BILL ANALYSIS �
AB 1149
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CONCURRENCE IN SENATE AMENDMENTS
AB 1149 (Gordon and Wieckowski)
As Amended September 1, 2011
Majority vote
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|ASSEMBLY: |77-1 |(June 1, 2011) |SENATE: |31-4 |(September 7, |
| | | | | |2011) |
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Original Committee Reference: NAT. RES.
SUMMARY : Extends for five years the Department of Resources
Recycling and Recovery (DRRR) plastic market development program,
which provides Bottle Bill funds to support recyclers and
manufacturers using empty plastic beverage containers.
The Senate amendments specify that on and after January 1, 2012, in
addition to the $10,000,000 already authorized, DRRR may expend up
to 50% of processing payment savings (created by high scrap prices
for specific types of plastic) for market development payments for
empty plastic beverage containers.
EXISTING LAW , the Beverage Container Recycling and Litter Reduction
Act (Bottle Bill):
1)Establishes refund value and redemption payments for beverage
containers.
2)Requires a distributor to pay a redemption payment for every
beverage container sold or offered for sale in the state to DRRR,
which is required to deposit those amounts in the California
Beverage Container Recycling Fund (Fund). The money in the Fund
is continuously appropriated for the payment of refund values and
processing fees.
3)Requires DRRR to review the status of the Fund every three months
to ensure that funds are adequate to make expenditures according
the Bottle Bill and make specified determinations.
4)Authorizes funding for specified purposes to increase beverage
container recycling, including up to $10 million annually for
market development payments for empty plastic beverage containers
until January 1, 2012.
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AS PASSED BY THE ASSEMBLY , this bill extended the plastic market
development program and funding authority from January 1, 2012, to
January 1, 2017, and requires DRRR to consider specified factors
when setting payment amounts.
FISCAL EFFECT : According to the Senate Appropriations Committee, by
extending the sunset of the program, the bill will increase Bottle
Bill program costs by $10 million per year, plus administrative
costs of about $450,000 per year which are paid from the Beverage
Container Recycling Fund, but are not included in the $10 million
provided for market development payments.
COMMENTS : The Bottle Bill is designed to provide consumers with a
financial incentive for recycling and to make recycling convenient
to consumers so that the beverage container component of the solid
waste stream will decrease. The centerpiece of the Bottle Bill is
the California Redemption Value (CRV). Consumers pay a deposit, the
CRV, on each beverage container they purchase. Retailers collect
the CRV from consumers when they buy beverages. The dealer retains
a small percentage of the deposit for administration and remits the
remainder to the distributor, who also retains a small portion for
administration before remitting the balance to the DRRR. When
consumers return their empty beverage containers to a recycler (or
donate them to a curbside or other program), the deposit is paid
back as a refund.
For many years, surpluses have accumulated in the Fund as a result
of unredeemed deposits. Among other purposes, the surplus funds
have been used, per statute, to fund various programs to reduce
litter, increase recycling and promote used of recycled materials,
including the plastic market developments program. Surplus funds
have also been loaned to the General Fund in prior Budget Acts.
In May 2009, DRRR notified the Legislature that the Fund was facing
a $160 million shortfall by the end of the 2009-10 Fiscal Year and
initiated an 85% proportional reduction for all expenditures except
CRV payments to consumers. In October 2009, the department
increased this reduction to 100%. These deep cuts damaged the
state's recycling infrastructure and directly contributed to the
loss of at least 500 jobs statewide. In order to temporarily
alleviate this funding shortfall, the Legislature passed AB 8X 7
(Budget Committee) in March 2010, which provided a one-time influx
of $100 million dollars and temporary suspended multiple grant
programs to provide funding through 2010. According to DRRR's most
recent report on the Fund (April 8, 2011):
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In general terms, the Recycling Fund Condition Summary indicates
that the Fund will be solvent as long as expected loan repayments
to the Recycling Fund continue. The Recycling Fund Balance is
not projected to reach a level that would require proportionate
reduction in FY2010-11 or FY2011-2012. However, assessment is
entirely dependent upon continued repayment of historic loans
made from the Recycling Fund. The Governor's proposed
FY2011-2012 Budget includes General Fund loan repayments of $98M
in FY2010-2011 (of which, $68M has already been transferred to
the Recycling Fund) and $88M in FY2011-2012. It also includes
repayments of approximately $21M in each of those fiscal years
for loans made from the Recycling Fund to the Air Resources
Board. If those loan repayments-beyond the $68M already repaid
in the current year-are not made in FY2010-2011 and FY2011-2012,
�DRRR] will need to revisit the question of proportionate
reduction for the FY2011-2012 period.
The plastic market development program uses surplus redemption funds
from the Fund to make payments of up to $150 per ton to
California-based processors and manufacturers that recycle and
utilize post-consumer plastic beverage containers. In 2007-09, the
total amount of funds authorized was $5 million. For 2010 and 2011,
the legislature increased this payment authority to $10 million
annually. This bill would continue the $10 million annual
allocation until 2017.
Scrap prices for PET (polyethylene) are currently high, and experts
predict that they will remain higher than the cost of recycling.
Therefore, there will be no PET processing payment or processing fee
in 2012. This translates into a net reduction in program
expenditures of up to $25 million. The Senate amendments
additionally allocate 50% of anticipated PET processing payments
savings into plastic market development payments (about $7-10
million in 2012). Recipients of these payments (processors) use the
funds in large part to increase scrap prices to recyclers. This in
turn keeps processing fees down.
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092
FN: 0002765
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