BILL ANALYSIS

C.S.H.B. 4839

By: Walle

Environmental Regulation

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The 86th Texas Legislature passed legislation that required the Texas Commission on Environmental Quality (TCEQ), in cooperation with the Texas Economic Development and Tourism Office, to produce a plan to stimulate the use of recyclable materials as feedstock in processing and manufacturing. Following passage of that legislation, the TCEQ published a Recycling Market Development Plan in 2021. According to the plan, approximately 16 million tons of certain recyclable materials were disposed in Texas landfills in 2019 and that, based on applicable average commodity market values, $2 billion in materials went unrecycled in Texas in 2019.

The bill author has informed the committee that continuing to improve and invest in the state's recycling infrastructure can result in economic gains and reduce waste and that the state can continue to lead as new technologies are developed for other recyclable materials. C.S.H.B. 4839, drawing from recommendations in the TCEQ's plan, seeks to advance a free market approach toward creating a robust recycling infrastructure in Texas that incentivizes private market investment by setting out provisions relating to recycling innovation and market development that, among other things, provides for a recycling market development program.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the Texas Commission on Environmental Quality in SECTION 3 of this bill.

ANALYSIS

C.S.H.B. 4839 amends the Health and Safety Code to set out provisions relating to recycling innovation and market development and to revise certain existing provisions relating to stimulating the use of recyclable materials.

Recycling Innovation and Market Development

Recycling Market Development Program

C.S.H.B. 4839 requires the Texas Commission on Environmental Quality (TCEQ) to establish a recycling market development program to do the following:

· facilitate the realization of economic benefits to the state that may result from the expanded use of recycled material as feedstock in manufacturing and processing;

· promote the development of recycling infrastructure and technology in Texas; and

· make policy recommendations to the TCEQ.

The bill requires the program administrator to do the following:

· conduct research on the following:

o techniques to improve the recycling collection process and increase recycling rates in Texas;

o processes to improve the access of manufacturers in Texas to collected recyclable materials;

o the relationship between the supply of recyclable material and the demand for recycled material feedstock for manufacturing and end use; and

o potential improvements to technology currently used at recycling facilities in Texas;

· oversee and coordinate initiatives conducted by the TCEQ, the comptroller of public accounts, and other state agencies under the recycling market development implementation program;

· make recommendations to the TCEQ on potential financial incentives and policy changes to improve recycling infrastructure in Texas;

· identify and apply for federal funding opportunities related to recycling; and

· implement and manage financial incentives for the development of recycling infrastructure and technology in Texas, including by awarding grants or making loans under the bill's recycling innovation and market development provisions or by facilitating the application by eligible recipients for tax credits available under state or federal law.

Recycling Market Advisory Council

C.S.H.B. 4839 requires the TCEQ to appoint a recycling market advisory council to advise the program administrator on the implementation of provisions of the Solid Waste Disposal Act relating to the stimulation of the use of recyclable material and of the bill's provisions relating to recycling innovation and market development. The bill requires the TCEQ to appoint a person to the advisory council or fill a vacancy on the advisory council following review and recommendation of an applicant by the TCEQ executive director. The bill establishes that the advisory council is composed of the following 13 members:

· one representative from a regional council of governments;

· one representative from the paper and pulp industry in Texas;

· one representative from the organics recycling industry in Texas;

· one representative from the plastic manufacturing industry in Texas;

· one representative from the advanced recycling industry in Texas;

· one representative from the mechanical recycling industry in Texas;

· one representative from the materials recovery and sorting facilities industry in Texas;

· one representative from the aluminum industry in Texas;

· one representative from the glass industry in Texas;

· one representative from the alcoholic beverage or soft drink industry in Texas;

· one representative from the packaging supply or packaging conversion industry in Texas;

· one representative from the packaged retail goods industry in Texas; and

·  one representative from an environmental education or advocacy organization working on recycling.

