BILL ANALYSIS Ó AB 1108 Page 1 ASSEMBLY THIRD READING AB 1108 (Low) As Amended May 5, 2015 Majority vote ------------------------------------------------------------------ |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+-----------------------+------------------| |Natural |9-0 |Williams, Dahle, | | |Resources | |Cristina Garcia, | | | | |Hadley, Harper, | | | | |McCarty, Rendon, Mark | | | | |Stone, Wood | | | | | | | |----------------+------+-----------------------+------------------| |Appropriations |17-0 |Gomez, Bigelow, Bloom, | | | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Holden, Jones, | | | | |Quirk, Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Prohibits certified recycling centers from paying the California Refund Value (CRV) to a consumer for more than 50 AB 1108 Page 2 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 $0.05 for containers that hold fewer than 24 ounces and $0.10 for containers that hold 24 ounces or more and requires a distributor to pay a redemption payment to the California Department of Resources Recycling and Recovery (CalRecycle). Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees. 2)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 regulations. 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 fees. AB 1108 Page 3 d) After deducting refund values, administrative fees, and a reserve for contingencies, appropriate remaining Fund monies to designated programs, grants, and fee payments (Public Resources Code Section 14581). 3)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. FISCAL EFFECT: According to the Assembly Appropriations Committee, unknown, annual costs savings, potentially in the hundreds of thousands to of dollars, resulting from fraud AB 1108 Page 4 deterrence (Beverage Recycling Fund). COMMENTS: 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. 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 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 AB 1108 Page 5 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 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. Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0000514 AB 1108 Page 6