BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1239


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          Date of Hearing:  August 29, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 1239  
          (Gordon) - As Amended August 16, 2016


          SUBJECT:  Tire recycling:  California tire regulatory fee and  
          waste tire program


          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 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  








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               recycling.  The remaining $0.75 is deposited into the Air  
               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; and,


             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: 


          1) Establishes the TRIP and a policy goal of source reducing or  
             recycling 75% of solid waste tires in the state by 2020.

          2) Requires CalRecycle to establish a tire recycling incentive  
             program and develop a plan to include a tiered incentive  
             payment structure in the TRIP to maximize the amount of  
             recycling.

          3) Establishes the California tire regulatory fee:

             a)    Authorizes CalRecycle to establish the fee in an  
                amount, not to exceed $1 per new tire sold, that is  








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                sufficient to generate revenue equivalent to the  
                reasonable costs incurred by CalRecycle related for  
                regulatory activities regarding waste tires;   

             b)    Requires CalRecycle to adopt regulations to implement  
                the initial fee and authorizes CalRecycle to adjust the  
                fee based on specified factors; 

             c)    Requires a waste tire generator to pay a California  
                tire regulatory fee and remit the fee to the state for  
                deposit in the California Tire Recycling Management Fund;  
                and,

             d)    Requires CalRecycle to identify specific programs that  
                the California tire regulatory fee would fund.

          4) Makes an entity eligible to receive an incentive payment upon  
             demonstrating to CalRecycle that the entity purchased  
             California-generated waste tire material processed in the  
             state and sold an incentive-eligible tire product  
             incorporating that material to an end user.

          5) Specifies that an "eligible entity" to receive incentive  
             payments includes, but is not limited to, a manufacturer that  
             produces a product using California-generated waste tires for  
             purchase by an end user.

          6) Includes examples of "incentive-eligible tire products," such  
             as pavement-related products (e.g., rubberized asphalt),  
             walkways and pathways, poured in place and tile playground  
             mats, and landscape nuggets and mulch.

          7) Excludes specified products from "incentive-eligible tire  
             products."

          8) Requires a waste and used tire hauler, on and after January  
             1, 2018, to submit an electronic manifest, instead of a paper  
             manifest, to CalRecycle within seven days of the date of the  
             pickup or delivery for each load of waste or used tires  








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             transported.

          9) Repeals the Rubberized Pavement Market Development Act.

          10)If the 75% policy goal is met for 3 consecutive years,  
             requires CalRecycle to review existing tire recycling  
             programs and make recommendations, as specified.

          11)Sunsets the provisions of this bill on January 1, 2024.

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, this bill has the following fiscal impacts: 


          1)$880,000 annually (California Tire Management Fund) to  
            CalRecycle for the first 3 years, some of which would be  
            offset by fees.


          2)After the third year, ongoing costs of approximately $642,000  
            annually (California Tire Management Fund) to CalRecycle, some  
            of which would be offset by fees.


          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 Market Report:  2013, California has achieved an  
          overall diversion rate of 87.3%.  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  








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          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 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.   








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


          The Waste Tire Manifest System is a tracking mechanism used by  
          CalRecycle to monitor the generation, transportation, and  
          ultimate disposal of used/waste tires in California.  The goal  
          of the system is to help eliminate the illegal storage or  
          disposal of used/waste tires by allowing CalRecycle to focus  
          enforcement efforts on worst offenders.  The waste tire manifest  
          system program applies to all persons, businesses, nonprofits,  
          and government agencies that generate, transport, or receive  
          waste or used tires.  CalRecycle and tire enforcement agency  
          staff members inspect and investigate waste and used tire  
          generators, end-use facilities, and haulers to ensure that  
          manifests are properly completed, handled, and submitted to  
          CalRecycle.  The law also allows, but does not require, that  
          data to be submitted electronically to CalRecycle.  This bill  
          updates the tire manifest system and requires that electronic  
          reporting.  


          





          REGISTERED SUPPORT / OPPOSITION:




          Support


          Alameda Waste Management Authority and Recycling Board (Stop  
          Waste)









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          BAS Recycling


          Californians Against Waste 
          California Association of Local Conservation Corps 
          California League of Conservation Voters 


          California State Association of Counties 
          CRM Company 
          Don't Waste LA


          Los Angeles Alliance for a New Economy


          Marin County Hazardous and Solid Waste Management JPA 
          Mojave Desert and Mountain Recycling 
          Napa Recycling and Waste Services 
          Rural County Representatives of California 
          Sonoma County, AB 939 Local Task Force 
          WILDCOAST


          Zanker Recycling 




          Opposition


          California Tire Dealers Association 


          Howard Jarvis Taxpayers Association 










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          Rubber Manufacturers Association 


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