(1)Existing law, the California Beverage Container Recycling and Litter Reduction Act, requires every beverage container sold or offered for sale in this state to have a minimum refund value. Under the act, the Department of Resources Recycling and Recovery is required to calculate a processing fee for each beverage container with a specified scrap value, which is required to be paid by beverage manufacturers for each beverage container sold or transferred to a distributor or dealer. The department is required to calculate the processing fee in a specified manner so that the actual processing fee generally equals 65% of the processing payment that the department is required to pay to processors if the scrap value of the container having a refund value pursuant to the act is less than the cost of recycling.

Existing law provides that a violation of the act or a regulation adopted pursuant to the act is a crime.

This bill, on and after January 1, 2021, would require the total number of plastic beverage containers filled with a beverage by a beverage manufacturer, as specified, to contain, on average, specified amounts of postconsumer recycled plastic content per year pursuant to a tiered plan that would require the total number of plastic beverage containers to contain, on average, no less than 75% postconsumer recycled plastic content per year on and after January 1, 2030. 2035, except as specified. The bill would impose civil penalties, in specified amounts, on a beverage manufacturer for a violation of these requirements. The bill would authorize the department to enforce these provisions and would authorize the department to conduct audits and inspections of a beverage manufacturer for the purpose of ensuring compliance. The bill would authorize the department to assess additional civil penalties, if violations are found, based on the audits and annual report submitted to the department by beverage manufacturers, as prescribed. The bill would require penalties collected to be deposited in the Recycling Enhancement Penalty Account, which the bill would create. The bill would require moneys in the Recycling Enhancement Penalty Account to be expended upon appropriation by the Legislature. Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.

(2)Existing law requires a manufacturer of a beverage sold in a plastic beverage container subject to the California Redemption Value, as specified, to annually report to the department the amount of virgin plastic and postconsumer recycled plastic used by the manufacturer for plastic beverage containers subject to the California Redemption Value for sale in the state in the previous calendar year.

This bill instead would require, beginning March 1, 2022, and annually thereafter, a manufacturer of a beverage sold in a plastic beverage container to report to the department, under penalty of perjury, in pounds and by resin type the amount of virgin plastic and postconsumer recycled plastic used in the plastic beverage containers filled with a beverage by the beverage manufacturer in the previous year that are sold in the state. By requiring that the information be submitted under penalty of perjury, this bill would expand the crime of perjury and impose a state-mandated local program.

(3)Existing law requires all rigid plastic bottles and rigid plastic containers sold in the state to be labeled with a code indicating the resin used to produce the rigid plastic bottle or rigid plastic container.

This bill would specify that the above labeling requirement does not apply to rigid plastic containers or rigid plastic bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products.

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.

GOVERNOR'S VETO

GV Bill Id:AB 792

Author:(Ting and Irwin)

As Enrolled Ver:September 20, 2019

2/3 vote

SUMMARY:

Establishes minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that require the beverage container to contain, on average, no less than 75% postconsumer recycled plastic content on and after January 1, 2035.

Governor’s Veto Message:

While I support strong minimum content recycled standards, late amendments to this bill would result in a costly, burdensome process that undermines the worth intent of this legislation.

The waiver petitions allowed under this bill would put the burden on the state to prove to manufacturers that their products can meet recycling goals, rather than making clear that manufacturers have the responsibility to create products that can meet these goals.

As we work together on next steps to evolve the California Beverage Container Recycling Program to meet the realities of recycling today, minimum recycled content standards should be established to support markets and expand remanufacturing. However, they must be established in a meaningful way that ensures the standards can be achieved.

I look forward to working with the Legislature and stakeholders to accomplish our shared goals.

COMMENTS:

Historically, California has been a global leader in waste management policies. However, in recent years the state has been unable to adopt broad policies to deal with the impacts of single-use plastic products. Just last week, the European Union (EU) announced a comprehensive single-use plastics ban by 2021. Under the new policy, many single-use items would be banned, including plastic cutlery, plates, straws, stirrers, balloon sticks, cotton swabs sticks, and expanded polystyrene foam food and beverage containers. All products covered by the ban would have to be replaced by "sustainable" alternatives. Additionally, all EU countries will be required to reach a 90% collection goal for plastic bottles by 2029, and plastic bottles will be required to contain 25% recycled content by 2025 and 30% by 2030.

Manufacturers are slowly responding to the need to increase recycled content in their products. Coca Cola has announced a goal to include 50% recycled content by 2030. PepsiCo's sustainability goals include increasing recycled materials in plastic packaging, reducing packaging's carbon impact, and working to increase recycling rates. While these goals indicate that incorporating additional recycled content is possible, currently the vast majority of plastic beverage containers contain little to no recycled content. AB 2530 (Gordon), Chapter 861, Statutes of 2016 required beverage container manufacturers to report the amount of recycled content in their products. According to the 2017 reports, the vast majority of manufacturers continue to use no recycled content.

The US has not developed significant markets for recycled content materials, including plastic and mixed paper. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56% by weight of global recycled plastic exports. In California, approximately one-third of recycled material is exported; 85% of the state's recycled mixed paper has been exported to China in recent years. In 2017, China established Operation National Sword, which included a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including mixed paper and paperboard, polyethylene terephthalate (PET), polyethylene (PE), polyvinyl chloride (PVC), and polystyrene (PS) beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5% contamination. Following China's actions, other countries (Malaysia, Vietnam, India, and Thailand) have enacted policies limiting or banning the importation of recycled materials, primarily plastic and mixed paper. These policies create serious challenges for recyclers. Recycling requires markets to create new products and close the loop. This challenge also provides an opportunity for California to improve its efforts to reduce the amount of waste it generates and expand its efforts to develop recycling manufacturing infrastructure, which has been shown to provide jobs, economic, and environmental benefits.

According to the Author:

In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all, and are dumped in landfills. In order to encourage efficient use of recyclable plastics, this bill sets a minimum recycled content standard for plastic bottles in California.

Arguments in Support:

A coalition of environmental organizations in support point out that recycled content requirements for glass containers has reduced pollution and stimulated closed-loop manufacturing in California and contend this bill will result in similar outcomes for plastic beverage containers.

Arguments in Opposition:

Groups in opposition question whether the market is ready to supply the amount of recycled plastic necessary to meet the requirements of the bill and prefer an aggregate requirement rather than a per-bottle requirement.

FISCAL COMMENTS:

According to the Senate Appropriations Committee, CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing [Beverage Container Recycling Fund (BCRF)] to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements. Additionally, there are potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account. Finally, to the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

VOTES:

ASM NATURAL RESOURCES: 8-1-2

YES: Friedman, Chau, Eggman, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Mathis

ABS, ABST OR NV: Flora, Melendez

ASM APPROPRIATIONS: 13-4-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Fong, Obernolte

ABS, ABST OR NV: Diep

ASSEMBLY FLOOR: 50-15-15

YES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Choi, Cunningham, Dahle, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Salas, Voepel

ABS, ABST OR NV: Cervantes, Chen, Cooley, Cooper, Daly, Diep, Flora, Frazier, Eduardo Garcia, Gray, Grayson, Mayes, Medina, Rodriguez, Blanca Rubio

SENATE FLOOR: 31-7-2

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener, Wilk

NO: Borgeas, Hurtado, Jones, Moorlach, Morrell, Nielsen, Stone

ABS, ABST OR NV: Bates, Grove

ASSEMBLY FLOOR: 60-12-7

YES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Cooley, Daly, Diep, Eggman, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Chen, Choi, Fong, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Voepel

ABS, ABST OR NV: Cooper, Cunningham, Flora, Frazier, Mayes, Ramos, Salas

UPDATED:

VERSION: September 20, 2019

CONSULTANT: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0002511

(Without Reference to File)

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 792

Author:(Ting and Irwin)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Establishes minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that require the beverage container to contain, on average, no less than 75% postconsumer recycled plastic content on and after January 1, 2035.

The Senate Amendments:

1. Require that between January 1, 2021 and December 31, 2024, beverage containers contain no less than 15% postconsumer recycled plastic per year, on average.
2. Extend the dates for the recycled content requirements for containers by five years.
3. Authorize the Department of Resources Recycling and Recovery (CalRecycle) to consider reduce or waive the minimum content requirements based on:
   1. Changes in market conditions;
   2. Recycling rates;
   3. The availability of recycled plastic suitable to meet the minimum content requirements;
   4. The capacity of recycling or processing infrastructure; and,
   5. The progress made by beverage manufacturers in achieving the goals of the bill.
4. Specify that the penalties for violations are civil, rather than administrative, penalties.
5. Remove the penalty for beverage containers containing between 75% and 90% recycled content.
6. Reduce the penalties to between $0.05 per pound to $0.25 per pound, depending on specified factors.
7. Authorize CalRecycle to issue a corrective action plan, as specified, rather than penalties.
8. Requires CalRecycle to consider granting a waiver, reduction, or extension on penalties assessed for beverage manufacturers who have demonstrated progress toward meeting the requirements if:
   1. The beverage manufacturer has failed to meet the minimum recycled content requirements; or,
   2. The beverage manufacturer anticipates that it will fail to meet the minimum content requirements.
9. When determining whether to grant a waiver, reduction, or extension on penalties, requires CalRecycle to consider:
   1. Anomalous market conditions;
   2. Disruption in, or lack of supply of, recycled plastics; and,
   3. Other factors that have prevented a beverage manufacturer from meeting the requirements.
10. Specify that penalty funds shall be allocated, upon appropriation, for the sole purpose of supporting the recycling, infrastructure, collection, and processing of plastic beverage containers in the state.
11. Specify that the bill does not apply to beverage manufacturers that display a pattern of operation in compliance with the law and have projected processing fees for each calendar year of under $15,000, as specified.
12. Specify that rigid plastic packaging containers or bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products are exempt from the state's Rigid Plastic Packaging Container Law.
13. Preempt local governments from adopting an ordinance regulating the minimum recycled plastic content requirements for plastic beverage containers.
14. When allocating plastic market development payments, require CalRecycle to prioritize funding for increasing the collection, production, procurement, and use of "beverage-grade" recycled plastic in beverage containers.
15. Require plastic reclaimers to report specified information to CalRecycle annually, beginning March 1, 2020.

COMMENTS:

Historically, California has been a global leader in waste management policies. However, in recent years the state has been unable to adopt broad policies to deal with the impacts of single-use plastic products. Just last week, the European Union (EU) announced a comprehensive single-use plastics ban by 2021. Under the new policy, many single-use items would be banned, including plastic cutlery, plates, straws, stirrers, balloon sticks, cotton swabs sticks, and expanded polystyrene foam food and beverage containers. All products covered by the ban would have to be replaced by "sustainable" alternatives. Additionally, all EU countries will be required to reach a 90% collection goal for plastic bottles by 2029, and plastic bottles will be required to contain 25% recycled content by 2025 and 30% by 2030.

Manufacturers are slowly responding to the need to increase recycled content in their products. Coca Cola has announced a goal to include 50% recycled content by 2030. PepsiCo's sustainability goals include increasing recycled materials in plastic packaging, reducing packaging's carbon impact, and working to increase recycling rates. While these goals indicate that incorporating additional recycled content is possible, currently the vast majority of plastic beverage containers contain little to no recycled content. AB 2530 (Gordon), Chapter 861, Statutes of 2016 required beverage container manufacturers to report the amount of recycled content in their products. According to the 2017 reports, the vast majority of manufacturers continue to use no recycled content.

The US has not developed significant markets for recycled content materials, including plastic and mixed paper. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56% by weight of global recycled plastic exports. In California, approximately one-third of recycled material is exported; 85% of the state's recycled mixed paper has been exported to China in recent years. In 2017, China established Operation National Sword, which included a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including mixed paper and paperboard, polyethylene terephthalate (PET), polyethylene (PE), polyvinyl chloride (PVC), and polystyrene (PS) beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5% contamination. Following China's actions, other countries (Malaysia, Vietnam, India, and Thailand) have enacted policies limiting or banning the importation of recycled materials, primarily plastic and mixed paper. These policies create serious challenges for recyclers. Recycling requires markets to create new products and close the loop. This challenge also provides an opportunity for California to improve its efforts to reduce the amount of waste it generates and expand its efforts to develop recycling manufacturing infrastructure, which has been shown to provide jobs, economic, and environmental benefits.

According to the Author:

In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all, and are dumped in landfills. In order to encourage efficient use of recyclable plastics, this bill sets a minimum recycled content standard for plastic bottles in California.

Arguments in Support:

A coalition of environmental organizations in support point out that recycled content requirements for glass containers has reduced pollution and stimulated closed-loop manufacturing in California and contend this bill will result in similar outcomes for plastic beverage containers.

Arguments in Opposition:

Groups in opposition question whether the market is ready to supply the amount of recycled plastic necessary to meet the requirements of the bill and prefer an aggregate requirement rather than a per-bottle requirement.

