BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            AB 2530
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          |Author:    |Gordon                                               |
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          |Version:   |6/15/2016              |Hearing      |6/29/2016       |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Rebecca Newhouse                                     |
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          SUBJECT:  Recycling:  beverage containers.

            ANALYSIS:
          
          Existing law:
          
          1) Under the California Beverage Container Recycling and Litter  
             Reduction Act (Bottle Bill):

             a)    Requires beverage containers, as defined, sold in-state  
                to have a California redemption value (CRV) of 5 cents for  
                containers that hold fewer than 24 ounces and 10 cents for  
                containers that hold 24 ounces or more, and requires  
                distributors to pay a redemption payment to the Department  
                of Resources Recycling and Recovery (CalRecycle) for every  
                beverage container sold in the state. These funds are  
                continuously appropriated to CalRecycle for the payment of  
                refund values and processing fees. 

             b)    Requires every glass manufacturer in the state to use  
                at least 35% of postfilled glass in the manufacturing of  
                their glass food, drink or beverage containers, as  
                specified. 

          2)Pursuant to the Integrated Waste Management Act:  


             a)   Requires that rigid plastic packaging containers sold in  
               the state contain a minimum of 25% postconsumer recycled  
               material and have a recycling rate of at least 45%.  







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             b)   Requires that manufacturers of plastic trash bags that  
               are at or above 0.70 mils thick to  annually certify that  
               they comply with one of the following: 


               i)     That the bags sold in California contain a minimum  
                 of 10% recycled content; or,


               ii)    That all plastic products sold by the manufacturer  
                 in California contain a minimum of 30% recycled content.   



             c)   Requires that expanded polystyrene loosefill packaging  
               (i.e., packing peanuts) sold in the state contain a minimum  
               of 60% recycled content.  


             d)   Prohibits a manufacturer or supplier from selling a  
               plastic food or beverage container that is advertised with  
               a specific recycling content amount unless the manufacturer  
               or supplier is able to provide certification of that claim  
               in a format that is easy to understand and scientifically  
               accurate.  


             e)   Requires a manufacturer or supplier to provide  
               information and documentation verifying the recycling  
               content of a plastic food or beverage container within 90  
               days of a request for such information made by a member of  
               the public or a state agency.


          This bill:  

          1) Requires a manufacturer of a plastic beverage container,  
             beginning in March 1, 2018, to report the amount of virgin  
             plastic and postconsumer recycled content in plastic used in  
             their beverage containers subject to CRV sold in the state  
             the previous calendar year.









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          2) Requires manufacturers submit the above information to  
             CalRecycle under penalty of perjury. 

          3) Specifies that the requirements above do not apply to a  
             refillable plastic beverage container. 

            Background
          
          1) Statutes requiring recycled content. California has several  
             programs and statutes that require minimum levels of recycled  
             content or "postconsumer" material in various products or  
             purchases. Postconsumer material is generally defined as  
             products that were bought, used, and recycled by consumers.  
             For example, a plastic bottle that has been purchased,  
             recycled, and used to make another product would be  
             considered postconsumer material.  

             a)    Rigid plastic packaging container law.  California's  
                Rigid Plastic Packaging Container (RPPC) law was enacted  
                in 1991 as part of an effort to reduce the amount of  
                plastic waste disposed in California landfills and to  
                increase the use of recycled postconsumer plastic.  The  
                law mandates that rigid plastic packaging containers sold  
                in the state contain a minimum of 25% postconsumer  
                recycled material.  Some products are exempt from  
                compliance, including food, drugs, baby formula, and other  
                materials. 

             b)    Glass beverage container recycled content.  California  
                state law requires in-state glass manufacturers to use a  
                minimum of 35% postfilled glass (glass that had previously  
                been filled with a beverage or food) in the manufacturing  
                of their glass food drink, or beverage containers,  
                measured in the aggregate on an annual basis, and a  
                minimum of 25% postfilled glass if the manufacturers use  
                at least half mixed-color cullet. 

                Glass manufacturers are required to report each month to  
                CalRecycle on the total tons of new glass food, drink and  
                beverage containers made in California and the tons of  
                California postfilled glass used in the manufacturing of  
                those new containers. 

