BILL ANALYSIS �
AB 1846
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: AB 1846
AUTHOR: Gordon
AMENDED: April 22, 2014
FISCAL: Yes HEARING DATE: June 4, 2014
URGENCY: No CONSULTANT: Rebecca Newhouse
SUBJECT : BEVERAGE CONTAINERS: ENFORCEMENT
SUMMARY :
Existing law , under the California Beverage Container Recycling and
Litter Reduction Act (Act), requires beverage containers sold in
this state to have a California redemption value (CRV) of 5 cents
for containers that hold fewer than 24 ounces and 10 cents for
containers that hold 24 ounces or more, and requires a distributor
to pay a redemption payment to the Department of Resources
Recycling and Recovery (CalRecycle). These funds are continuously
appropriated to CalRecycle for the payment of refund values and
processing fees. The Act also:
1) Requires CalRecycle to establish reporting periods of six months
each for redemption rates and recycling rates for beverage
containers and requires them to determine and report the
redemption rates and recycling rates for those beverage
containers for each reporting period.
2) Requires CalRecycle to certify recycling centers and promulgate
regulations establishing a procedure for certification of
recycling centers.
3) Prohibits a certified recycling center or processor from paying
or claiming any refund value, processing payment, or
administrative fee on beverage containers if the center or
processor knew, or should have known, that the containers were
from out of state.
4) Requires CalRecycle to pay handling fees to supermarket sites,
nonprofit convenience zone recyclers, or rural region recyclers
to provide an incentive for the redemption of empty beverage
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containers in convenience zones, and adopt guidelines and
methods specifying a procedure for the payment of these fees.
This bill :
1) Specifies that a certified recycling center or processor shall
not pay or claim any refund value, processing payment, or
administrative fee on beverage containers if the center knew, or
should have known, that the containers are ineligible for
redemption.
2) Adds the authority for CalRecycle to suspend or permanently
revoke eligibility of a certified recycling center to receive
handling fees at one or more recycling centers as one of the
disciplinary actions available under the Act.
COMMENTS :
1) Background on the Act . The Act is designed to provide consumers
with a financial incentive for recycling and to make recycling
convenient to consumers. The centerpiece of the Act 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
CalRecycle. 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.
Handling fees . Handling fees are monthly payments made by
CalRecycle to recycling centers that meet certain eligibility
requirements. A recycler can receive a monthly handling fee
payment for each eligible container redeemed at an eligible
center. CalRecycle makes handling fee payments to recyclers in
order to provide incentives for the convenient redemption of
empty beverage containers, with the idea being that there is an
extra cost incurred by these recyclers associated with redeeming
containers at certain locations, specifically near supermarkets
and places of beverage retail. The handling fee is based solely
on actual numbers of containers redeemed as reported on a
calendar monthly basis. To be eligible for handling fees, a
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recycler must be one of the following types of recycling
centers:
a) Supermarket Site Recycling Center, where the recycling
center is located within or outside and immediately adjacent
to the entrance of, or within
a parking lot or loading area surrounding, a supermarket which
is the focal point of a convenience zone, or a dealer that is
located within that zone, and which is accessible to motor
traffic.
b) Nonprofit Convenience Zone Recycling Center, where the
operator of the site must be a nonprofit organization and has
recycling centers which are certified and located somewhere
within a convenience zone.
c) Rural Region Recycling Center, where the recycling center
must be located in a rural region and the recycling center is
located somewhere within a convenience zone.
2) Structural deficit . Deposits on covered beverage containers are
remit to CalRecycle and deposited into the Beverage Container
Recycling Fund (BCRF). The BCRF's expenditures fit into two
primary categories: 1) CRV reimbursements to recycler and 2)
program expenses, including administration, grant programs,
education and outreach that are funded by unredeemed CRV. Higher
recycling rates reduce the amount of unredeemed CRV to fund
program expenses. The "breakeven" recycling rate where
expenditures equal revenues is about 72%.
According to CalRecycle, the Act is currently operating under an
approximately $100 million annual structural deficit, where
program expenditures exceed program revenues under the current
mandated expenditure and revenue structure, mainly caused by
historically high recycling rates, along with mandated program
payments and outstanding General Fund loans. When the Act does
not have adequate funding, CalRecycle is required to
"proportionally reduce" many of the program's expenditures
evenly among program participants, with the exception of CRV
redemption for consumers.
3) Fraud . The BCRF is currently operating at a recycling rate of
greater than 80%, but it is known that there is a fraction of
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fraud within the program that artificially elevates the
recycling rate and contributes to the structural deficit.
A significant type of fraud is the importation of out-of-state
beverages. In the summer of 2011, CalRecycle, in coordination
with the Department of Food and Agriculture (CDFA) initiated a
"no-cost" pilot program to survey and document vehicles
importing out-of-state beverage container material into
California through all 16 CDFA Border Protection Stations.
During the first 60 calendar days of the pilot program, the
information gathered indicated that over 2,500 vehicles,
including 378 rental trucks filled to capacity, imported
out-of-state beverage container material through these stations.
Based on the survey data referenced above, CalRecycle states
that a conservative estimate of fraud exposure to the Act Fund
is $7 million annually.
In addition to the redemption of out-of-state beverage
containers by recycling centers and processors, fraud is also
performed when redeeming ineligible materials, such as
previously redeemed beverage containers and beverage containers
not subject to CRV, including wine bottles and milk containers.
Pursuant to AB 1933 (Gordon) Chapter 540, Statutes of 2012,
CalRecycle adopted regulations early this year, effective
immediately, to require anyone transporting into California a
load of empty plastic or aluminum beverage containers weighing
25 pounds or more, or 250 pounds or more of glass, to pass
through a CDFA quarantine inspection station and obtain and
carry proof of inspection. A form documenting the source and
destination of the material must also be completed.
Other recent changes CalRecycle has undertaken to prevent fraud
include new training requirements for operators of recycling
centers and processing facilities, along with revised
regulations that reduce the number of containers an individual
can bring to recycling centers in a single day from 500 pounds
of aluminum or plastic to 100 pounds, and from 2,500 pounds of
glass to 1,000 pounds.
This bill clarifies that, in addition to prohibiting the paying
or claiming of CRV on beverage containers that a recycler or
processor knew or should of known came from outside the state,
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they are also prohibited from paying or claiming CRV on other
illegible materials.
This bill also authorizes CalRecycle to suspend or permanently
revoke handling fees from recycling centers as one of the
disciplinary actions available under the bill for violating any
provision in the Act or regulation adopted pursuant to the Act,
engaging in fraud or deceit to obtain certification or
registration, or engaging in dishonesty incompetence, negligence
or fraud in performing their duties.
SOURCE : Author
SUPPORT : Association of California Recycling Industries
Californians Against Waste
California Nevada Soft Drink Association
Glass Packaging Institute
OPPOSITION : None on file