BILL ANALYSIS Ó AB 1108 Page 1 Date of Hearing: May 13, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1108 (Low) - As Amended May 5, 2015 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill prohibits certified recycling centers from accepting or paying the California Refund Value (CRV) to a consumer for more than 50 pounds of aluminum or plastic beverage containers AB 1108 Page 2 or 500 pounds of glass beverage containers during a 24-hour period. FISCAL EFFECT: Unknown, annual costs savings, potentially in the hundreds of thousands to of dollars, resulting from fraud deterrence (Beverage Recycling Fund). 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 over 2,500 vehicles, including 378 rental trucks filled to capacity, imported out-of-state beverage container material through these stations. According to CalRecycle, a conservative estimate of fraud exposure is $7 million annually. This bill makes it more difficult to redeem large amounts of out-of-state beverage containers. COMMENTS: 1)Purpose. 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. AB 1108 Page 3 This bill 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. 2)Background. The California Beverage Container Recycling and Litter Reduction Act (Bottle Bill) 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. 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 refund. AB 1108 Page 4 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. 3)Previous Redemption Limits. 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. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 AB 1108 Page 5