BILL NUMBER: SB 1906 CHAPTERED 09/27/00 CHAPTER 731 FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2000 APPROVED BY GOVERNOR SEPTEMBER 25, 2000 PASSED THE SENATE AUGUST 31, 2000 PASSED THE ASSEMBLY AUGUST 30, 2000 AMENDED IN ASSEMBLY AUGUST 29, 2000 AMENDED IN ASSEMBLY AUGUST 24, 2000 AMENDED IN ASSEMBLY AUGUST 18, 2000 AMENDED IN SENATE APRIL 24, 2000 INTRODUCED BY Senator Sher FEBRUARY 24, 2000 An act to amend Sections 14504, 14529.7, 14541, 14551.5, 14552, 14553, 14561, 14571.8, 14581, 14591, 14591.1, 14591.2, and 14591.4 of, to amend and renumber Section 14595 of, to amend and repeal Section 14549.1 of, to add Sections 14514, 14515.1, 14539.5, 14541.5, and 14591.6 to, to add Chapter 8.5 (commencing with Section 14595) to Division 12.1 of, and to repeal Sections 14571.9 and 14592 of, the Public Resources Code, relating to beverage container recycling, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1906, Sher. Beverage containers: enforcement. (1) The existing California Beverage Container Recycling and Litter Reduction Act requires a distributor of specified beverage containers to pay a redemption payment to the Department of Conservation, for each beverage container, as defined, sold or transferred, for deposit in the California Beverage Container Recycling Fund and provides for an increase in that payment, as specified. The money in the fund is continuously appropriated to the department to pay refund values, processing payments, and for other purposes. "Beverage" is defined, for purposes of the act, to include, among other things, carbonated and noncarbonated water, noncarbonated soft drinks and sport drinks, specified noncarbonated fruit drinks, coffee and tea drinks, and carbonated fruit drinks, if those products are sold in plastic, glass, bimetal, or aluminum containers in liquid, ready-to-drink form and intended for human consumption. Milk, medical food, and infant formula are excluded from that definition of beverage. The act requires beverage manufacturers to indicate a specified message on every beverage container sold or offered for sale by that beverage manufacturer. A violation of the act is a crime and the penalties for violations of the act are deposited in the fund. This bill would additionally include, in that definition of beverage, vegetable juice in beverage containers of 16 ounces or less, thereby making an appropriation. The bill would also define the terms "infant formula," "noncarbonated soft drink," and "medical food" for purposes of that definition of beverage. The bill would exempt any beverage container included within the coverage of the act on January 1, 2001, from specified labeling requirements, until January 1, 2002. (2) Existing law excludes from the act any program involving the collection and payment of deposits for beverage containers sold, used, or consumed at national parks and monuments, military installations, or any other property owned by and under the jurisdiction of the United States. This bill would provide that the act applies to a national park or monument, military installation, or any other property owned by, and under the jurisdiction of, the United States, to the extent permitted by federal law, with regard to a beverage container not otherwise subject to a program involving the collection and payment of deposits for beverage containers. The bill would define the term "a program involving the collection and payment of deposits" for this purpose. The bill would state that these changes do not constitute a change in, but are declaratory of, existing law. (3) The existing act authorizes the department to pay a quality glass incentive payment to curbside recycling programs. This bill would specify that payment is to be made to operators of curbside recycling programs. The bill would repeal that authority on January 1, 2003. (4) The existing act requires the department to register the operators of curbside programs. The act also authorizes the department to take disciplinary action against, among others, any certificate holder. This bill would provide that a registered operator of a curbside program is deemed a certificate holder for purposes of the act. (4.5) Existing law authorizes the department to conduct an audit or investigation during the 2-year period before the onset of the audit or investigation. This bill would, after January 1, 2002, increase the amount of time for which the department may conduct an audit to a 3-year period. (5) The existing act requires the department to provide a report to the Legislature on or before January 1, 2002, on the impact of a statewide public education and information campaign and to make recommendations for any future campaigns. This bill would require that the report and recommendations be made on or before July 1, 2002. (6) Existing law requires the processor to pay a dropoff or collection program, or other specified program, the refund value, certain administrative costs, and the processing payment for each empty beverage container received by the processor. Existing law requires the department to certify recycling centers and processors for purposes of the act, and authorizes the department to issue a certificate as a probationary certificate that is limited to a period of one year. This bill would require the department to certify dropoff and collection programs, and would require the Director of Conservation to adopt, by regulation, requirements and standards for certification. The bill would prohibit a certified dropoff or collection program from receiving refund values or processing payments on an empty beverage container that was received from a noncertified recycler or on other specified beverage containers not subject to the act. The bill would revise the provisions for the issuance of a probationary certificate, including authorizing the issuance of a probationary certificate for up to 2 years. (7) Existing law imposes criminal and civil penalties for specified violations of the act, including submission of false or fraudulent claims for payment. Existing law authorizes the department to take disciplinary action against any certificate holder, officer, director, or managing employee. The bill would specify procedures for the assessment of civil penalties, and would require the department to take into account specified factors when assessing these penalties. The bill would additionally authorize the department to take disciplinary action against any party responsible for, directing, contributing to, participating in, or otherwise influencing the operations of a certified or registered facility or program and would revise the disciplinary actions the department is authorized to take against that party. This bill would include, as actions subject to criminal penalties, the redemption of out-of-state containers, as defined. The bill would authorize the department to issue a cease and desist order when a person is engaged in recycling activity that violates the act, any regulation adopted pursuant to the act, or an order issued under the act. The bill would prescribe procedures for requesting a hearing regarding such an order and would require the Attorney General, upon request of the department, to petition the superior court for the issuance of a preliminary or permanent