California Department of Resources Recycling and Recovery (CalRecycle) 

ListServ Archive Message: Extended Producer Responsibility

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Subject:    CalRecycle 2014-15 Budget Change Proposals (January 13, 2014)
Date Sent:    January 13, 2014
From:    EPR@calrecycle.ca.gov
Message:   

The Governor’s Budget for 2014-15 has been released and, in an effort to provide our stakeholders and other interested parties with important information on the Administration’s 2014-15 budget and budget change proposals (BCP), CalRecycle is providing you with a summary of the proposals now under consideration by the Legislature. These proposals will be heard in legislative budget subcommittees over the next several months.
Please visit CalRecycle’s web site at http://www.calrecycle.ca.gov/Temp/201415BCPs/ to download PDF versions of the full BCPs. Please direct any questions on these proposals, or the legislative budget process, to CalRecycle’s Legislative and External Affairs Office at (916) 341-6283.

(NOTE: Because this notification has been sent to all department email lists, stakeholders subscribed to more than one list may receive multiple copies of this message.)

Beverage Container Recycling Program Reform Phase II: Sustainably Reducing the Structural Operating Deficit
The Beverage Container Recycling Program is one of the state’s most successful recycling and environmental protection efforts. The state’s recycling rate currently exceeds 82 percent. However, because of the state’s high recycling rate and mandated program payments, expenditures from the Beverage Container Recycling Fund exceed revenues by approximately $100 million.

The budget proposes several programmatic changes necessary to ensure the fiscal integrity of the program, while continuing efforts to increase the state’s recycling rate. These program reforms, as well as those implemented through budget actions last year, were developed through a stakeholder process aimed at addressing the structural imbalance and better aligning financial incentives to encourage recycling. Specifically, the Budget proposes the following reforms:

  • Three-year phase-out of processing fee subsidies. Currently, the program subsidizes glass and plastic manufacturers by offsetting a portion of the cost to recycle containers. Offset payments that subsidize manufacturer costs will be reduced by $26.3 million in 2014-15, $26.3 million in 2015-16, and by $14.4 million in 2016-17 to reflect the full elimination. Under this proposal, manufacturers will ultimately bear the full cost of recycling. A three-year phase out will provide the industry with time to adjust to these reductions.
  • Eliminate fee payments. Administrative fees paid to processors and recyclers will be eliminated, while also relieving their administrative burden by requiring and facilitating electronic filing. Projected savings are $13 million in 2014-15, with ongoing savings of $26 million beginning in 2015-16.
  • Redirect existing funds to support local recycling and deter fraud. Existing payments to cities and counties do not provide incentives to increase recycling. Eliminating existing city and county payments, and redirecting funds to increase a competitive grant program by $3.5 million and establish a $7 million Recycling Enforcement competitive grant program will better support local recycling compliance and enforcement efforts.
  • Diversify funding for local conservation corps. Reducing $15 million of existing BCRF grant funding to local conservation corps, and redirecting a like amount of other special funds to support local corps recycling programs. New funding for local corps will be provided by the Tire Recycling Management Fund ($5 million), the Electronic Waste Recovery and Recycling Account ($8 million), and the Used Oil Recycling Fund ($2 million). The BCRF would provide $6 million in grants.

Initial Transition for Support of DORIIS from Contractors to State Staffing
The CalRecycle Division of Recycling Integrated Information System (DORIIS) is the primary automated system used within the CalRecycle Beverage Container Recycling Program. The DORIIS system was completed in July 2010 at a cost of approximately $21 million. CalRecycle has a contract in place through December 2015 at an annual cost of about $1.3 million for the ongoing maintenance and development of DORIIS. There are six consulting staff directly associated with DORIIS support, with additional contracted staff engaged as needed to perform specific technical functions. This proposal requests two limited term positions and $258,000 to begin the transition from contractor staff to state staff supporting DORIIS, to provide an adequate complement of state staff in conjunction with reduced contractor staffing to provide support comparable to current contracted levels. The two limited term positions are contingent upon approval of a Maintenance and Operations Transition Plan by the Department of Technology in accordance with the State Administrative Manual Section 4946. A supplemental request during the 2015-16 budget development process may be submitted depending upon the scope of the transition plan and projected need for vendor support. This proposal, when fully implemented, will result in annual savings of approximately $250,000.

