Analysis of the 2007-08 Budget Bill: Resources

California Integrated Waste Management Board (3910)

The California Integrated Waste Management Board (CIWMB), in conjunction with local agencies, is responsible for promoting waste management practices aimed at reducing the amount of waste that is disposed in landfills. The CIWMB administers various programs that promote waste reduction and recycling, with particular programs for tires, used oil, and electronics. The board also regulates landfills through a permitting, inspection, and enforcement program that is mainly enforced by local enforcement agencies that are certified by the board. In addition, CIWMB oversees the cleanup of abandoned solid waste sites.

The budget proposes expenditures of $199.1 million from various funds (primarily special funds) for support of CIWMB, which is essentially the same amount as estimated expenditures in 2006-07.

Waste Tire Diversion Rates Need Improvement

The California Integrated Waste Management Board administers the waste tire recycling management program to reduce the landfill disposal and stockpiling of whole tires. Even though 10.2 million (25 percent) of waste tires annually generated in the state are not diverted to productive end uses, the budget does not propose any program changes to address this issue. We recommend the adoption of supplemental report language to require the board to report on options, and related statutory changes, that it would recommend to increase the diversion rate.

Waste Tire Recycling Management Program Created in 1990. The CIWMB administers the state’s Waste Tire Recycling Management Program. The program was statutorily created in 1990 to reduce the landfill disposal and stockpiling of whole tires through the establishment of a statewide tire recycling program. The CIWMB administers the program to encourage the diversion of waste tires from the state’s landfills through a number of activities, including:

• Conducting/funding research into new technologies that increase the useful lifespan of tires.

• Conducting/funding research into waste tire product development and applications.

• Assessing market demand for waste tire products.

• Undertaking, on its own and in conjunction with state and local public agencies, waste tire demonstration projects.

• Providing marketing, grants, and technical assistance to business and to state and local public end users of waste-tire products.

• Developing waste tire engineering curriculum for use at universities and in continuing education for professionals.

Waste Tire Diversion Up. In 1990, at the program’s inception, the state diverted 34 percent of waste tires from landfills to other productive end uses. As of 2005 (the last year for which data are available), the rate of waste tire diversion was 75 percent, or 30.6 million tires diverted out of 40.8 million tires generated.

Waste tires are diverted for a number of productive end uses, such as crumb rubber—wire-free tire shreds of varying sizes—and rubberized asphalt concrete (RAC)—paving material that is a blend of crumb rubber, asphalt, and other materials. Figure 1 shows the various productive end uses of waste tires in California.

Waste Tire Piles Down. At the program’s inception, there were many large, preexisting piles of illegally stored waste tires throughout the state. The board reports that between 1994 and 2002, it identified 894 illegal tire sites that collectively held 6.1 million waste tires.

Through the board’s enforcement efforts, it has been able to bring about the cleanup and/or proper storage of waste tires at nearly all of the 894 illegal tire sites, including the Tracy and Westley tire piles—sites of large, long-burning tire fires that occurred in the late 1990s. In recent years, the board has contracted with the California Highway Patrol for use of its helicopters to identify remote tire piles. Nonetheless, the board newly identifies fewer large, illegal tire piles every year.

Believing it has largely resolved the problem of existing piles of illegally stored tires, the board now focuses its enforcement efforts on preventing the reappearance of such tire piles. Currently, the board’s primary enforcement activities include permitting and inspection of storage facilities and tracking the transport of waste tires. The board’s enforcement efforts are carried out by its own staff, as well as by local government agencies that receive enforcement grants from the board.

Tire Fee Structure Has Varied Over Time. The waste tire recycling program is supported entirely by fees. The amount of the fee, as well as its point of collection, has varied over time. Currently, the fee is $1.75 per tire, collected when the tire is purchased. Of that amount, 75 cents is deposited in the Air Pollution Control Fund (APCF) to fund local air district programs to mitigate or remediate air pollution caused by tires, including waste tire pile fires. The balance of the fee—$1.00—is deposited into the California Tire Recycling Management Fund (CTRMF) to fund CIWMB’s waste tire activities.

Legislature Retains Higher Fee. The CIWMB’s portion of the fee was statutorily set to decrease from $1.00 to 75 cents on December 31, 2006. However, at hearings on the 2006-07 budget, the Legislature revised statute so that CIWMB’s portion of the fee remains at $1.00. In retaining the higher fee, the Legislature recognized an opportunity for the board to expand efforts to divert the roughly 10.2 million waste tires disposed of in California landfills each year. However, the Legislature did not give specific direction regarding which board activities to increase waste tire diversion it wanted CIWMB to expand.

