Amended in Assembly June 23, 2016

Amended in Assembly May 25, 2016

Senate Bill No. 842

Introduced by Committee on Budget and Fiscal Review

January 7, 2016

begin delete An act relating to the Budget Act of 2016. end delete begin insert An act to amend Sections 14575 and 14585 of, to amend and repeal Section 14581 of, and to add and repeal Sections 14572.3 and 14575.2 of, the Public Resources Code, relating to recycling, and making an appropriation therefor, to take effect immediately, bill related to the budget. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 842, as amended, Committee on Budget and Fiscal Review. begin delete Budget Act of 2016. end delete begin insert California Beverage Container Recycling and Litter Reduction Act. end insert

begin insert

(1) Existing law, the California Beverage Container Recycling and Litter Reduction Act, requires a distributor to pay a redemption payment for every beverage container sold or offered for sale in the state. The act requires the Department of Resources Recycling and Recovery to annually designate convenience zones, as defined, statewide, and requires at least one certified recycling center or location within every convenience zone that accepts all types of empty beverage containers and pays the refund value, if any, at one location, and that is open for business 30 hours per week.

end insert begin insert

This bill would exempt from the requirement that each convenience zone be served by at least one certified recycling center a convenience zone that was served by, or exempted because of, a recycling center that closed between January 1, 2016, and March 31, 2016, inclusive, or that closed as a result of an action taken by the department on or after July 1, 2016.

end insert begin insert

(2) Under the act, the department is required to calculate a processing fee for each beverage container with a specified scrap value, which is required to be paid by beverage manufacturers for each beverage container sold or transferred to a distributor or dealer. The department is required to calculate the processing fee in a specified manner, so that the actual processing fee generally equals 65% of the processing payment that the department is required to pay to processors if the scrap value of the container having a refund value pursuant to the act is less than the cost of recycling. The department is required to establish a processing fee account in the continuously appropriated California Beverage Container Recycling Fund for each material type and to deposit processing fees and other amounts in the applicable account.

end insert begin insert

This bill would, for purposes of calculating processing payments on and after July 1, 2016, require the department, until April 1, 2017, to use the actual cost of recycling that was in effect on December 30, 2015, to calculate processing fees. The bill would make an appropriation by changing the terms and conditions under which the department is authorized to make payments from a continuously appropriated fund. The bill would provide that the processing fees shall not be higher than they would be absent these provisions.

end insert begin insert

Existing law authorizes the department to reduce, subject to the availability of funds, the processing fee based on the recycling rate of the container by expending funds deposited in the processing fee account for that material type, in accordance with a specified formula.

end insert begin insert

This bill would provide a definition for the phrase, “subject to the availability of funds,” and state that definition is declaratory of existing law. The bill would prohibit the department, until April 1, 2017, from finding that funds are unavailable for purposes of that processing fee reduction.

end insert begin insert

Existing law authorizes the department to adjust the processing payment upon making specified determinations with regard to, among other things, the statewide scrap value for the most recent available 12-month period and the amount of funds in the processing fee account.

end insert begin insert

This bill would instead require, for purposes of adjusting the processing payment, use of the statewide scrap value as determined for the most recent available 3-month period.

end insert begin insert

(3) The act continuously appropriates to the department the amount necessary to pay handling fees to provide an incentive for the redemption of empty beverage containers in convenience zones. Existing law specifies procedures for determining the number of containers for which a handling fee may be paid and requires the department to set the amount of the handling fee using a specified method, but formerly required the per-container handling fee to be set until March 1, 2013, at an amount not less than the amount of the per-container handling fee that was in effect on July 1, 2011.

end insert begin insert

This bill would require the per-container handling fee to be set until April 1, 2017, at an amount that is not less than the amount of the per-container handling fee that was in effect on July 1, 2015. The bill would authorize the department to expend, once the per-container handling fee is funded, up to $3,000,000 for the 2016-17 fiscal year for supplemental incentive handling fee payments to low-volume recycling centers. The bill would make an appropriation by changing the terms and conditions under which the department is authorized to make payments from a continuously appropriated fund.

end insert begin insert

(4) After setting aside funds for the payment of refund values and administrative fees, and for a reserve for contingencies, existing law continuously appropriates the remaining moneys in the fund to the department for expenditure for designated programs, grants, and fee payments, including, but not limited to, the processing fees and payments specified in (2) and the handling fees specified in (3).

