BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1005|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 1005
Author: Gordon (D) and Levine (D), et al.
Amended: 8/15/16 in Senate
Vote: 27
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 6-0, 6/8/16
AYES: Wieckowski, Gaines, Bates, Hill, Leno, Pavley
NO VOTE RECORDED: Jackson
SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/11/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NO VOTE RECORDED: Bates, Nielsen
ASSEMBLY FLOOR: 75-1, 1/25/16 - See last page for vote
SUBJECT: California Beverage Container Recycling and Litter
Reduction Act: market development payments
SOURCE: Californians Against Waste
DIGEST: This bill extends the sunset for plastic market
development payments from 2017 to 2018.
ANALYSIS: Existing law, under the California Beverage
Container Recycling and Litter Reduction Act (Act):
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). These funds are continuously
appropriated to CalRecycle for the payment of refund values
and processing fees.
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2)Requires CalRecycle to certify recycling centers and
processors that participate in the program.
3)Authorizes CalRecycle to award up to $10 million annually for
market development payments for empty plastic beverage
containers to certified entities and product manufacturers.
4)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.
5)Authorizes CalRecycle to allocate an amount greater than $10
million after 2012, as prescribed.
6)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.
7)Sunsets the plastic market development payments on January 1,
2017.
This bill extends the sunset for plastic market development
payments from 2017 to 2018.
Background
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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
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
that are funded by unredeemed CRV. Higher recycling rates
reduce the amount of unredeemed CRV to fund program expenses.
Structural deficit. As noted in the background, higher
recycling rates reduce the amount of unredeemed CRV to fund
program expenses, such as the Plastic Market Development
Payments (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 projects the
structural deficit, over the course of 2016-17, at $54.2
million. 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,
CalRecycle is required to "proportionally reduce" many of the
program's expenditures evenly among program participants,
with the exception of CRV redemption for consumers.
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According to the most recent Quarterly Report from CalRecycle
in July of this year, "[based] on this structural deficit,
and considering the current cash balance, the Department
estimates that in late Fiscal Year 2017-18, there will be
insufficient funds to fully support program payments and
maintain a minimal reserve for operations. Should this
occur, the Department will be compelled to enter into
proportional reductions to best manage remaining financial
resources."
2) PMDP. 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.
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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
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
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."
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
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product manufacturers for empty plastic beverage containers. AB
2467 was vetoed.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
$10 million annual appropriation (Beverage Container Recycling
Fund) to the PMDP.
$173,000 per year (Beverage Container Recycling Fund) to
CalRecycle for program administration.
SUPPORT: (Verified8/11/16)
Californians Against Waste (source)
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
National Association for PET Container Resources
Northern California Recycling Association
Peninsula Packaging Company
Peninsula Plastics Recycling, Inc.
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RePET Inc.
rePlanet
Repsco, Inc.
Sonoma County Waste Management Agency
Talco Plastics, Inc.
Tri-CED Community Recycling
UPSTREAM
Verdeco Recycling, Inc.
Zanker Recycling
OPPOSITION: (Verified8/11/16)
None received
ASSEMBLY FLOOR: 75-1, 1/25/16
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Rendon, Ridley-Thomas,
Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,
Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
NOES: Gray
NO VOTE RECORDED: Dababneh, Eduardo Garcia, Grove
Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108
8/15/16 20:10:02
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