injunction, if a person fails to comply with the cease and desist order issued by the department. The bill would prohibit any person from paying, claiming, or receiving any refund value, processing payment, handling fee, or administrative fee for imported beverage container material, previously redeemed containers, rejected containers, line breakage, or other ineligible material. The bill would also prohibit any person from redeeming or attempting to redeem those containers or materials, returning previously redeemed containers to the marketplace for redemption, or bringing these containers or materials to the marketplace for redemption, as specified. The bill would require any person importing more than a specified amount of beverage container material into the state to report the material and provide an opportunity for inspection. The bill would prohibit any person from falsifying documents required pursuant to the act or the regulations adopted by the department. The bill would authorize the department to adopt emergency regulations to implement these prohibitions, and would provide that these emergency regulations are not to be repealed by the Office of Administrative Law and are to remain in effect until revised by the Director of Conservation. (8) The bill would require the department, by March 1, 2001, after consulting with the recycling industry, to submit a report to the Legislature as to any recommended changes to the act regarding enforcement. (9) Since a violation of the bill's requirements would be a crime, the bill would impose a state-mandated local program. (10) The bill also would repeal obsolete provisions, and delete nonconforming cross-references. (11) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 14504 of the Public Resources Code is amended to read: 14504. (a) Except as provided in subdivision (b), "beverage" means any of the following products if those products are in liquid, ready-to-drink form, and are intended for human consumption: (1) Beer and other malt beverages. (2) Wine and distilled spirit coolers. (3) Carbonated water, including soda and carbonated mineral water. (4) Noncarbonated water, including noncarbonated mineral water. (5) Carbonated soft drinks. (6) Noncarbonated soft drinks and "sport" drinks. (7) Except as provided in paragraph (4) of subdivision (b), noncarbonated fruit drinks that contain any percentage of fruit juice. (8) Coffee and tea drinks. (9) Carbonated fruit drinks. (10) Vegetable juice in beverage containers of 16 ounces or less. (b) "Beverage" does not include any of the following: (1) Any product sold in a container that is not an aluminum beverage container, a glass container, a plastic beverage container, or a bimetal container. (2) Wine, or wine from which alcohol has been removed, in whole or in part, whether or not sparkling or carbonated. (3) Milk, medical food, or infant formula. (4) One hundred percent fruit juice in containers that are 46 ounces or more in volume. (c) For purposes of this section, the following definitions shall apply: (1) "Infant formula" means any liquid food described or sold as an alternative for human milk for the feeding of infants. (2) (A) "Medical food" means a food or beverage that is formulated to be consumed, or administered enterally under the supervision of a physician, and that is intended for specific dietary management of diseases or health conditions for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation. (B) A "medical food" is a specially formulated and processed product, for the partial or exclusive feeding of a patient by means of oral intake or enteral feeding by tube, and is not a naturally occurring foodstuff used in its natural state. (C) "Medical food" includes any product that meets the definition of "medical food" in the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 360ee (b)(3). (3) "Noncarbonated soft drink" means a nonalcoholic, noncarbonated naturally or artificially flavored water containing sugar or sweetener or trace amounts of various elements from both natural and synthetic sources. SEC. 2. Section 14514 is added to the Public Resources Code, to read: 14514. "Managing employee" includes, but is not limited to, any person who manages the operation of a facility or is authorized by the certified operator to sign shipping reports. SEC. 3. Section 14515.1 is added to the Public Resources Code, to read: 14515.1. "Out-of-state container" means a used beverage container or used beverage container component that is not subject to Section 14560, and that is brought into this state. SEC. 4. Section 14529.7 of the Public Resources Code is amended to read: 14529.7. (a) Except as provided in subdivision (b), this division does not apply to any program involving the collection and payment of deposits for beverage containers sold, used, or consumed at national parks and monuments, military installations, or any other property owned by and under the jurisdiction of the United States. (b) To the extent permitted by federal law, this division, including, but not limited to, Section 14560.5, shall apply to a national park or monument, military installation, or any other property owned by, and under the jurisdiction of, the United States, with regard to a beverage container not otherwise subject to a program involving the collection and payment of deposits for beverage containers. (c) For purposes of this section, "a program involving the collection and payment of deposits" means a program, other than one imposed pursuant to this division, at a national park or monument, military installation, or any other property owned by, and under the jurisdiction of, the United States, that imposes a deposit on a beverage container at the time of sale and provides an opportunity for the beverage container purchaser to redeem the deposit at the national park or monument, military installation, or other property owned by, and under the jurisdiction of, the United States. SEC. 5. Section 14539.5 is added to the Public Resources Code, to read: 14539.5. (a) The department shall certify dropoff and collection programs pursuant to this section. The director shall adopt, by regulation, requirements and standards for certification and a dropoff or collection program shall meet all the standards and requirements contained in the regulations for certification. The regulations shall require that all information be submitted to the department under penalty of perjury. The regulations shall require, in addition to any other conditions that may be imposed by the department, that both of the following conditions be met for certification: (1) The dropoff or collection program demonstrates, to the satisfaction of the department, that the dropoff or collection program will operate in accordance with this division. (2) The dropoff or collection program notifies the department promptly of any material change in the nature of its operations that conflicts with the information submitted in the application for certification. (b) A certified dropoff or collection program shall not receive any refund value or processing payment on an empty beverage container that the certified dropoff or collection program knew, or should have known, was received from a noncertified recycler, on any beverage container