(1)The California Beverage Container Recycling and Litter Reduction Act requires certified recycling centers, when accepting an empty beverage container from a consumer, to pay the refund value. The act requires a processor to pay a refund value to a certified recycling center for each beverage container received from the certified recycling center. A violation of the act is a crime.

This bill would prohibit a certified recycling center from paying the refund value to a consumer for more than to, or claiming the refund value for any material received from, a person who is not certified by the department and who delivers material in excess of 50 pounds of aluminum beverage containers or containers, 50 pounds of plastic beverage containers, or any combination thereof, or 500 pounds of glass beverage containers, submitted by that consumer person to the certified recycling center in a single 24-hour period. Since a violation of this requirement would be a crime, the 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 no reimbursement is required by this act for a specified reason.

(1)The California Beverage Container Recycling and Litter Reduction Act requires certified recycling centers, when accepting an empty beverage container from a consumer, to pay the refund value. A violation of the act is a crime.

This bill would prohibit a certified recycling center from accepting or paying the refund value to a consumer for more than 50 pounds of aluminum beverage containers or plastic beverage containers, or any combination thereof, or 500 pounds of glass beverage containers, submitted by that consumer to the certified recycling center in a single 24-hour period. Since a violation of this requirement would be a crime, the 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 no reimbursement is required by this act for a specified reason.

The California Clean Energy Jobs Act, an initiative approved by the voters as Proposition 39 at the November 6, 2012, statewide general election, made changes to corporate income taxes and, except as specified, provides for the transfer of $550,000,000 annually from the General Fund to the Clean Energy Job Creation Fund for 5 fiscal years beginning with the 201314 fiscal year. Moneys in the Clean Energy Job Creation Fund are available, upon appropriation by the Legislature, for purposes of funding eligible projects that create jobs in California and improve energy efficiency and expand clean energy generation. Existing law provides for the allocation of available funds to public school facilities, university and college facilities, and other public buildings and facilities, as well as job training and workforce development and public-private partnerships for eligible projects, as specified. Existing law establishes prescribed criteria that apply to all expenditures from the Clean Energy Job Creation Fund.

This bill would make technical, nonsubstantive changes to a provision within the act that transfers and allocates moneys from the Clean Energy Job Creation Fund.

 THIRD READING  

Bill No: AB 1108

Author: Low (D)

: 6/28/16 in Senate

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 4-0, 6/8/16

AYES: Wieckowski, Hill, Leno, Pavley

NO VOTE RECORDED: Gaines, Bates, Jackson

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 75-0, 5/26/15 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill reduces the daily load limits of empty beverage containers for purposes of receiving a California Redemption Value (CRV) payment.

ANALYSIS: Existing law, under the California Beverage Container Recycling and Litter Reduction Act (Act):

1. Requires beverage containers, as defined, sold in-state to have a 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 distributors to pay a redemption payment to the Department of Resources Recycling and Recovery (CalRecycle) for every beverage container sold in the state. These funds are continuously appropriated to CalRecycle for the payment of refund values and processing fees.
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.

This bill prohibits certified recycling centers from paying the CRV to, or claim CRV for material received from, a person not certified by CalRecycle and who delivers more than 50 pounds of aluminum beverage containers, 50 pounds of plastic beverage containers, or 500 pounds of glass beverage containers, during a 24-hour period.

Background

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 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.
2. Structural deficit. Deposits on covered beverage containers are remitted 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 75%.

CalRecycle’s most recent quarterly report projects an average structural deficit of $75 million from 2015-16 to 2017-18. This revenue-expenditure imbalance is primarily due to historically high recycling rates, and supplemental program costs including statutorily mandated program payments. Illegal redemption of beverage containers also contributes to the structural deficit.

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.

1. Fraud. The BCRF is currently operating at a recycling rate of greater than 80%, but it is known that there is some level of fraud within the program that artificially elevates the recycling rate and, as noted earlier, contributes to the structural deficit. A significant type of fraud is the importation of out-of-state beverages.

Pursuant to AB 1933 (Gordon, Chapter 540, Statutes of 2012), CalRecycle adopted regulations in 2013 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 California Department of Food and Agriculture 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 training requirements for operators of recycling centers and processing facilities, and revised regulations that reduce the number of containers individuals can redeem in a single day from 500 pounds of aluminum or plastic to 100 pounds, and from 2,500 pounds to 1,000 pounds of glass.

