CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 793

Author:(Ting and Irwin)

As Amended Ver:August 25, 2020

Majority vote

SUMMARY:

Establishes minimum postconsumer recycled content standards for plastic beverage containers subject to the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill).

The Senate Amendments:

1. Delete the previous contents of the bill, and instead:
   1. Require plastic beverage containers subject to the Bottle Bill to contain specified percentages of postconsumer recycled plastic annually:
      1. From January 1, 2022 until December 31, 2024, no less than 15%;
      2. From January 1, 2025 until December 31, 2029, no less than 25%; and,
      3. On and after January 1, 2030, no less than 50%.
   2. Specify that the requirements do not apply to refillable plastic beverage containers and certain beverage manufacturers whose projected processing fees are less than a specified amount.
   3. Beginning January 1, 2025, authorize the Director of the Department of Resources Recycling and Recovery (CalRecycle) to annually review and adjust the required minimum postconsumer recycled content percentage, either at the initiation of the Director or at the petition of the beverage manufacturing industry. Require the Director to consider certain factors, such as changes in market conditions, availability of recycled plastic suitable to meet the minimum recycled content requirements of this bill, and capacity of recycling or processing infrastructure.
   4. Beginning January 1, 2023, subject a beverage manufacturer that does not meet the minimum recycled plastic content requirements to an administrative penalty, and which is collected annually on and after March 1, 2024.
   5. Specify the formula for determining the penalty and require penalties to be based upon the amount of virgin and postconsumer recycled plastic material used by the beverage manufacturer to produce beverage containers.
   6. Requires CalRecycle to consider granting a reduction of the penalties based on specified factors and require a beverage manufacturer to submit a corrective action plan to CalRecycle in order to receive the reduction.
   7. Authorize CalRecycle to conduct audits and investigations and take enforcement action against a beverage manufacturer for the purpose of ensuring compliance with these requirements.
   8. Specify that penalties collected be deposited into the Recycling Enhancement Penalty Account and specify that the account is available for expenditure upon appropriation by the Legislature for the purpose of supporting the recycling infrastructure, collection, and processing of plastic beverage containers.
   9. Authorize CalRecycle to contract with a research university to study the polyethylene terephthalate and high-density polyethylene markets and requires for the study to be completed by May 1, 2028, if the Legislature makes an appropriation for these purposes before June 15, 2027.
   10. Require plastic reclaimers, commencing on or before March 1, 2024, to annually report the amount in pounds and by resin type of empty plastic beverage containers that the reclaimer has collected and sold in the previous calendar year to CalRecycle. Require manufacturers of postconsumer recycled plastic to annually report 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 to CalRecycle. Require the report to specify the amount in pounds of material that meets beverage manufacturer specifications for bottle grade material.
   11. Specify that the rigid plastic bottle and container labeling requirements do 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.

COMMENTS:

Plastics are estimated to comprise 60%-80% of all marine debris and 90% of all floating debris. 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. Most marine plastic pollution exists as small plastic particles due to excessive UV radiation exposure and subsequent photo-degradation. 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. In addition to the physical impacts of plastic pollution, hydrophobic chemicals present in the ocean in trace amounts bind to plastic particles, where they enter and accumulate in the food chain.

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% by weight of global recycled plastic exports. In California, approximately one-third of recycled material is exported.

In 2017, China established Operation National Sword, which banned 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 Southeast Asian countries have enacted policies limiting or banning the importation of recycled materials, primarily plastic and mixed paper. Markets have been further impacted by Covid-19, which has caused scrap values to drop dramatically and reduced international shipping.

Recycling requires markets to create new products and close the loop. The challenges created by reducing exports of recyclable materials also creates opportunity for California to develop in-state recycling infrastructure, which has been shown to provide jobs and economic and environmental benefits. This bill would require producers of plastic beverage containers to incorporate postconsumer recycled content, helping to close the loop and create markets for recycled materials.

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 793 sets a minimum recycled content standard for plastic bottles in California.

Arguments in Support:

Supporters of the bill state that they, “strongly support the recycled content provisions of Assembly Bill 793 by Assembly Members Ting and Irwin. Increasing the amounts of post-consumer recycled material in plastic beverage containers sold in this state will help to build demand and ensure domestic end-use markets for plastic beverage containers collected for recycling. While California has reaped environmental benefit from diverting most beverage containers from the waste and litter stream, analyses by CalRecycle and others demonstrate that the full environmental and economic benefits of recycling are derived from utilizing recycled material in manufacturing.”