that the certified dropoff or collection program knew or should have known came from out of this state, or any other beverage container or other product that does not have a refund value established pursuant to Section 14560. (c) The department may recover, in restitution pursuant to paragraph (5) of subdivision (c) of Section 14591.2, any payment made from the fund to a dropoff or collection program pursuant to Section 14573.5 that is based on a document that is not prepared or maintained in compliance with any applicable recordkeeping requirements required pursuant to this division or the department's regulations and that does not allow the department to verify the claims for those payments. SEC. 6. Section 14541 of the Public Resources Code is amended to read: 14541. (a) The department may issue a certificate pursuant to an initial or renewal application for certification as probationary, and the department may issue any other certificate as probationary pursuant to an enforcement action. (b) A probationary certificate issued pursuant to this section shall be issued for a limited period of not more than two years. Before the end of the probationary period, the department shall issue a nonprobationary certificate, extend the probationary period for not more than one year, or, after notice to the probationary certificate holder, revoke the probationary certificate. Subsequent to the revocation, the former probationary certificate holder may request a hearing, which, notwithstanding, Section 11445.20 of the Government Code, shall be conducted in the same form as a hearing for an applicant whose original application for certification is denied. (c) If conditions are imposed on the certificate holder as part of a disciplinary proceeding conducted pursuant to Section 14591.2, the certificate shall be considered probationary. If, at any time, the certificate holder violates any term or condition of the probationary certificate, the certificate may be revoked or suspended, after three days' notice, without any further hearing by the department. SEC. 7. Section 14541.5 is added to the Public Resources Code, to read: 14541.5. Any certification or registration granted by the department is a privilege and not a vested right or interest. SEC. 8. Section 14549.1 of the Public Resources Code is amended to read: 14549.1. (a) In order to improve the quality and marketability of glass containers collected for recycling by curbside recycling programs, the department may, consistent with Section 14581 and subject to the availability of funds, pay a quality glass incentive payment to operators of curbside recycling programs. The total amount shall not exceed three million dollars ($3,000,000) per calendar year. The department shall make a quality glass incentive payment based on all of the following: (1) The amount of the quality glass incentive payment shall be up to twenty-five dollars ($25) per ton, as determined by the department. (2) The department shall make a quality glass incentive payment only for color-sorted glass beverage containers that are substantially free of contamination. (3) The department shall make a quality glass incentive payment only for glass beverage containers that are either collected color sorted by curbside recycling programs, or collected commingled by curbside recycling programs and subsequently color sorted by the collector or the operator of a materials recovery facility. (4) Only one payment shall be made for each color-sorted glass beverage container collected. (b) This section shall remain in effect only until January 1, 2003, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2003, deletes or extends that date. SEC. 9. Section 14551.5 of the Public Resources Code is amended to read: 14551.5. (a) The department shall register the operators of curbside programs pursuant to this section. (b) Each curbside program that receives refund values and administrative fees from certified processors, or that receives refund values from certified recycling centers, shall register with the department for an identification number. No curbside program may receive refund values or administrative fees without a valid identification number. (c) The director shall adopt, by regulation, a procedure for the registration of curbside programs. This procedure shall include standards and requirements for registration. These regulations shall require that all information be submitted to the department under penalty of perjury. A curbside program shall meet all of the standards and requirements contained in the regulations for registration. (d) The department shall require that the identification numbers received pursuant to this section be used on shipping reports for material collected by curbside programs pursuant to Sections 14538 and 14539 and on all other reports or documentation required by the department to administer this division. (e) An operator of a curbside program registered pursuant to this section shall be deemed a certificate holder for purposes of this division. SEC. 10. Section 14552 of the Public Resources Code is amended to read: 14552. (a) The department shall establish and implement an auditing system to ensure that the information collected, and refund values and redemption payments paid pursuant to this division, comply with the purposes of this division. Notwithstanding Sections 14573 and 14573.5, the auditing system adopted by the department may include prepayment or postpayment controls. (b) (1) The department may audit or investigate any action taken during the following periods and may determine if there was compliance with this division and the regulations adopted pursuant to this division, during any, or all, of that period: (A) On and before December 31, 2001, the department may audit or investigate any action taken up to two years before the onset of the audit or investigations. (B) On and after January 1, 2002, the department may audit or investigate any action taken up to three years before the onset of the audit or investigation. (2) Notwithstanding any other provision of law establishing a shorter statute of limitation, the department may take an enforcement action, including, but not limited to, an action for restitution or to impose penalties, at any time within two years after the department discovers, or with reasonable diligence, should have discovered, a violation of this division or the regulations adopted pursuant to this division. (c) During the conduct of any inspection, including, but not limited to, an inspection conducted as part of an audit or investigation, the entity that is the subject of the inspection shall, during its normal business hours, provide the department with immediate access to its facilities, operations, and any relevant record, that, in the department's judgment, the department determines are necessary to carry out this section to verify compliance with this division and the regulations adopted pursuant to this division. (1) The department may take disciplinary action pursuant to Section 14591.2 against any person who fails to provide the department with access pursuant to this subdivision including, but not limited to, imposing penalties and the immediate suspension or termination of any certificate or registration held