BILL ANALYSIS �
AB 794
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2011-2012 Regular Session
BILL NO: AB 794
AUTHOR: Wieckowski
AMENDED: May 3, 2011
FISCAL: Yes HEARING DATE: June 20, 2011
URGENCY: No CONSULTANT: Caroll
Mortensen
SUBJECT : ELECTRONIC WASTE RECYCLING
SUMMARY :
Existing law :
1) Pursuant to the Hazardous Electronic Waste Recycling Act of
2003 (Public Resources Code �42460 et seq. and Health and
Safety Code �25214.0 et seq.):
a) Requires a consumer to pay a Covered Electronic Waste
(CEW) recycling fee upon the purchase of a new or
refurbished covered electronic device (CED) and
specifies the amount of the CEW recycling fee ranging
from $6 to $10 for each CED depending on the screen
size. (PRC �42464.)
b) Requires all fees collected pursuant to the Act to be
deposited in the Electronic Waste and Recovery and
Recycling Account, and authorizes those monies to be
appropriated for the following purposes:
i) To pay refunds of the CEW recycling fee.
ii) To make electronic waste recovery payments
to an authorized collector of CEW.
iii) To make electronic waste recycling payments to CEW
recyclers.
AB 794
Page 2
iv) To make specified payments to manufacturers who
take back
CEW from consumers for the purpose of recycling
the item. (�42476.)
2) Pursuant to the Department of Resources Recycling and
Recovery (DRRR) regulations (Chapter 8.2 of Division 7 of
Title 14 of the California Code of Regulations, commencing
with �18660.5):
a) Provides that only CEW resulting from a California
source, and not CEW owned by a person in California but
used entirely outside California, is eligible for
recovery or recycling payments, and correspondingly
prohibits a CEW collector or recycler from requesting
payments for non-California CEW. (�18660.6.)
b) Requires a CEW collector to make reasonable efforts
to determine if CEW it collects is from California or
non-California sources. These reasonable efforts
include, but are not limited to, conducting spot checks,
checking for a valid California identification, and
requiring additional documentation from collectors
delivering large numbers of CEW. (�18660.20(c).)
c) Requires CEW recyclers to ensure that recycling
payments are not claimed for non-California source
materials. (�18660.21(e).)
d) Requires DRRR to review payment claims made by CEW
collectors and recyclers and determine if a payment is
due under the Act. Authorizes DRRR to deny or adjust
payment for an incomplete or deficient payment claim.
(�18660.30.)
e) Allows DRRR to conduct an audit of CEW collectors and
recyclers to determine compliance with the Act.
Provides that if a CEW collector or recycler fails to
provide reasonable access for audits, DRRR may revoke
the collectors or recyclers approval to participate in
the payment program and deny current and future claims
for payment. (�18660.9.)
AB 794
Page 3
f) Allows a CEW recycler to file a formal appeal of a
denied or adjusted recycling payment claim within 30
days of the notice of denial or adjustment, and
specifies the required content of the appeal, and
provides for a hearing of the appeal before DRRR's
director or designee, who shall issue a written decision
stating the factual and legal basis for the decision.
(�18660.31)
This bill :
1) Authorizes DRRR to administratively impose civil liability
in an amount of up to $25,000 per violation against any
person, including a covered electronic waste (CEW)
collector or recycler, who makes a false statement or
representation in any document used for purposes of
compliance with the Act.
2) Provides that a collector or recycler whose claim includes
a false representation regarding the source of CEW shall
not be liable for that statement or representation if the
collector or the recycler has made verifiable and
reasonable efforts to determine the source of the covered
electronic waste, such as, but not limited to, checking
personal identification or performing reasonable spot
checks or audits of the veracity of source documentation.
3) Clarifies that DRRR can revoke the approval or deny the
renewal application of a CEW collector or recycler that
makes a false statement or representation in a document
used for purposes of compliance with the Act; or has a
history demonstrating a pattern of operation in conflict
with the requirements of the Act.
4) Clarifies that DRRR shall not pay an electronic waste
recycling payment or recovery payment for CEW generated
outside of the state and subsequently brought into the
state.
5) Requires DRRR to pay a CEW collector or recycler upon
completion of its review of a payment claim. Authorizes
AB 794
Page 4
DRRR to examine a payment claim to validate its
completeness, accuracy, truthfulness, and compliance with
applicable laws and regulations.
6) Permits DRRR to conduct a selective audit of authorized
collectors, covered CEW recyclers, or manufacturers to
determine whether recovery or recycling payments are being
paid by DRRR according to the requirements of the Act.
7) Provides that a CEW recycler wishing to contest the denial
or adjustment of a payment claim by DRRR shall appeal that
action by filing a written appeal within 30 days of the
notice denying or adjusting the claim, and specifies the
required content of the appeal.
8) States that DRRR shall provide a hearing to consider the
appeal, the reasons for denial or adjustment of the payment
claim, and any additional relevant information presented by
the claimant or DRRR staff; and subsequently to issue a
written decision stating the factual and legal basis for
the decision.