Arguments in Opposition:

None on file

FISCAL COMMENTS:

According to the Senate Appropriations Committee: unknown cost pressure, likely in the low millions of dollars, for CalRecycle to implement this bill; the Department of Justice estimates cost pressure of about $50,000 annually (special fund) to pursue enforcement actions against violators of this bill; unknown, potentially significant ongoing savings (Beverage Container Recycling Fund) to the extent that this bill stabilizes domestic markets for recycled plastic and increases recycled plastic scrap values; and, unknown potential penalty revenue due to enforcement actions against violators of this bill.

VOTES:

ASM NATURAL RESOURCES: 11-0-0

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

ASSEMBLY FLOOR: 77-0-3

YES: Aguiar-Curry, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, O'Donnell, Obernolte, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

ABS, ABST OR NV: Arambula, Chen, Salas

SENATE FLOOR: 39-0-1

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

ABS, ABST OR NV: Jones

UPDATED:

VERSION: August 25, 2020

CONSULTANT: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003550

 THIRD READING  

Bill No: AB 793

Author: Ting (D) and Irwin (D)

Amended: 8/25/20 in Senate

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 8/14/20

AYES: Allen, Bates, Dahle, Hill, Skinner, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/20/20

AYES: Portantino, Bates, Bradford, Hill, Jones, Leyva, Wieckowski

ASSEMBLY FLOOR: Not relevant

SUBJECT: Recycling: plastic beverage containers: minimum recycled content

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 50 percent postconsumer recycled plastic content by January 1, 2030.

Senate Floor Amendments of 8/25/20 require a reclaimer to report the amount of empty plastic beverage containers by resin type; make a technical change to the circumstances under which an extension may be granted for a penalty payment plan; and clarify a previous bill that is unrelated to minimum recycled content standards.

ANALYSIS:

1. Existing law, the California Beverage Container Recycling and Litter Reduction Act (Bottle Bill):
   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 contains 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, 2022, 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; 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 Director of CalRecycle, commencing January 1, 2025, on an annual basis and either when initiated by the Director or at the petition of the beverage manufacturing industry, to review and determine to adjust the required minimum postconsumer recycled content percentage. Requires the Director to consider certain factors, such as changes in market conditions, availability or recycled plastic suitable to meet the minimum recycled content requirements of this bill, and capacity of recycling or processing infrastructure.
3. Subjects a beverage manufacturer, commencing January 1, 2023, that does not meet the minimum recycled plastic content requirements to an administrative penalty, and which is collected annually commencing March 1, 2024.
   1. Specifies the formula that is used to calculate the penalty and requires penalties to be based upon the amount in pounds in the aggregate of virgin and postconsumer recycled plastic material used by the beverage manufacturer to produce beverage containers.
   2. Requires the penalties to be paid in quarterly installments or to arrange an alternative payment schedule subject to the approval of CalRecycle, not to exceed a 12-month payment plan, except as specified.
   3. Requires CalRecycle to consider granting a reduction of the penalties based on certain factors and requires a beverage manufacturer to submit to CalRecycle a corrective action plan in order to receive the reduction.
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. Authorizes CalRecycle to contract with a research university to study the polyethylene terephthalate and high-density polyethylene markets and requires for the study to be completed by May 1, 2028, if the Legislature makes an appropriation for these purposes before June 15, 2027.
7. Requires plastic material reclaimers, commencing on or before March 1, 2024, to annually report to CalRecycle the amount in pounds and by resin type of empty plastic beverage containers that the reclaimer has collected and sold in the previous calendar year. Also 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. Requires the report to specify the amount in pounds of material that meets beverage manufacturer specifications for bottle grade material.
8. 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 United States 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. Last year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021.

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 postconsumer material are not in the final food-contact product, that recycled postconsumer 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.

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.

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 793 sets a minimum recycled content standard for plastic bottles in California.”
2. Minimum content standards support recycling markets. Market challenges in plastic recycling are due to numerous reasons, including, but 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. While cheap and more economical for manufacturers, 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 a lower price will be paid for that material. 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:

• • • Increase demand for recycled plastic;
    • Increase scrap value for recycled plastic;
    • Increase the recycling rates for plastic beverage containers;
    • Incentivize a shift away from using non-economically feasible types of recycled plastics (#3-7); and
    • 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. 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. These provisions were originally in AB 792 (Ting, 2019). The following statement, from the Senate Environmental Quality Committee policy analysis of that bill, is from the proponents of the amendment and 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.”