by the operator. (2) The department shall protect any information obtained pursuant to this section in accordance with Section 14554, except that this section does not prohibit the department from releasing any information that the department determines to be necessary in the course of an enforcement action. (d) The auditing system adopted by the department shall allow for reasonable shrinkage in material due to moisture, dirt, and foreign material. The department, after an audit by a qualified auditing firm and a hearing, shall adopt a standard to be used to account for shrinkage and shall incorporate this standard in the audit process. (e) If the department prevails against any entity in any civil or administrative action brought pursuant to this division, and money is owed to the department as a result of the action, the department may offset the amount against amounts claimed by the entity to be due to it from the department. The department may take this offset by withholding payments from the entity or by authorizing all processors to withhold payment to a certified recycling center. (f) If the department determines, pursuant to an audit or investigation, that a distributor or beverage manufacturer has overpaid the redemption payment or processing fee, the department may do either of the following: (1) Offset the overpayment against future payments. (2) Refund the payment pursuant to Article 3 (commencing with Section 13140) of Chapter 2 of Part 3 of Division 3 of Title 2 of the Government Code. SEC. 11. Section 14553 of the Public Resources Code is amended to read: 14553. (a) All reports, claims, and other information required pursuant to this division and submitted to the department shall be complete, legible, and accurate, as determined by the department by regulation, and shall be signed, by an officer, director, managing employee, or owner of the certified recycling center, processor, distributor, beverage manufacturer, container manufacturer, or other entity. (b) The department may inspect the operations, processes, and records of any entity required to submit a report to the department pursuant to this division to determine the accuracy of the report and compliance with the requirements of this division. (c) A violation of this section is subject to the penalties specified in Section 14591.1. SEC. 12. Section 14561 of the Public Resources Code is amended to read: 14561. (a) (1) A beverage manufacturer shall clearly indicate on every beverage container sold or offered for sale by that beverage manufacturer in this state the message "CA Redemption Value" or "California Redemption Value," by either printing or embossing the beverage container or by securely affixing a clear and prominent stamp, label, or other device to the beverage container. (2) A beverage manufacturer may affix the message "CA Cash Refund," "California Cash Refund," or "CA 2.5c," if the container is less than 24 ounces, or "CA Cash Refund," "California Cash Refund," or "CA 5c," if the container is 24 ounces or more, on a beverage container sold or offered for sale by the beverage manufacturer, instead of the message specified in paragraph (1), but the message shall be affixed in the manner prescribed in paragraph (1). (b) Any refillable beverage container sold or offered for sale is exempt from this section. However, any beverage manufacturer or container manufacturer may place upon, or affix to, a refillable beverage container, any message that the manufacturer determines to be appropriate relating to the refund value of the beverage container. (c) No person shall offer to sell, or sell to a consumer a beverage container subject to subdivision (a) that has not been labeled pursuant to this section, except for a refillable beverage container that is exempt from labeling pursuant to subdivision (b). (d) The department may require that any beverage container intended for sale in this state be printed, embossed, stamped, labeled, or otherwise marked with a universal product code or similar machine-readable indicia. (e) Any beverage container labeled with the message specified in subdivision (a) shall have the minimum redemption payment established pursuant to Section 14560, which shall be paid by the distributor to the department pursuant to Section 14574. (f) To the extent not otherwise authorized by this section, a glass beverage container containing noncarbonated fruit drinks that contain any percentage of fruit juice, made subject to this division pursuant to Chapter 815 of the Statutes of 1999, may comply with the requirements of this section by embossing the container with the message described in paragraph (1) or (2) of subdivision (a). (g) Notwithstanding any other requirement of this section, any beverage container that is included within the scope of this division on January 1, 2000, but that was not subject to this division before that date, shall be exempt from the labeling requirements of this section until January 1, 2001. However, even though these beverage containers are not required to bear the message required by this section from January 1, 2000, to January 1, 2001, inclusive, notwithstanding subdivision (c) of Section 14512, they shall be considered "empty beverage containers" for all of the purposes of this division during that period of time. (h) Notwithstanding any other requirement of this section, any beverage container that is included within the scope of this division on January 1, 2001, but that was not subject to this division before that date, shall be exempt from the labeling requirements of this section until January 1, 2002. However, even though these beverage containers are not required to bear the message required by this section from January 1, 2001, to January 1, 2002, inclusive, notwithstanding subdivision (c) of Section 14512, they shall be considered "empty beverage containers" for all of the purposes of this division during that period of time. SEC. 13. Section 14571.8 of the Public Resources Code is amended to read: 14571.8. (a) No lease entered into by a dealer after January 1, 1987, may contain a leasehold restriction that prohibits or results in the prohibition of the establishment of a recycling location. (b) The director may grant an exemption from the requirements of Section 14571 for an individual convenience zone only after the department solicits public testimony on whether or not to provide an exemption from Section 14571. The solicitation process shall be designed by the department to ensure that operators of recycling centers, dealers, and members of the public in the jurisdiction affected by the proposed exemption are aware of the proposed exemption. After evaluation of the testimony and any field review conducted, the department shall base a decision to exempt a convenience zone on one, or any combination, of the following factors: (1) The exemption will not significantly decrease the ability of consumers to conveniently return beverage containers for the refund value to a certified recycling center redeeming all material types. (2) Except as provided in paragraph (5), the nearest certified recycling center is within a reasonable distance of the convenience zone being considered from exemption. (3) The convenience zone is in the area of a curbside recycling