BILL ANALYSIS Ó AB 2153 Page 1 (Without Reference to File) ASSEMBLY THIRD READING AB 2153 (Cristina Garcia) As Amended June 1, 2016 2/3 vote. Urgency ------------------------------------------------------------------- |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 | | AB 2153 Page 2 | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Delete the contents of the bill, entirely, and replace with the following new language to: 1)Repeal and amend Article 10.5 of Chapter 6.5 of the Health & Safety Code regarding the management of lead-acid batteries. 2)Require a replacement lead-acid battery dealer to accept from a consumer a used lead-acid battery without regard to the brand or original dealer of the used battery for recycling. Cap the number of batteries that can be returned by a consumer at six lead-acid batteries per day. 3)Authorize consumers to be refunded the deposit if the lead-acid battery is returned within 45 days after purchase. 4)Require a lead-acid battery dealer to conspicuously post a written notice stating that the dealer is required by law to accept used lead-acid batteries and charge a fee on all replacement lead-acid battery sold. 5)Require a lead-acid battery dealer to charge a refundable deposit (unspecified dollar amount) plus a non-refundable $1 California Battery Fee on each lead-acid battery sold to a person buying a replacement lead-acid battery. 6)Require all replacement lead-acid batteries to have a widely understood recycling symbol. AB 2153 Page 3 7)Require a lead-acid battery dealer to collect the California Battery Fee at the time of sale and authorize the dealer to retain 1.5-% of the fee as reimbursement for any costs associated with the collection of the fee. Require the remainder of the fee be remitted to the State Board of Equalization (BOE). 8)Require each manufacturer to remit to the BOE a $1 Manufacturer Battery Fee for each lead-acid battery sold at retail to a person in California. 9)Require all California Battery Fee and Manufacturer Battery Fee revenues to be deposited into the Lead-Acid Battery Cleanup Fund. 10)Require Department Toxic Substances Control (DTSC) and BOE to be reimbursed for the costs of collection, auditing, and administration of funds. Cap administrative costs at 3%. 11)Authorize a wholesaler of lead-acid batteries to assume responsibility of paying the Manufacturer Battery Fee at the behest of the manufacturer. Require the wholesaler to notify BOE, DTSC, and the manufacturer of its intention to pay the Manufacturer Battery Fee. 12)Authorize any manufacturer exempted from its obligations to pay the Manufacturer Battery Fee to voluntarily submit an additional $1 Manufacturer Battery Fee per lead-acid battery. Prohibit the manufacturer from passing along the costs to the wholesaler or consumers. 13)Continuously appropriate all funds in the Lead-Acid Battery AB 2153 Page 4 Cleanup Fund to DTSC to fund the following activities: investigation, site evaluation, cleanup, abatement, remedy, removal, monitoring, or other response actions at any site in California investigated because of concerns about lead releases from a lead-acid battery recycling facility (from hereto referred to as eligible lead-related activities), and repayment of General Fund loans for lead contamination cleanup. 14)Require any funds spent by DTSC for any eligible lead-related activities to be drawn from the Lead-Acid Battery Cleanup Fund before drawing from any other fund source. 15)Require DTSC, prior to seeking to recover any moneys spent on eligible lead-related activities from any person who has remitted any amount of Manufacturer Battery Fees, other than persons who are or were the owners or operators, or legal successors to owners or operators, of a site at which such activity occurred, to draw from and deplete the funds in the Lead-Acid Battery Cleanup Fund, and exhaust efforts to recover any funds expended for any eligible lead-related activity from the owners or operators, or legal successors to owners or operators, of the site at which such activity occurred. 16)Require the balance of a judgment against any manufacturer who has remitted any amount of Manufacturer Battery Fees to be reduced by the amount the manufacturer has remitted to the state. 17)State that nothing in this bill shall be construed to limit or otherwise affect any cause of action that may exist under any law that the state may bring against the owners or operators, or legal successors to owners or operators, of a site at which any described eligible lead-related activity. AB 2153 Page 5 18)Require any funds spent from the Lead-Acid Battery Cleanup Fund that are subsequently recovered from any person to be deposited into the Lead-Acid Battery Cleanup Fund. 19)Prohibit funds from the Lead-Acid Battery Cleanup Fund from funding Green Chemistry as it relates to lead-acid batteries. 20)Preclude lead-acid batteries from consideration for inclusion on a list of Priority Products under DTSC's Safer Consumer Products Program as long as the national recycling rate for lead in batteries determined by the methodology accepted by the United States Environmental Protection Agency (US EPA) employed in the Battery Council International's National Recycling Rate Study exceeds a to be determined percentage. 21)State that this shall not preclude a study of the impacts and benefits of manufacture and recycling of lead-acid batteries pursuant to the Governor's May Revise proposal. 22)Require DTSC to report annually to the Governor and to the Legislature on the status of the Lead-Acid Battery Cleanup Fund and on DTSC's progress on implementation. 