AB 1108 aims to expand on CalRecycle’s ongoing efforts to eliminate fraud in the program by making it more difficult for individuals to fraudulently redeem large quantities of out-of-state beverage containers. Specifically, AB 1108 cuts current redemption weight limits to 50 pounds for plastic and aluminum beverage containers, and to 500 pounds for glass beverage containers. For glass, 500 pounds comes out to roughly 940 containers. Fifty pounds of aluminum and polyethylene terephthalate (PET) plastic beverage containers equates to about 1,450 aluminum containers, and about 1,000 PET containers.

Fraud enforcement. In recent years, CalRecycle and the Department of Justice (DOJ) have increased Bottle Bill fraud enforcement efforts, which have resulted in numerous arrests and several high profile prosecutions. In February 2015, a Los Angeles-area recycling business agreed to pay $1.8 million in restitution to the state’s Bottle Bill Program as part of a settlement agreement resulting from illegal claims for refunds on out-of-state bottles and cans. In November of 2014, five people were arrested in the Turlock area on charges of conspiracy, grand theft, and recycling fraud after investigators found 250,000 pounds of beverage containers (22 truckloads) unauthorized beverage containers and $125,000 cash. Also, in May of 2015, CalRecycle announced indictments of five Californians on grand theft and recycling fraud charges in Kern County. CalRecycle and DOJ conducted an investigation spanning nearly two years that revealed a complex scheme involving out-of-state used beverage containers, 24 Southern California recycling centers, and $14 million worth of fraudulent California Redemption Value claims.

Comments

Purpose of Bill. According to the author, “The Bottle Bill Program is a victim of its own success. While the intention of the beverage program was to be self-sustainable, in recent years the beverage program has not regenerated enough revenue to cover expenditures. One of the contributing factors of the deficit has been the importation of out-of-state beverage containers. According to CalRecycle, lowering the limits is a significant way to reduce fraud in the program. AB 1108 helps address the fraud in this well intentioned program by limiting how much a certified recycling center can accept from one consumer in a 24 hour period.”

The author also notes that “According to CalRecycle, lowering the limits is a significant way to reduce fraud in the program. As a result, importers of out-of-state containers, which are not eligible for CRV refunds, and scavenger fleets illegally removing the contents of residential curbside recycling bins will find it considerably time-consuming and risky to reap any fraudulent gains.”

Related/Prior Legislation

AB 1846 (Gordon, Chapter 596, Statutes of 2014), authorized CalRecycle to suspend or revoke the handling fees from a recycling center or centers if these are found to be committing fraud or deceit.

AB 1933 (Gordon, Chapter 540, Statutes of 2012), reduced the amounts of beverage container material that can be imported into the state without notice to CalRecycle and requires specified documentation for loads exceeding those limits.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/28/16)

None received

OPPOSITION: (Verified 6/28/16)

Association of California Recycling Industries

Camarillo Recycling, Inc.

2 Individuals

ARGUMENTS IN SUPPORT: - - -

ARGUMENTS IN OPPOSITION: The Association of California Recycling Industries states that AB 1108 would force consumers to make numerous trips in order to collect their pre-paid deposits, and that AB 1108 will benefit illegal operators by establishing a revolving door of illegal transactions. They also argue that CalRecycle’s reduced load limits for recyclable materials should first be evaluated before additional steps are taken.

ASSEMBLY FLOOR: 75-0, 5/26/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Bloom, Brough, Chávez, Harper, Mathis

Prepared by:

6/29/16 15:45:46

**** END ****

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 1108

SUBJECT: Beverage containers: recycling.

ANALYSIS:

Existing law, under the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill):

1. Requires beverage containers, as defined, sold in-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 distributors to pay a redemption payment to the Department of Resources Recycling and Recovery (CalRecycle) for every beverage container sold in the state. These funds are continuously appropriated to CalRecycle for the payment of refund values and processing fees. The Act also:
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.

This bill prohibits certified recycling centers from paying the CRV to a consumer for more than 50 pounds of aluminum beverage containers or plastic beverage containers, or any combination thereof, or 500 pounds of glass beverage containers, during a 24-hour period.