program that meets the criteria specified in Section 14509.5. (4) The requirements of Section 14571 cannot be met in a particular convenience zone due to local zoning or the dealer's leasehold restrictions for leases in effect on January 1, 1987, and the local zoning or leasehold restrictions are not within the authority of the department and the dealer. However, any lease executed after January 1, 1987, shall meet the requirements specified in subdivision (a). (5) The convenience zone has redeemed less than 60,000 containers per month for the prior 12 months and, notwithstanding paragraph (2), a certified recycling center is located within one mile of the convenience zone that is the subject of the exemption. (c) The department shall review each convenience zone in which a certified recycling center was not located on January 1, 1996, to determine the eligibility of the convenience zone under the exemption criteria specified in subdivision (b). (d) The total number of exemptions granted by the director under this section shall not exceed 35 percent of the total number of convenience zones identified pursuant to this section. (e) The department may, on its own motion, or upon petition by any interested person, revoke a convenience zone exemption if either of the following occurs: (1) The condition or conditions that caused the convenience zone to be exempt no longer exists, and the department determines that the criteria for an exemption specified in this section are not presently applicable to the convenience zone. (2) The department determines that the convenience zone exemption was granted due to an administrative error. (f) If an exemption is revoked and a recycling center is not certified and operational in the convenience zone, the department shall, within 10 days of the date of the decision to revoke, serve all dealers in the convenience zone with the notice specified in subdivision (a) of Section 14571.7. (g) An exemption shall not be revoked when a recycling center becomes certified and operational within an exempt convenience zone unless either of the events specified in paragraphs (1) and (2) of subdivision (e) occurs. SEC. 14. Section 14571.9 of the Public Resources Code is repealed. SEC. 15. Section 14581 of the Public Resources Code is amended to read: 14581. (a) Subject to the availability of funds, and pursuant to subdivision (c), the department shall expend the money set aside in the fund, pursuant to subdivision (c) of Section 14580 for the purposes of this section: (1) Twenty-three million five hundred thousand dollars ($23,500,00) shall be expended annually for the payment of handling fees required pursuant to Section 14585. (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) Fifteen million dollars ($15,000,000), plus the proportional share of the cost-of-living adjustment, as provided in subdivision (b), shall be expended annually in the form of grants for beverage container litter reduction programs and recycling programs issued to either of the following: (i) Certified community conservation corps, that were in existence on September 30, 1999, or that are formed subsequent to that date, that are designated by a city or a city and county to perform litter abatement, recycling, and related activities, if the city or the city and county has a population, as determined by the most recent census, of more than 250,000 persons. (ii) Community conservation corps, that are designated by a county to perform litter abatement, recycling, and related activities, and are certified by the California Conservation Corps as having operated for a minimum of two years and as meeting all other criteria of Section 14507.5. (B) Any grants provided pursuant to this paragraph shall not comprise more than 75 percent of the annual budget of a community conservation corps. (4) (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 may 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 of Conservation. The form shall specify the beverage container recycling or litter reduction activities for which the funds will be used. (E) The Department of Conservation 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. (5) (A) Five hundred thousand dollars ($500,000) may be expended annually in the form of grants for beverage container recycling and litter reduction programs. (B) Up to a total of six million eight hundred forty thousand dollars ($6,840,000) shall be paid to the City of San Diego, between January 1, 2000, and January 1, 2004, for a curbside recycling program conducted pursuant to Section 14549.7. (6) (A) The department shall expend the amount necessary to pay the processing payment established pursuant to subdivision (b) of 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 is calculated pursuant to Section 14575, 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 subdivision (g) of Section 14575. (ii) Funds equal to pay 75 percent of the processing payments established in subdivision (b) of Section 14575, in order to reduce the processing fee to the level provided in subdivision (f) of Section 14575. (B) Notwithstanding Section 13340 of the Government Code, the money in each processing fee account is hereby continuously appropriated to the department for expenditure without regard to fiscal year, for purposes of making processing payments, and reducing processing fees, pursuant to Section 14575. (7) (A) Up to ten million dollars ($10,000,000) shall be expended by the department between January 1, 2000, and January 1, 2002, for the purposes of undertaking a statewide public education and information campaign aimed at promoting increased recycling of beverage containers. (B) On or before July 1, 2002, the department shall provide a report to the Legislature on the impact of the statewide public education and information campaign and make recommendations for any future campaigns. (8) Up to three million dollars ($3,000,000) shall be expended annually for the payment of quality glass incentive payments pursuant to Section 14549.1. (9) (A) Three hundred thousand dollars ($300,000) shall be expended annually by the department, until January 1, 2003, pursuant to a cooperative agreement entered into between the department and Keep California Beautiful, a nonprofit 501(c)(3) organization chartered by the State of California in 1990, for the purpose of conducting statewide public education campaigns aimed at preventing and cleaning up beverage containers and related litter. The campaigns shall include, but not be limited to, coordination of Keep California Beautiful month. (B) Prior to making an expenditure pursuant to this paragraph, the department shall enter into a cooperative agreement with Keep California Beautiful. (C) As part of the cooperative agreement, Keep California Beautiful shall provide the department with an annual campaign plan and budget, and a report of previous year campaign activities. (D) On or before July 1, 2002, the department shall make a recommendation to the Legislature on future funding for beverage container litter prevention and cleanup activities by Keep California Beautiful. (b) The fifteen million dollars ($15,000,000) that is set aside pursuant to paragraph (3) of subdivision (a), is a base amount that the department shall adjust annually