BILL ANALYSIS Ó AB 2153 Page 1 Date of Hearing: April 12, 2016 ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS Luis Alejo, Chair AB 2153 (Cristina Garcia) - As Amended April 5, 2016 SUBJECT: Lead-Acid Battery Recovery and Recycling Act SUMMARY: Establishes mandatory requirements for the collection and recycling of lead-acid batteries. Specifically, this bill: 1) Establishes the Lead-Acid Battery Recovery and Recycling Act. 2) Defines "lead-acid battery" as any battery that consists of lead and sulfuric acid and is used as a power source. 3) Defines "lead-acid battery organization" (LABO) as a 501(c)(3) or 501 (c)(6) non-profit organization that is established by a qualified industry association, composed of manufacturers, recyclers, retailers, and environmental justice organizations. 4) Defines "qualified industry association" as the Battery Council International (BCI), or a successor of that organization, or a group of lead-acid battery manufacturers AB 2153 Page 2 that collectively represent at least 35 percent of the volume of lead-acid batteries manufactured in the United States. 5) Requires, on or before July 1, 2017, a qualified industry association to establish a LABO to develop, implement and administer the lead-acid battery recycling program. 6) Requires the California Department of Resources Recycling and Recovery (CalRecycle), within 60 days of receipt of a request for certification, to notify the LABO of CalRecycle's decision to certify or not. 7) Requires the director of CalRecycle to appoint an advisory committee to advise the LABO. Requires the advisory committee to be comprised of specified representatives. Requires the LABO to consult with the advisory committee at least once during the development of the plan, and annually prior to submitting an annual report and budget. 8) Requires, on or before January 1, 2018, each manufacturer, retailer, and recycler to register with the LABO. 9) Prohibits, on or after January 1, 2019, a retailer from selling, distributing, or offering for sale a lead-acid battery unless the manufacturer or recycler is in compliance with the provisions of this bill. 10) Requires, on or before July 1, 2018, the LABO to develop and submit to CalRecycle a plan with specified elements for AB 2153 Page 3 recycling lead-acid batteries. 11) Authorizes the LABO to include market development opportunities that would provide incentives to universities and research companies to find alternatives to lead in batteries. 12) Requires CalRecycle to review the plan for compliance and specifies time frames for taking action on approval. 13) Requires, on or before January 1, 2021, CalRecycle, in consultation with the LABO, to establish and make public the state baseline amount of, and goals for, recycling of lead-acid batteries with California recycling stickers. 14) Requires, on or before July 1, 2018, and annually thereafter, the LABO to prepare and submit to CalRecycle a proposed budget with specified information. Specifies timeframes for CalRecycle to review and approve the budget. 15) Requires the LABO to reimburse CalRecycle for incurred administrative costs. Establishes the Used Lead-Acid Battery Recycling Fund and requires all administrative revenues to be deposited into that fund. 16) Requires the LABO to set the amount of a recycling charge to be added to the purchase price of a lead-acid battery at the point of sale. Requires the charge to be based on the value of lead, prohibits the charge from exceeding $20 and from being less than $15; and, requires it to be a flat rate. Specifies terms and conditions for adjusting the amount of the charge. Requires a charge to be AB 2153 Page 4 assessed on all lead-acid batteries once CalRecycle approves the plan. Requires the charge to be clearly delineated on a customer's receipt of purchase. 17) Requires, on a quarterly basis, a manufacturer, recycler, retailer, or distributor to submit all moneys collected from the charge, minus the amount refunded to consumers for the return of lead-acid batteries with California recycling stickers, to the LABO. 18) Requires the LABO to remit to the state $1 from the sale of each lead-acid battery with a California recycling sticker. Requires remittance of $2 under specified conditions. 19) Establishes the Lead-Acid Battery Cleanup Fund for the deposit of the $1 from each sale of a lead-acid battery. Prohibits the balance of the fund from exceeding $100 million. 20) Requires continuous appropriation of the Lead-Acid Battery Cleanup Fund to the Department of Toxic Substances Control (DTSC) for the cleanup of areas of the state that have been contaminated by the production, recycling, or improper disposal of lead-acid batteries and activities. 