(1)Existing law requires the operator of a disposal facility to pay to the State Board of Equalization a fee based on the amount of all solid waste disposed of at each disposal site. The act requires the Department of Resources Recycling and Recovery to establish the amount of the fee, as specified, and limits the fee to a maximum of $1.40 per ton. Existing law requires the moneys collected from the fee to be deposited in the Integrated Waste Management Account and to be used by the department, upon appropriation, for specified purposes.

This bill would raise the fee imposed on an operator of a disposal facility from a maximum of $1.40 per ton to $5 $4 per ton between commencing January 1, 2017, and January 1, 2022, inclusive, and to $3.50 per ton on and after January 1, 2022. 2017. The bill would require a minimum of $1 $1.50 per ton of the fee collected from each operator between January 1, 2017, and operator, until January 1, 2022, and would authorize some or all of the fee collected thereafter, to be allocated to activities that promote recycling and the highest and best use of materials, as specified.

This bill additionally would require the department, commencing January 1, 2019, to establish, as provided, and impose a charge on all solid waste generators to be collected by a city, county, or city and county and remitted to the state board, as specified. The bill would require that the moneys collected from each solid waste generator between January 1, 2019, and would, until January 1, 2022, be allocated by authorize the department to allocate a portion of the moneys collected to fund activities that promote recycling and the highest and best use of materials, as specified. By adding to the duties of local governments, this bill would impose a state-mandated local program.

(2)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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

(3)This bill would declare that it is to take effect immediately as an urgency statute.

(1)Existing law requires the operator of a disposal facility to pay to the State Board of Equalization a fee based on the amount of all solid waste disposed of at each disposal site. The act requires the Department of Resources Recycling and Recovery to establish the amount of the fee, as specified, and limits the fee to a maximum of $1.40 per ton. Existing law requires the moneys collected from the fee to be deposited in the Integrated Waste Management Account and to be used by the department, upon appropriation, for specified purposes.

Existing law requires the operator of a disposal facility to pay to the State Board of Equalization a fee based on the amount of all solid waste disposed of at each disposal site. The act requires the Department of Resources Recycling and Recovery to establish the amount of the fee, as specified, and limits the fee to a maximum of $1.40 per ton.

Existing law requires the operator of a disposal facility to pay to the State Board of Equalization a fee based on the amount of all solid waste disposed of at each disposal site. The act requires the Department of Resources Recycling and Recovery to establish the amount of the fee, as specified, and limits the fee to a maximum of $1.40 per ton.

This bill would change the fee maximum to an unspecified amount per ton and would require that any amount over $1.40 per ton be used to cover the reasonable regulatory costs incurred by the department incident to the performance of various regulatory actions. The bill would also make various nonsubstantive changes.

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 1063

SUBJECT: Solid waste: charges

ANALYSIS:

Existing law, pursuant to the Integrated Waste Management Act of 1989 (Act) (Public Resources Code (PRC) §40000 et seq.):

1. Establishes a statewide policy goal that 75% of solid waste generated be diverted from landfill disposal by 2020 through source reduction, recycling, or composting.
   
   

2. Requires local agencies to divert, through source reduction, recycling, and composting, 50% of solid waste disposed by their jurisdictions.
   
   

3. Authorizes the Department of Resources Recycling and Recovery (CalRecycle) to collect a solid waste tipping fee of up to $1.40 per ton of solid waste disposed of in California.
   
   

4. Establishes the Integrated Waste Management Account (IWMA) in the Integrated Waste Management Fund.
   
   

5. Requires a commercial waste generator, including multi-family dwellings, to arrange for recycling services and requires local governments to implement commercial solid waste recycling programs designed to divert solid waste from businesses.
   
   

6. Requires generators of specified amounts of organic waste to arrange for recycling services for that material.

This bill:

1. Increases the solid waste tipping fee imposed on an operator of a disposal facility from up to $1.40 per ton to $4 per ton beginning January 1, 2017.
   
   

   1. Until January 1, 2022, requires a minimum of $1.50 of the $4 solid waste tipping fee collected to be allocated to activities that promote recycling and the highest and best use of materials, through any of the following means:
      
      

      1. Market incentive payments for recycling infrastructure and activities;
         
         

      2. Grants to local governments to implement programs that increase recycling and reduce disposal; or,
         
         

      3. Grants and loans to develop recycling infrastructure.
         
         

   2. Specifies that if sufficient moneys are collected in the IWMA, CalRecycle must prioritize market incentive payments.
      
      

   3. On and after January 1, 2022, authorizes some or all of the solid waste tipping fee to be allocated for activities that promote recycling and the highest and best use of materials.
      