end insert begin insert

This bill would make inoperative on April 1, 2017, the continuous appropriations of the remaining moneys in the fund, and related provisions.

end insert begin insert

(5) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

end insert begin delete

This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2016.

end delete

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

(a) The Legislature finds and declares all of the
following:

end insert begin insert

(1) Recycling is critical to reducing the amount of materials
sent to landfills and reducing the amount of virgin materials
necessary to produce new products.

end insert begin insert

(2) The state’s beverage container recycling program has
achieved significant success over the decades since it was enacted,
including a recycling rate as high as 85 percent in 2012-13.

end insert begin insert

(3) However, that success has been accompanied by significant
challenges, including reduced customer access to centers where
they can redeem their deposit, record low scrap prices, and a
structural deficit for the program’s operating fund.

end insert begin insert

(4) The Department of Resources Recycling and Recovery
projects that the California Beverage Container Recycling Fund
will have an average annual structural deficit of $74.7 million for
the fiscal years 2015-16 to 2017-18, inclusive.

end insert begin insert

(5) In order to continue the success of the state’s beverage
container recycling program, there must be a comprehensive
reprioritization of expenditures from the California Beverage
Container Recycling Fund and reconsideration of how the state
incentivizes the collection and reuse of recycled products.

end insert begin insert

(b) It is the intent of the Legislature to provide a limited-scope
temporary measure to preserve customer access to recycling while
the Legislature and the Department of Resources Recycling and
Recovery work with all stakeholders to restructure the state’s
beverage container recycling program and the California Beverage
Container Recycling Fund. This restructure should include, but
not be limited to, all of the following:

end insert begin insert

(1) What containers should be included in the program.

end insert begin insert

(2) How to continue to raise recycling rates.

end insert begin insert

(3) How to preserve convenient customer access to recycling.

end insert begin insert

(4) How to incentivize the use of products made with recycled
materials.

end insert begin insert

(c) It is the intent of the Legislature to suspend all payments
from the California Beverage Container Recycling Fund on April
1, 2017, unless there is comprehensive reform of the program.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 14572.3 is added to the end insert begin insert Public Resources Code end insert begin insert ,
to read: end insert

begin insert

begin insert 14572.3. end insert   

(a) Notwithstanding Sections 14571.6, 14571.7, and
14571.8, commencing July 1, 2016, a convenience zone shall be
exempt from the requirements of Section 14571 if either of the
following apply:

(1) The convenience zone was served by, or exempted because
of, a recycling center that closed between January 1, 2016, and
March 31, 2016, inclusive.

(2) The convenience zone was served by, or exempted because
of, a recycling center that closed as a result of an action taken by
the department on or after July 1, 2016.

(b) Exemptions granted pursuant to subdivision (a) shall be in
addition to the total number of exemptions that the director may
grant pursuant to subdivision (d) of Section 14571.8.

(c) This section shall become inoperative on April 1, 2017, and,
as of January 1, 2018, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2018, deletes or
extends the dates on which it becomes inoperative and is repealed.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 14575 of the end insert begin insert Public Resources Code end insert begin insert is
amended to read: end insert

14575.  

(a) If any type of empty beverage container with a
refund value established pursuant to Section 14560 has a scrap
value less than the cost of recycling, the department shall, on
January 1, 2000, and on or before January 1 annually thereafter,
establish a processing fee and a processing payment for the
container by the type of the material of the container.

(b) The processing payment shall be at least equal to the
difference between the scrap value offered to a statistically
significant sample of recyclers by willing purchasers, and except
for the initial calculation made pursuant to subdivision (d), the
sum of both of the following:

(1) The actual cost for certified recycling centers, excluding
centers receiving a handling fee, of receiving, handling, storing,
transporting, and maintaining equipment for each container sold
for recycling or, only if the container is not recyclable, the actual
cost of disposal, calculated pursuant to subdivision (c). The
department shall determine the statewide weighted average cost
to recycle each beverage container type, which shall serve as the
actual recycling costs for purposes of paragraph (2) of subdivision
(c), by conducting a survey of the costs of a statistically significant
sample of certified recycling centers, excluding those recycling
centers receiving a handling fee, for receiving, handling, storing,
transporting, and maintaining equipment.

(2) A reasonable financial return for recycling centers.

