BILL ANALYSIS �
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Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2467 (Nestande) - As Amended: March 28, 2014
SUBJECT : California Beverage Container Recycling and Litter
Reduction Act: market development payments
SUMMARY : Prohibits the Department of Resources Recycling and
Recovery (CalRecycle) from adopting or amending regulations
relating to the plastic market development payment (PMDP)
through an expedited or emergency process.
EXISTING LAW : establishes the California Beverage Container
Recycling and Litter Reduction Act (Bottle Bill), which:
1)Requires beverage containers sold in this state to have a
California redemption value (CRV) of five 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 CalRecycle. Continuously
appropriates these funds to CalRecycle for the payment of
refund values and processing fees.
2)Requires CalRecycle to:
a) Certify recycling centers and promulgate regulations
establishing a procedure for certification of recycling
centers. Specifies that these regulations shall include,
as a condition for certification, that if one or more
certified entities have operated at the same location
within the past five years, the recycling center must
demonstrate to CalRecycle that its operations exhibit a
pattern of compliance with the Bottle Bill and its related
regulations.
b) Pay 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, and adopt guidelines and
methods specifying a procedure for the payment of these
fees.
c) After deducting refund values, administrative fees, and
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a reserve for contingencies, appropriate remaining monies
to designated programs, grants, and fee payments (PRC
Section 14581).
d) Among these payments, authorizes CalRecycle award up to
$10 million for PMDPs to "certified entities" (collection
and processing operations/recyclers) and "product
manufacturers." Beginning in 2012, authorizes CalRecycle
to allocate an amount greater than $10 million, as
prescribed.
e) Specifies that CalReycle may set different payment
amounts for certified entities and product manufacturers,
but neither payment shall exceed $150 per ton, according to
the following considerations:
i) The minimum funding level needed to encourage
in-state washing and processing of empty plastic beverage
containers collected for recycling;
ii) The minimum funding level needed to encourage
in-state manufacturing that uses empty plastic beverage
containers collected for recycling; and,
iii) The total amount of funds projected to be available
(currently $10 million annually) for plastic market
development payments and the desire to maintain the
minimum funding level needed throughout the year.
f) Sunsets the PMDP on January 1, 2017.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background on the PMDP . 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 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
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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.
The PMDP was established in 2006 and extended in 2011. The
2011 extension also authorized CalRecycle to expend an amount
greater than $10 million annually if it makes specified
determinations. Existing law is explicit that CalRecycle may
expend "up to" $10 million, and that PMDPs "shall not exceed"
$150 per ton; both of these provisions allow CalRecycle to
expend lesser amounts. Existing law further specifies that
when determining the amount of the PMDP for certified entities
and product manufacturers, it must consider the amount of
funds projected to be available and "the desire to maintain
the minimum funding level throughout the year."
The PMDP is designed to encourage the in-state recycling of
plastic beverage containers. While the number of certified
entities has remained fairly constant, the number of product
manufacturers has more than doubled since the beginning of the
program. In 2013, eight certified entities and 46
manufacturers received the PMDP. Five companies are both
certified entities and product manufacturers, which enables
them to receive the PMPD for both processing and
manufacturing.
2)Proposed regulatory changes . In spite of the broad authority
granted to CalRecycle to adjust the amount of the PMDP and
statutory guidance that CalRecycle should consider "the desire
to maintain the minimum funding level throughout the year,"
CalRecycle held a workshop in October 2013 because PMDP
funding had been depleted by the second quarter "for the past
several years." The purpose of the workshop was to discuss
proposed emergency regulatory changes to limit payments to
product manufacturers only and cease all payments to certified
entities. After the workshop, a number of certified entities
expressed concern to CalRecycle about the proposed changes and
the use of the emergency regulations process, which would
reduce the public comment period from 45 days to only five.
In January 2014, CalRecycle issued a notice to PMDP
participants stating that, as in previous years, the PMDP
would be $150 per ton for certified entities and product
manufacturers. This notice did not reference emergency
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regulations. In February, CalRecycle issued a notice stating
that it will allocate $2.5 million per quarter for PMDPs, and
stated that "the Department's plans are to enact new emergency
regulations to issue PMDP payments to manufacturers only."
The notice indicated that certified entities would stop
receiving the PMDP after the first quarter. CalRecycle has
not released draft regulations or any additional notices
related to the program.
3)State of emergency ? The law requires that in order to adopt
emergency regulations, they must be necessary for the
"immediate preservation of the public peace, health and
safety, and general welfare." The Office of Administrative
Law (OAL) defines an emergency as "a situation that calls for
immediate actions to avoid serious harm to the public peace,
health, safety, or general welfare." Unlike many other
emergency regulations, which remain in effect for only 180
days, emergency regulations adopted by CalRecycle remain in
effect until revised by the director.
The regular rulemaking process generally involves workshops or
public meetings to discuss the proposed regulations prior to
noticing the formal rulemaking process. Once the regulations
are noticed, the Administrative Procedures Act requires a
minimum 45-day public comment period and additional 15-day
public comment periods for any substantial modifications. In
contrast, emergency regulations allow for very limited public
involvement. Interested parties are provided five days'
notice prior to filing, followed by five days to submit
comments to OAL. If approved, emergency regulations go into
effect 10 days after being submitted to OAL.
At the October workshop, CalRecycle acknowledged that funds
for the PMDP have been depleted by the second quarter for
several years. This problem has occurred despite the
statutory requirement that minimum funding levels be
maintained throughout the year. While this fund issue is a
significant problem, CalRecycle has never adopted regulations
(emergency or otherwise) to address it. Even though it
explained back in October that emergency regulation would be
necessary, it did not actually promulgate emergency
regulations at that time, or when it issued the February
notice. Therefore, if the problem has existed for several
years, and rulemaking action has not been taken since the
October workshop, what is the compelling need for emergency
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regulations at this time? Given the concerns of the
stakeholders and the implication of regulations on this issue,
it seems more appropriate to begin the regular rulemaking
process now so CalRecycle, stakeholders, and the public can
work on a long term solution that preserves the intent of the
PMDP. This would be preferable to the impending threat of
emergency regulations.
4)This bill . According to the author, "elimination of this
payment to [certified] entities will be detrimental to
businesses that have developed a business model that is
supported by those payments. In order to allow those
businesses time to restructure their business plans, the
traditional regulatory process should be followed."
5)Suggested amendment . This bill proposes to prohibit
CalRecycle from adopting emergency regulations relating to the
PMDP in order to allow for the full public comment period.
However, given the sometimes volatile nature of the Bottle
Bill Fund and potential for proportional reductions in all
programs authorized by PRC Section 14581, the authority to
enact emergency regulations in a legitimate emergency is
important to the stability of the Bottle Bill program. In
order to ensure that CalRecycle continues to provide funding
for both recyclers and manufacturers, the committee may wish
to amend the bill to preserve CalRecycle's emergency
regulatory authority and instead clarify that the PMDP shall
continue to be paid to both certified entities and product
manufacturers. This amendment would preserve CalRecycle's
broad authority to adjust the amount of the payment.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092
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