FISCAL COMMENTS:

According to the Senate Appropriations Committee, CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing [Beverage Container Recycling Fund (BCRF)] to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements. Additionally, there are potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account. Finally, to the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

VOTES:

ASM NATURAL RESOURCES: 8-1-2

YES: Friedman, Chau, Eggman, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Mathis

ABS, ABST OR NV: Flora, Melendez

ASM APPROPRIATIONS: 13-4-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Fong, Obernolte

ABS, ABST OR NV: Diep

ASSEMBLY FLOOR: 50-15-15

YES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Choi, Cunningham, Dahle, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Salas, Voepel

ABS, ABST OR NV: Cervantes, Chen, Cooley, Cooper, Daly, Diep, Flora, Frazier, Eduardo Garcia, Gray, Grayson, Mayes, Medina, Rodriguez, Blanca Rubio

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0002440

 THIRD READING  

Bill No: AB 792

Author: Ting (D) and Irwin (D), et al.

Amended: 9/10/19 in Senate

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 7/3/19

AYES: Allen, Hill, Skinner, Stern, Wieckowski

NOES: Dahle

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-1, 8/30/19

AYES: Portantino, Bradford, Durazo, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 50-15, 5/23/19 - See last page for vote

SUBJECT: Recycling: plastic containers: minimum recycled content and labeling

SOURCE: Author

DIGEST:

This bill imposes specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that requires the beverage container to contain, on average, no less than 75 percent postconsumer recycled plastic content on and after January 1, 2035.

Senate Floor Amendments of 9/10/19:

1. Require the director of the Department of Resources Recycling and Recovery (CalRecycle) to consider whether the minimum recycled content requirements should be reduced or waived based on certain factors, as specified, instead of authorizing beverage manufacturing industry or beverage manufacturer to individually seek a reduction or waiver.
2. Define “beverage manufacturing industry” for purposes of the bill.
3. Require CalRecycle to consider certain factors when considering whether to grant a waiver, reduction, or extension of penalties assessed.
4. Allow penalties assessed pursuant to the bill to be appealed to the Office of Administrative Hearings.
5. Remove a civil penalty that would impose 115 percent of the difference between a manufacturer’s actual recycled content percentage and the reported recycled content.
6. Define “bottle-grade” for purposes of reporting required under the bill.

Senate Floor Amendments of 9/6/19:

1. Lower the amount of postconsumer recycled plastic required to be in plastic beverage containers between 2021 and 2025 from 15% to 10%.
2. Require, commencing 2030, plastic beverage containers contain no less than 50% postconsumer recycled plastic, instead of 75% commencing in 2035.
3. Allow the beverage manufacturing industry or a beverage manufacturer to seek from the director of CalRecycle a reduction or waiver from these minimum recycled content requirements; and require the director to take into consideration certain factors when deciding whether to grant a reduction or waiver. Allow the director to grant or renew an unlimited number of extensions if the director makes a certain finding.
4. Change the enforcement provisions to be based on the weight by which the beverage manufacturer does not meet the minimum recycled content requirements, instead of being based on number plastic beverage containers.
5. Allow CalRecycle to require a beverage manufacturer to submit a corrective action plan instead of, or in addition to, paying the penalty for noncompliance.
6. Require CalRecycle to consider certain factors in determining whether to assess a penalty and the amount of the penalty.
7. Require CalRecycle to contract with a research university to study polyethylene terephythalate and high-density polyethylene markets and for the study to be completed by May 1, 2025.
8. Prohibit a city, county, or other local government jurisdiction from adopting an ordinance regulating the minimum recycled plastic content requirements for plastic beverage containers.
9. Require CalRecycle to give priority to increase the collection, production, or procurement, and usage of beverage-grade recycling plastic in beverage containers when making market development payments.
10. Require plastic material reclaimers and manufacturers of postconsumer recycled plastic to report to CalRecycle certain information relating to the amount of plastic material collected and sold and the amount of “food grade” flake, pellet, sheet, fines, and other forms sold, as applicable.

ANALYSIS:

Existing law:

1. Establishes the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which:
   1. Requires beverage containers sold in this state to have a 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 Department of Resources Recycling and Recovery (CalRecycle). Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees.
   2. Requires that each new glass container manufactured in the state contain a minimum of 35 percent postfilled (recycled food container cullet) glass. Requires every glass food, drink, or beverage container manufacturer in the state to report the amount of tons of new glass and the tons of postfilled glass used in the manufacturing of those containers to CalRecycle.
   3. Provides that any person convicted of a violation is guilty of an infraction punishable by a fine of up to $100 and not more than $1,000 per violation.
2. Requires all rigid plastic bottles and rigid plastic containers sold in the state to be labeled with the code indicating the resin used to produce the rigid plastic bottle or rigid plastic container.

This bill:

1. Requires, between January 1, 2021, and December 31, 2024, the total number of plastic beverage containers filled with a beverage sold by a beverage manufacturer subject to the CRV for sale in the state to, on average, contain no less than 10 percent postconsumer recycled plastic per year. Increases that amount to 25 percent between January 1, 2025, and December 31, 2029; and 50 percent on and after January 1, 2030.
   1. Does not apply these requirements to refillable plastic beverage containers and certain beverage manufacturers whose projected processing fees are less than a specified amount.
2. Requires the director of CalRecycle to consider, at least annually or at the petition of the beverage industry not more than semiannually, whether the minimum recycled content requirements should be waived or reduced. Requires the director to consider certain factors, such as changes in market conditions and capacity of recycling or processing infrastructure.
3. Subjects, commencing January 1, 2022, a beverage manufacturer that does not meet the minimum recycled plastic content requirements described in 2) to a civil penalty, and which, after March 1, 2023, increases as compliance rates decrease.
   1. Authorizes CalRecycle to require a beverage manufacturer to submit a corrective action plan detailing how the beverage manufacturer will come into compliance in lieu of, or in addition to, a civil penalty.
   2. Requires CalRecycle to consider certain factors in determining whether to assess a penalty and the amount of the penalty. Requires CalRecycle to consider granting a waiver, reduction, or extension of the penalties assessed to a beverage manufacturer that has demonstrated progress towards meeting those requirements, based on certain factors.
   3. Provides that the penalties may be appealed to the Office of Administrative Hearings.
4. Authorizes CalRecycle to conduct audits and investigations and take enforcement action against a beverage manufacturer for the purpose of ensuring compliance with these requirements.
5. Deposits penalties collected into the Recycling Enhancement Penalty Account, which is created by this bill. Moneys in the account are available for expenditure upon appropriation by the Legislature for the purpose of supporting the recycling infrastructure, collection, and processing of plastic beverage containers.
6. Requires CalRecycle to contract with a research university to study the polyethylene terephthalate and high-density polyethylene markets and for the study to be completed by 2025.
7. Requires CalRecycle to prioritize moneys to increase the collection, production, procurement, and usage of beverage-grade recycling plastic in beverage containers when determining which entities to make market development payments to.
8. Requires plastic material reclaimers to annually report to CalRecycle the number of empty plastic beverage containers that the reclaimer has collected and sold in the previous calendar year. Requires manufacturers of postconsumer recycled plastic to annually report to CalRecycle the amount of “food-grade” flake, pellet, sheet, fines, or other forms sold in the previous calendar year and their capacity to produce “food-grade” material.
9. Specifies that the rigid plastic bottle and container labeling requirement does not apply to rigid plastic containers and rigid plastic bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products.

Background

1. Plastic in the Bottle Bill. The vast majority (97 percent) of beverage containers subject to the Bottle Bill are made out of Polyethylene Terephthalate (PET, #1). PET is used to manufacture most soft drink and water bottles. Other types of plastics used to make containers subject to the Bottle Bill include High Density Polyethylene (HDPE, #2), Polyvinyl Chloride (PVC, #3), Low Density Polyethylene (LDPE, #4), Polypropylene (PP, #5), Polystyrene (PS, #6), and other (#7). The table below shows a breakdown of containers sold in 2018 by plastic type, as well as containers recycled and their recycling rate.

Plastic Containers Sold and Recycling Rate in 2018

Source: CalRecycle May 2019 Biannual Report of Beverage Container Sales, Returns, Redemption, and Recycling Rates

1. Recycled plastic markets. The US has not developed significant markets for recycled content materials, including plastic. Historically, China has been the largest importer of recyclable materials. In an effort to improve the quality of the materials it accepts and to combat the country's significant environmental challenges, China established Operation National Sword in 2017, which included inspections of imported recyclable materials and a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including PET, HDPE, PVC, and PS beginning January 1, 2018. In November 2017, China announced that imports of recyclable materials that are not banned will be required to include no more than 0.5 percent contamination.

Following China’s actions, other Southeast Asian countries have enacted policies limiting or banning the importation of recyclable plastic materials. Last year, Malaysia and Vietnam implemented import restrictions. Earlier this year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021. While the recyclable plastic markets for #1 and #2 plastics have not significantly been affected, these international restrictions on recyclable plastic exports have affected scrap value prices for #3-7 plastics. As of February 2019, PP plastic had a negative scrap value of -$33 per ton, down from a positive value of $112 in 2018.

1. Recycled plastic beverage containers. PET is one of the easiest plastics to recycle, and recycled PET (rPET) can be used to manufacture numerous items including beverage containers, clothing, health care product containers, and carpet, among many others. Other types of plastics, particularly #3, 4, 6, and 7 plastics, are much more challenging to recycle, and many of these types of products simply get sent to a landfill. This problem has likely been exasperated by the recent export restrictions implemented by China and other countries.

The Food and Drug Administration (FDA) oversees the use of recycled materials to make new food containers. FDA's safety concerns include ensuring that contaminants from the post-consumer material are not in the final food-contact product, that recycled post-consumer material not regulated for food-contact use is not incorporated into food-contact packaging, and that adjuvants in the recycled plastic comply with the regulations for food-contact use. To address these concerns, FDA considers each proposed use of recycled plastic on a case- by-case basis and issues informal advice as to whether the recycling process is expected to produce plastic suitable for food-contact applications. FDA has prepared the Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry Considerations to assist manufacturers of recycled-content food packaging.

Comments

1. Purpose of Bill. According to the author, “In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all, and are dumped in landfills. In order to encourage efficient use of recyclable plastics, AB 792 sets a minimum recycled content standard for plastic bottles in California.”
2. Minimum content standards support recycling markets. The plastic recycling market challenges mentioned previously are due to numerous reasons, including, but are not limited to:
   1. Low demand for recycled plastic. As mentioned previously, beverage container manufacturers currently use very little recycled plastic on their own. The major reason for low demand for recycled plastics by beverage manufacturers is due to the low price for producing virgin plastic, making it a much cheaper option than using recycled plastic. This is considered a market failure as the low market price for virgin plastic does not account for its high environmental costs from production, disposal, and litter.
   2. Low scrap value for plastic. Demand directly impacts price, and low demand for recycled plastic means lower prices. Scrap value for #3-7 plastics is particularly problematic, but even PET, which has a positive scrap value, is still much lower than aluminum. As of February 2019, the scrap value for a ton of PET was $188, compared to aluminum which was $1,150 per ton. Recent shifts by beverage manufacturers from using aluminum to plastic, as well as the market impacts from the China policy, has only exasperated this challenge.
   3. Low recycling rate for plastic. In turn, low scrap value for plastic reduces the recycling incentive, leading to lower recycling rates.

This bill is intended to help correct these market failures. By requiring manufacturers of plastic beverage containers to achieve specified recycled-content requirements, this bill has the potential to support plastic recycling markets in the following ways:

1. Increase demand for recycled plastic.
2. Increase scrap value for recycled plastic.
3. Increase the recycling rates for plastic beverage containers.
4. Incentivize a shift away from using non-economically feasible types of recycled plastics (#3-7).
5. Reverse the trend back to using more aluminum beverage containers.

All of these intended market impacts from this bill have the potential to correct market failures and lead to a reduction in the production of virgin plastic and plastic waste.

1. Supply challenges. Major challenges to achieving the mandates in this bill will likely stem from having a sufficient supply of rPET. The production and supply of rPET is a complex global market, and challenges include the following:
   1. FDA requirements for rPET used for food containers. Currently, the majority of rPET produced is used for non-food contact containers such as polyester fibers used in clothing and carpets. Producing rPET to meet the higher FDA requirements for food contact containers is more expensive and difficult. Much of the recycled PET feedstock cannot be manufactured into rPET used for food containers due to high levels of contamination.
   2. Competition from other uses of rPET. As mentioned previously, rPET is used to manufacture numerous types of products, posing competition for beverage container manufacturers to obtain a sufficient supply.
   3. Yield loss. Depending on the quality of PET, there is typically a 60 percent to 75 percent technical yield loss when producing rPET. The yield loss can be due to issues such as contamination or container shapes used to produce rPET. Yield loss means a larger supply of feedstock PET is required to produce a comparable amount of rPET.
   4. Out-of-state sourcing. Preferably, beverage container manufacturers would source their rPET supplies from in-state producers. However, the rPET market is a global one, and if necessary, establishing new out-of-state supply chains to meet the mandates from this bill may present challenges.

These challenges are solvable, and overcoming them could lead to positive public benefits. There are numerous strategies that could be employed to help alleviate in-state supply challenges including increasing recycling rates, decreasing contamination levels, reducing exports, light weighting, and choosing substitute materials such as aluminum. Over time, because supplies of used PET feedstock and rPET are global markets, sufficient supply chains will likely be established to overcome any in-state supply challenges. One thing the world is not short of is a supply of plastic.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, as this bill was amended on July 5, 2019, CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing (Beverage Container Recycling Fund - BCRF) to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements. Additionally, there are potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account. Finally, to the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

SUPPORT: (Verified 9/13/19)

California State Controller, Betty Yee

5 Gyres Institute

Association of California Recycling Industries

Association of Plastic Recyclers

Brightline Defense

California League of Conservation Voters

California Plastics Recyclers Coalition

Californians Against Waste

CarbonLITE Industries

Center for Oceanic Awareness, Research, and Education

Defenders of Wildlife

Dolores Huerta Foundation

Friends Committee on Legislation of California

Green Fiber International, Inc.