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

According to the Senate Appropriations Committee:

• Unknown cost pressure, likely in the low millions of dollars, for CalRecycle to implement this bill.
• The Department of Justice estimates cost pressure of about $50,000 annually (special fund) to pursue enforcement actions against violators of this bill.
• Unknown, potentially significant ongoing savings (BCRF) to the extent that this bill stabilizes domestic markets for recycled plastic and increases recycled plastic scrap values.
• Unknown potential penalty revenue due to enforcement actions against violators of this bill.

SUPPORT: (Verified 8/26/20)

5 Gyres Institute

7th Generation Advisors

American Beverage Association

California Chapters of the Solid Waste Association of North America Legislative Task Force

California League of Conservation Voters

Californians Against Waste

Center for Oceanic Awareness, Research, & Education

City and County of San Francisco

Container Recycling Institute

Defenders of Wildlife

Heal the Bay

Monterey Bay Aquarium

Natural Resources Defense Council

Nature Conservancy

Nestle Waters North America, Inc.

Northern California Recycling Association

One Earth Recycling

Plastic Oceans International

Plastic Pollution Coalition

Plastic Recycling Corporation of California

Recology

RecycleSmart

Republic Services INC.

RethinkWaste

San Francisco Department of the Environment

Save Our Shores

Seventh Generation Advisors

Sierra Club California

StopWaste

Surfrider Foundation

The Story of Stuff Project

Tomra North America, INC.

UPSTREAM

Western Placer Waste Management Authority

Wishtoyo Chumash Foundation

Zero Waste USA

OPPOSITION: (Verified 8/26/20)

None received

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

8/26/20 14:52:59

**** END ****

 THIRD READING  

Bill No: AB 793

Author: Ting (D) and Irwin (D)

Amended: 8/20/20 in Senate

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 8/14/20

AYES: Allen, Bates, Dahle, Hill, Skinner, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/20/20

AYES: Portantino, Bates, Bradford, Hill, Jones, Leyva, Wieckowski

ASSEMBLY FLOOR: Not relevant

SUBJECT: Recycling: plastic beverage containers: minimum recycled content

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 50 percent postconsumer recycled plastic content by January 1, 2030.

ANALYSIS:

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

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.
   

This bill:

1. Requires, between January 1, 2022, 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; 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 Director of CalRecycle, commencing January 1, 2025, on an annual basis and either when initiated by the Director or at the petition of the beverage manufacturing industry, to review and determine to adjust the required minimum postconsumer recycled content percentage. Requires the Director to consider certain factors, such as changes in market conditions, availability or recycled plastic suitable to meet the minimum recycled content requirements of this bill, and capacity of recycling or processing infrastructure.
   
3. Subjects a beverage manufacturer, commencing January 1, 2023, that does not meet the minimum recycled plastic content requirements to an administrative penalty, and which is collected annually commencing March 1, 2024.
   
   1. Specifies the formula that is used to calculate the penalty and requires penalties to be based upon the amount in pounds in the aggregate of virgin and postconsumer recycled plastic material used by the beverage manufacturer to produce beverage containers.
      
   2. Requires the penalties to be paid in quarterly installments or to arrange an alternative payment schedule subject to the approval of CalRecycle, not to exceed a 12-month payment plan, except as specified.
      
   3. Requires CalRecycle to consider granting a reduction of the penalties based on certain factors and requires a beverage manufacturer to submit to CalRecycle a corrective action plan in order to receive the reduction.
      
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. Authorizes CalRecycle to contract with a research university to study the polyethylene terephthalate and high-density polyethylene markets and requires for the study to be completed by May 1, 2028, if the Legislature makes an appropriation for these purposes before June 15, 2027.
   
7. Requires plastic material reclaimers, commencing on or before March 1, 2024, to annually report to CalRecycle the amount in pounds of empty plastic beverage containers that the reclaimer has collected and sold in the previous calendar year. Also 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. Requires the report to specify the amount in pounds of material that meets beverage manufacturer specifications for bottle grade material.