      

2. Beginning January 1, 2019, requires CalRecycle to establish and impose a quarterly charge on all solid waste generators (generator charge) to be collected by a local government and remitted to the Board of Equalization (BOE).
   
   

   1. Beginning January 1, 2019, and every three years thereafter, requires the generator charge to be calculated for the purpose of collecting enough money to recover CalRecycle’s costs to administer and implement the Act that are not covered by the moneys collected through the solid waste tipping fee.
      
      

   2. Until January 1, 2022, provides that the generator charge must include an amount, as determined by CalRecycle, sufficient to ensure that not less than $15 million is collected annually for the purpose of funding activities that promote recycling and the highest and best use of materials.
      
      

   3. Requires the local governments, or up to two designees per city or county, to collect the charge and remit the moneys to BOE.
      
      

Background

1. Statewide waste diversion goals. CalRecycle is tasked with diverting from landfills at least 75% of solid waste statewide by 2020 through source reduction, recycling and composting. Source reduction, or waste prevention, is designing products to reduce the amount of waste that will later need to be thrown away and also to make the resulting waste less toxic. Recycling is the recovery of useful materials, such as paper, glass, plastic, and metals, from the trash to use to make new products reducing the amount of virgin raw materials needed. Composting involves collecting organic waste, such as food scraps and yard trimmings, and storing it under conditions designed to help it break down naturally; the resulting compost can then be used as a natural fertilizer/soil amendment. By using and reusing materials in the most productive and sustainable ways across their entire life cycle, conserving resources and reducing wastes can minimize the environmental impacts of the materials we use.

According to CalRecycle, California’s statewide disposal in 2014 was 31.2 million tons and its populations was 38.4 million residents, which resulted in the disposal rate of 4.5 pounds/resident/day. Almost all (99%) of California’s 31.2 million tons of disposal were landfilled in the state, while approximately 1% was exported to landfills out of state. An additional 0.82 million tons were transformed to three permitted waste-to-energy plants in California.

To calculate diversion rates, local jurisdictions compare estimated maximum allowable disposal to report-year disposal – In 2014, the diversion rate was 65%. While California as a whole remained well above the 50% diversion mandate set for local jurisdictions, the statewide diversion rate for 2014 was at 50% in the effort to achieve the goal of 75% recycling, composting or source reduction of solid waste by 2020.

According to the Department of Finance, labor markets, real estate markets, and construction, continued to grow steadily in 2014 with the peak number of jobs surpassing the pre-recession peak. As the economy improves, solid waste generation will likely continue to rise. Disposal has continued to increase since 2012. If diversion programs are not in place to handle additional waste, then higher amounts are likely expected to be landfilled in the future.

2. Organic waste. Organic waste means food waste, green waste, landscape and pruning waste, nonhazardous wood waste, and food-soiled paper waste that is mixed in with food waste. Of the approximately 30 million tons of solid waste being disposed in landfills each year, about 30% is organic waste; and food continues to be the highest single item disposed at over 15%.
   
   Greenhouse gas (GHG) emissions resulting from the decomposition of organic wastes in landfills have been identified as a significant source of emissions contributing to climate change. According to the California Air Resources Board (ARB), landfills emit 8 million tons of carbon dioxide equivalent every year produced by the decomposition of organic materials. A recent report by the Intergovernmental Panel on Climate Change states that the global warming impact of methane is 34 times that of carbon dioxide over a 100-year period. However, organic wastes are recyclable. Recycling technologies for organic waste include composting, anaerobic digestion, and other types of processing that generate renewable fuels, energy, soil amendments, and mulch. Increasing the recycling of organic wastes would help reduce GHG emissions from landfills.
   
   

3. State tipping fee. A tipping fee is a surcharge levied on waste disposal and is based on the quantity (weight or volume) of waste disposed. One of the purposes of such a disposal fee is to discourage waste generation and encourage recycling. However, they also may create incentives to dispose of waste illegally or to transport waste to other locations where disposal is cheaper.
   
   The current cap on the state tipping fee was established over two decades ago in 1993. At that time, the tipping fee was set at $1.34 per ton, and the California Integrated Waste Management Board (now CalRecycle) was authorized to increase the fee as needed, to a maximum of $1.40, beginning with Fiscal Year (FY) 1995-96. The $1.40/ton tipping fee is assessed on the amount of waste deposited at a landfill. These facilities then remit the funds to BOE, which deposits the moneys directly into the IWMA.
   