The bill requires the executive director to designate the presiding officer of the advisory council. The bill establishes that a member of the advisory council serves a five-year term. The bill requires the advisory council to convene at the call of the presiding officer at least twice a year. The bill exempts the council from specified Government Code provisions relating to the duration of an advisory committee.

Texas Recycling Fund

C.S.H.B. 4839 establishes the Texas Recycling Fund as a dedicated account in the general revenue fund to be administered by the TCEQ executive director. The bill establishes that the fund consists of the following:

· money appropriated to the credit of the fund;

· principal and interest payments on all loans from the fund; and

· gifts, grants, or donations received for the fund.

Money in the fund may be used only as provided by the bill's provisions relating to recycling innovation and market development. The bill prohibits the TCEQ from doing the following:

· adopting or imposing a fee or penalty that is to be paid by a private entity and deposited to the credit of the fund;

· directing money collected by the TCEQ from a fee or penalty authorized by law or TCEQ rule to be deposited to the credit of the fund; or

· authorizing a private organization or entity to impose a fee or penalty that is to be paid by a private entity and deposited to the credit of the fund.

C.S.H.B. 4839 authorizes the TCEQ to use money in the fund as follows:

· for the administration of the recycling market development program;

· to award grants or provide loans to business entities operating in Texas that provide a public benefit to the state by encouraging economic development related to recycling projects, as provided by the bill's provisions regarding the recycling innovation grant program and recycling loan program;

· to award grants to a public institution of higher education in Texas to conduct research that provides a public benefit to the state by facilitating the development of recycling technology and infrastructure in Texas;

· to conduct recycling research pilot projects, including pilot projects conducted in partnership with other state agencies or business entities; or

· to support the implementation of the TCEQ's recycling education program that is intended for the public.

Recycling Innovation Grant Program

C.S.H.B. 4839 requires the TCEQ by rule to establish a recycling innovation grant program to allow the recycling market development program administrator to use money from the fund to make grants to entities that provide a public benefit to the state by doing the following:

· conducting research on or investing in new recycling technologies and processes in Texas;

· enhancing the availability of recycled material for use in manufacturing or packaging of products; or

· investing in technology that reduces recycling costs or increases recycling efficiency of recyclable material.

C.S.H.B. 4839 establishes that projects that may be considered for a grant include the following:

· expanding recycling and sorting infrastructure, including pilot projects;

· expanding or upgrading recycling equipment;

· promoting development and improving services in rural communities in Texas;

· addressing contamination of recyclable material;

· investing in processes or technology that make recycling more economically viable;

· offsetting an entity's documented operating costs for producing manufacturing feedstock from recycled material; or

· enhancing the marketability of recycled material.

The bill caps the amount of a grant at 50 percent of the amount of actual eligible costs incurred by the grant recipient within a time period prescribed by the TCEQ. The bill requires the program administrator to ensure the following in awarding a grant:

· the grant provides an applicable public benefit to the state;

· the TCEQ retains sufficient control over the grant to ensure the state receives a public benefit; and

· the grant complies with the bill's eligibility requirements and applicable rules.

Recycling Loan Program

C.S.H.B. 4839 requires the TCEQ by rule to establish a loan program to allow the recycling market development program administrator to use money from the fund to provide financial assistance to business entities for projects that provide a public benefit to the state by improving recycling outcomes in Texas. The bill requires the program administrator to ensure the following in making a loan:

· the loan provides a public benefit to the state by encouraging the development of recycling technology and infrastructure in Texas;

· the TCEQ retains sufficient control over the loan to ensure the state receives a public benefit; and

· the loan complies with the bill's eligibility requirements and applicable rules.