Increase Beverage Container Recycling Revenue Through Increased Audit Coverage
The department requests five three-year limited term auditor positions and $566,000 from the Beverage Container Recycling Fund. These positions and funding are needed to increase audit coverage of Beverage Manufacturers and Distributors (BMD) to better protect the integrity of the Beverage Container Recycling Fund (Fund). The emphasis will be on identifying potential revenues owed to CalRecycle and mitigating the risk to the fund. With approximately 3,182 registered BMD entities selling over 20 billion beverage containers in California and only 13 positions to conduct BMD audits, the State is at risk of not receiving an estimated $1.88 million in moneys owed to the fund per fiscal year. Thus, maintaining insufficient resources to audit BMD entities posing a risk to the fund also contributes to the annual operating deficit that exceeds $100 million.

Electronic Waste Recycling Fraud Investigations and Business Practice Assessment
The Department of Resources Recycling and Recovery (CalRecycle) is requesting additional authority to contract with other regulatory departments to enhance programmatic and fiscal integrity of the Covered Electronic Waste Recycling Program. Specifically CalRecycle is requesting $500,000 to establish an IAA with the California Department of Food and Agriculture, Division of Measurement Standards (CDFA) to fund auditors and field inspectors to assess operational conformance with applicable recordkeeping requirements and ensure compliance with Weighmaster rules. CDFA is in agreement with this request and will not require additional reimbursement authority to implement this proposal.

Provisional Budget Language Change for Two-Year Grant Appropriations
The department proposes provisional budget language authorizing the department to encumber grant funding over a two-year period for appropriations from the California Tire Recycling Management Fund. This provisional language provides flexibility in the encumbrance of grants and the payment of funds. This request does not include any additional fiscal resources.

Used Mattress Recovery and Recycling Program
The department requests six and one-half permanent positions and $595,000 annually in the Used Mattress Recycling Fund (UMRF) to implement the department’s responsibilities under the mattress stewardship law pursuant to Chapter 388, Statutes of 2013 (SB 254). In addition, loan authority for $1.6 million from the Integrated Waste Management Account to the UMRF is requested to provide adequate funding in the UMRF until the administrative fee authorized by SB 254 can be collected by CalRecycle on or before Fiscal Year 2016-17.

Rubberized Asphalt Concrete Market Development Act
The Rubberized Asphalt Concrete Market Development Act (AB 513, Frazier, Chapter 499, Statutes of 2013) requires CalRecycle to award grants for various projects that use rubberized asphalt concrete (RAC) and prescribes how to calculate the grant amount.
Because the act did not provide an additional appropriation, this proposal seeks to augment CalRecycle’s expenditure authority by $5.2million annually from the Tire Recycling Management Fund and 1.5 three-year limited term positions to manage the increased workload. This additional authority will enable CalRecycle to increase funding for RAC grants by spending down the existing tire fund balance without impacting other necessary tire-related programs already in place. Because the act stipulates that grants are awarded based on a reimbursement rate which is lower than the current methodology calculations, CalRecycle estimates the average grant award will decrease resulting in a greater number of grants awarded and an increased workload.

Greenhouse Gas Emission Reductions Through Recycling and Composting
The department requests $30 million in 2014-15 and $30 million in 2015-16 from the Greenhouse Gas Reduction Fund revenues to be used for (1) grants and loans for in-state development of infrastructure to process organic materials and recyclable commodities into new value-added products; (2) 7 limited-term positions for four years at an annual cost of $758,000to implement this program; (3) funding for an already authorized position that would be dedicated to environmental justice issues, at an annual cost of $59,000; and (4) trailer bill language (Public Resource Code 42990) authorizing the use of these funds for statewide grants and a revolving loan program.

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Note: In January 2010, the California Integrated Waste Management Board (CIWMB) became CalRecycle, and some web pages were moved, therefore you may encounter broken links in some of these archived messages. You may be able to find the page using this listing: http://www.calrecycle.ca.gov/Help/MergerMap.htm.

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