BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2153


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          (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 |                     |








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          |                |     |                      |                     |
          |                |     |                      |                     |
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          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.









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          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  








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            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.









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          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  








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            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. 









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          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  








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          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. 









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          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.








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          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  








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          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  








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          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  








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          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. 








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          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  








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            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