COMMENTS :
1)Purpose of Bill . According to the author, this bill seeks
to address the problem of fraudulent claims for recycling or
recovery payments within the electronic waste recycling
program operated by DRRR. This type of fraud was one of the
key problems identified during a joint oversight hearing by
the Assembly Natural Resources and the Environmental Safety
and Toxic Materials Committees earlier this year. To
address the problems of fraud, the bill would impose civil
liability of up to $25,000 per violation upon a person who
makes a false statement or representation on any document
used for purposes of compliance with the Electronic Waste
Recycling Act. The bill also seeks to codify numerous
regulations authorizing DRRR to conduct reviews of recycling
payment claims and to audit the operations of recyclers and
collectors.
2)Background of the Electronic Waste Recycling Act . In 2003,
California adopted the Electronic Waste Recycling Act of
AB 794
Page 5
2003 (Act) that established the nation's first electronic
waste recovery and recycling program on computer monitors,
laptop computers, televisions, and similar video display
devices. The Act established a funding mechanism to improve
and provide for the proper end-of-life management of certain
hazardous electronic products. The program is funded
through a fee paid by consumers of covered electronic
devices at the time of retail purchase.
CEW collectors are those individuals who collect,
consolidate, and transport CEW generated in California.
Collectors deliver the waste to CEW recyclers who receive,
process, and recycle the CEW. Both CEW collectors and
recyclers may submit payment claims to DRRR for
compensation. DRRR reviews the claims for compliance with
the Act and, if appropriate, makes payments to approved
collectors and recyclers that are intended to offset the net
cost of appropriate waste recovery, processing, and
recycling activities.
According to DRRR data, since January 2005 approximately 965
million pounds of claimed CEW have been recycled and over
$420 million in payments have been made to CEW collectors
and recyclers. There are approximately 600 approved CEW
collectors and 60 approved recyclers throughout the state.
As a side benefit, the state's CEW infrastructure also
recovers substantial quantities of miscellaneous electronic
waste not covered by the CEW payment system.
3)Fraudulent Claims and Noncompliance Cost the State .
According to DRRR statistics reflecting claims submitted
from 2005 through part of 2010, DRRR has annually denied
between 2 percent and 12 percent of payment claims because
of non-compliance or significantly inconsistent (and
possibly fraudulent) documentation. Since 2005,
approximately $20 million in payment claims have been
denied-an average of 5% of total payments claimed.
A major issue with fraud involves electronic waste that is
brought in from out of state. The Act only allows payment
for CEW generated in California. DRRR regulations prohibit
payment for CEW owned by a person in California but used
AB 794
Page 6
entirely outside of the state. However, some CEW collectors
and recyclers seek payment under the Act for out-of-state
electronic waste by submitting fraudulent documents claiming
that the waste was generated in California. Some believe
that millions of dollars have already been paid out in
fraudulent claims where the fraud unfortunately went
undetected by the state.
4)Deterring Fraudulent Claims . The bill provides DRRR with
significant administrative authority to punish and deter
fraud by allowing DRRR to impose up to $25,000 in fines per
violation against a CEW collector or recycler who makes a
false statement in a document submitted or used for the
purpose of complying with the Act. This includes, most
notably, the paperwork accompanying a payment claim that
purports to document the source of the CEW as being within
the state. Additionally, the bill authorizes DRRR to
exclude a collector or recycler from the CEW program who has
committed fraud or has a history demonstrating malfeasance
under the Act.
5)Existing Regulations . Under existing regulations, DRRR is
authorized to review payment claims to ensure compliance
under the Act and to prevent fraud. As part of this review,
DRRR conducts spot-checking, which involves contacting the
sources of the CEW listed on the payment claim. DRRR may
also conduct audits to detect fraud, including examining
on-site activities or reviewing the subject's books or
accounts. The bill clarifies existing statutory authority
and support DRRR's authority to conduct reviews of payment
claims and to conduct audits necessary to increase detection
of fraudulent claims.
6)Related Legislation .
a) AB 549 (Carter) seeks to require, as a condition of
making e-waste recycling or recovery payments by DRRR,
that the covered electronic device for which the payment
is claimed was used in California. AB 549 is currently
in the Environmental Quality Committee. It is a two-year
bill.
AB 794
Page 7
b) AB 583 (Knight) seeks to transfer the duties, powers,
and authority of the DTSC under the Electronic Waste
Recycling Act to DRRR. Assembly Environmental Safety and
Toxic Materials Committee hearing on AB 583 was canceled
at the author's request.
c) AB 960 (Lowenthal) seeks to revise the requirements
imposed on exportation of CEW to additionally include a
person who exports electronic waste or a previously used
electronic device and would also include, in the
provision, an export intended for reuse. AB 960 will be
heard by the Environmental Quality Committee on June 20,
2011.
7)Amendments Necessary . Amendments are necessary to address
the following concerns:
a) AB 794 adds a provision {�42474 (d)} imposing a civil
liability for false statements by recyclers and
collectors. However, that same provision has language
that allows a recycler or collector who makes a false
statement or representation on a claim to not be liable
for a civil liability if the collector or recycler has
made verifiable and reasonable efforts to determine the
source of the CEW. This creates a loophole that could
further hinder DRRR's ability to impose that penalty.
That language should be stricken.
b) AB 794 amends several code sections also in AB 960
(Lowenthal). Amendments will be needed to address
chaptering-out problems.
SOURCE : Californians Against Waste
SUPPORT : None on file
OPPOSITION : None on file
AB 794
Page 8