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 United States 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. Last year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021.

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 postconsumer material are not in the final food-contact product, that recycled postconsumer 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.

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.

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 793 sets a minimum recycled content standard for plastic bottles in California.”
2. Minimum content standards support recycling markets. Market challenges in plastic recycling are due to numerous reasons, including, but 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. While cheap and more economical for manufacturers, 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 a lower price will be paid for that material. 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:

• • • Increase demand for recycled plastic;
    • Increase scrap value for recycled plastic;
    • Increase the recycling rates for plastic beverage containers;
    • Incentivize a shift away from using non-economically feasible types of recycled plastics (#3-7); and
    • 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.

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

According to the Senate Appropriations Committee:

• Unknown cost pressure, likely in the low millions of dollars, for CalRecycle to implement this bill.
• The Department of Justice estimates cost pressure of about $50,000 annually (special fund) to pursue enforcement actions against violators of this bill.
• Unknown, potentially significant ongoing savings (BCRF) to the extent that this bill stabilizes domestic markets for recycled plastic and increases recycled plastic scrap values.
• Unknown potential penalty revenue due to enforcement actions against violators of this bill.

SUPPORT: (Verified 8/21/20)

5 Gyres Institute

7th Generation Advisors

American Beverage Association

California League of Conservation Voters

Californians Against Waste

Center for Oceanic Awareness, Research, & Education

City and County of San Francisco

Container Recycling Institute

Defenders of Wildlife

Heal the Bay

Monterey Bay Aquarium

Natural Resources Defense Council

Nestle Waters North America, Inc.

Northern California Recycling Association

One Earth Recycling

Plastic Oceans International

Plastic Pollution Coalition

Plastic Recycling Corporation of California

Recology

Recyclesmart

Republic Services INC.

RethinkWaste

San Francisco Department of the Environment

Save Our Shores

Seventh Generation Advisors

Sierra Club California

Solid Waste Association of North America's Legislative Task Force, California Chapters

StopWaste

Surfrider Foundation

The Nature Conservancy

The Story of Stuff Project

Tomra North America, INC.

UPSTREAM

Wishtoyo Chumash Foundation

Zero Waste USA

OPPOSITION: (Verified 8/21/20)

None received

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

8/24/20 14:12:49

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 793 (Ting) - Recycling: plastic beverage containers: minimum recycled content

Bill Summary:

This bill would impose specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV).

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

The following information is revised to reflect amendments

adopted by the committee on August 20, 2020

Fiscal Impact:

• Unknown cost pressure, likely in the low millions of dollars, for the Department of Resources Recycling and Recovery (CalRecycle) to implement this bill.
• The Department of Justice estimates cost pressure of about $50,000 annually (special fund) to pursue enforcement actions against violators of this bill.
• Unknown, potentially significant ongoing savings (BCRF) to the extent that this bill stabilizes domestic markets for recycled plastic and increases recycled plastic scrap values.
• Unknown potential penalty revenue due to enforcement actions against violators of this bill.

Author Amendments: The author’s amendments would

reduce costs by removing analysis requirements for reclaimer reporting, simplifying the penalties structure, delaying implementation of major costs to 2024 and 2025, and making provisions permissive or upon budget appropriation. Specifically, the amendments would:

• Change the director review to be permissive and require the department to adopt regulations on what the review process, timeline, etc. would look like.
• Allow for proportional reduction in case there are not funds to do a review and for CalRecycle to contract to get some of the information needed to do the review.
• Delay the implementation of some provisions.
• Make the penalties based on the amount of rPET used, calculated with $0.20/pound initial penalty amount.
• Provide more language and guidance for corrective action plans.
• Make the recycling market study permissive and upon budget appropriation. It also changes the due date from 2025 to 2028.
• Remove “food grade” and “bottle grade” definitions.
• Remove requirement for CalRecycle to do a summary of reported information.

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 793 (Ting) - Recycling: plastic beverage containers: minimum recycled content

Bill Summary:

This bill would impose specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV).

Fiscal Impact:

• The Department of Resources Recycling and Recovery (CalRecycle) estimates ongoing costs of $3.59 million (Beverage Container Recycling Fund [BCRF]) to implement this bill, as well as a one-time cost of $500,000 (BCRF) to complete the required market study.
• The Department of Justice estimates cost pressure of about $50,000 annually (special fund) to pursue enforcement actions against violators of this bill.
• Unknown, potentially significant ongoing savings (BCRF) to the extent that this bill stabilizes domestic markets for recycled plastic and increases recycled plastic scrap values.
• Unknown potential penalty revenue due to enforcement actions against violators of this bill.

