BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1108

                                                                    Page  1

          Date of Hearing:  April 27, 2015


                                 Das Williams, Chair

          AB 1108  
          (Low) - As Amended March 26, 2015

          SUBJECT:  Beverage Containers:  recycling

          SUMMARY:  Prohibits certified recycling centers from accepting  
          or paying the California Refund Value (CRV) to a consumer for  
          more than 50 pounds of aluminum beverage containers or plastic  
          beverage containers, or 500 pounds of glass beverage containers  
          during a 24-hour period.  

          EXISTING LAW, pursuant to the California Beverage Container  
          Recycling and Litter Reduction Act (Bottle Bill):

          1)Requires beverage containers sold in this state to have a 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  
            CalRecycle.  Continuously appropriates these funds to  
            CalRecycle for the payment of refund values and processing  

          2)Defines a number of terms, including: 

             a)   "Beverage" to include, among other things, soda, beer  
               and other malt beverages, wine and distilled spirit  


                                                                    AB 1108

                                                                    Page  2

               coolers, carbonated mineral and soda waters, noncarbonated  
               fruit drinks, and vegetable juices in liquid form that are  
               intended for human consumption.  Excludes from the  
               definition of 'beverage,' among other things, vegetable  
               drinks in beverage containers of more than 16 ounces, milk,  
               medical food, and any product sold in a container that is  
               not an aluminum beverage container, a glass container, a  
               plastic beverage container, or a bimetal container. 

             b)   "Convenience zone" to mean either an area within a  
               one-half mile radius of a supermarket, or an area  
               designated by CalRecycle at a location where there is no  
               supermarket but there are two or more dealers located  
               within a one-mile radius of each other, and meet certain  
               specified criteria.  

             c)   "Certified recycling center" to mean an operation that  
               is certified by CalRecycle and that accepts from consumers,  
               and pays or provides the CRV for, empty beverage containers  
               for recycling.  

          3)Requires CalRecycle to: 

             a)   Establish reporting periods of six months each for  
               redemption rates and recycling rates for beverage  
               containers and requires them to determine and report the  
               redemption rates and recycling rates for those beverage  
               containers for each reporting period. 

             b)   Certify recycling centers and promulgate regulations  
               establishing a procedure for certification of recycling  
               centers.  Specifies that these regulations shall include,  
               as a condition for certification, that if one or more  
               certified entities have operated at the same location  
               within the past five years, the recycling center must  
               demonstrate to CalRecycle that its operations exhibit a  
               pattern of compliance with the Bottle Bill and its related  


                                                                    AB 1108

                                                                    Page  3

             c)   Pay handling fees to supermarket sites, nonprofit  
               convenience zone recyclers, or rural region recyclers to  
               provide an incentive for the redemption of empty beverage  
               containers in convenience zones, and adopt guidelines and  
               methods specifying a procedure for the payment of these  

             d)   After deducting refund values, administrative fees, and  
               a reserve for contingencies, appropriate remaining Fund  
               monies to designated programs, grants, and fee payments  
               (PRC Section 14581).

          4)Requires certified recycling centers to comply with the  
            requirements of the Bottle Bill and: 
             a)   Operate during specified business hours; 
             b)   Post signage that is at least two feet by two feet,  
               which includes the types of containers that can be redeemed  
               and the price paid by weight or per container; 

             c)   Notify CalRecycle of any material change in the nature  
               of the operation; 

             d)   Complete a precertification training program; 

             e)   Accept and pay CRV for all Bottle Bill containers, and  
               not pay CRV for any container that is not included in the  
               Bottle Bill or any container that the center knows, or  
               should have known, is from out of state; 

             f)   Prepare and maintain specified documentation; and,

             g)   Comply with all regulations adopted by CalRecycle. 


                                                                    AB 1108

                                                                    Page  4

          FISCAL EFFECT:  Unknown


          1)Author's statement.  
               AB 1108 prohibits a certified recycling center from  
               accepting or paying the CRV to a consumer for more than 50  
               pounds of aluminum beverage containers or plastic beverage  
               containers, or any combination thereof, or 500 pounds of  
               glass beverage containers, submitted by that consumer to  
               the certified recycling center in a single 24-hour period? 

               According to CalRecycle, lowering the limits is a  
               significant way to reduce fraud in the program.  As a  
               result, importers of out-of-state containers, which are not  
               eligible for CRV, and scavenger fleets illegally removing  
               the contents of residential curbside recycling bins will  
               find it considerably more time-consuming and risky to reap  
               any fraudulent gains.  