23)Require any manufacturer who has remitted any amount of fees and who is held responsible by any authority under the California Hazardous Substances Account Act or any other law for the payment or reimbursement of any moneys to the state or a regional board for an eligible lead-related activity to have its responsibility for such payment or reimbursement reduced by the amounts that manufacturer remitted. 24)Authorize the state to bring an action against a manufacturer AB 2153 Page 6 who has remitted any amount of fees for the payment or reimbursement of any moneys to the State or a regional board for any of the eligible lead-related activities if the state has a reasonable basis to believe that the manufacturer ultimately would be held responsible for amounts in excess of the amount the manufacturer has remitted. 25)Require the state to notify the manufacturer of the state's intent to bring an action and meet and confer with the manufacturer to reach an agreement by which the manufacture voluntarily resolves the state's claim. 26)State that nothing shall be construed to create a private cause of action against a manufacturer, affect any cause of action that may exist under other law or reduce the amount of damages for which the manufacturer is held liable in any civil action for personal injury or wrongful death. 27)State that nothing shall be construed to limit or otherwise affect a claim the state may assert against the owners or operators, or legal successors to owners or operators, of a site at which any eligible lead-related activity. 28)Prohibit any administrative order or judicial relief from being sought to compel any person who has remitted fees to take any eligible lead-related activity at a site unless the Lead-Acid Battery Cleanup Fund has been exhausted by the state. 29)Authorize DTSC to impose civil administrative penalties not to exceed $1,000 per day on any person who is in violation. Requires all penalties to be deposited into the Lead-Acid Battery Cleanup Fund. AB 2153 Page 7 30)Establish this as an urgency act in order to increase the cleanup of toxic materials and prevent additional toxic pollution at the earliest possible time. 31)Establish the effective date as January 1, 2017. FISCAL EFFECT: According to the Assembly Appropriations Committee, the April 14, 2016, version, of this bill would result in: 1)Unknown, continuously appropriated costs for DTSC lead clean-up activities clean-resulting from the battery charge; 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: According to the author, "AB 2153 will create a state mandated Lead-Acid (Car) Battery fee that will serve as a funding mechanism for clean-up of areas contaminated by lead-acid batteries. Consumers will be charged a $1 fee per car battery at point of sale. Manufacturers will pay a $1 fee on AB 2153 Page 8 all batteries sold in the state. The money from the fee can go to re-pay the Governor's 176.6 million dollar loan, and will be used to clean up areas of the state that have been contaminated by the production and recycling of 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. Lead-acid batteries: According to the United States Geological Survey, the lead-acid battery industry accounted for about 90% of reported United States 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. Under current law, any dealer of lead-acid batteries is required to accept a lead-acid battery from a consumer, regardless of type and size of the battery. This bill, as amended, narrows the requirement for retailers to take back virtually any lead acid battery and authorizes retailers to reject a lead-acid battery if it is not the same "type and size" that is sold by that retailer. The author may wish to consider restoring current law, which affords more flexibility to consumers to return their spent lead-acid batteries for recycling. AB 2153 Page 9 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 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. AB 2153 Page 10 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. 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. Repaying the 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. Therefore, the previous version of the bill (April 14) clarified that funds from the fees accrued under this bill and deposited into the Lead-Acid Battery Cleanup Fund may only be used to fund any cleanup costs where there is no responsible party. This bill could be further amended to make that same clarification. 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. A non-refundable $1 Consumer Battery Fee would be paid by the consumer and $1 AB 2153 Page 11 Manufacturer Battery Fee would be paid per lead-acid battery manufacturer. An additional $1 per battery could be collected if a wholesaler pays the Manufacturer Battery Fee on the manufacturer's behest and the manufacturer voluntarily pays an additional $1 fee. The bill would authorize those fee revenues to be continuously appropriated to DTSC for the investigation, site evaluation, cleanup, abatement, remedy, removal, monitoring, or other response actions at any site in California investigated because of concerns about lead releases from a lead acid battery recycling facility. In addition, this bill would authorize funds in the Lead-Acid Battery Cleanup Fund to be used towards repaying the General Fund loan. Under this bill, any funds spent by DTSC for any eligible lead-related activities must be drawn from the Lead Acid Battery Cleanup Fund before drawing from any other fund source. The bill also requires the financial obligations of any manufacturer found financially responsible for any lead-related activity (site cleanup) to be reduced by the amount that the manufacturer remitted in Manufacturer Battery Fee or voluntary fees. If a manufacturer is found responsible for site