BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: AB 1063
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|Author: |Williams |
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|Version: |8/17/2015 |Hearing |8/19/2015 |
| | |Date: | |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant:|Joanne Roy |
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SUBJECT: Solid waste: charges
ANALYSIS:
Existing law, pursuant to the Integrated Waste Management Act of
1989 (Act) (Public Resources Code (PRC) §40000 et seq.):
1) Establishes a statewide policy goal that 75% of solid waste
generated be diverted from landfill disposal by 2020 through
source reduction, recycling, or composting.
2) Requires local agencies to divert, through source reduction,
recycling, and composting, 50% of solid waste disposed by
their jurisdictions.
3) Authorizes the Department of Resources Recycling and Recovery
(CalRecycle) to collect a solid waste tipping fee of up to
$1.40 per ton of solid waste disposed of in California.
4) Establishes the Integrated Waste Management Account (IWMA) in
the Integrated Waste Management Fund.
5) Requires a commercial waste generator, including multi-family
dwellings, to arrange for recycling services and requires
local governments to implement commercial solid waste
recycling programs designed to divert solid waste from
businesses.
6) Requires generators of specified amounts of organic waste to
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arrange for recycling services for that material.
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This bill:
1)Increases the solid waste tipping fee imposed on an operator
of a disposal facility from up to $1.40 per ton to $4 per ton
beginning January 1, 2017.
a) Until January 1, 2022, requires a minimum of $1.50 of
the $4 solid waste tipping fee collected to be allocated to
activities that promote recycling and the highest and best
use of materials, through any of the following means:
i) Market incentive payments for recycling
infrastructure and activities;
ii) Grants to local governments to implement programs
that increase recycling and reduce disposal; or,
iii) Grants and loans to develop recycling
infrastructure.
b) Specifies that if sufficient moneys are collected in the
IWMA, CalRecycle must prioritize market incentive payments.
c) On and after January 1, 2022, authorizes some or all of
the solid waste tipping fee to be allocated for activities
that promote recycling and the highest and best use of
materials.
2)Beginning January 1, 2019, requires CalRecycle to establish
and impose a quarterly charge on all solid waste generators
(generator charge) to be collected by a local government and
remitted to the Board of Equalization (BOE).
a) Beginning January 1, 2019, and every three years
thereafter, requires the generator charge to be calculated
for the purpose of collecting enough money to recover
CalRecycle's costs to administer and implement the Act that
are not covered by the moneys collected through the solid
waste tipping fee.
b) Until January 1, 2022, provides that the generator
charge must include an amount, as determined by CalRecycle,
sufficient to ensure that not less than $15 million is
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collected annually for the purpose of funding activities
that promote recycling and the highest and best use of
materials.
c) Requires the local governments, or up to two designees
per city or county, to collect the charge and remit the
moneys to BOE.
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Background
1) Statewide waste diversion goals. CalRecycle is tasked with
diverting from landfills at least 75% of solid waste
statewide by 2020 through source reduction, recycling and
composting. Source reduction, or waste prevention, is
designing products to reduce the amount of waste that will
later need to be thrown away and also to make the resulting
waste less toxic. Recycling is the recovery of useful
materials, such as paper, glass, plastic, and metals, from
the trash to use to make new products reducing the amount of
virgin raw materials needed. Composting involves collecting
organic waste, such as food scraps and yard trimmings, and
storing it under conditions designed to help it break down
naturally; the resulting compost can then be used as a
natural fertilizer/soil amendment. By using and reusing
materials in the most productive and sustainable ways across
their entire life cycle, conserving resources and reducing
wastes can minimize the environmental impacts of the
materials we use.
According to CalRecycle, California's statewide disposal in
2014 was 31.2 million tons and its populations was 38.4
million residents, which resulted in the disposal rate of 4.5
pounds/resident/day. Almost all (99%) of California's 31.2
million tons of disposal were landfilled in the state, while
approximately 1% was exported to landfills out of state. An
additional 0.82 million tons were transformed to three
permitted waste-to-energy plants in California.
To calculate diversion rates, local jurisdictions compare
estimated maximum allowable disposal to report-year disposal
- In 2014, the diversion rate was 65%. While California as a
whole remained well above the 50% diversion mandate set for
local jurisdictions, the statewide diversion rate for 2014
was at 50% in the effort to achieve the goal of 75%
recycling, composting or source reduction of solid waste by
2020.
