BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 254 (Hancock and Correa) - Solid waste: used mattresses:  
          recycling and recovery.
          
          Amended: April 15, 2013         Policy Vote: EQ 6-3
          Urgency: No                     Mandate: No
          Hearing Date: April 29, 2013                      Consultant:  
          Marie Liu     
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 254 would require a mattress recycling  
          organization to develop and implement a manufacturer and  
          retailer stewardship program to recover and recycle used  
          mattresses.

          Fiscal Impact: 
              Ongoing costs of approximately $500,000 to the Integrated  
              Waste Management Fund (Special Fund) in FY 2014-15 first to  
              draft regulations and guidance documents and for review and  
              certification of the mattress recycling organization and its  
              plan then for ongoing oversight and enforcement.
              Ongoing revenues of approximately $500,000 to the Used  
              Mattress Recycling Account beginning in FY 2015-16 for  
              reimbursement of state costs.

          Background: The Product Stewardship for Carpets Program requires  
          manufactures of carpet sold in California to submit a carpet  
          product stewardship plan to the Department of Resources  
          Recycling and Recovery (CalRecycle) that demonstrates how it  
          will manage waste carpet. A similar program also exists for  
          paint under the Architectural Paint Recovery Program. 

          Proposed Law: This bill would establish the Used Mattress  
          Recovery and Recycling Act (act). Specifically, the act would:
               By July 1, 2014, allow a qualified industry or association  
              to request to be certified as a mattress recycling  
              organization (organization) by CalRecycle.
               By January 1, 2015, require that all manufacturers and  
              retailers of mattresses offered for sale in California  
              register with the organization. 
               Require the organization to develop and submit to  








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              CalRecycle, for approval, a plan for recycling used  
              mattresses, and means to fund that plan, by April 1, 2015. 
               Require the organization to annually submit a budget to  
              CalRecycle beginning July 1, 2015.
               Require the organization to reimburse CalRecycle for all  
              its cost in implementing the act on a quarterly basis.
               Require the organization to establish a mattress recycling  
              charge that shall be added to the purchase price of a  
              mattress at the point of sale. Any retailer that sells a  
              mattress to a consumer shall collect the charge then remit  
              it to the organization.
               Require CalRecycle to place specific information about the  
              organization and the program on its website.
               Require a retailer, beginning July 1, 2014, to offer  
              consumers the option to have a used mattress picked up for  
              recovery, at no cost to the consumer, at the time of  
              delivery of a new mattress.
               Allow CalRecycle to impose an administrative civil penalty  
              for violations of this act. All penalties shall be deposited  
              into the Mattress Recovery and Recycling Penalty Account  
              within the Integrated Waste Management Fund and may be  
              expended, upon appropriation by the Legislature, to  
              administer and enforce the act.

          Related Legislation: SB 1118 (Hancock, 2012) would have  
          established mattress recycling goals for the state. SB 1118  
          failed passage on the Senate Floor.

          Staff Comments: Based on CalRecycle's experience with other  
          extended producer responsibility programs, the department  
          believes that its costs will be approximately $500,000 for two  
          Integrated Waste Management Specialists, one Staff Programmer  
          Analyst, one Accounting Officer, and a half Staff Counsel  
          position first to develop the program and associated regulations  
          and guidance documents. Later, these positions would then be  
          needed for oversight and enforcement activities including  
          creating, maintaining, and publishing a database for compliant  
          manufactures and reviewing annual reports.

          This bill intends to be cost neutral to the state by requiring  
          the organization to reimburse CalRecycle for its costs on a  
          quarterly basis. However, there are certain initial costs that  
          will occur before there is an organization that CalRecycle can  
          request reimbursement from (such as certifying the organization)  








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          or before the organization has generated funds to pay for any  
          reimbursements (such as reviewing the initial recovery and  
          recycling plan and associated budget). Staff believes  
          clarification is needed on whether these initial costs are  
          intended to be paid by the industry, and if so, how. Staff notes  
           that initial costs can be covered with an upfront fee, such as  
          an application fee. 

          This bill would direct any assessed penalties to be used to help  
          fund the administration and enforcement of the act. Staff notes  
          that generally allowing program implementation to be paid for by  
          fines and penalties can be a perverse incentive, or at least  
          create the illusion of a perverse incentive, for overly  
          aggressive enforcement. However, because this bill requires  
          CalRecycle's ongoing costs to be fully reimbursable by the  
          organization, there would be no incentive for overly aggressive  
          enforcement.