cleanup, those fees act like a deposit on their cleanup costs. If a manufacturer is never found responsible for site cleanup, those remitted fees help to cover other manufacturer or recycler's cleanup costs, which could be considered a way of mandating corporate social responsibility. Clarifying responsibility: A manufacturer could have more than one wholesaler selling lead-acid batteries in California. Under this bill, more than one wholesaler could assume responsibility to pay the Manufacturer Battery Fee. The bill does not determine any threshold at which the manufacturer is released from responsibility. The bill simply requires a wholesaler to notify intent to pay the Manufacturer Battery Fee. If a AB 2153 Page 12 wholesaler manages 20% of the manufacturer's battery sales in California elects to pay the Manufacturer Battery Fee, it's unclear if the manufacturer is off the hook for the fee for the other 80% of its batteries sold in California. The author may wish to consider making the manufacturer's obligations under the bill commensurate with the wholesaler(s) paying the fee on that manufacturer's behalf. 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 Battery Council International (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 (Health and Safety Code Section (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, many 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 AB 2153 Page 13 returned to the retailer at the time of purchase of a new battery, the deposit is conditionally 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 is supposed to give retailers a tool to comply with those laws by incentivizing consumers to return their batteries. However, the core charge is unevenly charged and refunded in the retail industry, which has created an inconsistent implementation of the core charge amongst California car battery dealers. Establishing a state-mandated fee-for-recycling will compel all lead-acid battery manufacturers and dealers to comply with the requirements set forth in this bill and prevent an ongoing patchwork of retailer participation, as is the case under the current core charges. Governor's Budget: The May Revise proposed an increase and two positions for DTSC to evaluate listing lead-acid batteries as "priority products" subject to DTSC's Safer Consumer Products regulations. As part of DTSC's Hazardous Waste Reduction Initiative, it will conduct research, engage with stakeholders, evaluate options, and implement recommended actions to better protect the people and environment of California from adverse impacts related to the manufacture, use, recycling, and disposal of lead acid batteries. This bill would preclude lead-acid batteries from consideration for inclusion in the Safer Consumer Products Regulations as long as the national recycling rate for lead in batteries determined by the methodology accepted by the United States EPA employed in the BCI's National Recycling Rate Study exceeds a to be determined percentage. AB 2153 Page 14 While the bill is mindful of the Administration's budget proposal, it is in conflict with the direction of that proposal. According to the auto care industry, 99.6% of all lead-acid core batteries are recycled in California. Supposing that statistic is accurate for California, the author will have to consider what percentage could be applied to the bill to render the exemption meaningful. Federal Toxic Substances Control Act (TSCA) reform: Congress is actively working on legislation to update and reform TSCA, which is much needed action on federal chemical policy. One of the versions being considered in the US Senate (Chemical Safety for the 21st Century Act (S. 697)), however, contains preemption language that would eliminate state authority to maintain or develop protections against dangerous chemicals before compliance with new federal rules is required; in other words, it would preempt state chemical management laws, such as California's Safer Consumer Products program. On September 30, 2015, Governor Jerry Brown sent a letter to the Senate Majority Leader asking that the regulatory pause in S. 697 be eliminated. Matt Rodriguez, Secretary for Environmental Protection at the California Environmental Protection Agency, also sent a letter asking that S. 697's preemption provisions be removed as it would prevent California from fully implementing Safer Consumer Products program. The Administration's letters to Congress on this point underscore the priority of the state to maintain the integrity of the Safer Consumer Products program. Additional issues for consideration: As this bill moves through the Legislature, the author and the Legislature should consider the following issues: 1)The baseline amount of the "deposit" portion of the fee. Statutorily establishing the core fee (the amount in addition to the nonrefundable Consumer Battery Fee) will ensure AB 2153 Page 15 consumers pay the same fee statewide. This is especially important if the refund must be paid regardless of where the battery is returned. 2)Clarification of the recycling symbol to be included on all lead-acid batteries. 3)The differences between the Green Chemistry proposals in the bill and the Governor's budget. 4)Eliminating prohibitions on loans to other programs. The Legislature has used loans from state funds to balance the budget, and restricting loans restricts the budgeting process for future legislatures. 5)To prevent obfuscating DTSC's budget processes for funding hazardous waste cleanup, consider how language impacts DTSC's current process. 6)Proportionality of wholesaler payment of the Manufacturer Battery Fee. Analysis Prepared by: Paige Brokaw / E.S. & T.M. / (916) 319-3965 FN: 0003369