(c) The department shall base the processing payment pursuant
to this section upon all of the following:

(1) Except as provided in paragraph (2), for calculating
processing payments that will be in effect on and after January 1,
2004, the department shall determine the actual costs for certified
recycling centers, every second year, pursuant to paragraph (1) of
subdivision (b). The department shall adjust the recycling costs
annually to reflect changes in the cost of living, as measured by
the Bureau of Labor Statistics of the United States Department of
Labor or a successor agency of the United States government.

(2) On and after January 1, 2010, the department shall use the
most recently published, measured actual costs of recycling for a
specific beverage material type if the department determines the
number of beverage containers for that material type that is returned
for recycling pursuant to Section 14551, based on the most recently
published calendar year number of beverage containers returned
for recycling, is less than 5 percent of the total number of beverage
containers returned for recycling for all material types. The
department shall determine the actual recycling cost to be used for
calculating processing payments for those beverage containers in
the following manner:

(A) The department shall adjust the costs of recycling that
material type every second year by the percentage change in the
most recently measured cost of recycling HDPE plastic beverage
containers, as determined by the department. The department shall
use the percentage change in costs of recycling HDPE plastic
beverage containers for this purpose, even if HDPE plastic
beverage containers are less than 5 percent of the total volume of
returned beverage containers.

(B) The department shall adjust the recycling costs annually for
that material type to reflect changes in the cost of living, as
measured by the Bureau of Labor Statistics of the United States
Department of Labor or a successor agency of the United States
government.

(d) Except as specified in subdivision (e), the actual processing
fee paid by a beverage manufacturer shall equal 65 percent of the
processing payment calculated pursuant to subdivision (b).

(e)  begin insert (1) end insert begin insert   end insert The department, consistent with Section 14581 and
subject to the availability of funds, shall reduce the processing fee
paid by beverage manufacturers by expending funds in each
material processing fee account, in the following manner:

begin delete

(1)

end delete

begin insert (A) end insert  On January 1, 2005, and annually thereafter, the processing
fee shall equal the following amounts:

begin delete

(A)

end delete

begin insert (i) end insert  Ten percent of the processing payment for a container type
with a recycling rate equal to or greater than 75 percent.

begin delete

(B)

end delete

begin insert (ii) end insert  Eleven percent of the processing payment for a container
type with a recycling rate equal to or greater than 65 percent, but
less than 75 percent.

begin delete

(C)

end delete

begin insert (iii) end insert  Twelve percent of the processing payment for a container
type with a recycling rate equal to or greater than 60 percent, but
less than 65 percent.

begin delete

(D)

end delete

begin insert (iv) end insert  Thirteen percent of the processing payment for a container
type with a recycling rate equal to or greater than 55 percent, but
less than 60 percent.

begin delete

(E)

end delete

begin insert (v) end insert  Fourteen percent of the processing payment for a container
type with a recycling rate equal to or greater than 50 percent, but
less than 55 percent.

begin delete

(F)

end delete

begin insert (vi) end insert  Fifteen percent of the processing payment for a container
type with a recycling rate equal to or greater than 45 percent, but
less than 50 percent.

begin delete

(G)

end delete

begin insert (vii) end insert  Eighteen percent of the processing payment for a container
type with a recycling rate equal to or greater than 40 percent, but
less than 45 percent.

begin delete

(H)

end delete

begin insert (viii) end insert  Twenty percent of the processing payment for a container
type with a recycling rate equal to or greater than 30 percent, but
less than 40 percent.

begin delete

(I)

end delete

begin insert (ix) end insert  Sixty-five percent of the processing payment for a container
type with a recycling rate less than 30 percent.

begin delete

(2)

end delete

begin insert (B) end insert  The department shall calculate the recycling rate for
purposes of paragraph (1) based on the 12-month period ending
on June 30 that directly precedes the date of the January 1
processing fee determination.

begin insert

(2) For purposes of this subdivision, “subject to the availability
of funds” means subject to the projected annual program revenues
being equal to or exceeding projected annual program expenditures
in the most recent fund condition statement provided to the
Legislature pursuant to Section 14556. This paragraph is
declaratory of existing law.

end insert begin insert

(3) Notwithstanding paragraph (2), the department shall not,
until April 1, 2017, find that funds are unavailable for purposes
of paragraph (1).

end insert

(f) Not more than once every three months, the department may
make an adjustment in the amount of the processing payment
established pursuant to this section notwithstanding any change
in the amount of the processing fee established pursuant to this
section, for any beverage container, if the department makes the
following determinations:

(1) The statewide scrap value paid by processors for the material
type for the most recent available begin delete 12-month end delete begin insert three-month end insert period
directly preceding the quarter in which the processing payment is
to be adjusted is 5 percent more or 5 percent less than the average
scrap value used as the basis for the processing payment currently
in effect.

