BILL ANALYSIS Ó AB 1063 Page 1 Date of Hearing: April 27, 2015 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 1063 (Williams) - As Amended April 20, 2015 SUBJECT: Solid waste: disposal facility: fees SUMMARY: Requires the Department of Resources Recycling and Recovery (CalRecycle) to hold public hearings and workshops to develop a proposal to revise the state's solid waste tipping fee. EXISTING LAW, pursuant to the California Integrated Waste Management Act (Act): 1)Specifies a state policy goal that 75% of solid waste generated be diverted from landfill disposal by 2020 through source reduction, recycling, or composting. 2)Requires each local jurisdiction to divert 50% of solid waste from landfill disposal. 3)Authorizes CalRecycle to collect a solid waste tipping fee of up to $1.40 per ton of solid waste disposed of in California. THIS BILL: AB 1063 Page 2 1)On or before July 1, 2016, requires CalRecycle to hold a public hearing and a workshop to develop a proposal for the Legislature regarding a new solid waste management fee to provide CalRecycle adequate funding to: a) Develop financial incentives to promote the recycling of organic material; b) Provide resources to develop infrastructure and incentives necessary to achieve the statewide policy goal of 75%; and, c) Provide a sustainable funding structure that ensures CalRecycle's ability to carry out its responsibilities under the Act. 2)Requires CalRecycle to seek public input from interested groups, including, but not limited to, representatives of the solid waste industry, local government, disadvantaged communities, and environmental groups. 3)Within six months of the public hearing and workshop, requires CalRecycle to submit the proposal to the Legislature. FISCAL EFFECT: Unknown COMMENTS: 1)Author statement. AB 1063 Page 3 Achieving California's 75% recycling goal will eliminate 50% of CalRecycle's revenue, while demanding additional resources to expand and oversee additional recycling and waste management infrastructure. Specifically, achieving 75% recycling will reduce CalRecycle's current revenue by $29 million annually. The immediate loss of revenue does not account for the statewide investment that will be needed to develop the infrastructure and capacity necessary to recycle an additional 22 million tons of material by 2020. CalRecycle estimates that at least $125 million will be needed annually to develop the market and infrastructure necessary to achieve the 75% goal. Finally, CalRecycle will need an additional $11 million to properly manage and regulate the new infrastructure. 2)History of the state's tipping fee. The current cap on the tipping fee was established over two decades ago in 1993. At that time, the tipping fee was set at $1.34 per ton, and authorized the California Integrated Waste Management Board (now CalRecycle) to increase the fee as needed, to a maximum of $1.40, beginning with the 1995-1996 fiscal year. CIWMB acted on this authority six years later, and raised the state tipping fee to the maximum $1.40 on July 1, 2001. 3)CalRecycle's expanded jurisdiction and shrinking revenues. Over the last few years, a number of bills have increased recycling requirements in the state. CalRecycle is tasked with diverting at least 75% of solid waste statewide by 2020. Currently, organic materials make up one-third of the waste stream and food continues to be the highest single item disposed at over 15% of disposal. CalRecycle is also charged with implementing its Strategic Directive 6.1, which calls for reducing organic waste disposal by 50% by 2020. According to CalRecycle, significant gains in organic waste diversion are necessary to meet the 75% goal and implement Strategic Directive 6.1. Recycling technologies for organic waste include composting, anaerobic digestion, and other types of AB 1063 Page 4 processing that generate renewable fuels, energy, soil amendments, and mulch. Other states have taken similar actions, and 23 have banned the disposal of green waste (i.e., yard trimmings and landscape waste) in landfills. Recycling organic waste also has substantial greenhouse gas emissions reduction benefits. According to the Air Resources Board, landfills emit nearly 8 million tons of carbon dioxide equivalent every year produced by the decomposition of organic materials. A recent report by the Intergovernmental Panel on Climate Change states that the global warming impact of methane is 34 times that of carbon dioxide over a 100 year period. While increasing diversion has significant environmental benefits, it results in decreasing revenues for CalRecycle, which is funded by the state's solid waste tipping fee on waste disposed of in landfills. In order to address this combination of increasing challenges and decreasing revenues, CalRecycle will need to reevaluate its options for ongoing funding that will be sustainable as the state moves toward 75% recycling. 4)Other state fees. The total median tipping fee in California for landfill disposal is $45 per ton, which includes the state fee of $1.40, local fees, and landfill charges. (California's average landfill charge is $54 per ton, but according to CalRecycle that figure is "inflated due to skewed data" based on the survey methods used. CalRecycle states that the median cost is more representative of the state as a whole.) While this is fairly consistent with the national average of $49 per ton, California's recycling rate of 66% far exceeds states with similarly low disposal costs. For example, the New England area has average tipping fees of $77 per ton and a 76% diversion rate. Areas of the country with disposal fees similar to California's have much lower rates of recycling; the Great Lakes area has average disposal costs of $45 per ton, and a recycling rate of only 24%. AB 1063 Page 5 Several states have higher state tipping fees, including Pennsylvania ($7.25 per ton), Wisconsin ($7.00 recycling fee assessed on each ton of solid waste disposed), Ohio ($4.75 per ton), and Missouri ($2.11 per ton). 5)Previous legislation. a) AB 1594 (Williams), Chapter 719, Statutes of 2014, eliminates diversion credit for green material used as alternative daily cover at a landfill, but exempts the material from the state tipping fee. b) AB 1826 (Chesbro), Chapter 727, Statutes of 2014, requires generators of specified amounts of organic waste to arrange for recycling services and requires local governments to implement organic waste recycling programs. c) AB 341 (Chesbro), Chapter 476, Statutes of 2011, established a statewide 75% recycling goal and requires commercial waste generators to arrange for recycling services and requires local governments to implement commercial solid waste recycling programs. d) AB 2866 (DeLeon, 2008) would have increased the state's tipping fee from $1.40 to $2.00 per ton for purposes of establishing a trust fund to cover potential closure and postclosure landfill costs. This bill was held in the Senate Appropriations Committee. e) AB 1610 (Nunez, 2007) would have raised the cap on the tipping fee to $2.00 per ton. This bill was subsequently amended to address an unrelated issue. f) AB 712 (DeLeon, 2007) would have imposed a $0.50 surcharge on the tipping fee to establish a program within the Air Resources Board to develop clean fuels from solid waste and landfill gas. This bill was held in the Senate Appropriations Committee. AB 1063 Page 6 g) AB 1220 (Eastin) Chapter 656, Statutes of 1993, set the tipping fee at $1.34 per ton and authorized CalRecycle to increase the tipping fee to a maximum of $1.40, on or after the 1995-96 fiscal year. h) AB 939 (Sher) Chapter 1095, Statutes of 1989, established the Act and the tipping fee at $0.50 per ton and capping the fee at $0.75 prior to June 30, 1991, and $1.00 per ton thereafter. REGISTERED SUPPORT / OPPOSITION: Support Californians Against Waste (sponsor) Rural County Representatives of California Opposition AB 1063 Page 7 Western Placer Waste Management Authority Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916) 319-2092