Heal the Bay

Mojave Desert & Mountain Recycling Authority

Natural Resources Defense Council

Nestle Waters North America, Inc.

Northern California Recycling Association

One Earth Recycling

Peninsula Plastics Recycling Inc.

Plastic Pollution Coalition

Recology Inc.

Recycle Smart

RePET Inc.

rePlanet

Republic Services

RethinkWaste

Seventh Generation Advisor

Sierra Club California

Solid Waste Association of North America’s Legislative Task Force

StopWaste

Surfrider Foundation

The Story of Stuff Project

Tomra Systems ASA

UPSTREAM

Verdeco Recycling, Inc.

Wishtoyo Chumash Foundation

Zero Waste USA

OPPOSITION: (Verified 9/13/19)

California Bottled Water Association

California Food Producers

Los Angeles County Solid Waste Management Committee/Integrated Waste Management Task Force

Plastics Industry Association

Plastics Recycling Corporation of California

Sun Hing Foods Inc.

Valley Industry and Commerce Association

ASSEMBLY FLOOR: 50-15, 5/23/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Choi, Cunningham, Dahle, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Salas, Voepel

NO VOTE RECORDED: Cervantes, Chen, Cooley, Cooper, Daly, Diep, Flora, Frazier, Eduardo Garcia, Gray, Grayson, Mayes, Medina, Rodriguez, Blanca Rubio

Prepared by: Genevieve M. Wong / E.Q. / (916) 651-4108

9/13/19 16:32:57

**** END ****

 THIRD READING  

Bill No: AB 792

Author: Ting (D) and Irwin (D), et al.

Amended: 9/6/19 in Senate

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 7/3/19

AYES: Allen, Hill, Skinner, Stern, Wieckowski

NOES: Dahle

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-1, 8/30/19

AYES: Portantino, Bradford, Durazo, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 50-15, 5/23/19 - See last page for vote

SUBJECT: Recycling: plastic containers: minimum recycled content and labeling

SOURCE: Author

DIGEST:

This bill imposes specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that requires the beverage container to contain, on average, no less than 75 percent postconsumer recycled plastic content on and after January 1, 2035.

Senate Floor Amendments of 9/6/19:

1. Lower the amount of postconsumer recycled plastic required to be in plastic beverage containers between 2021 and 2025 from 15% to 10%.
2. Require, commencing 2030, plastic beverage containers contain no less than 50% postconsumer recycled plastic, instead of 75% commencing in 2035.
3. Allow the beverage manufacturing industry or a beverage manufacturer to seek from the director of the Department of Resources Recycling and Recovery (CalRecycle) a reduction or waiver from these minimum recycled content requirements; and require the director to take into consideration certain factors when deciding whether to grant a reduction or waiver. Allow the director to grant or renew an unlimited number of extensions if the director makes a certain finding.
4. Change the enforcement provisions to be based on the weight by which the beverage manufacturer does not meet the minimum recycled content requirements, instead of being based on number plastic beverage containers.
5. Allow CalRecycle to require a beverage manufacturer to submit a corrective action plan instead of, or in addition to, paying the penalty for noncompliance.
6. Require CalRecycle to consider certain factors in determining whether to assess a penalty and the amount of the penalty.
7. Require CalRecycle to contract with a research university to study polyethylene terephythalate and high-density polyethylene markets and for the study to be completed by May 1, 2025.
8. Prohibit a city, county, or other local government jurisdiction from adopting an ordinance regulating the minimum recycled plastic content requirements for plastic beverage containers.
9. Require CalRecycle to give priority to increase the collection, production, or procurement, and usage of beverage-grade recycling plastic in beverage containers when making market development payments.
10. Require plastic material reclaimers and manufacturers of postconsumer recycled plastic to report to CalRecycle certain information relating to the amount of plastic material collected and sold and the amount of “food grade” flake, pellet, sheet, fines, and other forms sold, as applicable.

ANALYSIS:

Existing law:

1. Establishes the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which:
   1. Requires beverage containers sold in this state to have a 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 Department of Resources Recycling and Recovery (CalRecycle). Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees.
   2. Requires that each new glass container manufactured in the state contain a minimum of 35 percent postfilled (recycled food container cullet) glass. Requires every glass food, drink, or beverage container manufacturer in the state to report the amount of tons of new glass and the tons of postfilled glass used in the manufacturing of those containers to CalRecycle.
   3. Provides that any person convicted of a violation is guilty of an infraction punishable by a fine of up to $100 and not more than $1,000 per violation.
2. Requires all rigid plastic bottles and rigid plastic containers sold in the state to be labeled with the code indicating the resin used to produce the rigid plastic bottle or rigid plastic container.

This bill:

1. Requires, between January 1, 2021, and December 31, 2024, the total number of plastic beverage containers filled with a beverage sold by a beverage manufacturer subject to the CRV for sale in the state to, on average, contain no less than 10 percent postconsumer recycled plastic per year. Increases that amount to 25 percent between January 1, 2025, and December 31, 2029; and 50 percent on and after January 1, 2030.
   1. Does not apply these requirements to refillable plastic beverage containers and certain beverage manufacturers whose projected processing fees are less than a specified amount.
2. Authorizes the beverage manufacturing industry or a beverage manufacturer to seek from the director of CalRecycle, and authorizes the director to grant a reduction or waiver of the above-described minimum recycled content requirements for up to one year if the director makes a specified finding, and allows the director to grant extensions of these one-year waivers. Requires the director to consider certain factors, such as changes in market conditions.
3. Subjects, commencing January 1, 2022, a beverage manufacturer that does not meet the minimum recycled plastic content requirements described in 2) to a civil penalty, and which, after March 1, 2023, increases as compliance rates decrease.
   1. Authorizes CalRecycle to require a beverage manufacturer to submit a corrective action plan detailing how the beverage manufacturer will come into compliance in lieu of, or in addition to, a civil penalty.
   2. Requires CalRecycle to consider certain factors in determining whether to assess a penalty and the amount of the penalty.
4. Authorizes CalRecycle to conduct audits and investigations and take enforcement action against a beverage manufacturer for the purpose of ensuring compliance with these requirements.
5. Imposes an additional civil penalty of 115 percent of the difference between the manufacturer’s audited actual average postconsumer recycled plastic content percentage and the percentage reported if an audit or investigation reveals than the actual percentage was lower than the amount reported.
6. Deposits penalties collected into the Recycling Enhancement Penalty Account, which is created by this bill. Moneys in the account are available for expenditure upon appropriation by the Legislature for the purpose of supporting the recycling infrastructure, collection, and processing of plastic beverage containers.
7. Provides that penalties assessed are in addition to any other applicable civil or criminal penalties.
8. Requires CalRecycle to contract with a research university to study the polyethylene terephthalate and high-density polyethylene markets and for the study to be completed by 2025.
9. Requires CalRecycle to prioritize moneys to increase the collection, production, procurement, and usage of beverage-grade recycling plastic in beverage containers when determining which entities to make market development payments to.
10. Requires plastic material reclaimers to annually report to CalRecycle the number of empty plastic beverage containers that the reclaimer has collected and sold in the previous calendar year. Requires manufacturers of postconsumer recycled plastic to annually report to CalRecycle the amount of “food-grade” flake, pellet, sheet, fines, or other forms sold in the previous calendar year and their capacity to produce “food-grade” material.
11. Specifies that the rigid plastic bottle and container labeling requirement does not apply to rigid plastic containers and rigid plastic bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products.

Background

1. Plastic in the Bottle Bill. The vast majority (97 percent) of beverage containers subject to the Bottle Bill are made out of Polyethylene Terephthalate (PET, #1). PET is used to manufacture most soft drink and water bottles. Other types of plastics used to make containers subject to the Bottle Bill include High Density Polyethylene (HDPE, #2), Polyvinyl Chloride (PVC, #3), Low Density Polyethylene (LDPE, #4), Polypropylene (PP, #5), Polystyrene (PS, #6), and other (#7). The table below shows a breakdown of containers sold in 2018 by plastic type, as well as containers recycled and their recycling rate.

Plastic Containers Sold and Recycling Rate in 2018

Source: CalRecycle May 2019 Biannual Report of Beverage Container Sales, Returns, Redemption, and Recycling Rates

1. Recycled plastic markets. The US has not developed significant markets for recycled content materials, including plastic. Historically, China has been the largest importer of recyclable materials. In an effort to improve the quality of the materials it accepts and to combat the country's significant environmental challenges, China established Operation National Sword in 2017, which included inspections of imported recyclable materials and a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including PET, HDPE, PVC, and PS beginning January 1, 2018. In November 2017, China announced that imports of recyclable materials that are not banned will be required to include no more than 0.5 percent contamination.

Following China’s actions, other Southeast Asian countries have enacted policies limiting or banning the importation of recyclable plastic materials. Last year, Malaysia and Vietnam implemented import restrictions. Earlier this year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021. While the recyclable plastic markets for #1 and #2 plastics have not significantly been affected, these international restrictions on recyclable plastic exports have affected scrap value prices for #3-7 plastics. As of February 2019, PP plastic had a negative scrap value of -$33 per ton, down from a positive value of $112 in 2018.

1. Recycled plastic beverage containers. PET is one of the easiest plastics to recycle, and recycled PET (rPET) can be used to manufacture numerous items including beverage containers, clothing, health care product containers, and carpet, among many others. Other types of plastics, particularly #3, 4, 6, and 7 plastics, are much more challenging to recycle, and many of these types of products simply get sent to a landfill. This problem has likely been exasperated by the recent export restrictions implemented by China and other countries.

The Food and Drug Administration (FDA) oversees the use of recycled materials to make new food containers. FDA's safety concerns include ensuring that contaminants from the post-consumer material are not in the final food-contact product, that recycled post-consumer material not regulated for food-contact use is not incorporated into food-contact packaging, and that adjuvants in the recycled plastic comply with the regulations for food-contact use. To address these concerns, FDA considers each proposed use of recycled plastic on a case- by-case basis and issues informal advice as to whether the recycling process is expected to produce plastic suitable for food-contact applications. FDA has prepared the Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry Considerations to assist manufacturers of recycled-content food packaging.

Comments

1. Purpose of Bill. According to the author, “In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all, and are dumped in landfills. In order to encourage efficient use of recyclable plastics, AB 792 sets a minimum recycled content standard for plastic bottles in California.”
2. Minimum content standards support recycling markets. The plastic recycling market challenges mentioned previously are due to numerous reasons, including, but are not limited to:
   1. Low demand for recycled plastic. As mentioned previously, beverage container manufacturers currently use very little recycled plastic on their own. The major reason for low demand for recycled plastics by beverage manufacturers is due to the low price for producing virgin plastic, making it a much cheaper option than using recycled plastic. This is considered a market failure as the low market price for virgin plastic does not account for its high environmental costs from production, disposal, and litter.
   2. Low scrap value for plastic. Demand directly impacts price, and low demand for recycled plastic means lower prices. Scrap value for #3-7 plastics is particularly problematic, but even PET, which has a positive scrap value, is still much lower than aluminum. As of February 2019, the scrap value for a ton of PET was $188, compared to aluminum which was $1,150 per ton. Recent shifts by beverage manufacturers from using aluminum to plastic, as well as the market impacts from the China policy, has only exasperated this challenge.
   3. Low recycling rate for plastic. In turn, low scrap value for plastic reduces the recycling incentive, leading to lower recycling rates.

This bill is intended to help correct these market failures. By requiring manufacturers of plastic beverage containers to achieve specified recycled-content requirements, this bill has the potential to support plastic recycling markets in the following ways:

1. Increase demand for recycled plastic.
2. Increase scrap value for recycled plastic.
3. Increase the recycling rates for plastic beverage containers.
4. Incentivize a shift away from using non-economically feasible types of recycled plastics (#3-7).
5. Reverse the trend back to using more aluminum beverage containers.

All of these intended market impacts from this bill have the potential to correct market failures and lead to a reduction in the production of virgin plastic and plastic waste.

1. Supply challenges. Major challenges to achieving the mandates in this bill will likely stem from having a sufficient supply of rPET. The production and supply of rPET is a complex global market, and challenges include the following:
   1. FDA requirements for rPET used for food containers. Currently, the majority of rPET produced is used for non-food contact containers such as polyester fibers used in clothing and carpets. Producing rPET to meet the higher FDA requirements for food contact containers is more expensive and difficult. Much of the recycled PET feedstock cannot be manufactured into rPET used for food containers due to high levels of contamination.
   2. Competition from other uses of rPET. As mentioned previously, rPET is used to manufacture numerous types of products, posing competition for beverage container manufacturers to obtain a sufficient supply.
   3. Yield loss. Depending on the quality of PET, there is typically a 60 percent to 75 percent technical yield loss when producing rPET. The yield loss can be due to issues such as contamination or container shapes used to produce rPET. Yield loss means a larger supply of feedstock PET is required to produce a comparable amount of rPET.
   4. Out-of-state sourcing. Preferably, beverage container manufacturers would source their rPET supplies from in-state producers. However, the rPET market is a global one, and if necessary, establishing new out-of-state supply chains to meet the mandates from this bill may present challenges.