According to the Department of Finance, labor markets, real
estate markets, and construction, continued to grow steadily
in 2014 with the peak number of jobs surpassing the
pre-recession peak. As the economy improves, solid waste
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generation will likely continue to rise. Disposal has
continued to increase since 2012. If diversion programs are
not in place to handle additional waste, then higher amounts
are likely expected to be landfilled in the future.
2) Organic waste. Organic waste means food waste, green waste,
landscape and pruning waste, nonhazardous wood waste, and
food-soiled paper waste that is mixed in with food waste. Of
the approximately 30 million tons of solid waste being
disposed in landfills each year, about 30% is organic waste;
and food continues to be the highest single item disposed at
over 15%.
Greenhouse gas (GHG) emissions resulting from the decomposition
of organic wastes in landfills have been identified as a
significant source of emissions contributing to climate
change. According to the California Air Resources Board
(ARB), landfills emit 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. However, organic wastes are recyclable. Recycling
technologies for organic waste include composting, anaerobic
digestion, and other types of processing that generate
renewable fuels, energy, soil amendments, and mulch.
Increasing the recycling of organic wastes would help reduce
GHG emissions from landfills.
3) State tipping fee. A tipping fee is a surcharge levied on
waste disposal and is based on the quantity (weight or
volume) of waste disposed. One of the purposes of such a
disposal fee is to discourage waste generation and encourage
recycling. However, they also may create incentives to
dispose of waste illegally or to transport waste to other
locations where disposal is cheaper.
The current cap on the state tipping fee was established over
two decades ago in 1993. At that time, the tipping fee was
set at $1.34 per ton, and the California Integrated Waste
Management Board (now CalRecycle) was authorized to increase
the fee as needed, to a maximum of $1.40, beginning with
Fiscal Year (FY) 1995-96. The $1.40/ton tipping fee is
assessed on the amount of waste deposited at a landfill.
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These facilities then remit the funds to BOE, which deposits
the moneys directly into the IWMA.
4) State tipping fee revenue. The total amount of revenue
generated by the tipping fee varies annually; actual revenues
for the past five years are as follows:
FY 2009-10~ $41.9M
FY 2010-11~ $42.3M
FY 2011-12~ $40.8M
FY 2012-13~ $40.9M
FY 2013-14~ $43.3M
Individual departments with appropriations, which include
CalRecycle, BOE, State Water Resources Control Board, Office
of Environmental Health Hazard Assessment, Fi$cal, and
SCO/Department of Finance Assessments, may access the IWMA
directly to fund their activities.
1) What programs are funded by the state tipping fee? According
to CalRecycle, the state tipping fee is the main source of
revenue deposited into the IWMA. The IWMA partially supports
the Waste Reduction and Management program and partially
supports the Education and Environment Initiative program.
The majority of the department's programs, with the exception
of the Beverage Container Recycling Program, are funded
through multiple sources. However, items that rely solely on
IWMA funding include:
Household Hazardous Waste Grants (~ $1.5
million (M) annually).
Local Enforcement Agent (LEA) Grants (~
$1.4M annually).
Solid Waste Disposal Site Cleanup Trust Fund
to support the Solid Waste Disposal and Codisposal
Site Cleanup Program ($5M annually).
Used Mattress Extended Producer
Responsibility program ($1.6M loan for seed money in
FY 2014-15).
1) Additional disposal charges. According to CalRecycle, most
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landfills have more than one disposal charge. In addition to
the state's $1.40 tipping fee, landfills usually have a
publicly posted fee for individuals or businesses
"self-hauling" waste; and have negotiated disposal rates with
solid waste haulers, cities, counties, and other facility
operators. About 20% of disposal is self-hauled, while 80%
of disposal is transported to landfills by solid waste
haulers. Tipping fees vary due to the unique circumstances
at each landfill, such as location, owner, size, proximity to
other landfills, and other operational factors.
Comments
1) Purpose of Bill. According to the author:
California is a leader in progressive waste reduction policies.
As the state moves towards the 75% diversion goal, the resulting
reduction in disposal will cause a sharp decline in tipping fee
revenue which supports CalRecycle's oversight of disposal and
recycling. With landfills projected to play a diminishing role
in solid waste materials management, disposal and diversion
program funding options should be reassessed so they're not
completely reliant on tipping fees. But perhaps what's more
important is the lack of infrastructure available to process
material diverted from landfills. CalRecycle estimates at least
100 new or expanded facilities must be built by 2020 in order to
achieve targets for diversion which advances the State goals
related to air quality, climate, energy, and soil
sustainability.