21) Authorizes the lead-acid recycling organization to hire independent third-party auditors to audit entities responsible for remitting the specified revenues. Specifies audit requirements. Specifies administrative record keeping requirements for lead-acid recycling organizations. 22) Requires, on or before July 1, 2020, and annually thereafter, a lead-acid recycling organization to submit a report with specified information relevant to the implementation of the plan, including quantification of lead-acid batteries bought, collected and recycled; compliance and demonstrations of good faith efforts; among AB 2153 Page 5 other required information. Specifies timeframes for CalRecycle to review and approve the report. 23) Requires, on or before July 1, 2020, and annually thereafter, a person that is engaged in business as a recycler to submit a report to CalRecycle that includes the number of lead-acid batteries with California recycling stickers and other information germane to proving compliance. 24) Requires, on or before July 1, 2020, and annually thereafter, the operator of a solid waste landfill facility to report to CalRecycle, if requested, on the number of used lead-acid batteries with California recycling stickers received by that facility that were recycled or disposed of in the preceding calendar year. 25) Requires, when the charge on lead-acid batteries becomes operative, the manufacturer, recycler, retailer or distributor to affix a California recycling sticker to each lead-acid battery at the point of sale. 26) Requires a consumer who returns a lead-acid battery with a California recycling sticker to a manufacturer, retailer, or other entity that sells lead-acid batteries to be given a refund of the recycling charge minus $3. States that $1 of the $3 shall be remitted to the Lead-Acid Battery Cleanup Fund and the remaining $2 shall be used by the LABO for administration and implementation of the program. A consumer returning a lead-acid battery without a sticker is not eligible for the refund. Requires a retailer that sells a used lead-acid battery to a manufacturer to remit 75% of the sale price of the used lead-acid battery to the LABO for deposit into the Lead-Acid Battery Cleanup Fund. AB 2153 Page 6 27) Requires, on or before March 1, 2018, and annually thereafter, CalRecycle to post on its Internet Website a list of manufacturers and recyclers that are in compliance with this chapter. 28) Authorizes CalRecycle to impose an administrative civil penalty on any manufacturer, LABO, recycler, or retailer that is in violation. The penalty shall not exceed $1,000 per day, but if the violation is intentional, knowing, or reckless, the penalty may go up to $10,000 per day. Specifies additional administrative actions CalRecycle may take on noncompliant entities. 29) Establishes the Lead-Acid Battery Recovery and Recycling Penalty Account and requires all administrative civil penalties collected to be deposited into that account. 30) Authorizes CalRecycle to adopt emergency regulations to implement the provisions of this bill. 31) States that any action by a lead-acid battery organization or its members as it relates to the requirements of this bill is not a violation of the Cartwright Act (Business & Professions Code (B&P) § 16700, et seq.), the Unfair Practices Act (B&P 1700, et seq.), or the Unfair Competition Law (B&P § 17200, et seq.) 32) Authorizes the Lead-Acid Battery Cleanup Fund to repay any loan made by the General Fund to the Toxic Substances Control Account during the 2016-17 fiscal year for the cleanup of lead contamination in the state. 33) Establishes this as an urgency act in order to increase the cleanup of toxic materials and prevent additional toxic AB 2153 Page 7 pollution at the earliest possible time. EXISTING LAW: 1) Prohibits the disposal of a lead-acid battery at a solid waste facility, or on or in any land, surface waters, watercourses, or marine waters. (Health and Safety Code (H&S) § 25215.2) 2) Requires retailers to accept the trade-in of a spent lead-acid battery by a consumer upon purchase of a new one. (H&S § 25215.3) 3) Governs the management of used lead-acid batteries. (California Code of Regulations, Title 22, § 66266.80 and 66266.81) 4) Requires all lead-acid batteries purchased by any state agency for, and, at the next required installation of a battery in, an automobile or light truck owned or operated by the state agency, to be a recycled lead-acid battery, to the extent that all existing stock of nonrecycled batteries have been utilized. (Public Resources Code (PRC) § 42442) 5) Requires the California Integrated Waste Management Board (CIWMB, now CalRecycle) to coordinate with DTSC to develop and implement a public information program to provide uniform and consistent information on the proper disposal of hazardous substances found in and around homes, and to assist the efforts of counties required to provide household hazardous collection, recycling, and disposal programs. (PRC § 47050 - 47051) AB 2153 Page 8 6) The CIWMB's duties and responsibilities were transferred to CalRecycle in 2010. (SB 63, Chapter 21, Statutes of 2009) 7) Establishes the California Used Mattress Recovery and Recycling Act to reduce illegal dumping, increase recycling, and substantially reduce public agency costs for the end-of-use management of used mattresses. Establishes an industry-run, statewide program to increase the recovery and recycling of mattresses at their end-of-use. (PRC § 42985) FISCAL EFFECT: Unknown. COMMENTS: Need for the bill: According to the author, "AB 2153 will reallocate an already imposed fee on almost all car batteries and create state mandated Lead-Acid (Car) Battery Recycling program that will include a Stewardship Plan and a Contamination Abatement program. $1 from the sale of every lead-acid battery will go to re-pay the $176.6 million loan fund and on-going programs to ultimately fund clean-up of areas contaminated by lead-acid batteries." The problem with lead: Lead has been listed under California's Proposition 65 since 1987 as a substance that can cause reproductive damage and birth defects and has been on the list of chemicals known to cause cancer since 1992. According to the Office of Environmental Health Hazard Assessment, lead has multiple toxic effects on the human body. In particular, decreased intelligence in children and increased blood pressure in adults are among the more serious non-carcinogenic effects. AB 2153 Page 9 Lead is a probable carcinogen in humans. Even at low levels, lead may cause a range of health effects including behavioral problems and learning disabilities. Children six years old and under are most at risk because this is when the brain is developing. There is no level of lead that has been proven safe, either for children or for adults. Both the U.S. Centers for Disease Control and Prevention (CDC) and the California Department of Health Services consider any blood lead level more than 10 g/dl (micrograms of lead per deciliter of blood) to be unsafe for children and for pregnant or nursing women. Lead-acid batteries: According to the U.S. Geological Survey, the lead-acid battery industry accounted for about 90% of reported U.S. lead consumption during 2015. Lead-acid batteries fall into two primary categories: starting, lighting and ignition (SLI) batteries and industrial batteries. SLI batteries, which account for 83% of the battery sector, are used in most on-road vehicles, such as passenger vehicles, light trucks, buses, commercial vehicles and motorcycles. SLI batteries are also used in tractors, marine craft, aircraft and military vehicles. According to the California Board of Equalization's estimates, based on 2012 Census data, lead-acid car battery sales in California are approximately $1.6 billion. That is based on an estimate of roughly 16 million batteries sold at an average cost of $100. According to the Department of Motor Vehicles, as of 2012, there were more than 33.5 million total vehicles registered in California. AB 2153 Page 10 Exide Technologies: The Exide Technologies (Exide) battery recycling facility in Vernon, California recycled lead from used automotive batteries and other sources. The facility could process about 25,000 automotive and industrial batteries a day, providing a source of lead for new batteries. Over the course of decades of operation, the facility polluted the soil beneath it with high levels of lead, arsenic, cadmium and other toxic metals. It also has contaminated groundwater, released battery acid onto roads and contaminated homes and yards in surrounding communities with lead emissions. In March, 2015, Exide was forced to close the facility for good and, under a state agreement with DTSC, set aside $7.7 million to test homes and other structures around the facility for pollution resulting from the facility. DTSC estimates homes between 1.3 and 1.7 miles away from the facility may potentially be affected by Exide's lead contamination - that equates to somewhere between 5,000 - 10,000 residential properties. Cleaning each home costs about $45,000, according to DTSC. If the cleanup grows to thousands of properties, it could cost hundreds of millions of