Background

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.
2. Structural deficit. Deposits on covered beverage containers are remitted 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 75%.

CalRecycle’s most recent quarterly report projects an average structural deficit of $75 million from 2015-16 to 2017-18. This revenue-expenditure imbalance is primarily due to historically high recycling rates, and supplemental program costs including statutorily mandated program payments. Illegal redemption of beverage containers also contributes to the structural deficit.

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.

1. Fraud. The BCRF is currently operating at a recycling rate of greater than 80%, but it is known that there is some level of fraud within the program that artificially elevates the recycling rate and, as noted earlier, contributes to the structural deficit. A significant type of fraud is the importation of out-of-state beverages.

Pursuant to AB 1933 (Gordon, Chapter 540, Statutes of 2012), CalRecycle adopted regulations in 2013 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 California Department of Food and Agriculture (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 training requirements for operators of recycling centers and processing facilities, and revised regulations that reduce the number of containers individuals can redeem in a single day from 500 pounds of aluminum or plastic to 100 pounds, and from 2,500 pounds to 1,000 pounds of glass.

AB 1108 aims to expand on CalRecycle’s ongoing efforts to eliminate fraud in the program by making it more difficult for individuals to fraudulently redeem large quantities of out-of-state beverage containers. Specifically, AB 1108 would cut current redemption weight limits to 50 pounds for plastic and aluminum beverage containers, and to 500 pounds for glass beverage containers. AB 1108 also specifies that a recycling center is prohibited from paying CRV refunds on “any combination” of plastic or aluminum beverage containers over 50 pounds. For glass, 500 pounds comes out to roughly 940 containers. Fifty pounds of aluminum and polyethylene terephthalate (PET) plastic beverage containers equates to about 1,450 aluminum containers, and about 1,000 PET containers.

Fraud enforcement. In recent years, CalRecycle and the Department of Justice (DOJ) have increased Bottle Bill fraud enforcement efforts, which have resulted in numerous arrests and several high profile prosecutions. In February 2015, a Los Angeles-area recycling business agreed to pay $1.8 million in restitution to the state’s Bottle Bill Program as part of a settlement agreement resulting from illegal claims for refunds on out-of-state bottles and cans. In November of 2014, five people were arrested in the Turlock area on charges of conspiracy, grand theft, and recycling fraud after investigators found 250,000 pounds of beverage containers (22 truckloads) unauthorized beverage containers and $125,000 cash. Also, in May of 2015, CalRecycle announced indictments of five Californians on grand theft and recycling fraud charges in Kern County. CalRecycle and DOJ conducted an investigation spanning nearly two years that revealed a complex scheme involving out-of-state used beverage containers, 24 Southern California recycling centers, and $14 million worth of fraudulent California Redemption Value claims.

Comments

1. Purpose of Bill. According to the author, “The Bottle Bill Program is a victim of its own success. While the intention of the beverage program was to be self-sustainable, in recent years the beverage program has not regenerated enough revenue to cover expenditures. One of the contributing factors of the deficit has been the importation of out-of-state beverage containers. According to CalRecycle, lowering the limits is a significant way to reduce fraud in the program. AB 1108 helps address the fraud in this well intentioned program by limiting how much a certified recycling center can accept from one consumer in a 24 hour period.”

The author also notes that “According to CalRecycle, lowering the limits is a significant way to reduce fraud in the program. As a result, importers of out-of-state containers, which are not eligible for CRV refunds, and scavenger fleets illegally removing the contents of residential curbside recycling bins will find it considerably time-consuming and risky to reap any fraudulent gains.”

Related/Prior Legislation

AB 1846 (Gordon, Chapter 596, Statutes of 2014), authorizes CalRecycle to suspend or revoke the handling fees from a recycling center or centers if these are found to be committing fraud or deceit.

AB 1933 (Gordon, Chapter 540, Statutes of 2012), reduces the amounts of beverage container material that can be imported into the state without notice to CalRecycle and requires specified documentation for loads exceeding those limits.

SOURCE:

Author

SUPPORT:

None received

OPPOSITION:

Association of California Recycling Industries

Camarillo Recycling, Inc.