Legislature Has Given Direction on Use of Tire Fee Funds. In recent years, the Legislature has provided specific direction to the board as to the use of the tire fee revenues to promote the diversion of waste tires from landfills. Such direction includes:

• The RAC Grant Program for Local Public Works (Chapter 671, Statutes of 2002 [SB 1436, Kuehl]). Authorized CIWMB to implement a program to award grants to local government entities for funding of public works projects that use RAC. The measure specified the size of eligible projects and the amount and proportion of crumb rubber that a project would need to use to be eligible for the grants, as well as the permissible amounts of the grants (between $6,250 and $50,000). The RAC grant program was to expire January 1, 2007. However, subsequent legislation (Chapter 300, Statutes of 2006 [SB 1346, Simitian]) extended the program to January 1, 2011, revised eligibility requirements to include greater minimum usage of RAC, and increased the maximum grant amount to $250,000.

• Replacement Tire Efficiency Program (Chapter 645, Statutes of 2003 [AB 844, Nation]). Requires the California Energy Commission (CEC), in consultation with CIWMB, to adopt by July 1, 2007, and implement by July 1, 2008, efficiency standards for replacement tires based on CEC testing. The CIWMB funded the first phase of the program with $400,000 from the CTRMF. The CEC proposes to fund continued development of the efficiency standards with $500,000 from the Energy Resources Program Account as part of the 2007-08 budget.

• Use of Crumb Rubber in California Department of Transportation (Caltrans) Paving Projects (Chapter 709, Statutes of 2005 [AB 338, Levine]). Required CIWMB and Caltrans to jointly develop procedures for using crumb rubber and other tire-derived products in Caltrans projects. The statute also requires Caltrans to use, between 2007 and 2013, asphalt paving materials that contain increasing amounts of crumb rubber, given periodic demonstration of the material’s relative cost effectiveness.

Budget Proposal. The budget proposes a total of about $39.3 million from CTRMF for the board’s waste tire recycling program in 2007-08—roughly the same as estimated expenditures in the current year. The $39.3 million is proposed largely for market development and research, permitting, enforcement, clean up, and remediation.

Persistently Large Waste Tire Fee Fund Balance. The CTRMF, which funds the board’s waste tire management activities, has carried a persistently large balance for several years, as shown in Figure 2. (The fund balance does not reflect a roughly $17 million loan made from CTRMF to the General Fund in 2003-04, which has yet to be paid back.)

Although the fund balances have built up to substantial levels, the board’s program expenditures have remained relatively stable over the last several years. The 2007-08 budget proposal for the tire program does not reflect any significant program changes or initiatives. Absent such program enhancements and initiatives, it is likely that the fund balance would stay at relatively high levels in the future.

Options to Increase Tire Diversion and Address High Fund Balance. While CIWMB currently undertakes a variety of efforts to encourage the diversion of waste tires from landfills to productive end uses, the amount and proportion of waste tires that are not diverted from landfills is still large (10.2 million, or about 25 percent of waste tires generated annually). The waste tire program appears to be in a “holding pattern.” As Figure 3 shows, despite large initial gains in waste tire diversion, in recent years, both the diversion rate and the number of waste tires deposited into the state’s landfills each year have remained relatively constant.

We believe that the large fund balance presents the board with the opportunity to increase the waste tire diversion rate. In recent years, the Legislature has taken the lead by giving statutory direction on the use of the tire fund in an effort to increase the diversion rate.

We think that there are opportunities to draw down the CTRMF balance by enhancing program activities and thereby increase the diversion rate. For example, the board could increase expenditures on its activities designed to encourage the productive end use of waste tires, such as:

• Research Efforts and Demonstration Projects. Continue to fund CEC’s research into replacement tire efficiency, or expand its testing and certification of new tire-derived products. Similarly, CIWMB could expand its sponsorship of demonstration projects that use tire-derived materials for civil engineering projects.
• Marketing and Outreach. Continue and expand efforts to communicate to end users the viability and long-term cost effectiveness of tire-derived products and to provide technical assistance to them.

Recommend CIWMB Report on Options to Increase Waste Tire Diversion Rates. We think that the board is best positioned to identify those additional efforts most likely to increase the number of waste tires diverted from the state’s landfills, as well as to advise the Legislature of the policy choices that may be inherent in such efforts warranting legislative evaluation. Therefore, we recommend the adoption of the following supplemental report language:

Item 3910-001-0226. The California Integrated Waste Management Board shall submit a report to the Legislature by July 10, 2008, that identifies the following:

• A history of revenues, expenditures, and balances of the California Tire Recycling Management Fund since its inception, and projection of such information for 2008-09 and the subsequent two fiscal years.
• A history of waste tire diversion rates and end uses, and projection of such rates and uses for 2007 and the subsequent three years.
• Identification and assessment of the costs and effectiveness of options to increase the rate of diversion of waste tires from disposal in landfills.
• Any statutory changes that would assist the board’s efforts to increase the diversion rate.

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