BILL ANALYSIS Ó AB 1239 Page 1 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) AB 1239 Page 2 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 AB 1239 Page 3 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 AB 1239 Page 4 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 AB 1239 Page 5 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