Background:

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. Last year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021.

Minimum content standards support recycling markets. Market challenges in plastic recycling are due to numerous reasons, including, but 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. While cheap and more economical for manufacturers, 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 a lower price will be paid for that material. 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.

Proposed Law:

This bill would impose specified minimum postconsumer content standards for plastic beverage containers subject to the California Redemption Value (CRV). Specifically, this bill would:

1. Require, on and after January 1, 2022, the total number of plastic beverage containers filled with a beverage sold 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 50 percent postconsumer recycled plastic content per year on and after January 1, 2030, except as specified.
2. Impose annual civil penalties, in specified amounts, on a beverage manufacturer for violating these requirements, except as specified.
3. Authorize the department to enforce these provisions and to conduct audits and investigations of a beverage manufacturer for the purpose of ensuring compliance.
4. Require the department to contract with a research university to study specified markets and would require the department to allocate moneys from the California Beverage Container Recycling Fund, upon appropriation, for the study, to be completed by May 1, 2025.
5. Require a plastic material reclaimer and a manufacturer of postconsumer recycled plastic to report the required information to the department under penalty of perjury.

Related Legislation:

AB 792 (Ting) is very similar to this bill. AB 792 was vetoed by the Governor due to cost concerns and the burden waiver petitions allowed under the bill would put on the state.

SB 168 (Wieckowski, 2018) would have required CalRecycle to adopt minimum recycled content standards for plastic beverage containers. SB 168 did not receive enough votes to get off of the Assembly Floor.

Staff Comments:

CalRecycle estimates a need for 20 positions for a total of $2.6 million and $1 million per year in contract funds to implement. In addition, the department estimates a one-time cost of $500,000 to complete the market study.

Establishing minimum recycled content requirements could help develop and stabilize domestic markets for recycled plastic. As scrap values increase, recycling centers are less dependent upon payments made from the BCRF to stay profitable. An increase in scrap value of recycled plastic could result in reduced processing payments and corresponding savings to the BCRF.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: AB 793

SUBJECT: Recycling: plastic beverage containers: minimum recycled content

DIGEST: 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 50 percent postconsumer recycled plastic content by January 1, 2030.

ANALYSIS:

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

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.
   

This bill:

1. Requires, between January 1, 2022, 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 annually, whether the minimum recycled content requirements should be waived or reduced. Requires the director to consider certain factors, such as changes in market conditions, availability or recycled plastic suitable to meet the minimum recycled content requirements of the bill, and capacity of recycling or processing infrastructure.
   
3. Subjects, commencing January 1, 2023, a beverage manufacturer that does not meet the minimum recycled plastic content requirements described by the bill to a civil penalty, and which, after March 1, 2024, 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.
      
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 May 1, 2025.
   
7. Commencing on or before March 1, 2022, 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. Also 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. Requires the report to specify the amount of material that meets beverage manufacturer specifications for “bottle grade” material, as defined by the bill.
   

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. Last year, India announced that it will ban scrap plastic imports. Thailand has announced a ban that will go into effect in 2021.

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 postconsumer material are not in the final food-contact product, that recycled postconsumer 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.

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.

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 793 sets a minimum recycled content standard for plastic bottles in California.”
   
2. Minimum content standards support recycling markets. Market challenges in plastic recycling are due to numerous reasons, including, but 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. While cheap and more economical for manufacturers, 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 a lower price will be paid for that material. 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); and
    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. Waiving or reducing minimum recycled content requirements based on certain factors, but can’t increase based on those same factors? AB 793 requires CalRecycle to consider whether the minimum recycled content requirements should be waived or reduced based on a number of factors, including market conditions and the availability of recycled plastic. CalRecycle, however, would be prohibited from adjusting the minimum content higher than what is statutorily prescribed based on those same conditions. If CalRecycle can lower, or all together waive, the minimum content requirements due to market conditions or a lack of available recycled plastic, shouldn’t the department be able to increase minimum content requirements due to market conditions or an abundance of recycled plastic?
   
