BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1239


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          Date of Hearing:  April 27, 2015


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 1239  
          (Gordon) - As Amended April 21, 2015


          SUBJECT:  Tire recycling:  California tire regulatory fee


          SUMMARY:  Establishes the Tire Recycling Incentive Program  
          (TRIP) Act to provide incentives for tire recycling activities  
          in California.  Establishes a new tire regulatory fee, set by  
          the Department of Resources Recycling and Recovery (CalRecycle),  
          to cover its regulatory costs associated with waste and used  
          tire management.   


          EXISTING LAW:  


          1)Pursuant to the California Integrated Waste Management Act of  
            1989, establishes a state policy goal that 75% of solid waste  
            generated be diverted from landfill disposal by 2020.

          2)Establishes the California Tire Recycling Act (Act), which: 

             a)   Requires a person who purchases a new tire to pay a  
               California tire fee of $1.75 for each new tire purchased in  
               the state.  One dollar of which is deposited into the Tire  
               Recycling Fund for oversight, enforcement, and market  
               development grants relating to waste tire management and  
               recycling.   The remaining $0.75 is deposited into the Air  








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               Pollution Control Fund for programs and projects that  
               mitigate or remediate air pollution caused by tires.  

             b)   Reduces the fee on January 1, 2024 to $0.75 per tire, to  
               be deposited into the Tire Recycling Fund.  

             c)   Authorizes CalRecycle to award grants, loans, subsidies,  
               and rebates and pay incentives for various purposes related  
               to reducing landfill disposal of waste tires.

             d)   Requires CalRecycle to adopt a Five Year Plan, which  
               must be updated every two years, that establishes goals and  
               priorities for the waste tire program.

             e)   Defines "waste tire generator" as any person whose act  
               or process produces any amount of waste or used tires, or  
               causes a waste or used tire hauler to transport those waste  
               or used tires, or otherwise causes waste or used tires to  
               become subject to regulation.  

          THIS BILL establishes the TRIP, which: 


          1)Requires CalRecycle to establish a tire recycling incentive  
            program to award payments to eligible recipients, as  
            determined by CalRecycle, in the following manner: 


             a)   To cities, counties, other local government agencies,  
               and school districts to fund construction projects that use  
               recycled tires. 


             b)   To state and local government agencies, including  
               regional park districts, to fund disability access projects  
               at parks and bikeways.  


             c)   To a private manufacturer who produces a consumer  








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               product using recycled tires in California. 


          2)Requires CalRecycle to award $2 for every 12 pounds of crumb  
            rubber used by the eligible recipient and authorizes  
            CalRecycle to adjust this amount if it determines the  
            adjustment would further the purposes of CalRecycle's tire  
            program. 


          3)Requires CalRecycle to annually allocate $30 million for the  
            Program, unless or until the California tire fee becomes less  
            than $1.75. 


          4)Requires any waste tire generator to pay a California tire  
            regulatory fee at an amount to be determined by CalRecycle  
            pursuant to the following: 


             a)   For a waste tire generator that is a retail seller of  
               new tires to end purchasers at an amount sufficient to  
               generate revenues equivalent to the reasonable regulatory  
               costs incurred by CalRecycle for audits, inspections,  
               administrative costs, adjudications, manifesting,  
               registration, and other regulatory activities regarding the  
               generators, but not to exceed $1.25 per tire.  Authorizes  
               CalRecycle to establish different fees based on the type of  
               retail seller depending on the nature of the activity,  
               number of tires generated, and other appropriate factors.  


             b)   For a waste tire generator that is not a retail seller  
               at an amount sufficient to generate revenues equivalent to  
               the reasonable regulatory costs incurred by CalRecycle for  
               audits, inspections, administrative costs, adjudications,  
               manifesting, registration, and other regulatory activities  
               regarding the generators.  Authorizes CalRecycle to  
               establish different fees based on the type of retail seller  








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               depending on the nature of the activity, number of tires  
               generated, and other appropriate factors.  


             c)   Specifies that the "aggregate amount" of the regulatory  
               fees shall not exceed the aggregate reasonable regulatory  
               costs incurred by CalRecycle.  


          5)Requires the waste tire generator to remit the regulatory fee  
            quarterly.  


          6)Makes corresponding changes to the provision of law that  
            replaces current law on January 1, 2024.  


          FISCAL EFFECT:  Unknown


          COMMENTS: 


          1)Author's statement:  
          
               AB 1239 by Assembly Member Gordon and Speaker Atkins will  
               help expand the state's tire recycling infrastructure to  
               reduce greenhouse gases, create jobs, and cut the statewide  
               and local costs associated with tire pile cleanup.  