2 Individuals

ARGUMENTS IN SUPPORT: None received.

ARGUMENTS IN OPPOSITION: The Association of California Recycling Industries states that AB 1108 would force consumers to make numerous trips in order to collect their pre-paid deposits, and that AB 1108 will benefit illegal operators by establishing a revolving door of illegal transactions. They also argue that CalRecycle’s reduced load limits for recyclable materials should first be evaluated before additional steps are taken. They further note that AB 1108 treats all recyclable materials the same, and specifies “any combination thereof” when relating to different types of recyclable materials, which are currently prohibited from being co-mingled. Camarillo Recycling states that there are many legitimate types of consumers that collect larger quantities of beverage containers, and reducing the redemption limits will hamper their ability to redeem their containers.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1108

Author:(Low)

As Amended Ver:May 5, 2015

Majority vote

SUMMARY: Prohibits certified recycling centers from paying the California Refund Value (CRV) to a consumer for more than 50 pounds of aluminum beverage containers or plastic beverage containers, or 500 pounds of glass beverage containers during a 24-hour period.

EXISTING LAW, pursuant to the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill):

1. Requires beverage containers sold in this state to have a CRV of $0.05 for containers that hold fewer than 24 ounces and $0.10 for containers that hold 24 ounces or more and requires a distributor to pay a redemption payment to the California Department of Resources Recycling and Recovery (CalRecycle). Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees.

2. Requires CalRecycle to:

   1. 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. 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.

   3. 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.

   4. After deducting refund values, administrative fees, and a reserve for contingencies, appropriate remaining Fund monies to designated programs, grants, and fee payments (Public Resources Code Section 14581).

3. Requires certified recycling centers to comply with the requirements of the Bottle Bill and:

   1. Operate during specified business hours;

   2. Post signage that is at least two feet by two feet, which includes the types of containers that can be redeemed and the price paid by weight or per container;

   3. Notify CalRecycle of any material change in the nature of the operation;

   4. Complete a precertification training program;

   5. Accept and pay CRV for all Bottle Bill containers, and not pay CRV for any container that is not included in the Bottle Bill or any container that the center knows, or should have known, is from out of state;

   6. Prepare and maintain specified documentation; and,

   7. Comply with all regulations adopted by CalRecycle.

FISCAL EFFECT: According to the Assembly Appropriations Committee, unknown, annual costs savings, potentially in the hundreds of thousands to of dollars, resulting from fraud deterrence (Beverage Recycling Fund).

COMMENTS: The Bottle Bill is designed to provide consumers with a financial incentive for recycling and to make recycling convenient to consumers. 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 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.

In the summer of 2011, CalRecycle, in coordination with the California 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 Bottle Bill Fund is $7 million annually.

In recent years, CalRecycle and the Department of Justice (DOJ) have increased Bottle Bill fraud enforcement efforts, which have resulted in several high profile prosecutions. Most recently, last November, five people were arrested in the Turlock area on charges of conspiracy, grand theft, and recycling fraud after investigators found 250,000 pounds of beverage containers (22 truckloads) unauthorized beverage containers and $125,000 cash. In 2014, DOJ arrested a Los Angeles recycling center owner for defrauding the state of more than $500,000. In 2010, DOJ and CalRecycle participated in a multi-state fraud investigation that resulted in the arrest of 31 individuals for Bottle Bill fraud rings that took in over $3.5 million.

CalRecycle has made administrative changes to combat fraud. In January, 2014, CalRecycle reduced the number of containers an individual can bring to recycling centers for CRV 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 and required that anyone transporting 25 pounds or more of aluminum beverage containers or 250 pounds of glass beverage containers into the state must pass through a CDFA quarantine inspection station and obtain and carry a proof of inspection

This bill expands on CalRecycle's ongoing efforts to eliminate fraud in the program by making it more difficult for individuals to fraudulently redeem large quantities of out-of-state beverage containers.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0000514

Date of Hearing: May 13, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1108

Author:(Low) – As Amended Ver:May 5, 2015

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

SUMMARY:

This bill prohibits certified recycling centers from accepting or paying the California Refund Value (CRV) to a consumer for more than 50 pounds of aluminum or plastic beverage containers or 500 pounds of glass beverage containers during a 24-hour period.