AB 1063 fundamentally restructures disposal-based revenue to
both account for the anticipated loss of funds as well as
properly encourage diversion. In the short term, the bill
increases the tip fee which hasn't been increased in statute in
more than 20 years. In the long term, the bill establishes a
more equitable method for assessing fees on disposal: a fee on
the waste generator. Importantly, the largest portion of the
new revenue is dedicated for the sole purpose of building the
infrastructure necessary for diversion - infrastructure that
both creates jobs and decreases emissions. AB 1063 achieves two
goals: building more facilities and, secondarily, stabilizing
the state's funding as we achieve our goal of reducing disposal.
2) When will IWMA be in deficit with the existing state tipping
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fee? Under CalRecycle's interpretation of AB 341 (Chesbro,
Chapter 476, Statutes of 2011), the state diversion rate is
currently at 50%. For purposes of AB 939 (Sher, Chapter
1095, Statutes of 1989), the local jurisdiction diversion
rate is 65%. With the existing tipping fee of $1.40 per ton,
CalRecycle projects that the IWMA fund balance will go in the
negative in FY 2017-2018. This estimate is based on the
Governor's budget and does not account for any potential
decrease in disposal as the state achieves the 75% diversion
goal.
3) Hard to predict recycling rate. According to CalRecycle, the
department saw the amount of disposal significantly decrease
with the economic recession. However, with the economy
rebounding, CalRecycle is seeing an increase in disposal. At
the same time, mandatory commercial recycling, pursuant to AB
341, and mandatory organic recycling, pursuant to AB 1826
(Chesbro, Chapter 727, Statutes of 2014), are either just
coming online or will be coming online. The department
anticipates that these two policies will have an impact on
recycling rates closer to 2018. Given these variables, it is
difficult to predict with some certainty what the recycling
rate will be in FY 2017-18.
4) Underfunded grant and loan programs. According to
CalRecycle, the department has underfunded key grant and loan
programs, and seeks to bring those programs up to full
funding. In addition, CalRecycle has absorbed additional
responsibilities for which it seeks to improve program
delivery. A few examples are:
a) Household Hazardous Waste Grants - Provides competitive
grants to help local governments with hazardous waste
collection programs. Currently, funding is at $1.5M, but
is authorized for $5M. A fully funded program would
strengthen assistance, and the department could consider
funding for propane tanks, marine flares, etc. to meet the
changing waste stream.
b) Reuse Assistance Grant Program - Provides reimbursement
grants for California local public agencies to promote the
reuse of nonhazardous material. This program was defunded
in 2008 due to budget constraints.
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c) Recycling Market Development Zones (RMDZ) Loans -
Provides loans, technical assistance, and free product
marketing to businesses that use materials from the waste
stream to manufacture their products. The allocation has
been $0 for a number of years.
d) Increased Local Solid Waste Enforcement Agencies (LEA)
Support - Provides grants to LEAs to assist with
enforcement. CalRecycle would like to expand existing
grants to specifically assist with enforcement, including
processing appeals; investigation and enforcement for
illegal and abandoned disposal sites; advance training on
odor investigation and mitigations for compost sites; land
application sites, and sampling and testing of compost and
mulch.
5) CalRecycle's expanded responsibilities. Over the past few
years, there has been an increase in the number of recycling
requirements in the state, such as:
a) Diversion of at least 75% of solid waste from landfills
statewide by 2020. (AB 341 (Chesbro, Chapter 476,
Statutes of 2011)).
b) Strategic Directive 6.1, which calls for reducing
organic waste disposal by 50% by 2020.
c) Reducing the amount of organic materials sent to
landfills and increasing the production of compost and
mulch as part of the AB 32 (California Global Warming
Solutions Act of 2006) Scoping Plan.
d) Requiring businesses that generate a specified amount
of organic waste per week to arrange for recycling
services for that waste beginning April 1, 2016; and for
local jurisdictions to implement a recycling program to
divert organic waste from businesses beginning January 1,
2016. (AB 1826 (Chesbro, Chapter 727, Statutes of 2014)).
While such actions to increase diversion has environmental
benefits, it also will likely result in decreasing tipping
fee revenue, which would impair CalRecycle's ability to
fulfill its expanding duties.
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6) Proposed generator charge. This bill authorizes CalRecycle
to establish and impose a new, solid waste generator charge.