2. Off ramps for beverage manufacturers. Under the bill, beverage manufacturers have three potential opportunities to be “excused” from having to comply with, or otherwise be penalized for not complying with, the minimum content requirements.

• The director can waive or reduce the minimum postconsumer recycled plastic content percentages if the director makes a finding that the minimum recycled content requirement should be adjusted based on factors such as changes in market conditions, recycling rates, availability of recycled plastics, capacity of recycling or processing infrastructure, and progress made by beverage manufacturers.
• If a beverage is not in compliance with the minimum content requirements, the department, in lieu of or in addition to assessing a penalty, may require the beverage manufacturer to submit a corrective action plan. Whether a penalty is assessed is based on factors such as whether the violation is intentional, whether there is a chronic pattern of noncompliance, the economic size and condition of the beverage manufacturer, and whether the violation is due to circumstances beyond the reasonable control of the beverage manufacturer or otherwise unavoidable under the circumstances including, but not limited to, unforeseen changes in market conditions.
• If it is determined that a penalty should be assessed, the department is required to consider granting a waiver, reduction, or extension of the penalties after considering anomalous market conditions, disruption in, or lack of supply of, recycled plastics, and other factors that have prevented a beverage manufacturer from meeting the minimum content requirements. According to the author, this is consistent with CalRecycle’s current practices for assessing penalties.

A beverage manufacturer could seek relief from any of these requirements or enforcement provisions based on an assertion that there is no market available. Could this argument have the potential to undercut the entire premise of this bill – which is 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 enough time for the market to adjust to the content requirements. Exempting beverage manufactures from these requirements will hinder any progress in creating those markets and will not 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 for a corrective action plan, potentially allowing a beverage manufacturer to not comply with the minimum content standards in perpetuity.

However, it is also argued that market conditions is just one of multiple factors that CalRecycle must consider in each determination. CalRecycle must also consider the availability of supply. However, could a claim from beverage manufacturers that market conditions prevent them from complying with the bill’s requirements expose CalRecycle to a risk of litigation if CalRecycle ultimately finds that, despite the beverage manufacturers’ claim, the minimum content requirements should not be waived or reduced due to the availability of material?

Ultimately, the bill’s success of creating a market for recycled plastic will depend on CalRecycle’s implementation and the degree to which waivers and reductions are provided and the requirements enforced.

1. Duplicative Reporting. AB 901 (Gordon), Chapter 746, Statutes of 2015, changed how organics, recyclable material, and solid waste information is reported to CalRecycle. Disposal, recycling (including reclaimers), and compost facilities, as well as exporters, brokers, and transporters of recyclables or compost will be required to submit information directly to CalRecycle on the types, quantities, and destinations of materials that are disposed of, sold, or transferred inside or outside of the state. It also granted CalRecycle enforcement authority to collect this information. Regulations to implement AB 901 went into effect on March 5 last year.
   

The data acquired by the new regulations will inform CalRecycle’s understanding of material flows within the state’s recycling infrastructure; allow CalRecycle to better estimate total recycling and composting; and, enable CalRecycle to track progress towards several state goals and programs, including the state’s 75% recycling goal, mandatory commercial recycling, and organics diversion programs. This information will allow CalRecycle to implement various improvements in areas such as increased responsiveness to changes in the recycling landscape, operational efficiencies, and the targeting of state resources to recycling infrastructure to foster a circular economy.

CalRecycle also collects information regarding the number of plastic beverage containers processed by in-state reclaimers under the Plastic Market Development Payment (PMDP) Program, which is intended to develop California markets for recycled empty plastic beverage containers. CalRecycle makes payments of up to $10 million annually to certified entities and California product manufacturers. Up to $150 per ton, as determined by CalRecycle, may be paid to certified entities (i.e., reclaimers) for washing and producing flake, pellet, or other forms usable for a product manufacturer from empty plastic beverage containers collected in the state for recycling and product manufacturers using plastic material from the certified entity to manufacture a plastic product in the state. Certified entities and product manufacturers must each submit a PMDP Claim Form to CalRecycle for each calendar quarter in which the payment is being claimed. The reporting submitted under the PMDP Program provides CalRecycle with comprehensive information regarding the amount, type, and end use of plastic processed by reclaimers. In 2017, reclaimers reported 16,967 tons of polyethylene terephthalate (PET) and 2,590 tons of high-density polyethylene (HDPE).

