BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING


          AB  
          1108 (Low)


          As Amended  May 5, 2015


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes |Ayes                   |Noes              |
          |                |      |                       |                  |
          |                |      |                       |                  |
          |----------------+------+-----------------------+------------------|
          |Natural         |9-0   |Williams, Dahle,       |                  |
          |Resources       |      |Cristina Garcia,       |                  |
          |                |      |Hadley, Harper,        |                  |
          |                |      |McCarty, Rendon, Mark  |                  |
          |                |      |Stone, Wood            |                  |
          |                |      |                       |                  |
          |----------------+------+-----------------------+------------------|
          |Appropriations  |17-0  |Gomez, Bigelow, Bloom, |                  |
          |                |      |Bonta, Calderon,       |                  |
          |                |      |Chang, Daly, Eggman,   |                  |
          |                |      |Gallagher, Eduardo     |                  |
          |                |      |Garcia, Holden, Jones, |                  |
          |                |      |Quirk, Rendon, Wagner, |                  |
          |                |      |Weber, Wood            |                  |
          |                |      |                       |                  |
          |                |      |                       |                  |
           ------------------------------------------------------------------ 


          SUMMARY:  Prohibits certified recycling centers from paying the  
          California Refund Value (CRV) to a consumer for more than 50  








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          pounds of aluminum beverage containers or plastic beverage  
          containers, or 500 pounds of glass beverage containers during a  
          24-hour period.  


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


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


             a)   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. 
             b)   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. 


             c)   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.  








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


          3)Requires certified recycling centers to comply with the  
            requirements of the Bottle Bill and: 
             a)   Operate during specified business hours; 
             b)   Post signage that is at least two feet by two feet, which  
               includes the types of containers that can be redeemed and the  
               price paid by weight or per container; 


             c)   Notify CalRecycle of any material change in the nature of  
               the operation; 


             d)   Complete a precertification training program; 


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


             f)   Prepare and maintain specified documentation; and,


             g)   Comply with all regulations adopted by CalRecycle. 


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, unknown, annual costs savings, potentially in the  
          hundreds of thousands to of dollars, resulting from fraud  








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          deterrence (Beverage Recycling Fund).  


          COMMENTS:  The Bottle Bill is designed to provide consumers with a  
          financial incentive for recycling and to make recycling convenient  
          to consumers.  The centerpiece of the Bottle Bill is the CRV.   
          Consumers pay a deposit, the CRV, on each beverage container they  
          purchase.  Retailers collect the CRV from consumers when they buy  
          beverages.  The dealer retains a small percentage of the deposit  
          for administration and remits the remainder to the distributor,  
          who also retains a small portion for administration before  
          remitting the balance to CalRecycle.  When consumers return their  
          empty beverage containers to a recycler (or donate them to a  
          curbside or other program), the deposit is paid back as a refund.   



          In the summer of 2011, CalRecycle, in coordination with the  
          California Department of Food and Agriculture (CDFA), initiated a  
          "no-cost" pilot program to survey and document vehicles importing  
          out-of-state beverage container material into California through  
          all 16 CDFA Border Protection Stations.  During the first 60  
          calendar days of the pilot program, the information gathered  
          indicated that over 2,500 vehicles, including 378 rental trucks  
          filled to capacity, imported out-of-state beverage container  
          material through these stations.  Based on the survey data  
          referenced above, CalRecycle states that a conservative estimate  
          of fraud exposure to the Bottle Bill Fund is $7 million annually.


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








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          CalRecycle participated in a multi-state fraud investigation that  
          resulted in the arrest of 31 individuals for Bottle Bill fraud  
          rings that took in over $3.5 million.  


          CalRecycle has made administrative changes to combat fraud.  In  
          January, 2014, CalRecycle reduced the number of containers an  
          individual can bring to recycling centers for CRV in a single day  
          from 500 pounds of aluminum or plastic to 100 pounds, and from  
          2,500 pounds of glass to 1,000 pounds and required that anyone  
          transporting 25 pounds or more of aluminum beverage containers or  
          250 pounds of glass beverage containers into the state must pass  
          through a CDFA quarantine inspection station and obtain and carry  
          a proof of inspection


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




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



















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