SACRAMENTO, Calif. (July 12, 2016) — The Tire Industry Association (TIA) and the Rubber Manufacturers Association (RMA) are opposing a California state bill that would perpetuate subsidy payments to end-users of scrap tire-derived products.
California Assembly Bill 1239 was introduced in February 2015. The bill authorizes the California Department of Resources Recovery and Recycling (CalRecycle) to continue awarding grants, subsidies, loans, rebates and pay incentives to recycled rubber end-users.
AB 1239 requires CalRecycle to adopt a five-year plan, to be updated every two years, that establishes goals and priorities for the waste tire program, according to an analysis of the bill by the California Senate Committee on Environmental Quality.
The bill requires CalRecycle to allocate at least $20 million annually for tire recycling incentives between July 1, 2018 and Jan. 1, 2024. After Jan. 1, 2024, CalRecycle will allocate funding to the incentive program based on available agency funds, the analysis said.
AB 1239 maintains the current $1.75 fee on every new tire sold in California, but also creates a new “California tire regulatory fee,” not to exceed $1 per new tire, to fund the costs incurred by CalRecycle for regulatory activities involving waste tires, according to the analysis.
The original $1.75 fee would be reduced to 75 cents per tire on Jan. 1, 2024, the analysis said.
California already has a surplus of more than $60 million in its scrap tire management program, and CalRecycle currently receives more than $30 million annually from the proceeds of the current scrap tire fee, TIA said in the July 11 issue of its Weekly Legislative Update.
“TIA believes that a primary goal of California's scrap tire program should be to phase out government payments to end-users or other market participants and move toward an economically sustainable, free market program for scrap tire end-use markets,” the association said.
TIA and the RMA proposed amendments to AB 1239, including:
- Clarifying that no new tire fee can be initiated until current surplus tire funds are substantially drawn down;
- Sunsetting the new tire fee on Jan. 1, 2024;
- Requiring that CalRecycle should collect and make public information from recipients of the incentive program, to show whether the tire-derived material was advantageous and cost-effective compared to non-subsidized materials; and
- Requiring CalRecycle to conduct an independent economic study to examine how to structure incentive payments to increase consumption in eligible markets.
The assembly considered only the sunset request, TIA said.
“We are unaware of any other state having such a substantial surplus in its scrap tire program funding or such a massive scrap tire management bureaucracy,” it said. “Unfortunately, handing out ever larger subsidies has proven to do little to advance environmentally, socially and economically sustainable scrap tire markets.”
TIA is asking its California dealer members to contact Sen. Ricardo Lara, State Capitol, Room 5050, Sacramento, Calif. 95814 in opposition to AB 1239.
AB 1239 passed the California Assembly by a 50-29 vote on June 2, 2015. It was approved by the Senate Committee on Environmental Quality on June 30, 2016, and referred to the Senate Appropriations Committee.