FISCAL EFFECT:

Unknown, annual costs savings, potentially in the hundreds of thousands to of dollars, resulting from fraud deterrence (Beverage Recycling Fund).

In the summer of 2011, CalRecycle, in coordination with the California Department of Food and Agriculture (CDFA), initiated a 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 days of the pilot program, the information gathered revealed over 2,500 vehicles, including 378 rental trucks filled to capacity, imported out-of-state beverage container material through these stations. According to CalRecycle, a conservative estimate of fraud exposure is $7 million annually. This bill makes it more difficult to redeem large amounts of out-of-state beverage containers.

COMMENTS:

1. Purpose. According to CalRecycle, lowering the limits is a significant way to reduce fraud in the program. As a result, importers of out-of-state containers, which are not eligible for CRV, and scavenger fleets illegally removing the contents of residential curbside recycling bins will find it considerably more time-consuming and risky to reap any fraudulent gains.
   
   

This bill prohibits a certified recycling center from accepting or paying the CRV to a consumer for more than 50 pounds of aluminum beverage containers or plastic beverage containers, or any combination thereof, or 500 pounds of glass beverage containers, submitted by that consumer to the certified recycling center in a single 24-hour period.

2. Background. The California Beverage Container Recycling and Litter Reduction Act (Bottle Bill) requires beverage containers sold in this state to have a CRV of 5 cents for containers that hold fewer than 24 ounces and 10 cents for containers that hold 24 ounces or more.

The Bottle Bill is designed to provide consumers with a financial incentive for recycling and to make recycling convenient to consumers. 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 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.

According to CalRecycle, the Bottle Bill is currently operating under a structural deficit, mainly caused by historically high recycling rates and mandated program payments. The structural deficit means that program expenditures exceed program revenues under the current mandated expenditure and revenue structure. When the Bottle Bill 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. Previous Redemption Limits.

In January, 2014, CalRecycle reduced the number of containers an individual can bring to recycling centers for CRV 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 and required that anyone transporting 25 pounds or more of aluminum beverage containers or 250 pounds of glass beverage containers into the state must pass through a CDFA quarantine inspection station and obtain and carry a proof of inspection.

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 1108

Author:(Low) – As Amended Ver:March 26, 2015

SUBJECT: Beverage Containers: recycling

SUMMARY: Prohibits certified recycling centers from accepting or paying the California Refund Value (CRV) to a consumer for more than 50 pounds of aluminum beverage containers or plastic beverage containers, or 500 pounds of glass beverage containers during a 24-hour period.

EXISTING LAW, pursuant to the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill):

1. Requires beverage containers sold in this state to have a 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 CalRecycle. Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees.
   
   

2. Defines a number of terms, including:
   
   

   1. "Beverage" to include, among other things, soda, beer and other malt beverages, wine and distilled spirit coolers, carbonated mineral and soda waters, noncarbonated fruit drinks, and vegetable juices in liquid form that are intended for human consumption. Excludes from the definition of ‘beverage,' among other things, vegetable drinks in beverage containers of more than 16 ounces, milk, medical food, and any product sold in a container that is not an aluminum beverage container, a glass container, a plastic beverage container, or a bimetal container.
      
      

   2. “Convenience zone” to mean either an area within a one-half mile radius of a supermarket, or an area designated by CalRecycle at a location where there is no supermarket but there are two or more dealers located within a one-mile radius of each other, and meet certain specified criteria.
      
      

   3. "Certified recycling center" to mean an operation that is certified by CalRecycle and that accepts from consumers, and pays or provides the CRV for, empty beverage containers for recycling.

3. Requires CalRecycle to:
   
   

   1. 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. 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.
      
      

   3. 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.
      
      

   4. After deducting refund values, administrative fees, and a reserve for contingencies, appropriate remaining Fund monies to designated programs, grants, and fee payments (PRC Section 14581).

4. Requires certified recycling centers to comply with the requirements of the Bottle Bill and:

   1. Operate during specified business hours;

   2. Post signage that is at least two feet by two feet, which includes the types of containers that can be redeemed and the price paid by weight or per container;

   3. Notify CalRecycle of any material change in the nature of the operation;

   4. Complete a precertification training program;

   5. Accept and pay CRV for all Bottle Bill containers, and not pay CRV for any container that is not included in the Bottle Bill or any container that the center knows, or should have known, is from out of state;

   6. Prepare and maintain specified documentation; and,

   7. Comply with all regulations adopted by CalRecycle.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author's statement.