   

4. State tipping fee revenue. The total amount of revenue generated by the tipping fee varies annually; actual revenues for the past five years are as follows:

• FY 2009-10 ~ $41.9M

• FY 2010-11 ~ $42.3M

• FY 2011-12 ~ $40.8M

• FY 2012-13 ~ $40.9M

• FY 2013-14 ~ $43.3M
  
  

Individual departments with appropriations, which include CalRecycle, BOE, State Water Resources Control Board, Office of Environmental Health Hazard Assessment, Fi$cal, and SCO/Department of Finance Assessments, may access the IWMA directly to fund their activities.

5. What programs are funded by the state tipping fee? According to CalRecycle, the state tipping fee is the main source of revenue deposited into the IWMA. The IWMA partially supports the Waste Reduction and Management program and partially supports the Education and Environment Initiative program. The majority of the department’s programs, with the exception of the Beverage Container Recycling Program, are funded through multiple sources. However, items that rely solely on IWMA funding include:
   
   

• Household Hazardous Waste Grants (~ $1.5 million (M) annually).
  
  

• Local Enforcement Agent (LEA) Grants (~ $1.4M annually).
  
  

• Solid Waste Disposal Site Cleanup Trust Fund to support the Solid Waste Disposal and Codisposal Site Cleanup Program ($5M annually).
  
  

• Used Mattress Extended Producer Responsibility program ($1.6M loan for seed money in FY 2014-15).
  
  

6. Additional disposal charges. According to CalRecycle, most landfills have more than one disposal charge. In addition to the state’s $1.40 tipping fee, landfills usually have a publicly posted fee for individuals or businesses “self-hauling” waste; and have negotiated disposal rates with solid waste haulers, cities, counties, and other facility operators. About 20% of disposal is self-hauled, while 80% of disposal is transported to landfills by solid waste haulers. Tipping fees vary due to the unique circumstances at each landfill, such as location, owner, size, proximity to other landfills, and other operational factors.
   
   

Comments

1. Purpose of Bill. According to the author:
   
   

California is a leader in progressive waste reduction policies.  As the state moves towards the 75% diversion goal, the resulting reduction in disposal will cause a sharp decline in tipping fee revenue which supports CalRecycle’s oversight of disposal and recycling.  With landfills projected to play a diminishing role in solid waste materials management, disposal and diversion program funding options should be reassessed so they’re not completely reliant on tipping fees.  But perhaps what’s more important is the lack of infrastructure available to process material diverted from landfills. CalRecycle estimates at least 100 new or expanded facilities must be built by 2020 in order to achieve targets for diversion which advances the State goals related to air quality, climate, energy, and soil sustainability.

AB 1063 fundamentally restructures disposal-based revenue to both account for the anticipated loss of funds as well as properly encourage diversion.  In the short term, the bill increases the tip fee which hasn’t been increased in statute in more than 20 years.  In the long term, the bill establishes a more equitable method for assessing fees on disposal: a fee on the waste generator.  Importantly, the largest portion of the new revenue is dedicated for the sole purpose of building the infrastructure necessary for diversion – infrastructure that both creates jobs and decreases emissions.  AB 1063 achieves two goals: building more facilities and, secondarily, stabilizing the state’s funding as we achieve our goal of reducing disposal.

2. When will IWMA be in deficit with the existing state tipping fee? Under CalRecycle’s interpretation of AB 341 (Chesbro, Chapter 476, Statutes of 2011), the state diversion rate is currently at 50%. For purposes of AB 939 (Sher, Chapter 1095, Statutes of 1989), the local jurisdiction diversion rate is 65%. With the existing tipping fee of $1.40 per ton, CalRecycle projects that the IWMA fund balance will go in the negative in FY 2017-2018. This estimate is based on the Governor’s budget and does not account for any potential decrease in disposal as the state achieves the 75% diversion goal.
   
   

3. Hard to predict recycling rate. According to CalRecycle, the department saw the amount of disposal significantly decrease with the economic recession. However, with the economy rebounding, CalRecycle is seeing an increase in disposal. At the same time, mandatory commercial recycling, pursuant to AB 341, and mandatory organic recycling, pursuant to AB 1826 (Chesbro, Chapter 727, Statutes of 2014), are either just coming online or will be coming online. The department anticipates that these two policies will have an impact on recycling rates closer to 2018. Given these variables, it is difficult to predict with some certainty what the recycling rate will be in FY 2017-18.
   