The reporting requirement in this bill seems duplicative of the extensive reporting requirements reclaimers are already subject to under AB 901 and the PMDP Program.

1. Defining “bottle-grade” for purposes of reporting. “Bottle-grade” is not a term currently used in statute, and this bill provides a definition of that term. However, some argue that the definition of “bottle-grade,” as proposed by this bill, only captures a portion of the available universe of plastic that can be used in the manufacture of beverage containers and is not a true representation of what is actually available. There is no one standard because different beverage manufacturers use different specifications in the manufacturing of their plastic bottles. By defining the term more narrowly than what is actually available and used in practice, the definition, it is argued, excludes portions of available recycled plastic that is generated by in-state reclaimers. If only a fraction of the available plastic is being reported to CalRecycle, how does that inaccurate amount affect CalRecycle’s evaluation of the availability of plastic for purposes of waiving or reducing the minimum content standards, allowing a corrective action plan, or issuing, waiving, or reducing a penalty for noncompliance?
   
2. Availability of plastic is not limited to California. California-based reclaimers process recycled plastic beverage containers collected through the state’s Bottle Bill [a few also accept clamshells (i.e., berry containers)] into recycled pellet or flake for the manufacture of new plastic products. Because these containers held food (including beverages), as defined by federal regulation, the recycled material is suitable for use in food packaging. Demand in California has been primarily for clamshells rather than bottles, because most beverage containers contain little, if any, recycled content. Some material is sold outside of California for other purposes, depending on demand. The supply of recycled content material is not limited to California reclaimers. Other states, particularly those with Bottle Bill laws, are also producing food grade recycled plastic. Like virgin plastic, recycled content plastic is internationally traded.
   

The bill requires CalRecycle, when determining whether to adjust the minimum recycled content requirement, to consider certain factors including the availability of recycled plastic and changes in market conditions, including supply and demand for postconsumer recycled plastics. However, the language is silent on what data CalRecyle is to use. It seems that the purpose of the reclaimers reporting requirement is to aid CalRecycle in making this determination. However, as discussed above, the amount of reported recycled material available may not accurately reflect true supply amounts and, moreover, recycled material available from California reclaimers is not a true indicator of the availability of recycled plastic on the global market.

The committee may wish to amend the bill to require CalRecycle to consider supply and demand for postconsumer recycled plastics, collection rates, and bale availability both domestically and globally and to consider California’s and other beverage container recycling programs when considering the availability of suitable recycled plastic.

Related/Prior Legislation

AB 792 (Ting) is very similar to this bill. AB 792 was vetoed by the Governor due to cost concerns and the burden waiver petitions allowed under the bill would put on the state.

SB 168 (Wieckowski, 2018) would have required CalRecycle to adopt minimum recycled content standards for plastic beverage containers. SB 168 did not receive enough votes to get off of the Assembly Floor.

SOURCE:

Authors

SUPPORT:

5 Gyres Institute
7th Generation Advisors
American Beverage Association
California Chapters of The Solid Waste Association of North America's Legislative Task Force
California League of Conservation Voters
Californians Against Waste
Center for Oceanic Awareness, Research, & Education
City and County of San Francisco
Container Recycling Institute
Defenders of Wildlife
Heal the Bay
Monterey Bay Aquarium
Natural Resources Defense Council
Nature Conservancy
Nestle Waters North America, INC.
Northern California Recycling Association
One Earth Recycling
Plastic Oceans International
Plastic Pollution Coalition

Plastic Recycling Corporation of America
Recology
RecycleSmart
Republic Services INC.
RethinkWaste
San Francisco Department of The Environment
Save Our Shores
Seventh Generation Advisors
Sierra Club California
StopWaste
Surfrider Foundation
The Story of Stuff Project
Tomra North America, INC.
UPSTREAM
Wishtoyo Chumash Foundation
Zero Waste USA

OPPOSITION:

None received

-- END --

Date of Hearing: April 29, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 793 (

Author:Ting) – As Amended Ver:April 1, 2019

SUBJECT: Solid waste: biomass

SUMMARY: Defines “biomass” for purposes of the Integrated Waste Management Act (Act) and makes related changes to the definition of “biomass conversion.”