AB 1108 prohibits a certified recycling center from accepting or paying the CRV to a consumer for more than 50 pounds of aluminum beverage containers or plastic beverage containers, or any combination thereof, or 500 pounds of glass beverage containers, submitted by that consumer to the certified recycling center in a single 24-hour period…

According to CalRecycle, lowering the limits is a significant way to reduce fraud in the program. As a result, importers of out-of-state containers, which are not eligible for CRV, and scavenger fleets illegally removing the contents of residential curbside recycling bins will find it considerably more time-consuming and risky to reap any fraudulent gains.

2. California's Bottle Bill. The Bottle Bill is designed to provide consumers with a financial incentive for recycling and to make recycling convenient to consumers. 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 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.
   
   California's Bottle Bill has achieved an overall recycling rate over 80%– higher than any other bottle bill program in North America. According to Californians Against Waste, since its inception 25 years ago, the program has resulted in the recycling of over 11.9 million tons of glass; 3 million tons of aluminum; and, more than 2 million tons of plastic. In addition to the diversion from landfill disposal, this recycling has avoided an estimated 2 million metric tons of CO2 equivalent greenhouse gas emissions over the last four years.
   
   Recycling in California also results in economic benefits to the state. The Bottle Bill program has resulted in more than 10,000 jobs and over $100 million in reduced landfill disposal fees.
   
   

3. Preventing fraud. In some ways, the Bottle Bill program is a victim of its own success. According to CalRecycle, the Bottle Bill is currently operating under a structural deficit, mainly caused by historically high recycling rates and mandated program payments. The structural deficit means that program expenditures exceed program revenues under the current mandated expenditure and revenue structure. When the Bottle Bill 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.
   
   Fraud also contributes to the structural deficit. In the summer of 2011, CalRecycle, in coordination with the California 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 Bottle Bill Fund is $7 million annually.
   
   In recent years, CalRecycle and the Department of Justice (DOJ) have increased Bottle Bill fraud enforcement efforts, which have resulted in several high profile prosecutions. Most recently, last November, five people were arrested in the Turlock area on charges of conspiracy, grand theft, and recycling fraud after investigators found 250,000 pounds of beverage containers (22 truckloads) unauthorized beverage containers and $125,000 cash. In 2014, DOJ arrested a Los Angeles recycling center owner for defrauding the state of more than $500,000. In 2010, DOJ and CalRecycle participated in a multi-state fraud investigation that resulted in the arrest of 31 individuals for Bottle Bill fraud rings that took in over $3.5 million.
   
   CalRecycle has made administrative changes to combat fraud. In January, 2014, CalRecycle reduced the number of containers an individual can bring to recycling centers for CRV 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 and required that anyone transporting 25 pounds or more of aluminum beverage containers or 250 pounds of glass beverage containers into the state must pass through a CDFA quarantine inspection station and obtain and carry a proof of inspection. According to CalRecycle, the following table indicates the number of beverage containers per pound by material type.
   
   

Material Type	Containers per Pound
Aluminum	29.1
Glass	1.89
#1 PET (Polyethylene Terephthalate)	20.2
#2 HDPE (High Density Polyethylene)	7.3
#3 PVC (Polyvinyl Chloride)	11.2
#4 LDPE (Low Density Polyethylene)	40.6
#5 PP (Polypropylene)	8.8
#6 PS (Polystyrene)	113.8
# 7 Other	3.1

This bill expands on CalRecycle's ongoing efforts to eliminate fraud in the program by making it more difficult for individuals to fraudulently redeem large quantities of out-of-state beverage containers.

4. Suggested amendment. This bill prohibits certified recycling centers from accepting or paying CRV for specified amounts of beverage containers to improve fraud prevention; however, it is legal to import recycled materials, including beverage containers, into California for scrap value. The committee may wish to amend the bill to strike out "accept or" on page 3, line 35 to clarify that certified recycling centers are only prevented from paying CRV and can continue to accept and pay scrap value for recycled materials.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

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