to reflect any increases or decreases in the cost of living, as measured by the Department of Labor, or a successor agency, of the federal government. (c) (1) The department shall review all funds on a quarterly basis to ensure that there are adequate funds to make the payments specified in this section and the processing fee reductions required pursuant to Section 14575. (2) If the department determines, pursuant to a review made pursuant to paragraph (1), that there may be inadequate funds to pay the payments required by this section and the processing fee reductions required pursuant to Section 14575, the department shall immediately notify the appropriate policy and fiscal committees of the Legislature regarding the inadequacy. (3) On or before 180 days after the notice is sent pursuant to paragraph (2), the department may reduce or eliminate expenditures, or both, from the funds as necessary, according to the procedure set forth in subdivision (d). (d) 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. (e) Prior to making an expenditure pursuant to paragraph (7) 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. SEC. 16. Section 14591 of the Public Resources Code is amended to read: 14591. (a) Except as provided in subdivision (b), in addition to any other applicable civil or criminal penalties, any person convicted of a violation of this division is guilty of an infraction, which is punishable by a fine of one hundred dollars ($100) for each initial separate violation and not more than one thousand dollars ($1,000) for each subsequent separate violation per day. (b) (1) Every person who, with intent to defraud, takes any of the following actions is guilty of fraud: (A) Submits a false or fraudulent claim for payment pursuant to Section 14573 or 14573.5. (B) Fails to accurately report the number of beverage containers sold, as required by subdivision (b) of Section 14550. (C) Fails to make payments as required by Section 14574. (D) Redeems out-of-state containers, rejected containers, line breakage, or containers that have already been redeemed. (E) Returns redeemed containers to the marketplace for redemption . (F) Brings out-of-state containers, rejected containers, or line breakage to the marketplace for redemption. (G) Submits a false or fraudulent claim for handling fee payments pursuant to Section 14585. (2) If the money obtained or withheld pursuant to paragraph (1) exceeds four hundred dollars ($400), the fraud is punishable by imprisonment in the county jail for not more than one year or by a fine not exceeding ten thousand dollars ($10,000), or by both, or by imprisonment in the state prison for 16 months, two years, or three years, or by a fine not exceeding twenty-five thousand dollars ($25,000) or twice the late or unmade payments plus interest, whichever is greater, or by both fine and imprisonment. If the money obtained or withheld pursuant to paragraph (1) equals, or is less than, four hundred dollars ($400), the fraud is punishable by imprisonment in the county jail for not more than six months or by a fine not exceeding one thousand dollars ($1,000), or by both. (c) For purposes of this section and Chapter 8.5 (commencing with Section 14595), "line breakage" and "rejected container" have the same meanings as defined in the regulations adopted or amended by the department pursuant to this division. SEC. 17. Section 14591.1 of the Public Resources Code is amended to read: 14591.1. (a) (1) The department may assess a civil penalty upon a person who violates this division in an amount greater than one thousand dollars ($1,000) pursuant to this division and any regulations adopted pursuant to this division only after notice and hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. (2) The department may assess a civil penalty upon a person who violates this division in an amount equal to, or less than, one thousand dollars ($1,000), using a notice of violation process established by regulation and may use an informal hearing process pursuant to Article 10 (commencing with Section 11445.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2 of the Government Code. (3) Each violation of this division is a separate violation and each day of the violation is a separate violation. The department shall deposit all revenues from civil penalties in the Penalty Account specified in subdivision (d) of Section 14580. (b) Any person who intentionally or negligently violates this division may be assessed a civil penalty by the department pursuant to subdivision (a) of up to five thousand dollars ($5,000) for each separate violation, or for continuing violations, for each day that violation occurs. (c) Any person who violates this division by an action not subject to subdivision (b) may be assessed a civil penalty by the department pursuant to subdivision (a) of up to one thousand dollars ($1,000) for each separate violation, or for continuing violations, for each day that violation occurs. (d) No person may be liable for a civil penalty imposed under subdivision (b) and for a civil penalty imposed under subdivision (c) for the same act or failure to act. (e) In determining the amount of penalties to be imposed pursuant to this division, the department shall take into consideration the nature, circumstances, extent and gravity of the violation, the costs associated with bringing the action and, with respect to the violator, the ability to pay, the degree of culpability, compliance history, and any other matters that justice may require. SEC. 18. Section 14591.2 of the Public Resources Code is amended to read: 14591.2. (a) The department may take disciplinary action against any party responsible for directing, contributing to, participating in, or otherwise influencing the operations of, a certified or registered facility or program. A responsible party includes, but is not limited to, the certificate holder, registrant, officer, director, or managing employee. Except as otherwise provided in this division, the department shall provide a notice and hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code before taking any disciplinary action against a certificate holder. (b) All of the following are grounds for disciplinary action, in the form determined by the department in accordance with subdivision (c): (1) The responsible party engaged in fraud or deceit to obtain a certificate or registration. (2) The responsible party engaged in dishonesty, incompetence, negligence, or fraud in performing the functions and duties of a certificate holder or registrant. (3) The responsible party violated this division or any regulation adopted pursuant to this division, including, but not limited to, any requirements concerning auditing, reporting, standards of operation, or being open for business. (4) The responsible party is convicted of any crime of moral turpitude or fraud, any crime involving dishonesty, or any crime substantially related to the qualifications, functions, or duties of a certificate holder. (c) The department may take disciplinary action pursuant to this section, by taking any one of, or any combination of, the following: (1) Immediate revocation of the certificate or registration, or revocation of a certificate or registration as of a specific date in the future. (2) Immediate suspension of the certificate or registration for a specified period of time, or suspension of the certificate or registration as of a specific date in the future. Notwithstanding subdivision (a), the department may impose a suspension of five days or less through an informal notice, if the action is subject to a stay on appeal, pending an informal hearing convened in accordance with Article 10 (commencing with Section 11445.