(2) Funds are available in the processing fee account for the
material type.

(3) Adjusting the processing payment is necessary to further
the objectives of this division.

(g) (1) Except as provided in paragraphs (2) and (3), every
beverage manufacturer shall pay to the department the applicable
processing fee for each container sold or transferred to a distributor
or dealer within 40 days of the sale in the form and in the manner
which the department may prescribe.

(2) (A) Notwithstanding Section 14506, with respect to the
payment of processing fees for beer and other malt beverages
manufactured outside the state, the beverage manufacturer shall
be deemed to be the person or entity named on the certificate of
compliance issued pursuant to Section 23671 of the Business and
Professions Code. If the department is unable to collect the
processing fee from the person or entity named on the certificate
of compliance, the department shall give written notice by certified
mail, return receipt requested, to that person or entity. The notice
shall state that the processing fee shall be remitted in full within
30 days of issuance of the notice or the person or entity shall not
be permitted to offer that beverage brand for sale within the state.
If the person or entity fails to remit the processing fee within 30
days of issuance of the notice, the department shall notify the
Department of Alcoholic Beverage Control that the certificate
holder has failed to comply, and the Department of Alcoholic
Beverage Control shall prohibit the offering for sale of that
beverage brand within the state.

(B) The department shall enter into a contract with the
Department of Alcoholic Beverage Control, pursuant to Section
14536.5, concerning the implementation of this paragraph, which
shall include a provision reimbursing the Department of Alcoholic
Beverage Control for its costs incurred in implementing this
paragraph.

(3) (A) Notwithstanding paragraph (1), if a beverage
manufacturer displays a pattern of operation in compliance with
this division and the regulations adopted pursuant to this division,
to the satisfaction of the department, the beverage manufacturer
may make a single annual payment of processing fees, if the
beverage manufacturer meets either of the following conditions:

(i) If the redemption payment and refund value is not increased
pursuant to paragraph (3) of subdivision (a) of Section 14560, the
beverage manufacturer’s projected processing fees for a calendar
year total less than ten thousand dollars ($10,000).

(ii) If the redemption payment and refund value is increased
pursuant to paragraph (3) of subdivision (a) of Section 14560, the
beverage manufacturer’s projected processing fees for a calendar
year total less than fifteen thousand dollars ($15,000).

(B) An annual processing fee payment made pursuant to this
paragraph is due and payable on or before February 1 for every
beverage container sold or transferred by the beverage
manufacturer to a distributor or dealer in the previous calendar
year.

(C) A beverage manufacturer shall notify the department of its
intent to make an annual processing fee payment pursuant to this
paragraph on or before January 31 of the calendar year for which
the payment will be due.

(4) The department shall pay the processing payments on
redeemed containers to processors, in the same manner as it pays
refund values pursuant to Sections 14573 and 14573.5. The
processor shall pay the recycling center the entire processing
payment representing the actual costs and financial return incurred
by the recycling center, as specified in subdivision (b).

(h) When assessing processing fees pursuant to subdivision (a),
the department shall assess the processing fee on each container
sold, as provided in subdivisions (d) and (e), by the type of material
of the container, assuming that every container sold will be
redeemed for recycling, whether or not the container is actually
recycled.

(i) The container manufacturer, or a designated agent, shall pay
to, or credit, the account of the beverage manufacturer in an amount
equal to the processing fee.

(j) If, at the end of any calendar year for which glass recycling
rates equal or exceed 45 percent and sufficient surplus funds remain
in the glass processing fee account to make the reduction pursuant
to this subdivision or if, at the end of any calendar year for which
PET recycling rates equal or exceed 45 percent and sufficient
surplus funds remain in the PET processing fee account to make
the reduction pursuant to this subdivision, the department shall
use these surplus funds in the respective processing fee accounts
in the following calendar year to reduce the amount of the
processing fee that would otherwise be due from glass or PET
beverage manufacturers pursuant to this subdivision.

(1) The department shall reduce the glass or PET processing
fee amount pursuant to this subdivision in addition to any reduction
for which the glass or PET beverage container qualifies under
subdivision (e).