   

4. Underfunded grant and loan programs. According to CalRecycle, the department has underfunded key grant and loan programs, and seeks to bring those programs up to full funding. In addition, CalRecycle has absorbed additional responsibilities for which it seeks to improve program delivery. A few examples are:
   
   

   1. Household Hazardous Waste Grants – Provides competitive grants to help local governments with hazardous waste collection programs. Currently, funding is at $1.5M, but is authorized for $5M. A fully funded program would strengthen assistance, and the department could consider funding for propane tanks, marine flares, etc. to meet the changing waste stream.
      
      

   2. Reuse Assistance Grant Program – Provides reimbursement grants for California local public agencies to promote the reuse of nonhazardous material. This program was defunded in 2008 due to budget constraints.
      
      

   3. Recycling Market Development Zones (RMDZ) Loans – Provides loans, technical assistance, and free product marketing to businesses that use materials from the waste stream to manufacture their products. The allocation has been $0 for a number of years.
      
      

   4. Increased Local Solid Waste Enforcement Agencies (LEA) Support – Provides grants to LEAs to assist with enforcement. CalRecycle would like to expand existing grants to specifically assist with enforcement, including processing appeals; investigation and enforcement for illegal and abandoned disposal sites; advance training on odor investigation and mitigations for compost sites; land application sites, and sampling and testing of compost and mulch.
      
      

5. CalRecycle’s expanded responsibilities. Over the past few years, there has been an increase in the number of recycling requirements in the state, such as:
   
   

   1. Diversion of at least 75% of solid waste from landfills statewide by 2020. (AB 341 (Chesbro, Chapter 476, Statutes of 2011)).
      
      

   2. Strategic Directive 6.1, which calls for reducing organic waste disposal by 50% by 2020.
      
      

   3. Reducing the amount of organic materials sent to landfills and increasing the production of compost and mulch as part of the AB 32 (California Global Warming Solutions Act of 2006) Scoping Plan.
      
      

   4. Requiring businesses that generate a specified amount of organic waste per week to arrange for recycling services for that waste beginning April 1, 2016; and for local jurisdictions to implement a recycling program to divert organic waste from businesses beginning January 1, 2016. (AB 1826 (Chesbro, Chapter 727, Statutes of 2014)).

While such actions to increase diversion has environmental benefits, it also will likely result in decreasing tipping fee revenue, which would impair CalRecycle’s ability to fulfill its expanding duties.

6. Proposed generator charge. This bill authorizes CalRecycle to establish and impose a new, solid waste generator charge. According to CalRecycle, a generator charge is a charge applied to an individual or entity generating waste based on the actual amount of waste generated by the individual or entity. Unlike a disposal fee, which is a fee charged for tons disposed of at a landfill, a solid waste generator charge is assessed directly on the consumer generating the waste.
   
   The proposed generator charge is structured to fund two specific actions/programs. First, the generator charge is meant to mitigate revenue losses associated with decreased disposal revenue. Beginning in 2019, this bill requires CalRecycle to calculate decreases in disposal revenue on a three-year cycle. Every three years, CalRecycle will measure disposal rates – if disposal rates decrease, CalRecycle will adjust the generator charge to cover the difference. For example, if disposal decreased by 3 million tons from 2022 to 2025, CalRecycle would set the generator charge at an amount equivalent to the lost disposal fee revenue in 2025. Second, the generator charge is meant to support activities that promote recycling and the highest and best use of materials through recycling market development programs (e.g. incentive payments, grants, and loans).
   
   CalRecycle states that for the first time, the proposed generator charge structure would provide the department with a diversified and stable funding source, which is critical to its ability to manage solid waste once the 75% recycling goal is achieved.
   
   

7. Comparing other states’ disposal fees. The total median fee in California for landfill disposal is $45 per ton, which includes the state fee of $1.40, local fees, and landfill charges. (California’s average landfill charge is $54 per ton, but according to CalRecycle that figure is “inflated due to skewed data” based on the survey methods used. CalRecycle states that the median cost is more representative of the state as a whole.) While this is fairly consistent with the national average of $49 per ton, California’s recycling rate of 66% far exceeds states with similarly low disposal costs. For example, the New England area has average tipping fees of $77 per ton and a 76% diversion rate. Areas of the country with disposal fees similar to California’s have much lower rates of recycling. For example, the Great Lakes area has average disposal costs of $45 per ton, and a recycling rate of only 24%. Several states have higher state tipping fees, including Pennsylvania ($7.25 per ton), Wisconsin ($7 recycling fee assessed on each ton of solid waste disposed), Ohio ($4.75 per ton), and Missouri ($2.11 per ton).
   