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2 of the Government Code. (3) Imposition on the certificate or registration of any condition that the department determines would further the goals of this division. (4) Issuance of a probationary certificate or registration with conditions determined by the department. (5) Collection of amounts in restitution of any money improperly paid to the certificate holder or registrant from the fund. (6) Imposition of civil penalties pursuant to Section 14591.1. (d) The department may do any of the following in taking disciplinary action pursuant to this section: (1) If a certificate holder or registrant holds certificates or is registered to operate at more than one site or to operate in more than one capacity at one location, such as an entity certified as both a processor and a recycling center, the department may simultaneously revoke, suspend, or impose conditions upon some, or all of, the certificates held by the responsible party. (2) If the responsible party is an officer, director, partner, manager, employee, or the owner of a controlling ownership interest of another certificate holder or registrant, that other operator's certificate or registration may also be revoked, suspended, or conditioned by the department in the same proceeding, if the other certificate holder or registrant is given notice of that proceeding, or in a subsequent proceeding. (3) (A) If, pursuant to notice and a hearing conducted by the director or the director's designee in accordance with Article 10 (commencing with Section 11445.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2 of the Government Code, the department determines that the continued operation of a certified or registered entity poses an immediate and significant threat to the fund, the department may order the immediate suspension of the certificate holder or registrant, pending revocation of the certificate or registration, or the issuance of a probationary certificate imposing reasonable terms and conditions. The department shall record the testimony at the hearing and, upon request, prepare a transcript. For purposes of this section, an immediate and significant threat to the fund means any of the following: (i) A loss to the fund of at least ten thousand dollars ($10,000) during the six-month period immediately preceding the order of suspension. (ii) Missing or fraudulent records associated with a claim or claims totaling at least ten thousand dollars ($10,000) during the six-month period immediately preceding the order of suspension. (iii) A pattern of deceit, fraud, or intentional misconduct in carrying out the duties and responsibilities of a certificate holder during the six-month period immediately preceding the order of suspension. (iv) At least three claims submitted for ineligible material in violation of this division, including, but not limited to, a violation of Section 14595.5, during the six-month period immediately preceding the order of suspension. (B) An order of suspension or probation may be issued to any or all certified or registered facilities or programs operated by a person or entity that the department determines to be culpable or responsible for the loss or conduct identified pursuant to subparagraph (A). (C) The order of suspension or issuance of a probationary certificate imposing terms or conditions shall become effective upon written notice of the order to the certificate holder or registrant. Within 20 days after notice of the order of suspension, the department shall file an accusation seeking revocation of any or all certificates or registrations held by the certificate holder or registrant. The certificate holder or registrant may, upon receiving the notice of the order of suspension or probation, appeal the order by requesting a hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. A request for a hearing or appeal from an order of the department does not stay the action of the department for which the notice of the order is given. The department may combine hearings to appeal an order of suspension and a hearing for the proposed revocation of a certificate or registration into one proceeding. (D) Nothing in this section shall prohibit the department from immediately revoking a probationary certificate pursuant to subdivision (b) of Section 14541 or from taking other disciplinary action pursuant to Section 14591.2. SEC. 19. Section 14591.4 of the Public Resources Code is amended to read: 14591.4. (a) In addition to any other remedies, penalties, and disciplinary actions provided by this division or otherwise, the department may seek restitution of any money illegally paid to any person from the fund, plus interest at the rate earned on the Pooled Money Investment Account of the total amount. (b) A certificate holder is liable to the department for restitution pursuant to paragraph (5) of subdivision (c) of Section 14591.2 for payments made by the department to the certificate holder that are based on improperly prepared or maintained documents, as specified in paragraph (7) of subdivision (b) of Section 14538 and paragraph (8) of subdivision (b) of Section 14539. (c) If the department has a civil cause of action for restitution pursuant to subdivision (a) or (b), or if the department has a civil cause of action against a certificate holder or other responsible party for restitution under any other circumstance, the department may seek restitution in accordance with the following: (1) For restitution of an amount of more than one thousand dollars ($1,000), the department shall proceed in a hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The hearing may take place at the same time as a hearing to impose disciplinary action on a certificate holder. (2) For restitution of an amount of one thousand dollars ($1,000) or less, the department may use an informal hearing in accordance with Article 10 (commencing with Section 11445.