(2) The department shall determine the processing fee reduction
by dividing two million dollars ($2,000,000) from each processing
fee account by an estimate of the number of containers sold or
transferred to a distributor during the previous calendar year, based
upon the latest available data.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 14575.2 is added to the end insert begin insert Public Resources Code end insert begin insert ,
to read: end insert

begin insert

begin insert 14575.2. end insert   

(a) Notwithstanding Section 14575, for purposes of
calculating processing payments on and after July 1, 2016, the
department shall use the actual cost of recycling that was in effect
on December 30, 2015. The department shall adjust the recycling
costs annually to reflect changes in the cost of living, as measured
by the Bureau of Labor Statistics of the United States Department
of Labor or a successor agency of the United States government.

(b) Notwithstanding subdivisions (d) and (e) of Section 14575,
on and after July 1, 2016, the department shall not impose a
processing fee on a beverage manufacturer that is higher than the
processing fee that would be imposed without this section.

(c) This section shall become inoperative on April 1, 2017, and,
as of January 1, 2018, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2018, deletes or
extends the dates on which it becomes inoperative and is repealed.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 14581 of the end insert begin insert Public Resources Code end insert begin insert is
amended to read: end insert

14581.  

(a) Subject to the availability of funds and in
accordance with subdivision (b), the department shall expend the
moneys set aside in the fund, pursuant to subdivision (c) of Section
14580, for the purposes of this section in the following manner:

(1)  begin insert (A) end insert begin insert   end insert For each fiscal year, the department may expend the
amount necessary to make the required handling fee payment
pursuant to begin insert subdivisions (f) and (g) of end insert Section 14585.

begin insert

(B) Only after subparagraph (A) is funded for the 2016-17 fiscal
year, the department may expend up to three million dollars
($3,000,000) for supplemental incentive handling fee payments to
low-volume recycling centers pursuant to subdivision (h) of Section
14585.

end insert

(2) Fifteen million dollars ($15,000,000) shall be expended
annually for payments for curbside programs and neighborhood
dropoff programs pursuant to Section 14549.6.

(3) (A) Ten million five hundred thousand dollars ($10,500,000)
may be expended annually for payments of five thousand dollars
($5,000) to cities and ten thousand dollars ($10,000) for payments
to counties for beverage container recycling and litter cleanup
activities, or the department may calculate the payments to counties
and cities on a per capita basis, and may pay whichever amount
is greater, for those activities.

(B) Eligible activities for the use of these funds may include,
but are not necessarily limited to, support for new or existing
curbside recycling programs, neighborhood dropoff recycling
programs, public education promoting beverage container
recycling, litter prevention, and cleanup, cooperative regional
efforts among two or more cities or counties, or both, or other
beverage container recycling programs.

(C) These funds shall not be used for activities unrelated to
beverage container recycling or litter reduction.

(D) To receive these funds, a city, county, or city and county
shall fill out and return a funding request form to the department.
The form shall specify the beverage container recycling or litter
reduction activities for which the funds will be used.

(E) The department shall annually prepare and distribute a
funding request form to each city, county, or city and county. The
form shall specify the amount of beverage container recycling and
litter cleanup funds for which the jurisdiction is eligible. The form
shall not exceed one double-sided page in length, and may be
submitted electronically. If a city, county, or city and county does
not return the funding request form within 90 days of receipt of
the form from the department, the city, county, or city and county
is not eligible to receive the funds for that funding cycle.

(F) For the purposes of this paragraph, per capita population
shall be based on the population of the incorporated area of a city
or city and county and the unincorporated area of a county. The
department may withhold payment to any city, county, or city and
county that has prohibited the siting of a supermarket site, caused
a supermarket site to close its business, or adopted a land use policy
that restricts or prohibits the siting of a supermarket site within its
jurisdiction.

(4) One million five hundred thousand dollars ($1,500,000) may
be expended annually in the form of grants for beverage container
recycling and litter reduction programs.

(5) (A) The department shall expend the amount necessary to
pay the processing payment established pursuant to Section 14575.
The department shall establish separate processing fee accounts
in the fund for each beverage container material type for which a
processing payment and processing fee are calculated pursuant to
Section 14575, or for which a processing payment is calculated
pursuant to Section 14575 and a voluntary artificial scrap value is
calculated pursuant to Section 14575.1, into which account shall
be deposited both of the following:

(i) All amounts paid as processing fees for each beverage
container material type pursuant to Section 14575.