               AB 1239 proposes to establish a Tire Recycling Incentive  
               Program to provide an incentive payment for end-users of  
               recycled tires (including local governments that use tires  
               as rubberized pavement as well as manufacturers who produce  
               products using recycled tires.)  AB 1239 will also give  
               CalRecycle the authority to increase the state tire fee to  
               cover the costs of regulating waste tires (in an amount not  
               to exceed $1.25/tire.)  
          








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          2)Tire management in California.  According to CalRecycle,  
            approximately 40 million waste tires are generated in  
            California every year.  CalRecycle's diversion goal is 90%;  
            according to the California Waste Tire Market Report: 2013,  
            California has achieved an overall diversion rate of 87.3%.   
            Of the of the 40.8 million tires generated: 12.3 million were  
            exported (for fuel or reuse); 7.9 million were recycled as  
            ground rubber; 0.5 million were used in civil engineering  
            projects; 6.6 million were reused (either sold as used tires  
            or retreaded); 8.2 million were used as tire derived fuel in  
            cement kilns or at co-generation facilities; 1.2 million were  
            used as cover at landfills; and, 5.3 million were disposed in  
            landfills.  

            CalRecycle's "affiliated goals" to achieve its 90% diversion  
            rate for tires are: 1) develop long-term, sustainable, and  
            diversified market demand for California tire-derived  
            products; 2) ensure the protection of public health, safety,  
            and the environment while developing a safe and high-quality  
            supply infrastructure to meet that demand; and, 3) foster  
            information flow and technology and product development so  
            that environmental protection and diversion goals are achieved  
            with supply and demand in balance.  

            CalRecycle is in the process of adjusting its waste tire  
            market development programs, in accordance with its Five Year  
            Plan, to more effectively focus CalRecycle resources on  
            diversifying and expanding markets.  CalRecycle has also  
            indicated a long-term vision of increasing tire recycling,  
            rather than just diversion.  Specifically, CalRecycle has  
            begun crafting a new incentive program that would  
            differentiate incentive payments, with higher payments going  
            to "preferred end-users" that recycle waste tires into new  
            products such as rubberized asphalt concrete, moderate  
            payments for end uses such as tire-derived aggregate, and  
            lower payments for less-preferred non-disposal management such  
            as energy generation.  









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            CalRecycle's analysis of past grants indicates that about 25%  
            of the total sales of California-produced tire-derived  
            products were supported by grants, while about 12.5% of  
            California crumb rubber sold to paving applications was  
            supported by CalRecycle paving grants.  In order to achieve  
            CalRecycle's long-term goals for tire recycling, it is in the  
            process of redirecting approximately half of its budget for  
            the Tire Derived Product Grant Program to a new Tire Incentive  
            Program that will focus on promoting new tire-derived product  
            development and shift established product manufacturers to use  
            of ground rubber from other feedstock.  CalRecycle is also  
            replacing the Tire-Derived Product Business Assistance  
            Program, which offered a wide variety of assistance to  
            manufacturers, with a new Tire Outreach and Market Analysis  
            (TOMA) program. TOMA will focus exclusively on outreach and  
            education to promote tire-derived products. 

            This bill is consistent with the direction and recommendations  
            of CalRecycle's 2015 Five Year Plan.  

          3)Suggested amendments.  This bill contains a number of drafting  
            issues that inadvertently resulted in provisions that are not  
            consistent with the intent of the author.  In order to address  
            these issues, the committee may wish to adopt the following  
            amendments:  

             a)   Strike references to "waste tire generator" and clarify  
               that the regulatory fee is assessed on retail sellers of  
               new tires.  

             b)   Strike out lines 3 through 13 on page 6 of the bill to  
               clarify that there is one regulatory fee.  

             c)   Delete the provision that grants CalRecycle the  
               authority to establish different fees for different  
               sellers.  

             d)   Clarify that the amount of the one regulatory fee shall  
               not exceed CalRecycle's reasonable regulatory costs.  








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             e)   Make the corresponding changes to the provisions of the  
               bill that will become effective on January 1, 2024.  

          REGISTERED SUPPORT / OPPOSITION:




          Support


          Californians Against Waste


          California Association of Local Conservation Corps


          California League of Conservation Voters


          California State Association of Counties


          Don't Waste LA Project


          Environmental Action Committee of West Marin


          Los Angeles Alliance for a New Economy


          WILDCOAST




          Opposition








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          None on file




          Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)  
          319-2092