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2 of the Government Code. (d) Notwithstanding subdivisions (b) and (c) of Section 14591.1, if the department collects amounts in full restitution for money paid, the department may impose a penalty of not more than one hundred dollars ($100) for each separate violation, or for continuing violations, for each day that violation occurs. SEC. 20. Section 14591.6 is added to the Public Resources Code, to read: 14591.6. (a) When a person is engaged in recycling activity that violates this division, any regulation adopted pursuant to this division, or an order issued under this division, the department may issue an order to that person to cease and desist from that activity. (b) If a request for a hearing is filed in writing within 15 days of the date of service of the order described in subdivision (a), a hearing shall be held in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. If no written request for a hearing is filed within 15 days from the date of service of the order, the order shall be deemed the final order of the department and is not subject to review by any court or agency. (c) Upon the failure of any person or persons to comply with any cease and desist order issued by the department, the Attorney General, upon request of the department, shall petition the superior court for the issuance of a preliminary or permanent injunction, or both, as may be appropriate, restraining the person from continuing the activity in violation of the cease and desist order. (d) The court shall issue an order directing defendants to appear before the court at a certain time and place and show cause why the injunction should not be issued. The court may grant the prohibitory or mandatory relief that may be warranted. SEC. 21. Section 14592 of the Public Resources Code is repealed. SEC. 22. Section 14595 of the Public Resources Code is amended and renumbered to read: 14594.5. The department may assess upon any person, entity, or operation which redeems, attempts to redeem, or aids in the redemption of, empty beverage containers that have already been redeemed, a civil penalty of up to ten thousand dollars ($10,000) per transaction, or an amount equal to three times the damage or potential damage, whichever is greater, plus costs as provided in Section 14591.3, pursuant to notice and hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. SEC. 23. Chapter 8.5 (commencing with Section 14595) is added to Division 12.1 of the Public Resources Code, to read: CHAPTER 8.5. REPORTING REQUIREMENTS AND PAYMENT PROHIBITIONS RELATED TO OUT-OF-STATE AND OTHER INELIGIBLE CONTAINERS 14595. The Legislature finds and declares that the redemption of beverage container material imported from out of state, previously redeemed containers, rejected containers, and line breakage presents a significant threat to the integrity of the beverage container recycling program and fund. It is therefore the intent of the Legislature that no refund value or other recycling program payments be paid to any person for this material. It is further the intent of the Legislature that any person participating in conduct intended to defraud the state's beverage container recycling program shall be held accountable for that conduct. 14595.4. For purposes of this chapter, the following definitions shall apply: (a) "Person" means any individual, corporation, operation, or entity, whether or not certified or registered pursuant to this division. (b) "Refund value" means, in addition to the definition in Section 14524, any payment by a certified recycler for beverage container material that is at least 15 percent more than the statewide average scrap value for that material type, as determined by the department for the month in which the payment was made, unless the department determines that a reasonable basis exists for that payment. 14595.5. (a) (1) No person shall pay, claim, or receive any refund value, processing payment, handling fee, or administrative fee for any of the following: (A) Beverage container material that the person knew, or should have known, was imported from out of state. (B) A previously redeemed container, rejected container, line breakage, or other ineligible material. (2) No person shall, with intent to defraud, do any of the following: (A) Redeem or attempt to redeem an out-of-state container, rejected container, line breakage, previously redeemed container, or other ineligible material. (B) Return a previously redeemed container to the marketplace for redemption. (C) Bring an out-of-state container, rejected container, line breakage, or other ineligible material to the marketplace for redemption. (D) Receive, store, transport, distribute, or otherwise facilitate or aid in the redemption of a previously redeemed container, out-of-state container, rejected container, line breakage, or other ineligible material. (b) For purposes of implementing subdivision (a), the department shall take all reasonable steps to exclude beverage container material imported from out of state, previously redeemed containers, rejected containers, and line breakage, when conducting surveys to determine a commingled rate pursuant to Section 14549.5. 14596. (a) Any person importing more than 100 pounds of aluminum, bimetal, or plastic beverage container material, or more than 1,000 pounds of glass beverage container material, into the state, shall report the material to the department and provide the department with an opportunity for inspection, in accordance with the regulations adopted by the department. (b) The department may impose civil penalties pursuant to Section 14591.1 or take disciplinary action pursuant to Section 14591.2 for a violation of this section. 14597. (a) No person shall falsify documents required pursuant to this division or pursuant to regulations adopted by the department. The falsification of these documents is evidence of intent to defraud and, for purposes of subdivision (b) of Section 14591.1, constitutes intentional misconduct. The department may also take disciplinary action pursuant to Section 14591.2 against a person who engages in falsification including, but not limited to, revocation of any certificate or registration. (b) No person shall submit, or cause to be submitted, a fraudulent claim pursuant to this division. For purposes of this subdivision, a fraudulent claim is a claim based in whole or in part on false information or falsified documents. Any person who submits a fraudulent claim is subject to the assessment of penalties pursuant to subdivision (b) of Section 14591.1. The department may take action for full restitution for a fraudulent claim, pursuant to Section 14591.4, and may also take disciplinary action pursuant to Section 14591.2 including, but not limited to, revocation of any certificate or registration. 14599. The department may adopt emergency regulations to implement this chapter. Any emergency regulations, if adopted, shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and for the purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of these regulations is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, any emergency regulations adopted pursuant to this section shall be filed with, but not repealed by, the Office of Administrative Law, and shall remain in effect until revised by the director. SEC. 24. The amendment to Section 14529.7 of the Public Resources Code by Section 4 of this act does not constitute a change in, but is declaratory of, existing law. SEC. 25. (a) It is the intent of the Legislature that the Department of Conservation work with members of the recycling industry to identify any additional changes to the California Beverage Container Recycling and Litter Reduction Act that might be needed regarding enforcement of the act. (b) On or before March 1, 2001, the Department of Conservation shall, after consulting with the recycling industry, submit a report to the Legislature as to any recommended changes to the California Beverage Container Recycling and Litter Reduction Act that are needed regarding enforcement of the act. SEC. 26. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.