(ii) Funds equal to the difference between the amount in clause
(i) and the amount of the processing payments established in
subdivision (b) of Section 14575, and adjusted pursuant to
paragraph (2) of subdivision (c) of, and subdivision (f) of, Section
14575, to reduce the processing fee to the level provided in
subdivision (e) of Section 14575, or to reflect the agreement by a
willing purchaser to pay a voluntary artificial scrap value pursuant
to Section 14575.1.

(B) Notwithstanding Section 13340 of the Government Code,
the moneys in each processing fee account are hereby continuously
appropriated to the department for expenditure without regard to
fiscal years, for purposes of making processing payments pursuant
to Section 14575.

(6) Up to five million dollars ($5,000,000) may be annually
expended by the department for the purposes of undertaking a
statewide public education and information campaign aimed at
promoting increased recycling of beverage containers.

(7) Up to ten million dollars ($10,000,000) may be expended
annually by the department for quality incentive payments for
empty glass beverage containers pursuant to Section 14549.1.

(8) (A) Up to ten million dollars ($10,000,000) may be
expended annually by the department for market development
payments for empty plastic beverage containers pursuant to Section
14549.2, until January 1, 2017.

(B) In addition to the amount specified in subparagraph (A),
the department may expend the amount calculated pursuant to
subparagraph (C) for market development payments for empty
plastic beverage containers pursuant to Section 14549.2.

(C) The department shall calculate the amount authorized for
expenditure pursuant to subparagraph (B) in the following manner:

(i) The department shall determine, on or before January 1,
2012, and annually thereafter, whether the amount of funds
estimated to be necessary pursuant to clause (ii) of subparagraph
(A) of paragraph (6) for deposit to a processing fee account
established by the department for plastic beverage containers to
make processing payments for plastic beverage containers for the
current calendar year is less than the total amount of funds that
were estimated to be necessary the previous calendar year pursuant
to clause (ii) of subparagraph (A) of paragraph (6) for deposit to
that processing fee account.

(ii) If the amount estimated to be necessary for the current
calendar year, as specified in clause (i), is less than the amount
estimated to be necessary for the previous calendar year, the
department shall calculate the amount of that difference.

(iii) The department shall expend an amount that is not greater
than 50 percent of the amount calculated pursuant to clause (ii)
for purposes of subparagraph (B).

(iv) If the department determines that the amount of funds
authorized for expenditure pursuant to this subparagraph is not
needed to make plastic market development payments pursuant to
subparagraph (B) in the calendar year for which that amount is
allocated, the department may expend those funds during the
following year.

(v) If the department determines that there are insufficient funds
to both make the market development payments pursuant to
subparagraph (B) and to deposit the amount required by clause (ii)
of subparagraph (A) of paragraph (6), for purposes of making the
processing payments and reducing the processing fees pursuant to
Section 14575 for plastic beverage containers, the department shall
suspend the implementation of this subparagraph and subparagraph
(B).

(D) Subparagraphs (B) and (C) shall remain operative only until
January 1, 2017.

(b) (1) If the department determines, pursuant to a review made
pursuant to Section 14556, that there may be inadequate funds to
pay the payments required by this division, the department shall
immediately notify the appropriate policy and fiscal committees
of the Legislature regarding the inadequacy.

(2) On or before 180 days, but not less than 80 days, after the
notice is sent pursuant to paragraph (1), the department may reduce
or eliminate expenditures, or both, from the funds as necessary,
according to the procedure set forth in subdivision (c).

(c) If the department determines that there are insufficient funds
to make the payments specified pursuant to this section and Section
14575, the department shall reduce all payments proportionally.

(d) Prior to making an expenditure pursuant to paragraph (6) of
subdivision (a), the department shall convene an advisory
committee consisting of representatives of the beverage industry,
beverage container manufacturers, environmental organizations,
the recycling industry, nonprofit organizations, and retailers to
advise the department on the most cost-effective and efficient
method of the expenditure of the funds for that education and
information campaign.

(e) Subject to the availability of funds, the department shall
retroactively pay in full any payments provided in this section that
have been proportionally reduced during the period of January 1,
2010, through June 30, 2010.

begin insert

(f) This section shall become inoperative on April 1, 2017, and,
as of January 1, 2018, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2018, deletes or
extends the dates on which it becomes inoperative and is repealed.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 14585 of the end insert begin insert Public Resources Code end insert begin insert is
amended to read: end insert

14585.  