dollars. Removing lead-contaminated soil from thousands of homes surrounding Exide could result in the most extensive cleanup of its kind in California and will be among the largest cleanup ever conducted in the nation. At the end of the day, the cost of cleanup in and around the Exide facility is expected to top $500 million dollars. In February, 2016, Governor Jerry Brown announced a budget proposal for funding cleanup in the polluted communities surrounding the shuttered Exide facility. The proposal includes making $176.6 million available to DTSC to expedite and expand testing and cleanup of residential properties, schools, daycare centers and parks in the 1.7 mile radius around the facility and remove contaminated soil at the properties that have the highest lead levels and greatest potential to expose residents. AB 2153 Page 11 After the $176.6 million is expended, DTSC will need additional funds to do complete and thorough cleanup. This bill is intended to fill that gap while providing an ongoing source of funds to address future lead contamination from lead-acid batteries. Use of proposed battery charge revenues: AB 2153 would require a LABO to establish and add a charge to the purchase price of a lead-acid battery at the point of sale, and would authorize use of the battery charge revenues to provide a continuous appropriation to DTSC for the cleanup of areas of the state that have been contaminated by the production, recycling, or improper disposal of lead-acid batteries and activities. In addition, should the Legislature approve the $176.6 General Fund appropriation toward the Exide cleanup, AB 2153 would authorize funds in the Lead-Acid Battery Cleanup Fund to be used towards repaying the General Fund loan. Under current law, DTSC is authorized to incur direct cleanup costs and oversight costs in remediating contaminated properties, and then bill responsible parties for those costs. As it relates to the lead-contaminated communities surrounding the Exide facility, the state will pay for and conduct much of the cleanup, and then bill Exide and any other identified responsible party (RP) for the cleanup costs for reimbursable costs. Those bills, once paid by the RP(s), will, in effect, be a repayment on the General Fund loan. However, it is likely that a portion of the cleanup may not be attributable to any identifiable responsible party; in other words, a portion of the cleanup may be considered "orphan" share cleanup that the state (taxpayers) is responsible for remediating and funding. In that case, it may be most appropriate to clarify that funds from the charge accrued under this bill and deposited into the Lead-Acid Battery Cleanup Fund may only be used to fund any cleanup costs AB 2153 Page 12 where there is no responsible party. Core battery charges: According to a 2007 contracted report to the California Integrated Waste Management Board (CIWMB, which is now CalRecycle), Framework for Evaluating End-of-Life Product Management Systems in California, the need to have disposal options for lead-acid batteries lead to an industry response by BCI to promote model legislation for states to enact. That resulted in a model that included a landfill ban, a mandatory retailer-take back system, and mandatory collection of deposit on the purchase of a new battery if an old battery is not returned. California adopted a modified version of the model legislation in 1989 with only two of those components: 1. Prohibit the disposal of a lead-acid battery at a solid waste facility, or on or in any land, surface waters, watercourses, or marine waters (H&S § 25215.2); and, 2. Require that retailers accept the trade-in of a spent lead-acid battery by a consumer upon purchase of a new one. (H&S § 25215.3) California's laws, therefore, do not identify that a deposit should be added to the sale of batteries. Despite the lack of a deposit requirement, most retailers voluntarily charge a deposit as an incentive to get the batteries returned, and the deposit charge varies (usually between $15-$18). If a used battery is returned to the retailer at the time of purchase of a new battery, the deposit is usually waived. The deposit is considered a "core" charge, or deposit. Since it is illegal to dispose of lead-acid batteries in California landfills, and all retailers that sell lead-acid batteries must accept their return for disposal, the core charge AB 2153 Page 13 gives retailers a tool to comply with those laws by incentivizing consumers to return their batteries. However, a statutorily mandated deposit could substantially increase lead-acid battery collection rates, which in turn will require