These challenges are solvable, and overcoming them could lead to positive public benefits. There are numerous strategies that could be employed to help alleviate in-state supply challenges including increasing recycling rates, decreasing contamination levels, reducing exports, light weighting, and choosing substitute materials such as aluminum. Over time, because supplies of used PET feedstock and rPET are global markets, sufficient supply chains will likely be established to overcome any in-state supply challenges. One thing the world is not short of is a supply of plastic.

1. Off ramps for beverage manufacturers. AB 792 contains provisions that would require CalRecycle to consider certain things such as market conditions when it comes to requiring a beverage manufacturer to comply with the minimum content requirements or imposing penalties for noncompliance. Thus a beverage manufacturer could seek relief from these requirements or enforcement provisions based on an assertion that there is no market available. This undercuts the entire premise of this bill – to create those markets. If beverage manufacturers are exempt from the requirements due to market conditions, those markets will not develop. The purpose of gradually increasing the recycling content requirements is to allow time for the market to adjust to the content requirements. Exempting beverage manufactures from these requirements will not help create markets nor will it help with the recycling issues the state currently faces. Further, there is no limit on the number of extensions or renewals that CalRecycle may grant, potentially allowing a beverage manufacturer to not be in compliance in perpetuity.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, as this bill was amended on July 5, 2019, CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing (Beverage Container Recycling Fund - BCRF) to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements. Additionally, there are potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account. Finally, to the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

SUPPORT: (Verified 9/9/19)

California State Controller, Betty Yee

5 Gyres Institute

Association of California Recycling Industries

Association of Plastic Recyclers

Brightline Defense

California League of Conservation Voters

California Plastics Recyclers Coalition

Californians Against Waste

CarbonLITE Industries

Center for Oceanic Awareness, Research, and Education

Defenders of Wildlife

Dolores Huerta Foundation

Friends Committee on Legislation of California

Green Fiber International, Inc.

Heal the Bay

Mojave Desert & Mountain Recycling Authority

Natural Resources Defense Council

Northern California Recycling Association

One Earth Recycling

Peninsula Plastics Recycling Inc.

Plastic Pollution Coalition

Recology Inc.

Recycle Smart

RePET Inc.

rePlanet

Republic Services

RethinkWaste

Seventh Generation Advisor

Sierra Club California

Solid Waste Association of North America’s Legislative Task Force

StopWaste

Surfrider Foundation

The Story of Stuff Project

Tomra Systems ASA

UPSTREAM

Verdeco Recycling, Inc.

Wishtoyo Chumash Foundation

Zero Waste USA

OPPOSITION: (Verified 9/9/19)

California Bottled Water Association

California Chamber of Commerce

California Food Producers

California Manufacturers & Technology Association

DS Services of America, Inc.

Grocer Manufacturers Association

International Bottled Water Association

Los Angeles County Solid Waste Management Committee/Integrated Waste Management Task Force

Nestle Waters North America, Inc.

Niagara Bottling, LLC

Plastics Industry Association

Plastics Recycling Corporation of California

Sun Hing Foods Inc.

Valley Industry and Commerce Association

ARGUMENTS IN SUPPORT: StopWaste states, “Plastic pollution and its impact on the environment and human health have been well documented. Plastics are estimated to comprise 60-80% of all marine debris and 90% of all floating debris. By 2050, by weight there will be more plastic than fish in the ocean if nothing is done to change the trajectory of production and use of plastic. In California, more than 3 billion bottles are not recycled at all and are dumped in landfills or littered.

“For this bill to succeed upon implementation it is essential to have a robust recycling market and infrastructure and for funding to be available to make it happen. Because of its impact on the greenhouse gas emissions reduction, we strongly encourage the use of the Greenhouse Gas Reduction Fund. We also believe that the Recycling Market Development Zone Program which currently provides loans, technical assistance, and product marketing for new businesses, expanding existing businesses, creating jobs, and diverting waste from landfills should be strongly supported in order to manage the materials at their highest economic value and contribute to a circular economy.”

ARGUMENTS IN OPPOSITION: DS Services of America, Inc. writes, “Every plastic bottle is NOT created equal in terms of the intended content (a bottled water product (clear drinking water) as a regulated food is far different from a juice or a juice smoothie, as a beverage). PET bottles containing recycled content of 25% or higher presents concerns with discoloration and degradation of the bottle that would both be an aesthetic issue for our customers and consumers and an inventory management issue for our retail partners.”

ASSEMBLY FLOOR: 50-15, 5/23/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Choi, Cunningham, Dahle, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Salas, Voepel

NO VOTE RECORDED: Cervantes, Chen, Cooley, Cooper, Daly, Diep, Flora, Frazier, Eduardo Garcia, Gray, Grayson, Mayes, Medina, Rodriguez, Blanca Rubio

Prepared by: Genevieve M. Wong / E.Q. / (916) 651-4108

9/9/19 18:38:14

**** END ****

 THIRD READING  

Bill No: AB 792

Author: Ting (D) and Irwin (D), et al.

Amended: 8/30/19 in Senate

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 7/3/19

AYES: Allen, Hill, Skinner, Stern, Wieckowski

NOES: Dahle

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-1, 8/30/19

AYES: Portantino, Bradford, Durazo, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 50-15, 5/23/19 - See last page for vote

SUBJECT: Recycling: plastic containers: minimum recycled content and labeling

SOURCE: Author

DIGEST:

This bill imposes specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that requires the beverage container to contain, on average, no less than 75 percent postconsumer recycled plastic content on and after January 1, 2035.

ANALYSIS:

Existing law:

1. Establishes the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which:
   1. Requires beverage containers sold in this state to have a 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 Department of Resources Recycling and Recovery (CalRecycle). Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees.
   2. Requires that each new glass container manufactured in the state contain a minimum of 35 percent postfilled (recycled food container cullet) glass. Requires every glass food, drink, or beverage container manufacturer in the state to report the amount of tons of new glass and the tons of postfilled glass used in the manufacturing of those containers to CalRecycle.
   3. Provides that any person convicted of a violation is guilty of an infraction punishable by a fine of up to $100 and not more than $1,000 per violation.
2. Requires all rigid plastic bottles and rigid plastic containers sold in the state to be labeled with the code indicating the resin used to produce the rigid plastic bottle or rigid plastic container.
   

This bill:

1. Encourages beverage manufacturers to use plastic beverage containers that contain 100 percent recycled plastic content.
   
2. Requires, by March 1, 2022, and annually thereafter, every beverage manufacturer to report to CalRecycle in pounds and by resin type, under penalty of perjury, the amount of virgin plastic and postconsumer recycled plastic used by the manufacturer for plastic beverage containers subject to the a CRV for sale in the state in the previous calendar year.
   
3. Requires, between January 1, 2021, and December 31, 2024, the total number of plastic beverage containers filled with a beverage sold by a beverage manufacturer subject to the CRV for sale in the state to, on average, contain no less than 15 percent postconsumer recycled plastic per year. Increases that amount to 25 percent between January 1, 2025, and December 31, 2029; 50 percent between January 1, 2030, and December 31, 2034; and to 75 percent on and after January 1, 2035.
   
   1. Does not apply these requirements to refillable plastic beverage containers and certain beverage manufacturers whose projected processing fees are less than a specified amount.
      
4. Authorizes the CalRecycle to grant extensions to the minimum recycled plastic content requirements if CalRecycle makes a finding that a beverage manufacturer made a substantial effort but failed to meet the minimum content requirements due to extenuating circumstances.
   
5. Subjects a beverage manufacturer that does not meet the minimum recycled plastic content requirements described in 3) to a civil penalty, which increases as compliance rates decrease.
   
6. Authorizes CalRecycle to conduct audits and inspections and take enforcement action against a beverage manufacturer for the purpose of ensuring compliance with these requirements.
   
7. Imposes an additional civil penalty of 115 percent of the difference between the manufacturer’s audited actual average postconsumer recycled plastic content percentage and the percentage reported if an audit or inspection reveals than the actual percentage was lower than the amount reported.
   
8. Deposits penalties collected into the Recycling Enhancement Penalty Account, which is created by this bill. Moneys in the account are available for expenditure upon appropriation by the Legislature.
   
9. Provides that penalties assessed are in addition to any other applicable civil or criminal penalties.
10. Specifies that the rigid plastic bottle and container labeling requirement does not apply to rigid plastic containers and rigid plastic bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products.

Background

1. Plastic in the Bottle Bill. The vast majority (97 percent) of beverage containers subject to the Bottle Bill are made out of Polyethylene Terephthalate (PET, #1). PET is used to manufacture most soft drink and water bottles. Other types of plastics used to make containers subject to the Bottle Bill include High Density Polyethylene (HDPE, #2), Polyvinyl Chloride (PVC, #3), Low Density Polyethylene (LDPE, #4), Polypropylene (PP, #5), Polystyrene (PS, #6), and other (#7). The table below shows a breakdown of containers sold in 2018 by plastic type, as well as containers recycled and their recycling rate.

Plastic Containers Sold and Recycling Rate in 2018

Source: CalRecycle May 2019 Biannual Report of Beverage Container Sales, Returns, Redemption, and Recycling Rates

1. Recycled plastic markets. The US has not developed significant markets for recycled content materials, including plastic. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56 percent by weight of global recycled plastic exports. California currently exports roughly 30 percent of its recycled plastic.

In an effort to improve the quality of the materials it accepts and to combat the country's significant environmental challenges, China established Operation National Sword in 2017, which included inspections of imported recycled materials and a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including PET, HDPE, PVC, and PS beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5 percent contamination.

Following China’s actions, other Southeast Asian countries have enacted policies limiting or banning the importation of recycled plastic materials. Last year, Malaysia and Vietnam implemented import restrictions. Earlier this year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021. While the recycled plastic markets for #1 and #2 plastics have not significantly been affected, these international restrictions on recycled plastic exports have affected scrap value prices for #3-7 plastics. As of February 2019, PP plastic had a negative scrap value of -$33 per ton, down from a positive value of $112 in 2018.

1. Recycled plastic beverage containers. PET is one of the easiest plastics to recycle, and recycled PET (rPET) can be used to manufacture numerous items including beverage containers, clothing, health care product containers, and carpet, among many others. Other types of plastics, particularly #3, 4, 6, and 7 plastics, are much more challenging to recycle, and many of these types of products simply get sent to a landfill. This problem has likely been exasperated by the recent export restrictions implemented by China and other countries.

The Food and Drug Administration (FDA) oversees the use of recycled materials to make new food containers. FDA's safety concerns include ensuring that contaminants from the post-consumer material are not in the final food-contact product, that recycled post-consumer material not regulated for food-contact use is not incorporated into food-contact packaging, and that adjuvants in the recycled plastic comply with the regulations for food-contact use. To address these concerns, FDA considers each proposed use of recycled plastic on a case- by-case basis and issues informal advice as to whether the recycling process is expected to produce plastic suitable for food-contact applications. FDA has prepared the Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry Considerations to assist manufacturers of recycled-content food packaging.

AB 2530 (Gordon, Chapter 861, Statutes of 2016) required beverage container manufacturers to report the amount of recycled content in their products. According to the 2018 reports, the majority of beverage manufacturers in the state use very little or no recycled plastic resin in manufacturing their bottles. Notable exceptions are a few small manufacturers, as well as Nestlé and Niagara who used 37 percent and 40 percent recycled plastic, respectively.

Comments

1. Purpose of Bill. According to the author, “In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all, and are dumped in landfills. In order to encourage efficient use of recyclable plastics, AB 792 sets a minimum recycled content standard for plastic bottles in California.”
   
2. Minimum content standards support recycling markets. The plastic recycling market challenges mentioned previously are due to numerous reasons, including, but are not limited to:
   1. Low demand for recycled plastic. As mentioned previously, beverage container manufacturers currently use very little recycled plastic on their own. The major reason for low demand for recycled plastics by beverage manufacturers is due to the low price for producing virgin plastic, making it a much cheaper option than using recycled plastic. This is considered a market failure as the low market price for virgin plastic does not account for its high environmental costs from production, disposal, and litter.
   2. Low scrap value for plastic. Demand directly impacts price, and low demand for recycled plastic means lower prices. Scrap value for #3-7 plastics is particularly problematic, but even PET, which has a positive scrap value, is still much lower than aluminum. As of February 2019, the scrap value for a ton of PET was $188, compared to aluminum which was $1,150 per ton. Recent shifts by beverage manufacturers from using aluminum to plastic, as well as the market impacts from the China policy, has only exasperated this challenge.
   3. Low recycling rate for plastic. In turn, low scrap value for plastic reduces the recycling incentive, leading to lower recycling rates.
      

This bill is intended to help correct these market failures. By requiring manufacturers of plastic beverage containers to achieve specified recycled-content requirements, this bill has the potential to support plastic recycling markets in the following ways:

1. Increase demand for recycled plastic.
2. Increase scrap value for recycled plastic.
3. Increase the recycling rates for plastic beverage containers.
4. Incentivize a shift away from using non-economically feasible types of recycled plastics (#3-7).
5. Reverse the trend back to using more aluminum beverage containers.

