BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1005 (Gordon) - California Beverage Container Recycling and
Litter Reduction Act: market development payments
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|Version: June 14, 2016 |Policy Vote: E.Q. 6 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: June 27, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1005 extends the sunset date for the Plastic Market
Development Payment Program (PMDP) from January 1, 2017 to
January 1, 2022.
Fiscal
Impact:
$10 million annual appropriation (Beverage Container Recycling
Fund) to the PMDP for an additional five years.
$173,000 per year (Beverage Container Recycling Fund) to the
Department of Resources Recycling and Recovery (CalRecycle)
for program administration for an additional five years.
Background: Existing law establishes the California Beverage Container
Recycling and Litter Reduction Act (Bottle Bill) to create a
financial incentive for recycling and to decrease the beverage
container component of the solid waste stream by making
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recycling more convenient for consumers.
California Redemption Value. The California Redemption Value
(CRV) is the centerpiece of the Bottle Bill. Retailers collect
a small deposit, the CRV, on each beverage container purchased.
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.
Plastic Market Development Program. The PMDP uses surplus
redemption funds to make payments of up to $150 per ton to
California-based processors and manufacturers that recycle
and/or use post-consumer plastic beverage containers. Funds are
continuously appropriated to CalRecycle for this purpose. 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. The PMDP sunsets on January
1, 2017.
Beverage Container Recycling 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, incentive programs, and outreach that are funded
through unredeemed CRV.
CalRecycle's most recent quarterly report indicates an average
structural deficit of $75 million from 2015-16 and 2017-18. This
structural deficit is primarily due to supplemental program
costs, including statutorily mandated program payments, and
historically high recycling rates. The "break-even" recycling
rate (where expenditures equal revenues) is approximately 72
percent. The current recycling rate is 82 percent. The higher
recycling rate reduces the amount of unredeemed CRV to fund
program expenses.
When the BCRF does not have adequate funding, CalRecycle is
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required to "proportionally reduce" program expenditures, with
the exception of CRV redemption for consumers. According to
CalRecycle's most recent quarterly report, proportional
reductions will not occur prior to Fiscal Year 2017-18.
Recycling Fraud. In the summer of 2011, CalRecycle, in
coordination with the California Department of Food and
Agriculture (CDFA), initiated a 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 days of the pilot program, the information
gathered revealed more than 2,500 vehicles, including 378 rental
trucks filled to capacity, imported out-of-state beverage
container material through these stations. CalRecycle
conservatively estimates $7 million of fraud exposure per year.
Proposed Law:
This bill extends the sunset date for the PMDP from January 1,
2017 to January 1, 2022.
Related
Legislation: AB 1108 (Low, 2016) prohibits certified recycling
centers from accepting or paying the CRV to a consumer for more
than 50 pounds of aluminum beverage containers, plastic beverage
containers, or a combination of both, and 500 pounds of glass
beverage containers during a 24-hour period.
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