   According to CalRecycle, California has lower landfill tipping fees compared with other environmentally progressive areas such as the Northeastern and Northwestern regions of the United States and the European Union. With some exceptions, it appears that there may be a correlation between a higher tipping fee and a lower percentage of waste disposed into a landfill.
   
   

8. Investing in recycling infrastructure. Until January 1, 2022, this bill requires a minimum of $1.50 of the $4 tipping fee collected to be allocated to activities that promote recycling and the highest and best use of materials and ensures not less than $15 million annually will be collected for those purposes during that time.
   
   Although the funding for such activities may be needed to reduce disposal of waste to landfills, how do we know that the funds will be spent on activities that will benefit the environment and public health overall? Not every product made from recycled waste may be appropriate for the intended use. For example, questions have been raised whether the crumb rubber from recycled tires that is used in synthetic turf may have potential adverse health impacts.
   
   Also, does the overall benefit of recycling a product outweigh the potential environmental impacts of that recycling process such as the amount of energy or water consumed, or the potential pollution to air and water? If the preferred approach to waste management is to reduce, reuse, and recycle – and in that order – then why is the funding not focusing on the more preferred approaches of reduce and reuse?

Related/Prior Legislation

AB 1594 (Williams), Chapter 719, Statutes of 2014, eliminated diversion credit for green material used as alternative daily cover at a landfill, but exempts the material from the state tipping fee.

AB 1826 (Chesbro), Chapter 727, Statutes of 2014, required generators of specified amounts of organic waste to arrange for recycling services and requires local governments to implement organic waste recycling programs.

AB 341 (Chesbro), Chapter 476, Statutes of 2011, established a statewide 75% recycling goal and required commercial waste generators to arrange for recycling services and required local governments to implement commercial solid waste recycling programs.

AB 2866 (de León) (2008) would have increased the state’s tipping fee from $1.40 to $2.00 per ton for purposes of establishing a trust fund to cover potential closure and post-closure landfill costs. AB 2866 was held in Senate Appropriations Committee.

AB 1610 (Nuñez) (2007) would have raised the cap on the tipping fee to $2.00 per ton. AB 1610 was subsequently amended to address an unrelated issue.

AB 712 (de León) (2007) would have imposed a $0.50 surcharge on the tipping fee to establish a program within ARB to develop clean fuels from solid waste and landfill gas. AB 712 was held in the Senate Appropriations Committee.

AB 1220 (Eastin), Chapter 656, Statutes of 1993, set the tipping fee at $1.34 per ton and authorized CIWMB (now CalRecycle) to increase the tipping fee to a maximum of $1.40, on or after FY 1995-96.

AB 939 (Sher), Chapter 1095, Statutes of 1989, established the California Integrated Waste Management Act and the tipping fee at $0.50 per ton and capping the fee at $0.75 prior to June 30, 1991, and $1.00 per ton thereafter.

SOURCE:

Californians Against Waste

SUPPORT:

None received

OPPOSITION:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1063

Author:(Williams)

As Amended Ver:April 20, 2015

Majority vote

SUMMARY: Requires the Department of Resources Recycling and Recovery (CalRecycle) to hold public hearings and workshops to develop a proposal to revise the state's solid waste tipping fee. Specifically, this bill:

1. On or before July 1, 2016, requires CalRecycle to hold a public hearing and a workshop to develop a proposal for the Legislature regarding a new solid waste management fee to provide CalRecycle adequate funding to:

   1. Develop financial incentives to promote the recycling of organic material;

   2. Provide resources to develop infrastructure and incentives necessary to achieve the statewide policy goal of 75%; and,

   3. Provide a sustainable funding structure that ensures CalRecycle's ability to carry out its responsibilities under the California Integrated Waste Management Act.

2. Requires CalRecycle to seek public input from interested groups, including, but not limited to, representatives of the solid waste industry, local government, disadvantaged communities, and environmental groups.

3. Within six months of the public hearing and workshop, requires CalRecycle to submit the proposal to the Legislature.

EXISTING LAW, pursuant to the California Integrated Waste Management Act:

1. Specifies a state policy goal that 75% of solid waste generated be diverted from landfill disposal by 2020 through source reduction, recycling, or composting.

2. Requires each local jurisdiction to divert 50% of solid waste from landfill disposal.

3. Authorizes CalRecycle to collect a solid waste tipping fee of up to $1.40 per ton of solid waste disposed of in California.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has absorbable costs for CalRecycle to develop the proposal and report to the Legislature.