All of these intended market impacts from this bill have the potential to correct market failures and lead to a reduction in the production of virgin plastic and plastic waste.

1. Supply challenges. Major challenges to achieving the mandates in this bill will likely stem from having a sufficient supply of rPET. The production and supply of rPET is a complex global market, and challenges include the following:
   1. FDA requirements for rPET used for food containers. Currently, the majority of rPET produced is used for non-food contact containers such as polyester fibers used in clothing and carpets. Producing rPET to meet the higher FDA requirements for food contact containers is more expensive and difficult. Much of the recycled PET feedstock cannot be manufactured into rPET used for food containers due to high levels of contamination.
   2. Competition from other uses of rPET. As mentioned previously, rPET is used to manufacture numerous types of products, posing competition for beverage container manufacturers to obtain a sufficient supply.
   3. Yield loss. Depending on the quality of PET, there is typically a 60 percent to 75 percent technical yield loss when producing rPET. The yield loss can be due to issues such as contamination or container shapes used to produce rPET. Yield loss means a larger supply of feedstock PET is required to produce a comparable amount of rPET.
   4. Out-of-state sourcing. Preferably, beverage container manufacturers would source their rPET supplies from in-state producers. However, the rPET market is a global one, and if necessary, establishing new out-of-state supply chains to meet the mandates from this bill may present challenges.

These challenges are solvable, and overcoming them could lead to positive public benefits. There are numerous strategies that could be employed to help alleviate in-state supply challenges including increasing recycling rates, decreasing contamination levels, reducing exports, light weighting, and choosing substitute materials such as aluminum. Over time, because supplies of used PET feedstock and rPET are global markets, sufficient supply chains will likely be established to overcome any in-state supply challenges. One thing the world is not short of is a supply of plastic.

1. Clarifying AB 906 (Bloom, Chapter 823, Statutes of 2017). This bill includes a clarification of a previous bill that is unrelated to minimum recycled content standards. According to the author, “the amendment would simply clarify that the existing California law requiring a recycling label for rigid plastic containers does not apply to medical device packaging, since the packaging cannot be recycled for safety reasons.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing (Beverage Container Recycling Fund - BCRF) to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements. Additionally, there are potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account. Finally, to the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

SUPPORT: (Verified 8/30/19)

California State Controller, Betty Yee

5 Gyres Institute

Association of California Recycling Industries

Association of Plastic Recyclers

Brightline Defense

California League of Conservation Voters

California Plastics Recyclers Coalition

Californians Against Waste

CarbonLITE Industries

Center for Oceanic Awareness, Research, and Education

Defenders of Wildlife

Dolores Huerta Foundation

Friends Committee on Legislation of California

Green Fiber International, Inc.

Heal the Bay

Mojave Desert & Mountain Recycling Authority

Natural Resources Defense Council

Northern California Recycling Association

One Earth Recycling

Peninsula Plastics Recycling Inc.

Plastic Pollution Coalition

Recology Inc.

Recycle Smart

RePET Inc.

rePlanet

Republic Services

RethinkWaste

Seventh Generation Advisor

Sierra Club California

Solid Waste Association of North America’s Legislative Task Force

StopWaste

Surfrider Foundation

The Story of Stuff Project

Tomra Systems ASA

UPSTREAM

Verdeco Recycling, Inc.

Wishtoyo Chumash Foundation

Zero Waste USA

OPPOSITION: (Verified 8/30/19)

American Beverage Association

California Bottled Water Association

California Chamber of Commerce

California Food Producers

California Manufacturers & Technology Association

DS Services of America, Inc.

Grocer Manufacturers Association

International Bottled Water Association

Los Angeles County Solid Waste Management Committee/Integrated Waste Management Task Force

Nestle Waters North America, Inc.

Niagara Bottling, LLC

Plastics Industry Association

Plastics Recycling Corporation of California

Sun Hing Foods Inc.

Valley Industry and Commerce Association

ARGUMENTS IN SUPPORT: StopWaste states, “Plastic pollution and its impact on the environment and human health have been well documented. Plastics are estimated to comprise 60-80% of all marine debris and 90% of all floating debris. By 2050, by weight there will be more plastic than fish in the ocean if nothing is done to change the trajectory of production and use of plastic. In California, more than 3 billion bottles are not recycled at all and are dumped in landfills or littered.

“For this bill to succeed upon implementation it is essential to have a robust recycling market and infrastructure and for funding to be available to make it happen. Because of its impact on the greenhouse gas emissions reduction, we strongly encourage the use of the Greenhouse Gas Reduction Fund. We also believe that the Recycling Market Development Zone Program which currently provides loans, technical assistance, and product marketing for new businesses, expanding existing businesses, creating jobs, and diverting waste from landfills should be strongly supported in order to manage the materials at their highest economic value and contribute to a circular economy.”

ARGUMENTS IN OPPOSITION: DS Services of America, Inc. writes, “Every plastic bottle is NOT created equal in terms of the intended content (a bottled water product (clear drinking water) as a regulated food is far different from a juice or a juice smoothie, as a beverage). PET bottles containing recycled content of 25% or higher presents concerns with discoloration and degradation of the bottle that would both be an aesthetic issue for our customers and consumers and an inventory management issue for our retail partners.”

ASSEMBLY FLOOR: 50-15, 5/23/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Choi, Cunningham, Dahle, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Salas, Voepel

NO VOTE RECORDED: Cervantes, Chen, Cooley, Cooper, Daly, Diep, Flora, Frazier, Eduardo Garcia, Gray, Grayson, Mayes, Medina, Rodriguez, Blanca Rubio

Prepared by: Genevieve M. Wong / E.Q. / (916) 651-4108

9/3/19 11:26:04

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 792 (Ting) - Recycling: plastic containers: minimum recycled content and labeling

Bill Summary:

This bill would impose specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that would require the beverage container to contain, on average, no less than 75 percent postconsumer recycled plastic content on and after January 1, 2030.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 30, 2019

Fiscal Impact:

• CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing (Beverage Container Recycling Fund) to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements.
• Potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account.
• To the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

Author Amendments:

Amend per author to adjust the minimum content schedule and to provide an off-ramp for manufacturers should the below targets not be feasible. Specifically, to require:

• 15 percent minimum content by 2021
• 25 percent minimum content by 2025
• 50 percent minimum content by 2030
• 75 percent minimum content by 2035

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 792 (Ting) - Recycling: plastic containers: minimum recycled content and labeling

Bill Summary:

This bill would impose specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that would require the beverage container to contain, on average, no less than 75 percent postconsumer recycled plastic content on and after January 1, 2030.

Fiscal Impact:

• CalRecycle estimates that it would cost the department $61,000 for the first year, $776,000 in the second year, and $766,000 and six positions ongoing (Beverage Container Recycling Fund) to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements.
• Potential unknown administrative penalty revenues to the Recycling Enhancement Penalty Account.
• To the extent that increasing recycled plastic content increases scrap value for recycled plastic bottles, potential savings to the BCRF in reduced processing payments.

Background:

The Beverage Container Recycling Program (BCRP). The BCRP is run by CalRecycle and is designed to increase recycling of certain beverage containers. Whether a particular container is part of the program depends on the material, size, and content of the container. Consumers are incentivized to recycle by being required to pay a deposit on each eligible container—currently five cents or ten cents per container, depending on size—which they can recover if they return the container to a certified recycler. Most revenue into the BCRF is used to redeem customers for recycled containers. State law requires that much of the unredeemed CRV be spent on specified recycling-related payments.

Plastic in the BCRP. The vast majority (97 percent) of beverage containers subject to the Bottle Bill are made out of Polyethylene Terephthalate (PET, #1). PET is used to manufacture most soft drink and water bottles. Other types of plastics used to make containers subject to the BCRP include High Density Polyethylene (HDPE, #2), Polyvinyl Chloride (PVC, #3), Low Density Polyethylene (LDPE, #4), Polypropylene (PP, #5), Polystyrene (PS, #6), and other (#7).

Recycled plastic markets. The US has not developed significant markets for recycled content materials, including plastic. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56 percent by weight of global recycled plastic exports. California currently exports roughly 30 percent of its recycled plastic.

In an effort to improve the quality of the materials it accepts and to combat the country's significant environmental challenges, China enacted Operation Green Fence in 2013, under which it increased inspections of imported bales of recyclables and returned bales that did not meet specified requirements at the exporters' expense. In 2017, China established Operation National Sword, which included additional inspections of imported recycled materials and a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including PET, HDPE, PVC, and PS beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5 percent contamination.

Following China’s actions, other Southeast Asian countries have enacted policies limiting or banning the importation of recycled plastic materials. Last year, Malaysia and Vietnam implemented import restrictions. Earlier this year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021. While the recycled plastic markets for #1 and #2 plastics have not significantly been affected, these international restrictions on recycled plastic exports have affected scrap value prices for #3-7 plastics. As of February 2019, PP plastic had a negative scrap value of -$33 per ton, down from a positive value of $112 in 2018.

Recycled plastic beverage containers. PET is one of the easiest plastics to recycle, and recycled PET (rPET) can be used to manufacture numerous items including beverage containers, clothing, health care product containers, and carpet, among many others. Other types of plastics, particularly #3, 4, 6, and 7 plastics, are much more challenging to recycle, and many of these types of products simply get sent to a landfill. This problem has likely been exasperated by the recent export restrictions implemented by China and other countries.

The Food and Drug Administration (FDA) oversees the use of recycled materials to make new food containers. FDA's safety concerns include ensuring that contaminants from the post-consumer material are not in the final food-contact product, that recycled post-consumer material not regulated for food-contact use is not incorporated into food-contact packaging, and that adjuvants in the recycled plastic comply with the regulations for food-contact use. To address these concerns, FDA considers each proposed use of recycled plastic on a case- by-case basis and issues informal advice as to whether the recycling process is expected to produce plastic suitable for food-contact applications. FDA has prepared the Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry Considerations to assist manufacturers of recycled-content food packaging.

AB 2530 (Gordon), Chapter 861, Statutes of 2016 required beverage container manufacturers to report the amount of recycled content in their products. According to the 2018 reports, the majority of beverage manufacturers in the state use very little or no recycled plastic resin in manufacturing their bottles. Notable exceptions are a few small manufacturers, as well as Nestlé and Niagara who used 37 percent and 40 percent recycled plastic, respectively.

Proposed Law:

This bill would:

1. Encourage beverage manufacturers to use plastic beverage containers that contain 100 percent recycled plastic content.
2. Require, by March 1, 2022, and annually thereafter, every beverage manufacturer to report to CalRecycle in pounds and by resin type, under penalty of perjury, the amount of virgin plastic and postconsumer recycled plastic used by the manufacturer for plastic beverage containers subject to the a CRV for sale in the state in the previous calendar year.
3. Between January 1, 2021, and December 31, 2024, require a plastic beverage container filled with a beverage sold by a beverage manufacturer subject to the CRV for sale in the state to, on average, contain no less than 25 percent postconsumer recycled plastic. Increase that amount to 50 percent between January 1, 2025, and December 31, 2029, and to 75 percent on and after January 1, 2030.
4. Subject a beverage manufacturer that does not meet the minimum recycled plastic content requirements described in (3) to an administrative penalty, which increases as compliance rates decrease.
5. Require a beverage manufacturer to pay the penalties described in (4) based on information reported to CalRecycle on the date the annual report is due.
6. Authorize CalRecycle to conduct audits and inspections and take certain disciplinary action against a beverage manufacturer for the purpose of ensuring compliance with these requirements.
7. Impose an additional administrative penalty of 115 percent of the difference between the manufacturer’s audited actual average postconsumer recycled plastic content percentage and the percentage reported if an audit or inspection reveals than the actual percentage was lower than the amount reported.
8. Deposit penalties collected into the Recycling Enhancement Penalty Account, which is created by the bill. Moneys in the account would be available for expenditure upon appropriation by the Legislature.
9. Provide that penalties assessed are in addition to any other applicable civil or criminal penalties.
10. Specify that the penalties shall be adjusted to reflect changes in the California Consumer Price Index.
11. Specify that the rigid plastic bottle and container labeling requirement does not apply to rigid plastic containers and rigid plastic bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products.

Related Legislation:

SB 54 (Allen, 2019). This bill would establish the policy goal of the state that, by 2030, manufacturers and retailers achieve a 75 percent reduction of the waste generated from single-use packaging and products offered for sale or sold in the state through source reduction, recycling, or composting. This bill is pending before the Assembly Natural Resources Committee.

AB 1080 (Gonzalez, 2019). This bill is identical SB 54 and is pending before this committee.

AB 906 (Bloom), Chapter 823, Statutes of 2017. Defined PET for the purposes of a labeling requirement as a plastic having certain characteristics, including, among other things, a melting peak temperature, as determined by a specified procedure, within a specified temperature range.

