BILL ANALYSIS                                                                                                                                                                                                    Ó



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          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:   









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          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.










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          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.   








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            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.










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          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  








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            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; 










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          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  








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          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.









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          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  








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          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  








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          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












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