BILL ANALYSIS Ó AB 1005 Page 1 Date of Hearing: January 11, 2016 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 1005 (Gordon) - As Amended January 4, 2016 SUBJECT: California Beverage Container Recycling and Litter Reduction Act: market development payments SUMMARY: Extends the sunset for the Plastic Market Development Payment (PMDP) program from 2017 to 2022. EXISTING LAW establishes the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which: 1)Requires beverage containers sold in this state to have a California redemption value (CRV) of five cents for containers that hold fewer than 24 ounces and 10 cents for containers that hold 24 ounces or more and requires a distributor to pay a redemption payment to the Department of Resources Recycling and Recovery (CalRecycle). Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees. 2)Requires CalRecycle to: a) After deducting refund values, administrative fees, and a reserve for contingencies, appropriate remaining monies to designated programs, grants, and fee payments. AB 1005 Page 2 b) Award up to $10 million for PMDPs to "certified entities" (collection and processing operations/recyclers) and "product manufacturers." c) Specifies that CalRecycle may set different payment amounts for certified entities and product manufacturers, but neither payment shall exceed $150 per ton, according to the following considerations: i) The minimum funding level needed to encourage in-state washing and processing of empty plastic beverage containers collected for recycling; ii) The minimum funding level needed to encourage in-state manufacturing that uses empty plastic beverage containers collected for recycling; and, iii) The total amount of funds projected to be available (currently $10 million annually) for PMDPs and the desire to maintain the minimum funding level needed throughout the year. 3)Sunsets the PMDP program on January 1, 2017. FISCAL EFFECT: This bill would continue the existing allocation of $10 million annually for PMDP program. COMMENTS: 1)The Bottle Bill. The Bottle Bill is intended to create a financial incentive for recycling and to make recycling convenient for consumers to decrease the beverage container component of the solid waste stream. The centerpiece of the AB 1005 Page 3 Bottle Bill 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. 2)PMDP. The plastic market development program uses surplus redemption funds to make payments of up to $150 per ton to California-based processors and manufacturers that recycle and utilize post-consumer plastic beverage containers. In 2007-09, the total amount of funds authorized was $5 million. Beginning in 2010, the Legislature increased this payment authority to $10 million annually. This bill would extend the sunset on the current $10 million annual allocation from 2017 to 2022. 3)Program effectiveness. The PMDP has benefitted California plastic recyclers and processors, improved recycling markets in California, and created jobs for Californians. However, some suggestions have been made by stakeholders to improve the program, including addressing contamination in baled plastic and targeting payments to increase recycling. The author and committee may wish to work with CalRecycle and stakeholders should the bill move forward to ensure that the program operates efficiently and effectively to maximize recycling opportunities. REGISTERED SUPPORT / OPPOSITION: Support California Nevada Beverage Association AB 1005 Page 4 Californians Against Waste CarbonLITE Ecopet Plastics Global Plastics RePET Inc. Talco Plastics Inc. Verdeco Recycling, Inc. Opposition None on file Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916) 319-2092 AB 1005 Page 5