COMMENTS: According to the author:

Achieving California's 75% recycling goal will eliminate 50% of CalRecycle's revenue, while demanding additional resources to expand and oversee additional recycling and waste management infrastructure. Specifically, achieving 75% recycling will reduce CalRecycle's current revenue by $29 million annually. The immediate loss of revenue does not account for the statewide investment that will be needed to develop the infrastructure and capacity necessary to recycle an additional 22 million tons of material by 2020. CalRecycle estimates that at least $125 million will be needed annually to develop the market and infrastructure necessary to achieve the 75% goal. Finally, CalRecycle will need an additional $11 million to properly manage and regulate the new infrastructure.

The current cap on the tipping fee was established over two decades ago in 1993. At that time, the tipping fee was set at $1.34 per ton, and authorized the California Integrated Waste Management Board (now CalRecycle) to increase the fee as needed, to a maximum of $1.40, beginning with the 1995-1996 Fiscal Year. CIWMB acted on this authority six years later, and raised the state tipping fee to the maximum $1.40 on July 1, 2001.

Over the last few years, a number of bills have increased recycling requirements in the state. CalRecycle is tasked with diverting at least 75% of solid waste statewide by 2020. Currently, organic materials make up one-third of the waste stream and food continues to be the highest single item disposed at over 15% of disposal. CalRecycle is also charged with implementing its Strategic Directive 6.1, which calls for reducing organic waste disposal by 50% by 2020. According to CalRecycle, significant gains in organic waste diversion are necessary to meet the 75% goal and implement Strategic Directive 6.1. Recycling technologies for organic waste include composting, anaerobic digestion, and other types of processing that generate renewable fuels, energy, soil amendments, and mulch. Other states have taken similar actions, and 23 have banned the disposal of green waste (i.e., yard trimmings and landscape waste) in landfills.

Recycling organic waste also has substantial greenhouse gas emissions reduction benefits. According to the Air Resources Board, landfills emit nearly 8 million tons of carbon dioxide equivalent every year produced by the decomposition of organic materials. A recent report by the Intergovernmental Panel on Climate Change states that the global warming impact of methane is 34 times that of carbon dioxide over a 100-year period.

While increasing diversion has significant environmental benefits, it results in decreasing revenues for CalRecycle, which is funded by the state's solid waste tipping fee on waste disposed of in landfills. In order to address this combination of increasing challenges and decreasing revenues, CalRecycle will need to reevaluate its options for ongoing funding that will be sustainable as the state moves toward 75% recycling.

The total median tipping fee in California for landfill disposal is $45 per ton, which includes the state fee of $1.40, local fees, and landfill charges. (California's average landfill charge is $54 per ton, but according to CalRecycle that figure is "inflated due to skewed data" based on the survey methods used. CalRecycle states that the median cost is more representative of the state as a whole.) While this is fairly consistent with the national average of $49 per ton, California's recycling rate of 66% far exceeds states with similarly low disposal costs. For example, the New England area has average tipping fees of $77 per ton and a 76% diversion rate. Areas of the country with disposal fees similar to California's have much lower rates of recycling; the Great Lakes area has average disposal costs of $45 per ton, and a recycling rate of only 24%.

Several states have higher state tipping fees, including Pennsylvania ($7.25 per ton), Wisconsin ($7.00 recycling fee assessed on each ton of solid waste disposed), Ohio ($4.75 per ton), and Missouri ($2.11 per ton).

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0000326

Date of Hearing: May 6, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1063

Author:(Williams) – As Amended Ver:April 20, 2015

Urgency: No State Mandated Local Program: No Reimbursable: >

This bill requires CalRecycle to develop a proposal to revise the state's solid waste tipping fee. Specifically, this bill:

1. On or before July 1, 2016, requires CalRecycle to hold a public hearing and a workshop to develop a proposal for the Legislature regarding a new solid waste management fee to provide CalRecycle adequate funding to:

   1. Develop financial incentives to promote the recycling of organic material.

   2. Provide resources to develop infrastructure and incentives necessary to achieve the statewide diversion goal of 75%; and,

   3. Provide a sustainable funding structure that ensures CalRecycle's ability to carry out its responsibilities under the California Integrated Waste Management Act.

2. Requires CalRecycle to seek public input from interested groups, including, but not limited to, representatives of the solid waste industry, local government, disadvantaged communities, and environmental groups.

3. Requires CalRecycle to submit the proposal to the Legislature within six months of the public hearing.

FISCAL EFFECT:

Abosorbale costs for CalRecycle to develop the proposal and report to the Legislature.

COMMENTS:

1. Rationale. Current law establishes a policy goal of diverting 75% of generated solid waste from landfill disposal by 2020 through source reduction, recycling, or composting. While increasing diversion has significant environmental benefits, it results in decreasing revenues.