Staff Comments:

Processing Payment Savings. One required use for unredeemed CRV is “processing payments.” Processing payments are intended to cover the difference between a container’s scrap value and the cost of recycling it. For many material types, the cost of recycling containers is greater than the value of the recycled material, which is referred to as the “scrap value.” This means that, absent some additional financial support, accepting these containers from consumers and recycling them would be unprofitable for recyclers and processors, and they would be unlikely to do so. In addition, recycling these containers has benefits that are not reflected in their scrap value, such as reduced litter, environmental benefits like reduced greenhouse gas emissions, and preservation of the resources used to make virgin materials. For these reasons, the state subsidizes recycling by making “processing payments” from the BCRF to recyclers. A small portion of processing fee payments are covered by beverage manufacturers, but most of it is covered by the state.

To the extent that the recycled content standard required by this bill increases demand for recycled plastic bottles, this bill could increase scrap values thereby reducing the processing payments made from the BCRF.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: AB 792

SUBJECT: Recycling: plastic containers: minimum recycled content and labeling

DIGEST: This bill would impose specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV) that would require the beverage container to contain, on average, no less than 75 percent postconsumer recycled plastic content on and after January 1, 2030.

ANALYSIS:

Existing law:

1. Establishes the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which:
   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 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. Defines "beverage" to include 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 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.
   3. Requires that each new glass container manufactured in the state contain a minimum of 35 percent postfilled (recycled food container cullet) glass. Requires every glass food, drink, or beverage container manufacturer in the state to report the amount of tons of new glass and the tons of postfilled glass used in the manufacturing of those containers to CalRecycle.
   4. Provides that any person convicted of a violation is guilty of an infraction punishable by a fine of up to $100 and not more than $1,000 per violation.
2. Requires all rigid plastic bottles and rigid plastic containers sold in the state to be labeled with the code indicating the resin used to produce the rigid plastic bottle or rigid plastic container.
   

This bill:

1. Encourages beverage manufacturers to use plastic beverage containers that contain 100 percent recycled plastic content.
   
2. Requires, by March 1, 2022, and annually thereafter, every beverage manufacturer to report to CalRecycle in pounds and by resin type, under penalty of perjury, the amount of virgin plastic and postconsumer recycled plastic used by the manufacturer for plastic beverage containers subject to the a CRV for sale in the state in the previous calendar year.
   
3. Between January 1, 2021, and December 31, 2024, requires a plastic beverage container filled with a beverage sold by a beverage manufacturer subject to the CRV for sale in the state to, on average, contain no less than 25 percent postconsumer recycled plastic. Increases that amount to 50 percent between January 1, 2025, and December 31, 2029, and to 75 percent on and after January 1, 2030.
   
4. Subjects a beverage manufacturer that does not meet the minimum recycled plastic content requirements described in (3) to an administrative penalty, which increases as compliance rates decrease.
   
5. Requires a beverage manufacturer to pay the penalties described in (4) based on information reported to CalRecycle on the date the annual report is due.
   
6. Authorizes CalRecycle to conduct audits and inspections and take certain disciplinary action against a beverage manufacturer for the purpose of ensuring compliance with these requirements.
   
7. Imposes an additional administrative penalty of 115 percent of the difference between the manufacturer’s audited actual average postconsumer recycled plastic content percentage and the percentage reported if an audit or inspection reveals than the actual percentage was lower than the amount reported.
   
8. Deposits penalties collected into the Recycling Enhancement Penalty Account, which is created by the bill. Moneys in the account are available for expenditure upon appropriation by the Legislature.
   
9. Provides that penalties assessed are in addition to any other applicable civil or criminal penalties.
10. Specifies that the penalties shall be adjusted to reflect changes in the California Consumer Price Index.
11. Specifies that the rigid plastic bottle and container labeling requirement does not apply to rigid plastic containers and rigid plastic bottles that are medical devices, medical products that are required to be sterile, prescription medicine, and packaging used for those products.
    

Background

1. Plastic in the Bottle Bill. The vast majority (97 percent) of beverage containers subject to the Bottle Bill are made out of Polyethylene Terephthalate (PET, #1). PET is used to manufacture most soft drink and water bottles. Other types of plastics used to make containers subject to the Bottle Bill include High Density Polyethylene (HDPE, #2), Polyvinyl Chloride (PVC, #3), Low Density Polyethylene (LDPE, #4), Polypropylene (PP, #5), Polystyrene (PS, #6), and other (#7). The table below shows a breakdown of containers sold in 2018 by plastic type, as well as containers recycled and their recycling rate.

Plastic Containers Sold and Recycling Rate in 2018

Source: CalRecycle May 2019 Biannual Report of Beverage Container Sales, Returns, Redemption, and Recycling Rates

1. Recycled plastic markets. The US has not developed significant markets for recycled content materials, including plastic. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56 percent by weight of global recycled plastic exports. California currently exports roughly 30 percent of its recycled plastic.

In an effort to improve the quality of the materials it accepts and to combat the country's significant environmental challenges, China enacted Operation Green Fence in 2013, under which it increased inspections of imported bales of recyclables and returned bales that did not meet specified requirements at the exporters' expense. In 2017, China established Operation National Sword, which included additional inspections of imported recycled materials and a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including PET, HDPE, PVC, and PS beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5 percent contamination.

Following China’s actions, other Southeast Asian countries have enacted policies limiting or banning the importation of recycled plastic materials. Last year, Malaysia and Vietnam implemented import restrictions. Earlier this year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021. While the recycled plastic markets for #1 and #2 plastics have not significantly been affected, these international restrictions on recycled plastic exports have affected scrap value prices for #3-7 plastics. As of February 2019, PP plastic had a negative scrap value of -$33 per ton, down from a positive value of $112 in 2018.

1. Recycled plastic beverage containers. PET is one of the easiest plastics to recycle, and recycled PET (rPET) can be used to manufacture numerous items including beverage containers, clothing, health care product containers, and carpet, among many others. Other types of plastics, particularly #3, 4, 6, and 7 plastics, are much more challenging to recycle, and many of these types of products simply get sent to a landfill. This problem has likely been exasperated by the recent export restrictions implemented by China and other countries.

The Food and Drug Administration (FDA) oversees the use of recycled materials to make new food containers. FDA's safety concerns include ensuring that contaminants from the post-consumer material are not in the final food-contact product, that recycled post-consumer material not regulated for food-contact use is not incorporated into food-contact packaging, and that adjuvants in the recycled plastic comply with the regulations for food-contact use. To address these concerns, FDA considers each proposed use of recycled plastic on a case- by-case basis and issues informal advice as to whether the recycling process is expected to produce plastic suitable for food-contact applications. FDA has prepared the Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry Considerations to assist manufacturers of recycled-content food packaging.

AB 2530 (Gordon), Chapter 861, Statutes of 2016 required beverage container manufacturers to report the amount of recycled content in their products. According to the 2018 reports, the majority of beverage manufacturers in the state use very little or no recycled plastic resin in manufacturing their bottles. Notable exceptions are a few small manufacturers, as well as Nestlé and Niagara who used 37 percent and 40 percent recycled plastic, respectively.

1. EU’s single-use plastic ban. Earlier this year, the European Union (EU) announced a comprehensive single-use plastics ban by 2021. Under the new policy, many single-use items would be banned, including plastic cutlery, plates, straws, stirrers, balloon sticks, cotton swabs sticks, and expanded polystyrene foam food and beverage containers. All products covered by the ban would have to be replaced by “sustainable” alternatives. Additionally, all EU countries will be required to reach a 90 percent collection goal for plastic bottles by 2029, and plastic bottles will be required to contain 25 percent recycled content by 2025 and 30 percent by 2030.

Comments

1. Purpose of Bill. According to the author,
   

“In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all, and are dumped in landfills. In order to encourage efficient use of recyclable plastics, AB 792 sets a minimum recycled content standard for plastic bottles in California.

1. Minimum content standards support recycling markets. The plastic recycling market challenges mentioned previously are due to numerous reasons, including, but are not limited to:
   1. Low demand for recycled plastic. As mentioned previously, beverage container manufacturers currently use very little recycled plastic on their own. The major reason for low demand for recycled plastics by beverage manufacturers is due to the low price for producing virgin plastic, making it a much cheaper option than using recycled plastic. This is considered a market failure as the low market price for virgin plastic does not account for its high environmental costs from production, disposal, and litter.
   2. Low scrap value for plastic. Demand directly impacts price, and low demand for recycled plastic means lower prices. Scrap value for #3-7 plastics is particularly problematic, but even PET, which has a positive scrap value, is still much lower than aluminum. As of February 2019, the scrap value for a ton of PET was $188, compared to aluminum which was $1,150 per ton. Recent shifts by beverage manufacturers from using aluminum to plastic, as well as the market impacts from the China policy, has only exasperated this challenge.
   3. Low recycling rate for plastic. In turn, low scrap value for plastic reduces the recycling incentive, leading to lower recycling rates.
      

This bill is intended to help correct these market failures. By requiring manufacturers of plastic beverage containers to achieve specified recycled-content requirements, this bill has the potential to support plastic recycling markets in the following ways:

1. Increase demand for recycled plastic.
2. Increase scrap value for recycled plastic.
3. Increase the recycling rates for plastic beverage containers.
4. Incentivize a shift away from using non-economically feasible types of recycled plastics (#3-7).
5. Reverse the trend back to using more aluminum beverage containers.

All of these intended market impacts from this bill have the potential to correct market failures and lead to a reduction in the production of virgin plastic and plastic waste.

1. Comprehensive strategies are needed. This bill can have positive and significant environmental and public benefits specifically by reducing the use of plastics that end up polluting our oceans and waterways. In addition to requiring the use of rPET, this bill could additionally incentivize manufacturing and consumer changes that reduce the use of problematic plastics. However, it is also possible that this bill could lead to unintended consequences such as shifting beverage container materials into ones that are more environmentally damaging or by reducing non-beverage container uses of rPET. As such, this bill should be seen as one component to a more comprehensive and ongoing strategy in the effort to eliminate and reduce single-use plastics and protect against potential unintended consequences.
2. Incentivizing source reduction. The penalties in this bill are enforced on a per bottle basis, essentially penalizing a 4 ounce water bottle the same as a 2 liter soda bottle. In contrast, penalizing by weight might lead to opportunities to incentivize beverage container manufacturers to source reduce through light weighting or other design changes. The bill already requires manufacturers to report plastic used by manufacturers by weight, so administratively this would not be cumbersome to enforce.

As this bill moves forward, the author may wish to consider revising the penalties to be based on weight rather than on a per bottle basis to incentivize the reduction of overall plastic used in manufacturing beverage containers.

1. Supply challenges. Major challenges to achieving the mandates in this bill will likely stem from having a sufficient supply of rPET. The production and supply of rPET is a complex global market, and challenges include the following:
   1. FDA requirements for rPET used for food containers. Currently, the majority of rPET produced is used for non-food contact containers such as polyester fibers used in clothing and carpets. Producing rPET to meet the higher FDA requirements for food contact containers is more expensive and difficult. Much of the recycled PET feedstock cannot be manufactured into rPET used for food containers due to high levels of contamination.
   2. Competition from other uses of rPET. As mentioned previously, rPET is used to manufacture numerous types of products, posing competition for beverage container manufacturers to obtain a sufficient supply.
   3. Yield loss. Depending on the quality of PET, there is typically a 60 percent to 75 percent technical yield loss when producing rPET. The yield loss can be due to issues such as contamination or container shapes used to produce rPET. Yield loss means a larger supply of feedstock PET is required to produce a comparable amount of rPET.
   4. Out-of-state sourcing. Preferably, beverage container manufacturers would source their rPET supplies from in-state producers. However, the rPET market is a global one, and if necessary, establishing new out-of-state supply chains to meet the mandates from this bill may present challenges.

In the short run, these supply challenges present real challenges for beverage container manufacturers and rPET producers. However, over the long run, these challenges are solvable, and overcoming them could also lead to positive public benefits. There are numerous strategies that could be employed to help alleviate in-state supply challenges in the long run including increasing recycling rates, decreasing contamination levels, reducing exports, light weighting, and choosing substitute materials such as aluminum. Over time, because supplies of used PET feedstock and rPET are global markets, sufficient supply chains will likely be established to overcome any in-state supply challenges. One thing the world is not short of is a supply of plastic.

1. Phased-in timeline. Over time, supply challenges are likely solvable. However, these challenges are problematic in the short term, and it will take time for the markets and supply chains to adjust. The expectation of reaching 25 percent recycled content by January 1, 2021 in this bill is likely particularly onerous from an economic feasibility perspective. Rather than making this large jump early on, the industry will likely need a more gradual schedule initially to achieve these ambitious targets. A more accelerated schedule can be implemented to reach the longer-term mandates because the industry will have plenty of time for planning and the markets and supply chains will have time to adjust.

The Committee may wish to amend the bill to adjust the timeline for reaching the minimum recycled content standards in this bill to allow for the manufacturers and the markets to adjust to these changes and help support an economically feasible pathway to reach the ambitious goals in the bill. The proposed schedule might be as follows:

1. Technical clarifications.

The Committee may wish to amend the bill to make the following technical changes:

• 1. Delete the penalty schedule that occurs on or after January 1, 2035, which is no longer applicable to the bill. Delete the dates for the penalty when the overall compliance rate is at least 75 percent but less than 100 percent, which will clarify that this penalty applies to all required recycled plastic content standards in perpetuity.
  2. Clarify CalRecycle’s enforcement authority over beverage container manufacturers by:
     1. Referencing civil penalties rather than administrative penalties.
     2. Referencing “an enforcement action pursuant to Chapter 8 of this division” rather than “a disciplinary action consistent with Section 14591.2” when authorizing the department to conduct audits and inspections.
  3. Clarify that the minimum recycled content standards are to be measured in the aggregate.