management of that waste. Are consumers getting the short end of the stick under the voluntary core charge? When it comes to consumer outreach, it is industry practice to disclose the core charge so customers know what they are paying; this is usually done by listing the deposit as a line-item on a receipt. It's also business practice, per the BCI model, to include signage alerting consumers about the take-back of the used batteries, but California chose not to adopt that latter standard when it enacted H&S § 25215. Therefore, consumers are paying the deposit in California at many retail locations, but many may not be aware they can return their used car batteries back to those retailers. In addition, lead-acid batteries have an average life-span of five years. According to the author's office, the issue with the current practice is that retailers typically do not accept spent lead-acid batteries for disposal without a receipt. Most consumers do not keep receipts for five years, which means those retailers are then keeping the entirety of the deposit and charging the deposit again when the consumer has to purchase a new battery. Since there is no law establishing the deposit, retailers profit off each additional lead-acid battery when the manufacturer drops off new batteries and picks up their primary source of lead, the old lead-acid batteries collected by the retailers. AB 2153 would allow a consumer returning a spent lead-acid battery to receive the deposit as long as it's a covered lead-acid battery with an appropriate California recycling sticker, which would make it more conducive to refunding the AB 2153 Page 14 deposit. Extended producer responsibility: CalRecycle defines extended producer responsibility (EPR) as a strategy to place a shared responsibility for end-of-life product management on the producers, and all entities involved in the product chain, instead of the general public; while encouraging product design changes that minimize a negative impact on human health and the environment at every stage of the product's lifecycle. This allows the costs of treatment and disposal to be incorporated into the total cost of a product. It places primary responsibility on the producer, or brand owner, who makes design and marketing decisions. It also creates a setting for markets to emerge that truly reflect the environmental impacts of a product, and to which producers and consumers respond. By shifting costs and responsibilities of product disposal to producers and others who directly benefit, EPR provides an incentive to eliminate waste and pollution through product design changes. Precedent on batteries: Up until February 8, 2006, California residents were allowed to throw away used household batteries in the trash. However, since then, all batteries have been considered hazardous waste and have been prohibited from every solid waste stream in the state. All batteries must be recycled, or taken to a household hazardous waste disposal facility, a universal waste handler, or an authorized recycling facility. According to a University of California study, "Single-Use Alkaline Battery Case Study," which assessed the extent to which product life-cycle greenhouse gas emissions might be reduced through possible product design, manufacturing, and end-of-life management strategies introduced under a producer's EPR initiatives, "batteries represent a reasonable opportunity for AB 2153 Page 15 EPR programs due to the ready availability of environmental improvements through design, manufacture, and end-of-life strategies, which may offer California additional greenhouse gas emissions reductions beyond those expected under its current batteries recycling scheme." This philosophy is applicable to lead-acid batteries. In 2004, the Legislature enacted the Rechargeable Battery Recycling Act, which went into effect July 1, 2006, requiring all retailers that sell or have sold rechargeable batteries to take back spent rechargeable batteries for recycling at no charge to the consumer. Rechargeable batteries only constitute about 5% of all disposed batteries, leaving room for much-needed policies for end-of-life battery management. This is a precedent for establishing a similar framework for lead-acid batteries. The aforementioned 2007 contracted CIWMB report stated that automobile lead-acid batteries contain, on average, 17 pounds of lead, 1.5 gallons of sulfuric acid and 1.6 pounds of polypropylene (plastic). According to representatives in the battery industry, lead-acid batteries are at least 99% percent recyclable including the lead, sulfuric acid, and plastic. As there are no longer lead ores