According to CalRecycle, a generator charge is a charge
applied to an individual or entity generating waste based on
the actual amount of waste generated by the individual or
entity. Unlike a disposal fee, which is a fee charged for
tons disposed of at a landfill, a solid waste generator
charge is assessed directly on the consumer generating the
waste.
The proposed generator charge is structured to fund two specific
actions/programs. First, the generator charge is meant to
mitigate revenue losses associated with decreased disposal
revenue. Beginning in 2019, this bill requires CalRecycle to
calculate decreases in disposal revenue on a three-year
cycle. Every three years, CalRecycle will measure disposal
rates - if disposal rates decrease, CalRecycle will adjust
the generator charge to cover the difference. For example,
if disposal decreased by 3 million tons from 2022 to 2025,
CalRecycle would set the generator charge at an amount
equivalent to the lost disposal fee revenue in 2025. Second,
the generator charge is meant to support activities that
promote recycling and the highest and best use of materials
through recycling market development programs (e.g. incentive
payments, grants, and loans).
CalRecycle states that for the first time, the proposed
generator charge structure would provide the department with
a diversified and stable funding source, which is critical to
its ability to manage solid waste once the 75% recycling goal
is achieved.
7) Comparing other states' disposal fees. The total median 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
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$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. For example, the Great Lakes area has
average disposal costs of $45 per ton, and a recycling rate
of only 24%. Several states have higher state tipping fees,
including Pennsylvania ($7.25 per ton), Wisconsin ($7
recycling fee assessed on each ton of solid waste disposed),
Ohio ($4.75 per ton), and Missouri ($2.11 per ton).
According to CalRecycle, California has lower landfill tipping
fees compared with other environmentally progressive areas
such as the Northeastern and Northwestern regions of the
United States and the European Union. With some exceptions,
it appears that there may be a correlation between a higher
tipping fee and a lower percentage of waste disposed into a
landfill.
8) Investing in recycling infrastructure. Until January 1,
2022, this bill requires a minimum of $1.50 of the $4 tipping
fee collected to be allocated to activities that promote
recycling and the highest and best use of materials and
ensures not less than $15 million annually will be collected
for those purposes during that time.
Although the funding for such activities may be needed to reduce
disposal of waste to landfills, how do we know that the funds
will be spent on activities that will benefit the environment
and public health overall? Not every product made from
recycled waste may be appropriate for the intended use. For
example, questions have been raised whether the crumb rubber
from recycled tires that is used in synthetic turf may have
potential adverse health impacts.
Also, does the overall benefit of recycling a product outweigh
the potential environmental impacts of that recycling process
such as the amount of energy or water consumed, or the
potential pollution to air and water? If the preferred
approach to waste management is to reduce, reuse, and recycle
- and in that order - then why is the funding not focusing on
the more preferred approaches of reduce and reuse?
Related/Prior Legislation
AB 1594 (Williams), Chapter 719, Statutes of 2014, eliminated
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diversion credit for green material used as alternative daily
cover at a landfill, but exempts the material from the state
tipping fee.
AB 1826 (Chesbro), Chapter 727, Statutes of 2014, required
generators of specified amounts of organic waste to arrange for
recycling services and requires local governments to implement
organic waste recycling programs.
AB 341 (Chesbro), Chapter 476, Statutes of 2011, established a
statewide 75% recycling goal and required commercial waste
generators to arrange for recycling services and required local
governments to implement commercial solid waste recycling
programs.
AB 2866 (de León) (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
post-closure landfill costs. AB 2866 was held in Senate
Appropriations Committee.
AB 1610 (Nuñez) (2007) would have raised the cap on the tipping
fee to $2.00 per ton. AB 1610 was subsequently amended to
address an unrelated issue.
AB 712 (de León) (2007) would have imposed a $0.50 surcharge on
the tipping fee to establish a program within ARB to develop
clean fuels from solid waste and landfill gas. AB 712 was held
in the Senate Appropriations Committee.
AB 1220 (Eastin), Chapter 656, Statutes of 1993, set the tipping
fee at $1.34 per ton and authorized CIWMB (now CalRecycle) to
increase the tipping fee to a maximum of $1.40, on or after FY
1995-96.
AB 939 (Sher), Chapter 1095, Statutes of 1989, established the
California Integrated Waste Management 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.
SOURCE: Californians Against Waste
SUPPORT: None received
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OPPOSITION: None received
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