                There is no similar statewide requirement for plastic  








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                beverage containers.

             c)    State Agency Buy Recycled Campaign. Current state law  
                establishes the State Agency Buy Recycled Campaign  
                (SABRC), which requires state agencies and the Legislature  
                to purchase recycled-content products and track those  
                purchases.  The SABRC requires minimum postconsumer  
                material content for 11 specified product categories,  
                including a minimum level of 10% postconsumer material for  
                plastic products.  All state agencies are mandated to  
                require all businesses to certify in writing the  
                percentage of postconsumer material in the products,  
                materials, goods, or supplies offered or sold to the  
                state. 

          2)Plastic recycling in California. California has around 10  
             reclaimers accepting plastic for washing and producing  
             recycled flake or pellets and over 30 manufacturers that use  
             recycled plastic to manufacture new products.  While there  
             has been significant growth in the use of recycled plastic in  
             California, the vast majority of recycled plastic is sent  
             overseas.  


           In 2014, Californians returned approximately 17.7 billion (one  
             million tons) beverage containers covered by the Bottle Bill.  
              Plastic containers accounted for 220,000 tons.  Roughly half  
             of these plastic containers are at least partially processed  
             in California.


          1)Barriers to using postconsumer plastic. 


             a)    Economics.  According to the report "One major driver  
                of California's recycling efforts is the broader market  
                for recyclable materials. In order for recycling to be  
                economically viable, the cost of processing and using the  
                recycled material must be less than that of virgin  
                material. One complication is that prices for materials  
                can fluctuate wildly, leading to dramatic variations in  
                the monetary reward for recycling."










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              The report further states, "The prices of individual  
                commodities are based on a range of factors, including  
                global supply, demand, strength of the U.S. dollar,  
                inventories, consumer consumption, material quality and  
                cleanliness, and the availability of facilities to process  
                recycled materials. In addition to the inherent volatility  
                of market prices for secondary materials, small changes in  
                prices can have strong impacts on the profitability of  
                secondary materials compared to virgin material. For  
                example, falling oil prices and other factors have reduced  
                the price of virgin plastic and made recycling plastics  
                less economically feasible by reducing the scrap value of  
                post-consumer recyclable plastic."


             b)    Contamination.  Historically, glass, steel, aluminum,  
                and paper have been recycled for use in food packaging.   
                The risk of postconsumer contamination has not been a  
                major concern with glass and metals, because they are  
                generally impervious to contaminants and are adequately  
                cleaned at the temperatures used in their recycling.  In  
                addition, pulp from reclaimed fiber in paper and  
                paperboard may be used for food-contact articles provided  
                it meets federal standards.  



             Manufacturers of plastic food packaging that contains  
                recycled plastic are responsible for ensuring that the  
                recycled material is of suitable purity for its intended  
                use and will meet all existing specifications for the  
                virgin material.  
              The federal Food and Drug Association (FDA) states that  
                safety concerns with the use of recycled plastic materials  
                in food packaging include: 1) that contaminants from the  
                postconsumer material may appear in the final food-contact  
                product made from the recycled material; 2) that recycled  
                postconsumer material not regulated for food-contact use  
                may be incorporated into food-contact packaging; and, 3)  
                that components in the recycled plastic may not comply  
                with the regulations for food-contact use. 


              To address these concerns, FDA considers proposed uses of  








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                recycled plastic on a case-by-case basis and issues  
                informal advice as to whether the recycling process is  
                expected to produce plastic suitable for food packaging.   
                FDA then issues a "non-objection" letter to the  
                manufacturer for the packaging.  Generally, manufacturers  
                use postfilled plastic, which refers to recycled materials  
                that contained food or beverages prior to recycling, to  
                meet FDA standards.  


              Several plastic food and drink manufacturers located in  
                California have received non-objection letters from the  
                FDA.  Depending on the beverage manufacturer and product  
                line, there is a range of recycled content used in plastic  
                beverage containers.  For example, Coca Cola uses on  
                average 6% recycled content for their PET packaging, Pepsi  
                Co reports they are at 10% for beverage containers,  
                Arrowhead and Nestle bottled water both report a 50%  
                recycled content rate, and Naked Juice reports that their  
                bottles are made from 100% recycled content. 