(a) The department shall adopt guidelines and methods
for paying handling fees to supermarket sites, nonprofit
convenience zone recyclers, or rural region recyclers to provide
an incentive for the redemption of empty beverage containers in
convenience zones. The guidelines shall include, but not be limited
to, all of the following:

(1) Handling fees shall be paid on a monthly basis, in the form
and manner adopted by the department. The department shall
require that claims for the handling fee be filed with the department
not later than the first day of the second month following the month
for which the handling fee is claimed as a condition of receiving
any handling fee.

(2) The department shall determine the number of eligible
containers per site for which a handling fee will be paid in the
following manner:

(A) Each eligible site’s combined monthly volume of glass and
plastic beverage containers shall be divided by the site’s total
monthly volume of all empty beverage container types.

(B) If the quotient determined pursuant to subparagraph (A) is
equal to, or more than, 10 percent, the total monthly volume of
the site shall be the maximum volume which is eligible for a
handling fee for that month.

(C) If the quotient determined pursuant to subparagraph (A) is
less than 10 percent, the department shall divide the volume of
glass and plastic beverage containers by 10 percent. That quotient
shall be the maximum volume that is eligible for a handling fee
for that month.

(3)  begin delete (A) end delete begin delete   end delete On and after the effective date of the act amending this
section during the begin delete 2011-12 end delete begin insert 2015-16 end insert Regular Session, and until
begin delete March end delete begin insert April end insert 1, begin delete 2013, end delete begin insert 2017, end insert the department shall pay a handling
fee per eligible container in the amount determined pursuant to
subdivisions (f) and (g).

begin delete end delete begin delete

(B) On and after July 1, 2014, the department shall pay a
handling fee per eligible container in the amount determined
pursuant to subdivision (f).

end delete begin delete end delete

(4) If the eligible volume in any given month would result in
handling fee payments that exceed the allocation of funds for that
month, as provided in subdivision (b), sites with higher eligible
monthly volumes shall receive handling fees for their entire eligible
monthly volume before sites with lower eligible monthly volumes
receive any handling fees.

(5) (A) If a dealer where a supermarket site, nonprofit
convenience zone recycler, or rural region recycler is located ceases
operation for remodeling or for a change of ownership, the operator
of that supermarket site nonprofit convenience zone recycler, or
rural region recycler shall be eligible to apply for handling fees
for that site for a period of three months following the date of the
closure of the dealer.

(B) Every supermarket site operator, nonprofit convenience
zone recycler, or rural region recycler shall promptly notify the
department of the closure of the dealer where the supermarket site,
nonprofit convenience zone recycler, or rural region recycler is
located.

(C) Notwithstanding subparagraph (A), any operator who fails
to provide notification to the department pursuant to subparagraph
(B) shall not be eligible to apply for handling fees.

(b) The department may allocate the amount authorized for
expenditure for the payment of handling fees pursuant to
begin insert subparagraph (A) of end insert paragraph (1) of subdivision (a) of Section
14581 on a monthly basis and may carry over any unexpended
monthly allocation to a subsequent month or months. However,
unexpended monthly allocations shall not be carried over to a
subsequent fiscal year for the purpose of paying handling fees but
may be carried over for any other purpose pursuant to Section
14581.

(c) (1) The department shall not make handling fee payments
to more than one certified recycling center in a convenience zone.
If a dealer is located in more than one convenience zone, the
department shall offer a single handling fee payment to a
supermarket site located at that dealer. This handling fee payment
shall not be split between the affected zones. The department shall
stop making handling fee payments if another recycling center
certifies to operate within the convenience zone without receiving
payments pursuant to this section, if the department monitors the
performance of the other recycling center for 60 days and
determines that the recycling center is in compliance with this
division. Any recycling center that locates in a convenience zone,
thereby causing a preexisting recycling center to become ineligible
to receive handling fee payments, is ineligible to receive any
handling fee payments in that convenience zone.

(2) The department shall offer a single handling fee payment
to a rural region recycler located anywhere inside a convenience
zone, if that convenience zone is not served by another certified
recycling center and the rural region recycler does either of the
following:

(A) Operates a minimum of 30 hours per week in one
convenience zone.

(B) Serves two or more convenience zones, and meets all of the
following criteria:

(i) Is the only certified recycler within each convenience zone.

