BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      AB 1239


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          ASSEMBLY THIRD READING


          AB  
          1239 (Gordon and Atkins)


          As Amended  May 5, 2015


          Majority vote


           ----------------------------------------------------------------- 
          |Committee       |Votes |Ayes                |Noes                |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Natural         |6-3   |Williams, Cristina  |Dahle, Hadley,      |
          |Resources       |      |Garcia, McCarty,    |Harper              |
          |                |      |Rendon, Mark Stone, |                    |
          |                |      |Wood                |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Appropriations  |12-5  |Gomez, Bonta,       |Bigelow, Chang,     |
          |                |      |Calderon, Daly,     |Gallagher, Jones,   |
          |                |      |Eggman,             |Wagner              |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |                |      |Eduardo Garcia,     |                    |
          |                |      |Gordon, Holden,     |                    |
          |                |      |Quirk, Rendon,      |                    |
          |                |      |Weber, Wood         |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |
           ----------------------------------------------------------------- 


          SUMMARY:  Establishes the Tire Recycling Incentive Program (TRIP)  








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          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.  Specifically, this bill:  


          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 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  
            TRIP until the California tire fee becomes less than $1.75. 


          4)Requires retail sellers to pay a California tire regulatory fee  
            at an amount to be determined by CalRecycle at an amount  
            sufficient to generate revenues equivalent to the reasonable  








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            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.  


          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:  According to the Assembly Appropriations  
          Committee, this bill has the following fiscal impacts: 




          1)Increased annual revenue of approximately $38.5 million  
            resulting from the fee (special fund), based on a fee of $1.25  
            on 30.8 million new tires sold annually.


          2)Annual transfers of $30 million from the Waste Tire Program to  
            TRIP (special fund) while the existing fee remains no less than  
            $1.75.


          3)Increased CalEPA administrative costs of approximately $1  
            million annually (special fund).


          COMMENTS: 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  








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          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.  


          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  








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          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.  




          Analysis Prepared by:                                               
                          Elizabeth MacMillan / NAT. RES. / (916) 319-2092    
                                                                      FN:  
          0000706