            Comments
          
          1) Purpose of Bill.  According to the author, "Thirty years ago,  
             the Legislature passed and the Governor signed the California  
             Beverage Container Recycling and Litter Reduction Act, better  
             known as the Bottle Bill.  This Act established California's  
             systems for the recycling of beverage containers.  In the  
             decades since the Bottle Bill was enacted, Californians have  
             embraced recycling beverage containers and roughly 82% are  
             returned for recycling.  Given the public's embrace of  
             recycling, consumers should be able to determine whether  
             beverage companies are using recycled plastic in the  
             beverages they purchase." 

          2) No postconsumer recycled content requirement. As noted in the  
             background, several other programs in California, including  
             the Rigid Plastic Packaging Container program, require  
             minimum levels of postconsumer recycled material. This bill  
             does not have a mandate for postconsumer recycled content in  
             beverage containers, but does require manufacturers who sell  
             beverages in plastic containers in California, and that are  
             subject to CVR, to report annually to CalRecycle on the level  








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             of postconsumer recycled material used for those plastic  
             beverages. 

            Related/Prior Legislation

          AB 1447 (Alejo) would have established minimum recycled content  
          standards for polyethylene terephthalate (PET) food and beverage  
          packing and expanded the recycled content requirement for glass  
          food and beverage containers to containers manufactured out of  
          state.  This bill was held in the Assembly Appropriations  
          Committee. 


          SB 732 (Pan) would have required every manufacturer of a  
          beverage sold in any plastic container to demonstrate to  
          CalRecycle that each type of a plastic beverage container sold  
          in California contains no less than 10% postfilled material, and  
          would have prohibited CalRecycle from reducing the processing  
          fees for beverage manufacturers unless their beverage containers  
          meet the required recycled content.  This bill was held in  
          Senate Environmental Quality Committee. 

            
          SOURCE:                    Californians Against Waste  

           SUPPORT:               

          As You Sow
          CarbonLITE Industries
          Central Contra Costa Solid Waste Authority
          Clean Water Action
          EcoPET Plastics, Inc.
          Global PET
          Los Angeles Alliance for a New Economy
          Marin County Hazardous and Solid Waste Management Joint Power  
                         Authority
          Marin Sanitary Service
          Napa Recycling &Waste Services
          Natural Resources Defense Council
          Northern California Recycling Association
          RePET
          Sierra Club California
          Sonoma County Waste Management Agency
          StopWaste








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          Tri-CED Community Recycling
          UPSTREAM
          Verdeco Recycling, Inc.
          West Coast Chapter of the Institute of Scrap Recycling  
                         Industries
          Zanker Recycling
           
           OPPOSITION:    

          American Beverage Association
          American Chemistry Council
          California Bottled Water Association
          California Chamber of Commerce
          California League of Food Processors
          California Manufacturers and Technology Association
          California Nevada Beverage Association
          California Retailers Association
          Grocery Manufacturers Association
          International Bottled Water Association
          Plastic Recycling Corporation of California
          SPI - The Plastics Industry Trade Association 
           
           ARGUMENTS IN  
          SUPPORT:    Proponents say that AB 2530 creates a
          voluntary market incentive for beverage producers to increase  
                         their use of
          recycled content. They note that while Californians have done a  
                         great job
          collecting beverage containers for recycling, the in-state  
                         plastic recycling market
          is facing considerable challenges, including the drastic drop in  
          oil prices, which 
          has lowered demand and price for California-generated recycled  
                         materials, and that
          this has many manufacturers reconsidering their commitments to  
                         using recycled 
          content. They further state that AB 2530 will encourage the  
                         development of a
          closed-loop recycling system that supports a robust in-state  
                         recycling industry that
          not only creates jobs but also provides a valuable raw material  
                         for the state's
          manufacturers. 
           








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           ARGUMENTS IN  
          OPPOSITION:    Opponents argue that AB 2530 would
          impose new, costly and unnecessary bureaucratic duties on the  
                         beverage industry
          that ignore the realities of today's regional beverage  
                         manufacturing and
          distribution marketplace. Specifically, they note that large  
                         beverage manufacturers
          have hundreds of specific product packages that would need an  
                         annual in-depth
          supply chain analysis to generate an accurate percentage of  
                         recycled content, and
          that there is no test to determine recycled content other than  
                         to audit the extensive
          supply chain of both the source of beverages and beverage  
          packaging. They state that the report would have to be revised  
          each year to ensure accuracy and that it is unrealistic to  
          assume such reports will provide meaningful information to the  
          public or CalRecyle.
           
           
                                          
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