          2)California's Bottle Bill.  The Bottle Bill is designed to  
            provide consumers with a financial incentive for recycling and  
            to make recycling convenient to consumers.  The centerpiece of  
            the Bottle Bill 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.  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  

          California's Bottle Bill has achieved an overall recycling rate  


                                                                    AB 1108

                                                                    Page  5

            over 80%- higher than any other bottle bill program in North  
            America.  According to Californians Against Waste, since its  
            inception 25 years ago, the program has resulted in the  
            recycling of over 11.9 million tons of glass; 3 million tons  
            of aluminum; and, more than 2 million tons of plastic.  In  
            addition to the diversion from landfill disposal, this  
            recycling has avoided an estimated 2 million metric tons of  
            CO2 equivalent greenhouse gas emissions over the last four  

          Recycling in California also results in economic benefits to the  
            state.  The Bottle Bill program has resulted in more than  
            10,000 jobs and over $100 million in reduced landfill disposal  

          3)Preventing fraud.  In some ways, the Bottle Bill program is a  
            victim of its own success.  According to CalRecycle, the  
            Bottle Bill is currently operating under a structural deficit,  
            mainly caused by historically high recycling rates and  
            mandated program payments. The structural deficit means that  
            program expenditures exceed program revenues under the current  
            mandated expenditure and revenue structure. 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.  

          Fraud also contributes to the structural deficit.  In the summer  
            of 2011, CalRecycle, in coordination with the California  
            Department of Food and Agriculture (CDFA), initiated a  
            "no-cost" 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 calendar days of the pilot program, the  
            information gathered indicated that over 2,500 vehicles,  
            including 378 rental trucks filled to capacity, imported  
            out-of-state beverage container material through these  
            stations.  Based on the survey data referenced above,  
            CalRecycle states that a conservative estimate of fraud  


                                                                    AB 1108

                                                                    Page  6

            exposure to the Bottle Bill Fund is $7 million annually.

          In recent years, CalRecycle and the Department of Justice (DOJ)  
            have increased Bottle Bill fraud enforcement efforts, which  
            have resulted in several high profile prosecutions.  Most  
            recently, last November, five people were arrested in the  
            Turlock area on charges of conspiracy, grand theft, and  
            recycling fraud after investigators found 250,000 pounds of  
            beverage containers (22 truckloads) unauthorized beverage  
            containers and $125,000 cash.  In 2014, DOJ arrested a Los  
            Angeles recycling center owner for defrauding the state of  
            more than $500,000.  In 2010, DOJ and CalRecycle participated  
            in a multi-state fraud investigation that resulted in the  
            arrest of 31 individuals for Bottle Bill fraud rings that took  
            in over $3.5 million.  

          CalRecycle has made administrative changes to combat fraud.  In  
            January, 2014, CalRecycle reduced the number of containers an  
            individual can bring to recycling centers for CRV in a single  
            day from 500 pounds of aluminum or plastic to 100 pounds, and  
            from 2,500 pounds of glass to 1,000 pounds and required that  
            anyone transporting 25 pounds or more of aluminum beverage  
            containers or 250 pounds of glass beverage containers into the  
            state must pass through a CDFA quarantine inspection station  
            and obtain and carry a proof of inspection.  According to  
            CalRecycle, the following table indicates the number of  
            beverage containers per pound by material type.  

                 |Material Type                   |Containers per  |
                 |                                |Pound           |
                 |Aluminum                        |      29.1      |
                 |Glass                           |      1.89      |
                 |#1 PET (Polyethylene            |      20.2      |
                 |Terephthalate)                  |                |


                                                                    AB 1108

                                                                    Page  7

                 |#2 HDPE (High Density           |      7.3       |
                 |Polyethylene)                   |                |
                 |#3 PVC (Polyvinyl Chloride)     |      11.2      |
                 |#4 LDPE (Low Density            |      40.6      |
                 |Polyethylene)                   |                |
                 |#5 PP (Polypropylene)           |      8.8       |
                 |#6 PS (Polystyrene)             |     113.8      |
                 |# 7 Other                       |      3.1       |

            This bill expands on CalRecycle's ongoing efforts to eliminate  
            fraud in the program by making it more difficult for  
            individuals to fraudulently redeem large quantities of  
            out-of-state beverage containers.    

          4)Suggested amendment.  This bill prohibits certified recycling  
            centers from accepting or paying CRV for specified amounts of  
            beverage containers to improve fraud prevention; however, it  
            is legal to import recycled materials, including beverage  
            containers, into California for scrap value.  The committee  
            may wish to amend the bill to strike out "accept or" on page  
            3, line 35 to clarify that certified recycling centers are  
            only prevented from paying CRV and can continue to accept and  
            pay scrap value for recycled materials.  




                                                                    AB 1108

                                                                    Page  8

          None on file


          None on file

          Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)