1. Add co-author.

Per request by the author, the Committee may wish to amend the bill to add Senator Skinner as a co-author.

1. Clarifying AB 906 (Bloom), Chapter 823, Statutes of 2017. This bill includes a clarification of a previous bill that is unrelated to minimum recycled content standards. The following statement from the sponsors of the author’s amendment explains the reasons for including it:

“Most medical devices used in settings requiring sterility (surgical kits, implant devices, etc.) are packaged in plastic packaging that uses a resin called PETG, due to its rigidity and resistance to heat which protects both the devices and their sterility during shipping. In 2017 AB 906 (Bloom) was enacted that required a change in the recycling labeling provisions for rigid plastic containers (primarily beverage containers) in California, changing the designation for PETG. At that time it was generally thought that the bill did not impact “medical devices” since the packaging for those devices is not recycled (it is disposed of as medical waste due to its use in surgical and other medical settings subject to contamination). The packaging for these devices is also regulated by the FDA, which regulates both the devices themselves and the packaging as one “unit” requiring preapproval of FDA before they can be used.

The enactment of AB 906 raised a question whether the bill, by making changes to PETG designation, would require medical device packaging, which is not recycled, to contain a recycling “triangle”, and therefore trigger possible reapproval of such packaging by the FDA.

The amendment would simply clarify that the existing California law requiring a recycling label for rigid plastic containers does not apply to medical device packaging, since the packaging cannot be recycled for safety reasons. The language used for the amendment conforms to the definition and exemption for medical devices used in SB 54 (Allen)/AB 1080 (Gonzalez). Those bills exempt medical device packaging from the recycling mandate for the same reason.”

Related/Prior Legislation

SB 54 (Allen, 2019). This bill would establish the policy goal of the state that, by 2030, manufacturers and retailers achieve a 75 percent reduction of the waste generated from single-use packaging and products offered for sale or sold in the state through source reduction, recycling, or composting. This bill is pending before the Assembly Natural Resources Committee.

AB 1080 (Gonzalez, 2019). This bill is identical SB 54 and is pending before this committee.

AB 906 (Bloom), Chapter 823, Statutes of 2017. Defined PET for the purposes of a labeling requirement as a plastic having certain characteristics, including, among other things, a melting peak temperature, as determined by a specified procedure, within a specified temperature range.

SOURCE:

Author

SUPPORT:

5 Gyres Institute

Association of California Recycling Industries

Association of Plastic Recyclers

Brightline Defense

California League of Conservation Voters

Californians Against Waste

CarbonLITE Industries

Center for Oceanic Awareness, Research, and Education

Defenders of Wildlife

Friends Committee on Legislation of California

Green Fiber International, Inc.

Heal the Bay

Los Angeles County Solid Waste Management Committee/Integrated Waste Management Task Force

Mojave Desert & Mountain Recycling Authority

Natural Resources Defense Council

One Earth Recycling

Plastic Pollution Coalition

Recology Inc.

RePET Inc.

rePlanet

Republic Services

RethinkWaste

Seventh Generation Advisor

Sierra Club California

Solid Waste Association of North America’s Legislative Task Force,

StopWaste

Surfrider Foundation

The Story of Stuff Project

Tomra Systems ASA

UPSTREAM

Verdeco Recycling, Inc.

Wishtoyo Chumash Foundation

Zero Waste USA

OPPOSITION:

American Beverage Association

California Bottled Water Association

DS Services of America, Inc.

International Bottled Water Association

Nestle Waters North America, Inc.

Niagara Bottling, LLC

Plastics Industry Association

Plastics Recycling Corporation of California

ARGUMENTS IN SUPPORT:

StopWaste states, “Plastic pollution and its impact on the environment and human health have been well documented. Plastics are estimated to comprise 60-80% of all marine debris and 90% of all floating debris. By 2050, by weight there will be more plastic than fish in the ocean if nothing is done to change the trajectory of production and use of plastic. In California, more than 3 billion bottles are not recycled at all and are dumped in landfills or littered.

For this bill to succeed upon implementation, it is essential to have a robust recycling market and infrastructure and for funding to be available to make it happen. Because of its impact on the greenhouse gas emissions reduction, we strongly encourage the use of the Greenhouse Gas Reduction Fund. We also believe that the Recycling Market Development Zone Program which currently provides loans, technical assistance, and product marketing for new businesses, expanding existing businesses, creating jobs, and diverting waste from landfills should be strongly supported in order to manage the materials at their highest economic value and contribute to a circular economy.”

ARGUMENTS IN OPPOSITION:

DS Services of America, Inc. writes, “Every plastic bottle is NOT created equal in terms of the intended content (a bottled water product (clear drinking water) as a regulated food is far different from a juice or a juice smoothie, as a beverage). PET bottles containing recycled content of 25% or higher presents concerns with discoloration and degradation of the bottle that would both be an aesthetic issue for our customers and consumers and an inventory management issue for our retail partners.

The timelines in AB 792 are also unrealistic. The bill requires 25% recycled content compliance in one (1) year after enactment. It further requires 50%

recycled content five (5) years after enactment. These timelines are unrealistic and ignore supply chain constraints, and the time involved in upgrading blow-molding machinery, not to mention the lack of available rPET supply; when ALL beverage manufacturers are completing for FDA approved food-grade quality recycled PET plastic.”

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 792

Author:(Ting and Irwin)

As Amended Ver:May 17, 2019

Majority vote

SUMMARY:

Establishes recycled-content requirements for plastic beverage containers.

Major Provisions

1. Establishes the following graduated content requirements from no less than 25% in 2021 to no less than 75% in 2034.
2. Penalizes manufacturers who do not achieve the recycled content requirements with the following graduated administrative civil penalties:
   1. Between January 1, 2021, and December 31, 2024, two and one-half mills ($0.0025) per container comprising a percentage of recycled content at least 75% but not less than 100% of the required recycled plastic content percentage.
   2. On and after January 1, 2025:
      1. Two and one half mills ($0.0025) per container comprising a recycled content at least 75% but not less than 90% of the required recycled plastic content percentage.
      2. Five mills ($0.005) per container comprising a recycled content at least 50% but less than 75% of the required recycled plastic content percentage.
      3. One cent ($0.01) per container comprising a recycled content at least 25% but less than 50% of the required recycled plastic content percentage.
      4. One and one-half cent ($0.015) per container comprising recycled content at least 15% but less than 25% of the required recycled plastic content percentage.
      5. Two cents ($0.02) per container comprising recycled content less than 15% of the required recycled plastic content percentage.
3. Requires CalRecycle to enforce the provisions of the bill including conducting audits and inspections for purposes of determining compliance. Allows CalRecyle to assess additional penalties.
4. No later than March 1, 2022, and annually thereafter, requires every beverage manufacturer to report the type of virgin plastic and post-consumer recycled plastic used in beverage containers.

COMMENTS:

Historically, California has been a global leader in waste management policies. However, in recent years the state has been unable to adopt broad policies to deal with the impacts of single-use plastic products. Just last week, the European Union (EU) announced a comprehensive single-use plastics ban by 2021. Under the new policy, many single-use items would be banned, including plastic cutlery, plates, straws, stirrers, balloon sticks, cotton swabs sticks, and expanded polystyrene foam food and beverage containers. All products covered by the ban would have to be replaced by "sustainable" alternatives. Additionally, all EU countries will be required to reach a 90% collection goal for plastic bottles by 2029, and plastic bottles will be required to contain 25% recycled content by 2025 and 30% by 2030.

Manufacturers are slowly responding to the need to increase recycled content in their products. Coca Cola has announced a goal to include 50% recycled content by 2030. PepsiCo's sustainability goals include increasing recycled materials in plastic packaging, reducing packaging's carbon impact, and working to increase recycling rates. While these goals indicate that incorporating additional recycled content is possible, currently the vast majority of plastic beverage containers contain little to no recycled content. AB 2530 (Gordon), Chapter 861, Statutes of 2016 required beverage container manufacturers to report the amount of recycled content in their products. According to the 2017 reports, the vast majority of manufacturers continue to use no recycled content.

The US has not developed significant markets for recycled content materials, including plastic and mixed paper. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56% by weight of global recycled plastic exports. In California, approximately one-third of recycled material is exported; 85% of the state's recycled mixed paper has been exported to China in recent years. In 2017, China established Operation National Sword, which included a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including mixed paper and paperboard, polyethylene terephthalate (PET), polyethylene (PE), polyvinyl chloride (PVC), and polystyrene (PS) beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5% contamination. Following China's actions, other countries (Malaysia, Vietnam, India, and Thailand) have enacted policies limiting or banning the importation of recycled materials, primarily plastic and mixed paper. These policies create serious challenges for recyclers. Recycling requires markets to create new products and close the loop. This challenge also provides an opportunity for California to improve its efforts to reduce the amount of waste it generates and expand its efforts to develop recycling manufacturing infrastructure, which has been shown to provide jobs, economic, and environmental benefits.

According to the Author:

In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all and are dumped in landfills or littered. In order to encourage efficient use of recyclable plastics, this bill sets a minimum recycled content standard for plastic bottles in California.

Arguments in Support:

A coalition of environmental organizations in support point out that recycled content requirements for glass containers has reduced pollution and stimulated closed-loop manufacturing in California and contend this bill will result in similar outcomes for plastic beverage containers.

Arguments in Opposition:

Groups in opposition question whether the market is ready to supply the amount of recycled plastic necessary to meet the requirements of the bill and prefer an aggregate requirement rather than a per-bottle requirement.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee

1. CalRecycle estimates first year costs of approximately $925,000 followed by on-going costs of $910,000 (6 PY) per year to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements (California Beverage Container Recycling Fund).
2. Unknown revenue resulting from penalties for noncompliance (Recycling Enhancement Penalty Account).

VOTES:

ASM NATURAL RESOURCES: 8-1-2

YES: Friedman, Chau, Eggman, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Mathis

ABS, ABST OR NV: Flora, Melendez

ASM APPROPRIATIONS: 13-4-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Fong, Obernolte

ABS, ABST OR NV: Diep

UPDATED:

VERSION: May 17, 2019

CONSULTANT: Elizabeth MacMillan / NAT. RES. / (916) 391-2092 FN: 0000920

Date of Hearing: May 1, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 792

Author:(Ting) – As Amended Ver:April 11, 2019

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

SUMMARY:

This bill establishes minimum recycled content requirements for plastic beverage containers. Specifically, this bill:

1. Establishes the following graduated content requirements:
   1. Between January 1, 2021, and December 31, 2024, no less than 25%.
   2. Between January 1, 2025, and December 31, 2029, no less than 50%.
   3. Between January 1, 2030, and December 31, 2034, no less than 75%.
   4. On and after January 1, 2035, no less than 100%.
2. Penalizes manufacturers who do not achieve the recycled content requirements with the following graduated administrative civil penalties:
   1. Between January 1, 2021, and December 31, 2024, two and one-half mills ($0.0025) per container comprising a percentage of recycled content at least 75% but not less than 100% of the required recycled plastic content percentage.
   2. On and after January 1, 2025:
      1. Two and one half mills ($0.0025) per container comprising a recycled content at least 75% but not less than 90% of the required recycled plastic content percentage.
      2. Five mills ($0.005) per container comprising a recycled content at least 50% but less than 75% of the required recycled plastic content percentage.
      3. One cent ($0.01) per container comprising a recycled content at least 25% but less than 50% of the required recycled plastic content percentage.
      4. One and one-half cent ($0.015) per container comprising recycled content at least 15% but less than 25% of the required recycled plastic content percentage.
      5. Two cents ($0.02) per container comprising recycled content less than 15% of the required recycled plastic content percentage.
3. Establishes the Recycling Enhancement Penalty Account and requires penalties to be deposited into the account for expenditure, upon appropriation by the Legislature.
4. Requires CalRecycle to enforce the provisions of the bill including conducting audits and inspections for purposes of determining compliance. Allows CalRecyle to assess additional penalties.
5. No later than March 1, 2022, and annually thereafter, requires every beverage manufacturer to report, in pounds and by resin type, the type of virgin plastic and post-consumer recycled plastic used in beverage containers, as specified, under penalty of perjury.
6. Declares it is the goal of the state for plastic beverage containers used by beverage manufacturers to contain 100% recycled content by 2035.

FISCAL EFFECT:

1. CalRecycle estimates first year costs of approximately $925,000 followed by on-going costs of $910,000 (6 PY) per year to collect and analyze minimum content data, conduct preliminary reviews, develop audit referrals and enforce requirements (California Beverage Container Recycling Fund).
2. Unknown revenue resulting from penalties for noncompliance (Recycling Enhancement Penalty Account).

COMMENTS:

1. Purpose. This bill responds to the growing concern over plastic marine debris, the lack of markets for recycled plastic and the dumping of plastic bottles in landfills, despite California Redemption Value (CRV). According to the author:

In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all and are dumped in landfills or littered. In order to encourage efficient use of recyclable plastics, this bill sets a minimum recycled content standard for plastic bottles in California.