in the country, recycled lead acid batteries are the primary source of materials for new lead acid batteries. Getting everyone to play the game: Collections and recycling historically of spent products have been supported by voluntary product stewards; however, companies that don't voluntarily fund recycling programs unfairly benefit from them. These products end up being recycled along with those from manufacturers who AB 2153 Page 16 voluntarily provide for the management of end-of-life of the products they put into the marketplace. Non-participants threaten the financial viability of product stewardship programs by increasing unsupported costs. They also create an unequal playing field whereby responsible businesses bear the burden that should be supported by all businesses in the technology/battery sectors. Call2Recycle, a battery stewardship organization, estimates that about 30 percent of the waste batteries collected in their program come from these non-participants, or "free riders," and, as the number of collections increase, the problem grows. Establishing a state-mandated fee-for-recycling will compel all lead-acid battery manufacturers to comply with the requirements sort forth in this bill and prevent an ongoing patchwork of retailer participation, as is the case under the current core charges. Arguments in support: According to Californians Against Waste, AB 2153 "creates a lead-acid battery recycling program dedicated to ? strategies for managing and reducing life-cycle impacts of lead-acid batteries, and conducting research to improve collection and recycling for used lead-acid batteries." Arguments in opposition: According to the Auto Care Association, California Automotive Wholesalers' Association, and Coalition for Auto Repair Equality, this bill seeks to "fix" a process that isn't broken; 99.6% of all lead-acid core batteries are recycled in California without government intervention, suggesting legislation is not necessary, and in fact, intrusive. AB 2153 Page 17 Technical amendments: 1. A secondary goal of AB 2153 is to replace the existing industry core charge with a statutory charge. The committee may wish to consider adding language to clarify the charge required under this bill shall supplant any voluntary core charge currently being charged to prevent a consumer from being charged two times by a retailer. 2. Clarify that funds from the charge accrued under this bill and deposited into the Lead-Acid Battery Cleanup Fund may only be used to fund any share of cleanup costs attributed to the Exide Technologies cleanup site and surrounding communities where there is no identifiable responsible party. 3. Section 42420(b) expresses the intent of the Legislature that existing lead-acid battery recycling operations that are in compliance with state and federal law shall not be adversely affected by this chapter. To prevent any unintended interpretation of that section, the committee may wish to consider a technical amendment to clarify that AB 2153 Page 18 CalRecycle may not use claims regarding compliance with requirements not directly mandated by AB 2153 to find an entity has not complied with the provisions of AB 2153. Related legislation: 1. SB 93 (De Léon) would appropriate $176.6 million for Exide pollution cleanup. It is pending before the Senate Budget Committee. 2. AB 118 (Santiago) also proposes to enact the $176.6 million appropriation for Exide pollution cleanup. It is pending before the Senate Budget Committee. REGISTERED SUPPORT / OPPOSITION: Support Action Now AMVETS Apostolic Faith Center Californians Against Waste California Communities Against Toxics AB 2153 Page 19 California League of Conservation Voters California Kids IAQ California Product Stewardship Council California Safe Schools Central California Environmental Justice Coalition for Clean Air Coalition for a Safe Environment Community Dreams Comité Pro Uno Network Del Amo Action Committee Desert Citizens Against Pollution Exide Access Outreach Project Greenaction for Health and Environmental Justice AB 2153 Page 20 Health Homes Collaborative Jordan Downs EJ Coalition Organización Deportiva BSLCA Our Right to Know Philippine Action Group for the Environment Sierra Club California Society for Positive Action Valley Improvement Projects Watts Labor Community Action Committee West Berkeley Alliance for Clean Air and Wilmington Improvement Network Safe Jobs AB 2153 Page 21 Opposition Auto Care Association California Automotive Wholesalers' Association California New Car Dealers Association Coalition for Auto Repair Equality (CARE) Analysis Prepared by:Paige Brokaw / E.S. & T.M. / (916) 319-3965