EXISTING LAW:

1. Pursuant to the Act:
   1. Defines “biomass conversion” as the production of heat, fuels, or electricity by the controlled combustion of, or the use of other noncombustion thermal conversion technologies on, the following materials, when separated from other solid waste:
      
      1. Agricultural crop residues.
         
      2. Bark, lawn, yard, and garden clippings.
         
      3. Leaves, silvicultural residue, and tree and brush pruning.
         
      4. Wood, wood chips, and wood waste.
         
      5. Nonrecyclable pulp or nonrecyclable paper materials.
         
   2. Specifies that “biomass conversion” does not include the controlled combustion of recyclable pulp or recyclable paper materials, or materials that contain sewage sludge, industrial sludge, medical waste, hazardous waste, or either high-level or low-level radioactive waste.
      
   3. Establishes a state recycling goal of 75% of solid waste generated be diverted from landfill disposal by 2020 through source reduction, recycling, and composting.
      
   4. Requires generators of specified amounts of organic waste (i.e., food waste and yard waste) to arrange for recycling services for that material.
   5. Establishes methane emission reduction goals that include targets to reduce the landfill disposal of organic waste 50% by 2020 and 75% by 2025 from the 2014 level. Requires the Department of Resources Recycling and Recovery (CalRecycle), in consultation with the Air Resources Board (ARB), to adopt regulations to achieve the organics reduction targets, which go into effect in 2022.
2. Requires ARB to approve and implement the comprehensive short-lived climate pollutant (SLCP) strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in hydrofluorocarbon gases (HFCs), and a 50% reduction in anthropogenic black carbon, by 2030.

FISCAL EFFECT: Nonfiscal

COMMENTS: CalRecycle is tasked with diverting at least 75% of solid waste statewide by 2020. Organic materials make up over half of the waste stream (54.8%); food continues to be the greatest single item disposed, comprising approximately 18% of materials landfilled. Leaves, grass, prunings, and trimmings represent just under 7% of the total waste stream.

Local governments are required to submit Source Reduction and Recycling Elements and comprehensive annual reports to CalRecycle to identify the programs and plans to ensure they meet the state's 50% diversion requirement for local jurisdictions and to assist CalRecycle in meeting the state's 75% diversion goal. Pursuant to AB 341 (Chesbro), Chapter 476, Statutes of 2011, generators are required to arrange for recycling services and requires local governments to implement commercial solid waste recycling programs designed to divert solid waste from businesses. AB 1826 (Chesbro), Chapter 727, Statutes of 2014, requires generators of specified amounts of organic waste (i.e., food waste and yard waste) to arrange for recycling services for that material.

Organic waste is primarily recycled using anaerobic digestion or composting. Anaerobic digestion is the controlled breakdown of organic matter without air, used to manage waste and/or to release energy. It is a biological process that produces an energy-rich biogas, which is used as a fuel. This technology has been used in the United States for decades in wastewater treatment facilities and dairy manure digesters. It is increasingly being used to manage the state's organic waste stream, including food waste, to generate clean energy. Digestate, the material left over at the end of the process, is similar to compost and can be composted with other material or used alone as a soil amendment. Composting is the aerobic controlled decomposition of organic material, such as leaves, twigs, grass clippings, and food scraps to produce compost, which can be used as a soil amendment and for slope stabilization.

Woody waste, such as the material removed in forest thinning projects, can be processed into mulch, which is used to control weeds or erosion, retain moisture in soil, and insulate soil from cold weather. Other materials commonly used for mulch include wood chips, ground up landscape trimmings, shredded bark, coarse compost material, straw, and shredded paper.

Compost and similar soil amendments have been shown to provide numerous benefits, including preserving topsoil and preventing erosion, increasing the water retention capacity of soil, reducing and improving the water quality of stormwater runoff, increasing the number of beneficial microorganisms, providing stable, slow-release nutrients, and enhancing soil carbon sequestration. Compost used in natural environments should meet the United States Environmental Protection Agency's requirements of a "process to further reduce pathogens." This process requires that the compost meet specific time and temperature requirements to destroy pathogens that may be present in the organic material prior to composting.

The Act currently defines “biomass conversion,” but lacks a definition of “biomass.” This creates some confusion and lack of clarity as the Legislature, state entities, and local governments work to establish and implement organic waste management policies and reduce short-lived climate pollutants. This bill specifies the definition of biomass and updates the definition of biomass conversion for purposes of the Act.

REGISTERED SUPPORT / OPPOSITION:

Support

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Opposition

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