1. Support and Opposition. A coalition of environmental organizations in support point out that recycled content requirements for glass containers has reduced pollution and stimulated closed-loop manufacturing in California and contend this bill will result in similar outcomes for plastic beverage containers. Groups in opposition, such as the California Bottled Water Association, question whether the market is ready to supply the amount of recycled plastic necessary to meet the requirements of the bill and prefer an aggregate requirement rather than a per-bottle requirement.
2. Related Legislation. AB 1488 (Burke) requires reclaimers to report specified information regarding recycled plastic beverage containers to CalRecycle. The bill is pending in this committee.

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

Date of Hearing: April 22, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 792 (

Author:Ting) – As Amended Ver:March 21, 2019

SUBJECT: Recycling: plastic beverage containers: minimum recycled content

SUMMARY: Establishes recycled-content requirements for plastic beverage containers.

EXISTING LAW:

1. 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 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 "beverage" to include 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 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.
      
   3. Requires that each new glass container manufactured in the state contain a minimum of 35% postfilled (recycled food container cullet) glass. Requires every glass food, drink, or beverage container manufacturer in the state to report the amount of tons of new glass and the tons of postfilled glass used in the manufacturing of those containers to CalRecycle every month.
      
   4. Provides that any person convicted of a violation is guilty of an infraction punishable by a fine of up to $100 and not more than $1,000 per violation.
      
2. Establishes the Rigid Plastic Packaging Container (RPPC) law, which requires that specified plastic containers that are made of plastic, capable of at least one closure, and hold a product sold in California to meet one of the following compliance options:
   
   1. Contain a minimum of 25% postconsumer recycled content;
      
   2. Be source reduced by at least 10%, as specified;
      
   3. Be routinely reused or refilled at least 5 times;
      
   4. Achieve a 45% recycling rate; or,
      
   5. The product manufacturer consumes sufficient California-generated postconsumer recycled content equivalent to achieving a 25% postconsumer recycling rate.
      

THIS BILL:

1. Declares that it is the goal of the state that plastic beverage containers used by beverage manufacturers contain 100% recycled content by 2035 in order to ensure markets for recycled plastic, address the volatility in foreign markets, and achieve the goals of the Bottle Bill.
2. Establishes minimum recycled content requirements for plastic beverage containers:
   1. From January 1 2021 to December 31, 2024, no less than 25%;
   2. From January 1, 2025 to December 31, 2029, no less than 50%;
   3. From January 1, 2030 to December 31, 2034, no less than 75%; and,
   4. On and after January 1 2035, no less than 100%.
3. Specifies that manufacturers that do not achieve the recycled content requirements are subject to administrative civil penalties:
   1. From January 1, 2021 to December 31, 2024, $0.0025 per container containing a percentage of recycled content that is at least 75% but not less than 100% of the required percentage;
   2. On and after January 1, 2025:
      1. $0.0025 per container that contains a percentage of recycled content that is at least 75% but not less than 90% of the required percentage;
      2. $0.005 per container that contains a percentage of recycled content that is at least 50% but less than 75% of the required percentage;
      3. $0.01 per container that contains a percentage of recycled content that is at least 25% but less than 50% of the required percentage;
      4. $0.015 per container that contains a percentage of recycled content that is at least 15% but less than 25% of the required percentage; and,
      5. $0.02 per container that contains a percentage of recycled content that is less than 15% of the required percentage.
4. Specifies that the penalties shall be adjusted to reflect changes in the California Consumer Price Index.
5. Specifies that is an audit determines that a manufacturer was not accurately reporting the minimum recycled content, authorizes the Department of Resources Recycling and Recovery (CalRecycle) to assess additional penalties, as specified.
6. Establishes the Recycling Enhancement Penalty Account and specifies that any penalties collected be deposited into the account.
7. Requires CalRecycle to enforce the provisions of the bill, including conducting audits and inspections for purposes of determining compliance.
8. Specifies that manufacturers report the amount of postconsumer recycled and virgin content used in their beverage containers in pounds.
9. Specifies that beginning January 1, 2022, a manufacturer shall report the percentage of recycled content used in plastic beverage containers.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement:

In California alone, nearly 12 billion plastic bottles are sold every year. While many plastic bottles are made of recyclable content, more than 3 billion bottles are not recycled at all and are dumped in landfills or littered. In order to encourage efficient use of recyclable plastics, this bill sets a minimum recycled content standard for plastic bottles in California.

1. Plastic seas. Plastics, including expanded polystyrene (EPS), are estimated to comprise 60-80% of all marine debris and 90% of all floating debris, which includes expanded polystyrene (EPS). According to the California Coastal Commission (Commission), the primary source of marine debris is urban runoff (i.e., litter). By 2050, by weight there will be more plastic than fish in the ocean if we keep producing (and failing to properly manage) plastics at predicted rates, according to The New Plastics Economy: Rethinking the Future of Plastics, a January 2016 report by the World Economic Forum.

Due to the interplay of ocean currents, marine debris preferentially accumulates in certain areas throughout the ocean. According to Eriksen et al. (2014), 24 expeditions from 2007-2013 estimated that there are approximately 96,400 metric tons of floating plastic in the Northern Pacific Ocean. The North Pacific Central Gyre is the ultimate destination for much of the marine debris originating from the California coast. A study by the Algalita Marine Research Foundation found an average of more than 300,000 plastic pieces per square mile of the Gyre and that the mass of plastic was six times greater than zooplankton floating on the water’s surface.

Most plastic marine debris exists as small plastic particles due to excessive UV radiation exposure and subsequent photo-degradation. EPS breaks down more rapidly into these smaller particles than rigid plastics. These plastic pieces are confused with small fish, plankton, or krill and ingested by birds and marine animals. Over 600 marine animal species have been negatively affected by ingesting plastic worldwide. Last year, scientists at the Australian Research Council Centre of Excellence for Coral Reef Studies at James Cook University found that corals are also ingesting small plastic particles, which remain in their small stomach cavities and impede their ability to consume and digest normal food.

In addition to the physical impacts of plastic pollution, hydrophobic chemicals present in the ocean in trace amounts (e.g., from contaminated runoff and oil and chemical spills) have an affinity for, and can bind to, plastic particles where they enter and accumulate in the food chain.

California Coastal Cleanup Day was first organized by the Commission in 1985. The Commission continues to organize the event annually and track the items collected. According to the Commission, the top ten items collected since 1984 are cigarette butts; food wrappers and containers; caps and lids; bags; cups, plates, and utensils; straws; glass bottles; plastic bottles; cans; and, construction material. Food wrappers and containers account for just over 10% of the material cleaned up.

In 2007, the Ocean Protection Council (OPC) adopted a resolution on "reducing and preventing marine debris." A year later, OPC released the Implementation Strategy for the [OPC] Resolution to Reduce and Prevent Ocean Litter, which established four broad objectives to reduce marine debris: 1) Reduce single-use packaging and promote sustainable alternatives; 2) Prevent and control litter and plastic debris; 3) Clean up and remove ocean litter; and, 4) Coordinate with other jurisdictions in the Pacific region.

1. Is California still a leader? Historically, California has been a global leader in waste management policies. However, in recent years the state has been unable to adopt broad policies to deal with the impacts of single-use plastic products. Just last week, the European Union (EU) announced a comprehensive single-use plastics ban by 2021. Under the new policy, many single-use items would be banned, including plastic cutlery, plates, straws, stirrers, balloon sticks, cotton swabs sticks, and expanded polystyrene foam food and beverage containers. All products covered by the ban would have to be replaced by “sustainable” alternatives. Additionally, all EU countries will be required to reach a 90% collection goal for plastic bottles by 2029, and plastic bottles will be required to contain 25% recycled content by 2025 and 30% by 2030.
2. Recycled content. Manufacturers are slowly responding to the need to increase recycled content in their products. Coca Cola has announced a goal to to include 50% recycled content by 2030. PepsiCo's sustainability goals include increasing recycled materials in plastic packaging, reducing packaging’s carbon impact, and working to increase recycling rates. While these goals indicate that incorporating additional recycled content is possible, currently the vast majority of plastic beverage containers contain little to no recycled content. AB 2530 (Gordon), Chapter 861, Statutes of 2016 required beverage container manufacturers to report the amount of recycled content in their products. According to the 2017 reports, the vast majority of manufacturers continue to use no recycled content. Coca Cola reported 16% in its carbonated soda bottles only; PepsiCo reports 26% recycled content. Only a handful of small manufacturers reported 100% recycled content.
   
   The Food and Drug Administration (FDA) oversees the use of recycled materials to make new food containers. FDA's safety concerns include ensuring that contaminants from the post consumer material are not in the final food-contact product, that recycled post-consumer material not regulated for food-contact use is not incorporated into food-contact packaging, and that adjuvants in the recycled plastic comply with the regulations for food-contact use. To address these concerns, FDA considers each proposed use of recycled plastic on a case-by-case basis and issues informal advice as to whether the recycling process is expected to produce plastic suitable for food-contact applications. FDA has prepared the Guidance for Industry - Use of Recycled Plastics in Food Packaging: Chemistry Considerations to assist manufacturers of recycled-content food packaging.
3. Markets. The US has not developed significant markets for recycled content materials, including plastic and mixed paper. Historically, China has been the largest importer of recycled materials. According to the International Solid Waste Association, China accepted 56% by weight of global recycled plastic exports. In California, approximately one-third of recycled material is exported; 85% of the state's recycled mixed paper has been exported to China in recent years.
   
   In an effort to improve the quality of the materials it accepts and to combat the country's significant environmental challenges, China enacted Operation Green Fence in 2013, under which it increased inspections of imported bales of recyclables and returned bales that did not meet specified requirements at the exporters' expense. In 2017, China established Operation National Sword, which included additional inspections of imported recycled materials and a filing with the World Trade Organization indicating its intent to ban the import of 24 types of scrap, including mixed paper and paperboard, polyethylene terephthalate (PET), polyethylene (PE), polyvinyl chloride (PVC), and polystyrene (PS) beginning January 1, 2018. In November 2017, China announced that imports of recycled materials that are not banned will be required to include no more than 0.5% contamination. Some market experts are hopeful that cleaner plastic materials, including those included in the ban, may be allowed in the future.
   
   Following China’s actions, other Southeast Asian countries have enacted policies limiting or banning the importation of recycled materials, primarily plastic and mixed paper. Last year, Malaysia and Vietnam implemented import restrictions. Earlier this month, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021. These policies create serious challenges for recyclers. Recycling requires markets to create new products and close the loop. This challenge also provides an opportunity for California to improve its efforts to reduce the amount of waste it generates and expand its efforts to develop recycling manufacturing infrastructure, which has been shown to provide jobs, economic, and environmental benefits.
   
   CalRecycle had indicated that it intends to continue to build and support recycling markets and infrastructure within California to reduce the state's need to export recycled material. CalRecycle’s Greenhouse Gas Reduction Grant and Loan Program, funded by the Greenhouse Gas Reduction Fund, provides financial incentives for capital investments in infrastructure for composting, anaerobic digestion, and recycling and manufacturing facilities that reduce greenhouse gas emissions. The Recycling Market Development Zone Program provides loans, technical assistance, and product marketing for new businesses, expanding existing businesses, creating jobs, and diverting waste from landfills. Additionally, CalRecycle continues to pursue options to reduce waste and increase the recyclability of packaging through its packaging reform process and to reduce the contamination levels in all recycling streams. This bill is intended to build markets for in-state generated plastic by requiring manufacturers of plastic beverage containers to achieve specified recycled-content requirements.
4. Suggested amendments. The committee may wish to make a number of clarifying and technical amendments to the bill to facilitate implementation:
   1. Move the reporting requirements into the appropriate section, beginning March 1, 2022, and sunset the existing provision on that date. Specify that reports to CalRecycle include resin type.
   2. Specify that beverage containers subject to the state’s Bottle Bill program are subject to the bill.
   3. Clarify that compliance is based on the average postconsumer recycled content.
   4. Clarify CalRecycle’s enforcement authority.
   5. Correct a drafting error by specifying that when a manufacturer falsely reports the recycled content, the penalty is 115%, rather than 15%, of the difference between its actual recycled content and the reported recycled content.
   6. Strike duplicative and unnecessary language.
   7. Make related technical and clarifying changes.
5. Related legislation. AB 1488 (Burke) requires reclaimers to report the amount of “bottle grade” material they produce to the Department of Resources Recycling and Recovery (CalRecycle). This bill is scheduled to be heard in this committee on April 8^th.

REGISTERED SUPPORT / OPPOSITION:

Support

California League of Conservation Voters
Californians Against Waste
CarbonLite Recycling
Center for Oceanic Awareness, Research, & Education
Defenders of Wildlife
Friends Committee on Legislation of California
Green Fiber International
Heal the Bay
Natural Resources Defense Council
Peninsula Plastics Recycling
Plastic Pollution Coalition
Recology
Repet Inc.
Replanet LLC
Republic Services Inc.
Seventh Generation Advisors
Sierra Club
Surfrider Foundation
The 5 Gyres Institute
The Story of Stuff Project
Upstream
Verdeco Recycling
Wishtoyo Chumash Foundation
Zero Waste USA

Opposition

Niagara Bottling, LLC

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. /