among program participants, with the exception of CRV redemption for consumers. Fraud also contributes to the structural deficit. In the summer of 2011, CalRecycle, 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. In April of this year, the Department of Justice (DOJ) arrested six people in two different cases for importing beverage containers into California and illegally redeeming them for CRV. The total amount of the fraud for both cases was approximately $425,000. DOJ estimates fraud in the program to be around $40 million annually. This bill: According to the author, this bill seeks to strengthen CalRecycle's enforcement authority by clarifying that it is unlawful to redeem out-of-state material or any other ineligible material for CRV. Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916) 319-2092 AB 1846 Page 5 FN: 0003288