Specifically, achieving 75% recycling will reduce CalRecycle's current revenue by $29 million annually. The immediate revenue loss is in addition to the future statewide investment needed to develop the infrastructure and capacity necessary to recycle an additional 22 million tons of material by 2020. CalRecycle estimates that at least $125 million will be needed annually to develop the market and infrastructure necessary to achieve the 75% goal. Finally, CalRecycle will need an additional $11 million to properly manage and regulate the new infrastructure. Calreycle will likely need various revenue sources to meet this need.

This bill begins the process of determining what level the tipping fee will be to contribute to meeting the future funding needs of CalRecycle.

2. Background. The current cap on the tipping fee was established over two decades ago in 1993. At that time, the tipping fee was set at $1.34 per ton, and authorized the California Integrated Waste Management Board (now CalRecycle) to increato increase the fee as needed, to a maximum of $1.40, beginning with the 1995-1996 fiscal year. The Board acted on this authority six years later, and raised the state tipping fee to the maximum $1.40 on July 1, 2001.

3. Other States. The total median tipping fee in California for landfill disposal is $45 per ton, which includes the state fee of $1.40, local fees, and landfill charges. (California's average landfill charge is $54 per ton, but according to CalRecycle that figure is "inflated due to skewed data" based on the survey methods used. CalRecycle states that the median cost is more representative of the state as a whole.) While this is fairly consistent with the national average of $49 per ton, California's recycling rate of 66% far exceeds states with similarly low disposal costs. For example, the New England area has average tipping fees of $77 per ton and a 76% diversion rate. Areas of the country with disposal fees similar to California's have much lower rates of recycling; the Great Lakes area has average disposal costs of $45 per ton, and a recycling rate of only 24%.

Several states have higher state tipping fees, including Pennsylvania ($7.25 per ton), Wisconsin ($7.00 recycling fee assessed on each ton of solid waste disposed), Ohio ($4.75 per ton), and Missouri ($2.11 per ton).

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 27, 2015

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

ABPCA Bill Id:AB 1063

Author:(Williams) – As Amended Ver:April 20, 2015

SUBJECT: Solid waste: disposal facility: fees

SUMMARY: Requires the Department of Resources Recycling and Recovery (CalRecycle) to hold public hearings and workshops to develop a proposal to revise the state's solid waste tipping fee.

EXISTING LAW, pursuant to the California Integrated Waste Management Act (Act):

1. Specifies a state policy goal that 75% of solid waste generated be diverted from landfill disposal by 2020 through source reduction, recycling, or composting.

2. Requires each local jurisdiction to divert 50% of solid waste from landfill disposal.
   
   

3. Authorizes CalRecycle to collect a solid waste tipping fee of up to $1.40 per ton of solid waste disposed of in California.
   
   

THIS BILL:

1. On or before July 1, 2016, requires CalRecycle to hold a public hearing and a workshop to develop a proposal for the Legislature regarding a new solid waste management fee to provide CalRecycle adequate funding to:

   1. Develop financial incentives to promote the recycling of organic material;

   2. Provide resources to develop infrastructure and incentives necessary to achieve the statewide policy goal of 75%; and,

   3. Provide a sustainable funding structure that ensures CalRecycle's ability to carry out its responsibilities under the Act.

2. Requires CalRecycle to seek public input from interested groups, including, but not limited to, representatives of the solid waste industry, local government, disadvantaged communities, and environmental groups.

3. Within six months of the public hearing and workshop, requires CalRecycle to submit the proposal to the Legislature.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author statement.

Achieving California's 75% recycling goal will eliminate 50% of CalRecycle's revenue, while demanding additional resources to expand and oversee additional recycling and waste management infrastructure. Specifically, achieving 75% recycling will reduce CalRecycle's current revenue by $29 million annually. The immediate loss of revenue does not account for the statewide investment that will be needed to develop the infrastructure and capacity necessary to recycle an additional 22 million tons of material by 2020. CalRecycle estimates that at least $125 million will be needed annually to develop the market and infrastructure necessary to achieve the 75% goal. Finally, CalRecycle will need an additional $11 million to properly manage and regulate the new infrastructure.

2. History of the state's tipping fee. The current cap on the tipping fee was established over two decades ago in 1993. At that time, the tipping fee was set at $1.34 per ton, and authorized the California Integrated Waste Management Board (now CalRecycle) to increase the fee as needed, to a maximum of $1.40, beginning with the 1995-1996 fiscal year. CIWMB acted on this authority six years later, and raised the state tipping fee to the maximum $1.40 on July 1, 2001.
   
