Date of Hearing: April 10, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 794

Author:(Ting) – As Introduced Ver:February 20, 2019

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

SUMMARY:

This bill requires CalRecycle to conduct a study on the changes to the international recycling market since January 1, 2018, and provide recommendations to the Legislature on how to foster more recycling of beverage containers in the state by January 1, 2021.

FISCAL EFFECT:

According to CalRecycle, the costs of this bill vary depending on the eventual scope of the report. A report based on internet research and policy recommendations would be minor and absorbable, while a more in-depth report requiring analysis of global markets and stakeholder engagement would require a contractor with a one-time cost up to $500,000 (special fund).

COMMENTS:

Background and Purpose. The United States 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, to increase inspections of imported bales of recyclables and return bales that did not meet requirements at the exporters' expense. In 2017, China established Operation National Sword, to include additional inspections and a filing with the World Trade Organization (WTO) 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.

The National Sword policy creates serious challenges for recyclers. However, 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 provides economic and environmental benefits.

Following China’s actions, other 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. Last month, India announced it will ban scrap plastic imports. Thailand announced a ban that will go into effect in 2021. These policies create serious challenges for recyclers.

This challenge 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 and to provide jobs and economic and environmental benefits.

According to the author:

Recent changes to the international recycling market have disrupted the export of recycled materials, and California needs strategies to adapt and recycle more materials here in the state instead of exporting these materials.

This bill requires CalRecycle to conduct a study on the changes to the international recycling market since January 1, 2018 and provide, by January 1, 2021, recommendations to the Legislature on how to foster more recycling of beverage container materials within the state.

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

Date of Hearing: March 25, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 794 (

Author:Ting) – As Introduced Ver:February 20, 2019

SUBJECT: Beverage container recycling: report to the Legislature

SUMMARY: Requires the Department of Resources Recycling and Recovery (CalRecycle) to conduct a study on the changes to the international recycling market since January 1, 2018 and provide, by January 1, 2021, recommendations to the Legislature on how to foster more recycling of beverage containers in the state.

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

1. Requires beverage containers sold in this state to have a California redemption value (CRV) of five cents for containers that hold fewer than 24 ounces and 10 cents for containers that hold 24 ounces or more and requires a distributor to pay a redemption payment to CalRecycle. Continuously appropriates these funds to CalRecycle for the payment of refund values and processing fees.
2. Defines a number of terms, including:
   
   1. "Beverage" to include 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.
      
   2. “Convenience zone” to mean either an area within a one-half mile radius of a supermarket, or an area designated by CalRecycle at a location where there is no supermarket but there are two or more dealers located within a one-mile radius of each other, and meets certain specified criteria.
      
3. Requires CalRecycle to:
   
   1. Establish reporting periods of six months each for redemption rates and recycling rates for beverage containers and requires them to determine and report the redemption rates and recycling rates for those beverage containers for each reporting period.
      
   2. Certify recycling centers and promulgate regulations establishing a procedure for certification of recycling centers. Specifies that these regulations shall include, as a condition for certification, that if one or more certified entities have operated at the same location within the past five years, the recycling center must demonstrate to CalRecycle that its operations exhibit a pattern of compliance with the Bottle Bill and its related regulations.
      
   3. Pay handling fees to supermarket sites, nonprofit convenience zone recyclers, or rural region recyclers to provide an incentive for the redemption of empty beverage containers in convenience zones, and adopt guidelines and methods specifying a procedure for the payment of these fees.
      
   4. After deducting refund values, administrative fees, and a reserve for contingencies, appropriate remaining monies to designated programs, grants, and fee payments.
      

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement:
   

Recent changes to the international recycling market have disrupted the export of recycled materials, and California needs strategies to adapt and recycle more materials her in the state instead of exporting these materials.

This bill requires CalRecycle to conduct a study on the changes to the international recycling market since January 1, 2018 and provide, by January 1, 2021, recommendations to the Legislature on how to foster more recycling of beverage container materials within the state.

1. Bottle Bill. The Bottle Bill was established in 1986 to be a self-funded program that encourages consumers to recycle beverage containers to prevent littering. The program accomplishes this goal by requiring consumers to pay a deposit for each eligible container purchased. Then the program guarantees consumers repayment of that deposit, the CRV, for each eligible container returned to a certified recycler. Statute includes two main goals for the program: (1) reducing litter; and, (2) achieving a recycling rate of 80% for eligible containers.

Over the last few years, various concerns about the program have been raised, such as the structural deficit, the effectiveness of some supplemental programs supported by the program, fraud, and whether some offsets support the goals of the program. Falling scrap values have created financial challenges for recyclers. Since 2013, nearly 1,000 recycling centers have closed, roughly 38% of the statewide total, leaving many Californians without redemption opportunities.

The Administration has attempted to collaborate with stakeholders on a comprehensive reform of the Bottle Bill that is intended to align with the state’s climate change goals and the state’s 75% solid waste reduction, recycling, and composting goal, as well as creating long-term fiscal sustainability. CalRecycle has proposed a policy framework for modernizing the program based on the following principles: a) Improving recycling and remanufacturing; b) Sharing responsibility; and, c) Enhancing adaptability and sustainability. However, CalRecycle has not sponsored legislation to accomplish these goals and several legislative policy and budget proposals have failed.

1. Eligible containers. Only certain beverage containers containing certain beverages are part of the CRV program. Most containers made from glass, plastic, aluminum, and bimetal (consisting of one or more metals) are eligible. Wine, spirits, milk, fruit juices over 46 ounces, vegetable juices over 16 ounces, and soy drinks are not eligible for CRV. Container types that are not included in the CRV program are cartons, pouches, and any container that holds 64 ounces or more.
2. Market challenges. 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 requires CalRecycle to make recommendations to the Legislature to address these challenges by recycling more beverage containers in-state.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

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