BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1108|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1108
Author: Low (D)
Amended: 6/28/16 in Senate
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 4-0, 6/8/16
AYES: Wieckowski, Hill, Leno, Pavley
NO VOTE RECORDED: Gaines, Bates, Jackson
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 75-0, 5/26/15 - See last page for vote
SUBJECT: Beverage containers: recycling
SOURCE: Author
DIGEST: This bill reduces the daily load limits of empty
beverage containers for purposes of receiving a California
Redemption Value (CRV) payment.
ANALYSIS: Existing law, under the California Beverage Container
Recycling and Litter Reduction Act (Act):
1)Requires beverage containers, as defined, sold in-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 distributors to pay a redemption payment to
the Department of Resources Recycling and Recovery
(CalRecycle) for every beverage container sold in the state.
These funds are continuously appropriated to CalRecycle for
the payment of refund values and processing fees.
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2)Requires CalRecycle to certify recycling centers and
promulgate regulations establishing a procedure for
certification of recycling centers.
3)Prohibits a certified recycling center or processor from
paying or claiming any refund value, processing payment, or
administrative fee on beverage containers if the center or
processor knew, or should have known, that the containers were
from out of state.
This bill prohibits certified recycling centers from paying the
CRV to, or claim CRV for material received from, a person not
certified by CalRecycle and who delivers more than 50 pounds of
aluminum beverage containers, 50 pounds of plastic beverage
containers, or 500 pounds of glass beverage containers, during a
24-hour period.
Background
1) Background on the Act. The Act is designed to provide
consumers with a financial incentive for recycling and to
make recycling convenient to consumers. The centerpiece of
the Act 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.
2) Structural deficit. Deposits on covered beverage containers
are remitted to CalRecycle and deposited into the Beverage
Container Recycling Fund (BCRF). The BCRF's expenditures fit
into two primary categories: 1) CRV reimbursements to
recycler and 2) program expenses, including administration,
grant programs, education and outreach that are funded by
unredeemed CRV. Higher recycling rates reduce the amount of
unredeemed CRV to fund program expenses. The "breakeven"
recycling rate where expenditures equal revenues is about
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75%.
CalRecycle's most recent quarterly report projects an average
structural deficit of $75 million from 2015-16 to 2017-18.
This revenue-expenditure imbalance is primarily due to
historically high recycling rates, and supplemental program
costs including statutorily mandated program payments.
Illegal redemption of beverage containers also contributes to
the structural deficit.
When the Act 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) Fraud. The BCRF is currently operating at a recycling rate of
greater than 80%, but it is known that there is some level of
fraud within the program that artificially elevates the
recycling rate and, as noted earlier, contributes to the
structural deficit. A significant type of fraud is the
importation of out-of-state beverages.
Pursuant to AB 1933 (Gordon, Chapter 540, Statutes of 2012),
CalRecycle adopted regulations in 2013 to require anyone
transporting into California a load of empty plastic or
aluminum beverage containers weighing 25 pounds or more, or
250 pounds or more of glass, to pass through a California
Department of Food and Agriculture quarantine inspection
station and obtain and carry proof of inspection. A form
documenting the source and destination of the material must
also be completed.
Other recent changes CalRecycle has undertaken to prevent
fraud include training requirements for operators of
recycling centers and processing facilities, and revised
regulations that reduce the number of containers individuals
can redeem in a single day from 500 pounds of aluminum or
plastic to 100 pounds, and from 2,500 pounds to 1,000 pounds
of glass.
AB 1108 aims to expand on CalRecycle's ongoing efforts to
eliminate fraud in the program by making it more difficult
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for individuals to fraudulently redeem large quantities of
out-of-state beverage containers. Specifically, AB 1108 cuts
current redemption weight limits to 50 pounds for plastic and
aluminum beverage containers, and to 500 pounds for glass
beverage containers. For glass, 500 pounds comes out to
roughly 940 containers. Fifty pounds of aluminum and
polyethylene terephthalate (PET) plastic beverage containers
equates to about 1,450 aluminum containers, and about 1,000
PET containers.
Fraud enforcement. In recent years, CalRecycle and the
Department of Justice (DOJ) have increased Bottle Bill fraud
enforcement efforts, which have resulted in numerous arrests
and several high profile prosecutions. In February 2015, a
Los Angeles-area recycling business agreed to pay $1.8
million in restitution to the state's Bottle Bill Program as
part of a settlement agreement resulting from illegal claims
for refunds on out-of-state bottles and cans. In November of
2014, 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. Also, in May of 2015, CalRecycle announced indictments
of five Californians on grand theft and recycling fraud
charges in Kern County. CalRecycle and DOJ conducted an
investigation spanning nearly two years that revealed a
complex scheme involving out-of-state used beverage
containers, 24 Southern California recycling centers, and $14
million worth of fraudulent California Redemption Value
claims.
Comments
Purpose of Bill. According to the author, "The Bottle Bill
Program is a victim of its own success. While the intention of
the beverage program was to be self-sustainable, in recent years
the beverage program has not regenerated enough revenue to cover
expenditures. One of the contributing factors of the deficit
has been the importation of out-of-state beverage containers.
According to CalRecycle, lowering the limits is a significant
way to reduce fraud in the program. AB 1108 helps address the
fraud in this well intentioned program by limiting how much a
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certified recycling center can accept from one consumer in a 24
hour period."
The author also notes that "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 refunds, and scavenger fleets illegally
removing the contents of residential curbside recycling bins
will find it considerably time-consuming and risky to reap any
fraudulent gains."
Related/Prior Legislation
AB 1846 (Gordon, Chapter 596, Statutes of 2014), authorized
CalRecycle to suspend or revoke the handling fees from a
recycling center or centers if these are found to be committing
fraud or deceit.
AB 1933 (Gordon, Chapter 540, Statutes of 2012), reduced the
amounts of beverage container material that can be imported into
the state without notice to CalRecycle and requires specified
documentation for loads exceeding those limits.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified 6/28/16)
None received
OPPOSITION: (Verified 6/28/16)
Association of California Recycling Industries
Camarillo Recycling, Inc.
2 Individuals
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ARGUMENTS IN SUPPORT: - - -
ARGUMENTS IN OPPOSITION: The Association of California
Recycling Industries states that AB 1108 would force consumers
to make numerous trips in order to collect their pre-paid
deposits, and that AB 1108 will benefit illegal operators by
establishing a revolving door of illegal transactions. They
also argue that CalRecycle's reduced load limits for recyclable
materials should first be evaluated before additional steps are
taken.
ASSEMBLY FLOOR: 75-0, 5/26/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bonilla,
Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu,
Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier,
Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley,
Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NO VOTE RECORDED: Bloom, Brough, Chávez, Harper, Mathis
Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108
6/29/16 15:45:46
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