BILL ANALYSIS Ó AB 2153 Page 1 ASSEMBLY THIRD READING AB 2153 (Cristina Garcia) As Amended April 14, 2016 2/3 vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Environmental |4-1 |Alejo, Lopez, |Beth Gaines | |Safety | |McCarty, Ting | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, | | | |Bonilla, Bonta, |Gallagher, Jones, | | | |Calderon, Daly, |Obernolte, Wagner | | | |Eggman, Eduardo | | | | |Garcia, Roger | | | | |Hernández, Holden, | | | | |Quirk, Santiago, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Establishes mandatory requirements for the collection and recycling of lead-acid batteries. Specifically, this bill: AB 2153 Page 2 1)Establishes the Lead-Acid Battery Recovery and Recycling Act. 2)Requires, on or before July 1, 2017, a qualified industry association to establish a lead-acid battery organization (LABO) to develop, implement and administer the lead-acid battery recycling program. 3)Requires the director of the California Department of Resources Recycling and Recovery (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. 4)Requires, on or before January 1, 2018, each manufacturer, retailer, and recycler to register with the LABO. 5)Requires, on or before July 1, 2018, the LABO to develop and submit to CalRecycle a plan with specified elements for recycling lead-acid batteries. 6)Authorizes the LABO to include market development opportunities that would provide incentives to universities and research companies to find alternatives to lead in batteries. 7)Requires CalRecycle to review the plan for compliance and specifies time frames for taking action on approval. AB 2153 Page 3 8)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. 9)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. 10)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. 11)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 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. 12)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. 13)Requires the LABO to remit to the state $1 from the sale of each lead-acid battery with a California recycling sticker. AB 2153 Page 4 Requires remittance of $2 under specified conditions. 14)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. 15)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. 16)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. 17)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 other required information. Specifies timeframes for CalRecycle to review and approve the report. 18)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. AB 2153 Page 5 19)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. 20)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. 21)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. 22)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. 23)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 AB 2153 Page 6 administrative actions CalRecycle may take on noncompliant entities. 24)Establishes the Lead-Acid Battery Recovery and Recycling Penalty Account and requires all administrative civil penalties collected to be deposited into that account. 25)Authorizes CalRecycle to adopt emergency regulations to implement the provisions of this bill. 26)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, the Unfair Practices Act, or the Unfair Competition Law. 27)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. 28)Establishes this as an urgency act in order to increase the cleanup of toxic materials and prevent additional toxic pollution at the earliest possible time. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill would result in: 1)Unknown, continuously appropriated costs for DTSC lead clean-up activities clean-resulting from the battery charge; AB 2153 Page 7 2)Increased initial costs for CalRecyle of between $650,000 and $750,000 and 6-7 Personnel Year (PY) to develop regulations, enforcement procedures, establish the fund and certify the advisory committee; and, 3)After the program is established, ongoing annual CalRecycle implementation and enforcement costs of approximately $1 million and 9-10 PY. Funding requires an initial loan from the Integrated Waste Management Account but ongoing funding is provided from the Fund. COMMENTS: 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. 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. 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. 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 AB 2153 Page 8 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 On April 20, 2016, the Governor signed AB 118 (Santiago), Chapter 10, Statutes of 2016 and SB 93 (De Léon), Chapter 9, Statutes of 2016, appropriating a $176.6 million loan from the Toxic Substances Control Account to enable DTSC to test the remaining properties, schools, daycare centers, and parks in the 1.7 mile radius and remove contaminated soil at the properties that have the highest lead levels and greatest potential exposure to residents. Cleanup costs initially incurred by the State will ultimately be sought from the parties responsible for the lead contamination. DTSC is looking for funds to pay for the work while it seeks additional money from Exide and other responsible parties. AB 2153 Page 9 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: This bill would require a fee to be added to the purchase price of a replacement lead-acid battery at the point of sale, and would authorize the revenues to be continuously 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, this bill 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. 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 AB 2153 Page 10 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 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 AB 2153 Page 11 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. This bill 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 deposit. Analysis Prepared by: Paige Brokaw / E.S. & T.M. / (916) 319-3965 FN: 0003201 AB 2153 Page 12