BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: AB 1005
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|Author: |Gordon and Levine |
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|Version: |1/4/2016 |Hearing |6/8/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: California Beverage Container Recycling and Litter
Reduction Act: market development payments
ANALYSIS:
Existing law, under the California Beverage Container Recycling
and Litter Reduction Act (Act), requires beverage containers
sold in this state to have a California redemption value (CRV)
of 5 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). These funds are
continuously appropriated to CalRecycle for the payment of
refund values and processing fees. The Act also:
1) Requires CalRecycle to certify recycling centers and
processors that participate in the program.
2) Authorizes CalRecycle to award up to $10 million annually for
market development payments for empty plastic beverage
containers to certified entities and product manufacturers.
3) Defines "certified entity," for purposes of the plastic
market development payments, as a recycling center,
processor, or dropoff or collection program certified by the
department, and defines "product manufacturer" to mean a
person who manufactures a plastic product in the state.
4) Authorizes CalRecycle to allocate an amount greater than $10
million after 2012, as prescribed.
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5) Specifies that CalRecycle may set different payment amounts
for certified entities and product manufacturers, not to
exceed $150 per ton, according to the following
considerations:
a) The minimum funding level needed to encourage in-state
washing and processing of empty plastic beverage
containers collected for recycling;
b) The minimum funding level needed to encourage in-state
manufacturing that uses empty plastic beverage containers
collected for recycling; and
c) The total amount of funds projected to be available for
plastic market development payments and the desire to
maintain the minimum funding level needed throughout the
year.
6) Sunsets the plastic market development payments on January 1,
2017.
This bill extends the sunset for plastic market development
payments from 2017 to 2022.
Background
1) Bottle bill. 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 and
those CRV payments are remitted 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.
The Fund. Deposits on covered beverage containers are
remitted to CalRecycle and deposited into the Beverage
Container Recycling Fund (BCRF). The BCRF's expenditures fit
into two primary categories: 1) CRV reimbursements to
recyclers and 2) program expenses, including administration,
grants and incentive programs, and education and outreach
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that are funded by unredeemed CRV. Higher recycling rates
reduce the amount of unredeemed CRV to fund program expenses.
2) PMDP. The Plastic Market Development Payments (PMDP) were
established by AB 3056 (Natural Resources Committee, Chapter
907, Statutes of 2006) and are one of the incentive programs
paid for out of the BCRF from unredeemed CRV. The PMDP is
designed to encourage in-state recycling of plastic beverage
containers to be used as feedstock for manufacturing in
California.
AB 1149 (Gordon, Chapter 486, Statutes of 2011) extended the
sunset of the PMDP program to 2017.
Incentive payments through the PMDP are provided to certified
entities (recycling centers and processors that are certified
by CalRecycle) for the washing and production of plastic
feedstock, such as flake, pellet, or other forms of processed
plastics.
In order to receive payments under this program, the
processed plastic must be derived from redeemed empty plastic
beverage containers.
Product manufacturers are also eligible for these incentives
for the manufacture of plastic products in the state.
Existing law specifies that CalRecycle may expend up to $10
million annually for these payments, with the ability to
expend an amount greater than $10 million annually if
CalRecycle makes specified determinations. Current law also
requires that payments under the program not exceed $150 per
ton, and specifies that CalRecycle must consider the amount
of funds projected to be available and "the desire to
maintain the minimum funding level throughout the year" for
the determination of incentive payment amount.
Payments under the program were previously set at $150 per
ton until the annual expenditure cap for the program was
reached. In 2014, CalRecycle capped the payments at $2.5
million per quarter, which averaged out to $47/ton payment.
While the number of certified entities receiving payments has
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remained fairly constant, the number of product manufacturers
has more than doubled since the beginning of the program. In
2015, 10 certified entities and 33 manufacturers received the
PMDP.
Comments
1) Purpose of Bill. According to the author, "AB 1005 would
extend the sunset on California's successful plastic market
development program, which incentivizes reuse of
California-generated recycled beverage containers. In my
first year in the Assembly, I authored the last measure on
this program. In years since, there has been a significant
increase in the in-state reuse of California-generated
material. Reusing California-generated material in
California is not only environmentally beneficial; it creates
and maintains jobs in California. The creation and
continuation of those green jobs can be traced back to our
support for policy such as the plastic market development
program."
The author also states, "when the program was last
reauthorized and expanded, Californians collected more than
250,000 tons of PET and HDPE plastic beverage containers for
recycling, with all but 25,000 tons exported overseas
(primarily to China) for processing and manufacturing. The
most recent figures show that about half of the containers
are now processed and remanufactured in California."
2) Structural deficit. As noted in the background, higher
recycling rates reduce the amount of unredeemed CRV to fund
program expenses, such as the PMDP. The "break-even"
recycling rate where expenditures equal revenues is about
72%. The current recycling rate for the program is 82%
exceeding the statutory recycling goal of the program (80%).
CalRecycle's most recent quarterly report identifies an
average structural deficit of $75 million from 2015-16 to
2017-18. This revenue-expenditure imbalance is primarily due
to historically high recycling rates, and supplemental
program costs including statutorily mandated program
payments.
When the Bottle Bill does not have adequate funding,
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CalRecycle is required to "proportionally reduce" many of the
program's expenditures evenly among program participants,
with the exception of CRV redemption for consumers.
According to the most recent Quarterly Report from CalRecycle
in January of this year, "[CalRecycle] estimates proportional
reductions in payments made to program participants will not
occur before Fiscal Year 2017-18. Proportional reductions
are delayed because of an adequate, albeit dwindling, fund
balance."
Unless significant program reforms are made in the next year,
it is possible proportional reduction of bottle bill
expenditures will be required, significantly reducing, and
potentially eliminating, most of the non-CRV payments from
the fund, including the PMDP.
3) Technical amendment. An amendment is needed to correct a
drafting error which incorrectly references paragraph (5) of
subdivision (a) on page 9, line 2.
Related/Prior Legislation
AB 1149 (Gordon, Chapter 486, Statutes of 2011) extended the
sunset of the PMDP program to 2017.
AB 2467 (Nestande, 2014) would have authorized CalRecycle to pay
a market development payment to both certified entities and
product manufacturers for empty plastic beverage containers. AB
2467 was vetoed.
SOURCE: Californians Against Waste
SUPPORT:
California Nevada Beverage Association
California Resource Recovery Association
CarbonLITE
Central Contra Costa Solid Waste Authority
Clean Water Action
Ecopet Plastics, Inc.
Epic Plastics
Global Plastics
Marin Sanitary Service
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National Association for PET Container Resources
Peninsula Packaging Company
Peninsula Plastics Recycling, Inc.
RePET Inc.
rePlanet
Repsco, Inc.
Sonoma County Waste Management Agency
Talco Plastics, Inc.
Tri-CED Community Recycling
UPSTREAM
Verdeco Recycling, Inc.
Zanker Recycling
OPPOSITION:
None received
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