(ii) Is open and operating at least eight hours per week in each
convenience zone and is certified at each location.

(iii) Operates at least 30 hours per week in total for all
convenience zones served.

(d) The department may require the operator of a supermarket
site or rural region recycler receiving handling fees to maintain
records for each location where beverage containers are redeemed,
and may require the supermarket site or rural region recycler to
take any other action necessary for the department to determine
that the supermarket site or rural region recycler does not receive
an excessive handling fee.

(e) The department may determine and utilize a standard
container per pound rate, for each material type, for the purpose
of calculating volumes and making handling fee payments.

(f) (1) On or before January 1, 2008, and every two years
thereafter, the department shall conduct a survey pursuant to this
subdivision of a statistically significant sample of certified
recycling centers that receive handling fee payments to determine
the actual cost incurred for the redemption of empty beverage
containers by those certified recycling centers. The department
shall conduct these cost surveys in conjunction with the cost
surveys performed by the department pursuant to subdivision (b)
of Section 14575 to determine processing payments and processing
fees. The department shall include, in determining the actual costs,
only those allowable costs contained in the regulations adopted
pursuant to this division that are used by the department to conduct
cost surveys pursuant to subdivision (b) of Section 14575.

(2) Using the information obtained pursuant to paragraph (1),
the department shall then determine the statewide weighted average
cost incurred for the redemption of empty beverage containers,
per empty beverage container, at recycling centers that receive
handling fees.

(3) Except as provided in subdivision (g), the department shall
determine the amount of the handling fee to be paid for each empty
beverage container by subtracting the amount of the statewide
weighted average cost per container to redeem empty beverage
containers by recycling centers that do not receive handling fees
from the amount of the statewide weighted average cost per
container determined pursuant to paragraph (2).

(4) The department shall adjust the statewide average cost
determined pursuant to paragraph (2) for each beverage container
annually to reflect changes in the cost of living, as measured by
the Bureau of Labor Statistics of the United States Department of
Labor or a successor agency of the United States government.

(5) The cost information collected pursuant to this section at
recycling centers that receive handling fees shall not be used in
the calculation of the processing payments determined pursuant
to Section 14575.

(g) (1) On and after the effective date of the act amending this
section during the begin delete 2011-12 end delete begin insert 2015-16 end insert Regular Session, and until
begin delete March end delete begin insert April end insert 1, begin delete 2013, end delete begin insert 2017, end insert the per-container handling fee shall
not be less than the amount of the per-container handling fee that
was in effect on July 1, begin delete 2011. end delete begin insert 2015. end insert

(2) The department may update the methodology and scrap
values used for calculating the handling fee from the most recent
cost survey if it finds that the handling fee resulting from the most
recent cost survey does not accurately represent the actual cost
incurred for the redemption of empty beverage containers by those
certified recycling centers.

begin insert

(h) (1) For the 2016-17 fiscal year, the department may expend
up to three million dollars ($3,000,000) from the fund for
supplemental incentive handling fee payments to low-volume
recycling centers. The department shall allocate the amount
authorized for these supplemental incentive handling fee payments
into 12 equal monthly allotments.

end insert begin insert

(2) Supplemental incentive handling fee payments shall be
distributed once per month in equal amounts to recycling centers
that are eligible for handling fees pursuant to subdivision (a),
subject to all of the following requirements:

end insert begin insert

(A) A recycling center shall not receive supplemental incentive
handling fee payments pursuant to this subdivision unless the
recycling center has no more than 600,000 beverage containers
eligible for handling fees per month.

end insert begin insert

(B) (i) Payments shall be distributed first to no more than 100
recycling centers with the lowest volumes of beverage containers
that are located in rural regions.

end insert begin insert

(ii) After payments are distributed pursuant to clause (i),
payments shall be distributed to other recycling centers with the
lowest volumes of beverage containers.

end insert begin insert

(iii) No more than 400 recycling centers shall receive
supplemental incentive handling fee payments pursuant to this
subdivision.

end insert begin insert

(3) The department may make the supplemental incentive
handling fee payments authorized pursuant to this subdivision by
augmenting handling fee payments received by recyclers pursuant
to subdivision (f) or (g) of this section.

end insert begin insert

(4) For the purposes of this subdivision, “rural region” has the
same meaning as in Section 14588.1.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert begin insert

This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes, relating to the Budget Act of 2016.

end delete