   
   

3. CalRecycle's expanded jurisdiction and shrinking revenues. Over the last few years, a number of bills have increased recycling requirements in the state. CalRecycle is tasked with diverting at least 75% of solid waste statewide by 2020. Currently, organic materials make up one-third of the waste stream and food continues to be the highest single item disposed at over 15% of disposal. CalRecycle is also charged with implementing its Strategic Directive 6.1, which calls for reducing organic waste disposal by 50% by 2020. According to CalRecycle, significant gains in organic waste diversion are necessary to meet the 75% goal and implement Strategic Directive 6.1. Recycling technologies for organic waste include composting, anaerobic digestion, and other types of processing that generate renewable fuels, energy, soil amendments, and mulch. Other states have taken similar actions, and 23 have banned the disposal of green waste (i.e., yard trimmings and landscape waste) in landfills.
   
   Recycling organic waste also has substantial greenhouse gas emissions reduction benefits. According to the Air Resources Board, landfills emit nearly 8 million tons of carbon dioxide equivalent every year produced by the decomposition of organic materials. A recent report by the Intergovernmental Panel on Climate Change states that the global warming impact of methane is 34 times that of carbon dioxide over a 100 year period.
   
   While increasing diversion has significant environmental benefits, it results in decreasing revenues for CalRecycle, which is funded by the state's solid waste tipping fee on waste disposed of in landfills. In order to address this combination of increasing challenges and decreasing revenues, CalRecycle will need to reevaluate its options for ongoing funding that will be sustainable as the state moves toward 75% recycling.
   
   

4. Other state fees. The total median tipping fee in California for landfill disposal is $45 per ton, which includes the state fee of $1.40, local fees, and landfill charges. (California's average landfill charge is $54 per ton, but according to CalRecycle that figure is "inflated due to skewed data" based on the survey methods used. CalRecycle states that the median cost is more representative of the state as a whole.) While this is fairly consistent with the national average of $49 per ton, California's recycling rate of 66% far exceeds states with similarly low disposal costs. For example, the New England area has average tipping fees of $77 per ton and a 76% diversion rate. Areas of the country with disposal fees similar to California's have much lower rates of recycling; the Great Lakes area has average disposal costs of $45 per ton, and a recycling rate of only 24%.

Several states have higher state tipping fees, including Pennsylvania ($7.25 per ton), Wisconsin ($7.00 recycling fee assessed on each ton of solid waste disposed), Ohio ($4.75 per ton), and Missouri ($2.11 per ton).

5. Previous legislation.
   
   

   1. AB 1594 (Williams), Chapter 719, Statutes of 2014, eliminates diversion credit for green material used as alternative daily cover at a landfill, but exempts the material from the state tipping fee.
      
      

   2. AB 1826 (Chesbro), Chapter 727, Statutes of 2014, requires generators of specified amounts of organic waste to arrange for recycling services and requires local governments to implement organic waste recycling programs.
      
      

   3. AB 341 (Chesbro), Chapter 476, Statutes of 2011, established a statewide 75% recycling goal and requires commercial waste generators to arrange for recycling services and requires local governments to implement commercial solid waste recycling programs.
      
      

   4. AB 2866 (DeLeon, 2008) would have increased the state's tipping fee from $1.40 to $2.00 per ton for purposes of establishing a trust fund to cover potential closure and postclosure landfill costs. This bill was held in the Senate Appropriations Committee.
      
      

   5. AB 1610 (Nunez, 2007) would have raised the cap on the tipping fee to $2.00 per ton. This bill was subsequently amended to address an unrelated issue.
      
      

   6. AB 712 (DeLeon, 2007) would have imposed a $0.50 surcharge on the tipping fee to establish a program within the Air Resources Board to develop clean fuels from solid waste and landfill gas. This bill was held in the Senate Appropriations Committee.
      
      

   7. AB 1220 (Eastin) Chapter 656, Statutes of 1993, set the tipping fee at $1.34 per ton and authorized CalRecycle to increase the tipping fee to a maximum of $1.40, on or after the 1995-96 fiscal year.
      
      

   8. AB 939 (Sher) Chapter 1095, Statutes of 1989, established the Act and the tipping fee at $0.50 per ton and capping the fee at $0.75 prior to June 30, 1991, and $1.00 per ton thereafter.

REGISTERED SUPPORT / OPPOSITION:

Support

Californians Against Waste (sponsor)

Rural County Representatives of California

Opposition

Western Placer Waste Management Authority

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092