BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          AB 341 (Chesbro)
          
          Hearing Date: 08/25/2011        Amended: 07/07/2011
          Consultant: Brendan McCarthy    Policy Vote: EQ 6-1
          _________________________________________________________________
          ____
          BILL SUMMARY: AB 341 requires the Department of Resources 
          Recycling and Recovery to increase the diversion of solid waste 
          from the currently required level of 50 percent to 75 percent by 
          2020. The bill requires certain businesses to arrange for 
          recycling services and requires local governments to implement a 
          commercial recycling program. The bill also makes a number of 
          technical and procedural changes to the laws governing solid 
          waste facility regulation.  
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           
          Cost to implement      Absorbable within existing 
          resourcesSpecial *
             commercial recycling

          Cost to further increase          Unknown costs, potentially in 
          the millions           Special *  
             the diversion rate to 75%         per year

          Reduced fee revenues   Up to $20,000 per year by 2020   Special 
          *

          * Integrated Waste Management Account.
          _________________________________________________________________
          ____

          STAFF COMMENTS: SUSPENSE FILE. 

          Under current law, local governments are required divert 50 
          percent of solid waste through source reduction, recycling, and 
          composting. The Department of Resources Recycling and Recovery 
          is required to determine whether local governments are in 
          compliance with this requirement. Local governments that are not 
          in compliance or are not making a good faith effort to come into 








          AB 341 (Chesbro)
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          compliance are subject to fines.
           
          Current law authorizes the Department to designate local 
          enforcement agencies to permit solid waste facilities and 
          enforce permit or other requirements. Current law requires local 
          governments to adopt and submit non-disposal facility elements 
          to the Department. These non-disposal facility elements must 
          include a description of new facilities and expansions of 
          existing facilities and all solid waste facility expansions that 
          recover for reuse more than five percent of total disposed 
          volume.

          AB 341 requires local governments to update existing 
          non-disposal facility elements as conditions change and provide 
          that information to the Department.

          The bill requires the Department to "ensure" that 75 percent of 
          generated solid waste is diverted through source reduction, 
          recycling, or composting. The bill prohibits the Department from 
          imposing any enforceable requirements on cities or counties. 

          The bill requires businesses that contract for solid waste 
          disposal and generate more than four cubic yards of solid waste 
          and recyclable materials per week or is a multifamily 
          residential dwelling of five or more units to arrange for 
          recycling services. Such businesses are required to either 
          separate recyclable materials from solid waste and arrange for 
          their collection, or to contract with a recycling service that 
          provides mixed waste processing services. The bill requires 
          local governments to implement a commercial recycling program, 
          unless a jurisdiction already has established such a program. 
          The Department is required to review such local commercial 
          recycling programs. 

          Staff notes that under authority granted pursuant to AB 32 
          (Nunez, Chapter 488, Statutes of 2006), the Air Resources Board 
          is administratively considering commercial recycling 
          requirements. The Air Resources Board is expected to vote on the 
          proposed regulation in October of this year. The Department 
          would then implement the regulation.

          The bill also makes a variety of technical changes to the code 
          sections governing solid waste.









          AB 341 (Chesbro)
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          According to the Department, the cost to oversee commercial 
          recycling requirements can be accommodated within existing 
          resources.

          Because the bill requires the Department to "ensure" that the 
          statewide diversion rate increases to 75 percent, while 
          prohibiting the Department from imposing requirements on local 
          governments, the bill will likely create substantial cost 
          pressure on the Department. The current statewide diversion rate 
          is 65 percent. (However, this diversion rate partially reflects 
          reduced disposal in landfills due to reduced economic activity 
          caused by the economic downturn. As the economy recovers, waste 
          generation and disposal rates will likely increase and hence the 
          diversion rate is expected to drop closer to 60 percent.) 
          Requiring commercial recycling should increase the diversion 
          rate, probably to between 65 and 70 percent. Further increasing 
          the diversion rate to 75 percent will likely require the 
          Department to create incentives for local governments, 
          businesses, or individuals to encourage additional source 
          reduction, recycling, or composting. Alternatively, the 
          Department may adopt regulations directly on such entities to 
          require additional source reduction or recycling. The bill does 
          not include specific actions required by the Department to 
          achieve the increased diversion rate. The costs for the 
          Department to achieve the increased diversion rate are unknown, 
          but could be substantial, particularly if the Department elects 
          to use grant programs to incentivize additional diversion.

          The Department collects a "tipping fee" of $1.40 per ton of 
          solid waste disposed of in the state. This fee is capped in 
          statute. Staff estimates that increasing diversion rates from 
          the about 60 percent (see above) to 75 percent, as required in 
          the bill, will reduce tipping fee revenues by about $20 million 
          per year by 2020. Staff also notes that the Integrated Waste 
          Management Account has a structural deficit of about $8 million 
          in the budget year and a projected year end fund balance of only 
          $6.2 million.

          While the bill imposes state mandates on local governments, 
          those mandates are not reimbursable because local governments 
          are authorized to levy fees to pay for the costs required under 
          the bill.










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          SB 1020 (Padilla, 2007) would have required the Integrated Waste 
          Management Board to develop a plan to achieve a 75 percent 
          diversion rate by 2020. That bill was held in the Assembly 
          Appropriations Committee.

          SB 25 (Padilla, 2010) would have increased the required 
          diversion rate to 60 percent by 2015 and also generally required 
          businesses to contract for recycling services. That bill was 
          held in the Assembly Natural Resources Committee.
          
          AB 479 (Chesbro, 2009) was substantially similar to this bill. 
          AB 479 was held on this committee's suspense file.

          AB 737 (Chesbro, 2009) would have implemented a commercial 
          recycling program and required the Department to report to the 
          Legislature on potential strategies to achieve a 75 percent 
          diversion rate. That bill was vetoed by Governor Schwarzenegger.

          AB 818 (Blumenfield) requires owners of multifamily residential 
          buildings to provide recycling services. That bill is in the 
          Assembly and pending concurrence in Senate amendments.