Eligibility Criteria and Requirements for Recycling Grants and Loans

C.S.H.B. 4839 requires the TCEQ by rule to establish eligibility criteria and requirements for a grant or loan made under the bill's recycling innovation and market development provisions. The eligibility criteria must require an entity receiving a grant or loan to:

· be in good standing under state laws;

· not owe delinquent taxes to a taxing unit of the state;

· have fully repaid any previous loan made under the bill's recycling loan program that is past the loan's maturity date;

· maintain sufficient financial assurance in accordance with TCEQ rules for a recycling facility;

· agree that the recipient may not use funds from an applicable grant or loan for financial assurance;

· demonstrate that a facility at which grant or loan funds may be used will comply with TCEQ requirements for the containment of odors or liquids; and

· demonstrate that the recipient holds any necessary facility permit or authorization under state or federal law by the time a grant or loan is made.

The requirements for a grant or loan must specify time limits for the storage and processing of material by a facility operated by an entity receiving a grant or loan. The bill restricts a recipient's use of a grant or loan made under the bill's recycling innovation and market development provisions to a recycling purpose approved under such provisions or TCEQ rule.

Rulemaking

C.S.H.B. 4839 requires the TCEQ to provide to the recycling market development program administrative support, staff, and facilities as necessary for the program to implement the bill's provisions relating to recycling innovation and market development. The bill requires the TCEQ to adopt rules as necessary to implement such provisions.

Stimulation of the Use of Recyclable Materials

C.S.H.B. 4839 changes from the TCEQ to the recycling market development program administrator the entity required to produce, in cooperation with the Texas Economic Development and Tourism Office, a plan regarding the stimulation of the use of recyclable materials as feedstock in processing and manufacturing. The bill changes the nature of the plan from a plan to stimulate such use to a plan with recommendations for such stimulation. The bill specifies that the plan be produced in consultation with the recycling market advisory council and that the production of the plan is for the TCEQ. The bill requires the plan to do the following, in addition to the plan requirements under current law:

· consider health effects related to recycled materials and recycling technologies;

· include a report on the progress and results of research conducted by the recycling market development program;

· include a report on the status of grants and loans provided through the program; and

· provide legislative and policy recommendations to the TCEQ regarding the purposes of the program.

The bill increases the frequency with which the plan is required to be updated from every four years to not later than December 1 of each even-numbered year. The bill requires the TCEQ's recycling education program that is intended for the public to include, as appropriate, educational materials developed under provisions relating to the TCEQ's public awareness program, the purpose of such program being the increase of awareness of individual responsibility for properly reducing and disposing of municipal solid waste and the encouragement of participation in waste source reduction, composting, reuse, and recycling.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 4839 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute includes a requirement absent from the introduced that the plan regarding the stimulation of the use of recyclable materials as feedstock in processing and manufacturing consider health effects related to recycled materials and recycling technologies.

Whereas the introduced included in the composition of the recycling market advisory council a representative from the State of Texas Alliance for Recycling, the substitute includes instead a representative from an environmental education or advocacy organization working on recycling.

The substitute includes a provision absent from the introduced prohibiting the TCEQ from doing the following:

· adopting or imposing a fee or penalty that is to be paid by a private entity and deposited to the credit of the Texas Recycling Fund;

· directing money collected by the TCEQ from a fee or penalty authorized by law or TCEQ rule to be deposited to the credit of the fund; or

· authorizing a private organization or entity to impose a fee or penalty that is to be paid by a private entity and deposited to the credit of the fund.

The substitute includes the following, which were not included in the introduced, as manners by which an entity may provide a public benefit to the state for purposes of a grant under the recycling innovation grant program:

· enhancing the availability of recycled material for use in manufacturing or packaging of products; and

· investing in technology that reduces recycling costs or increases recycling efficiency of recyclable material.

The substitute includes the following, which were not included in the introduced, as projects that may be considered for a grant:

· investing in processes or technology that make recycling more economically viable;

· offsetting an entity's documented operating costs for producing manufacturing feedstock from recycled material; and

· enhancing the marketability of recycled material.

The substitute includes provisions that were not in the introduced that do the following:

· cap the amount of a grant at 50 percent of the amount of actual eligible costs incurred by the grant recipient within a time period prescribed by the TCEQ; and

· require the recycling market development program administrator to ensure the following in awarding a grant:

o the grant provides an applicable public benefit to the state;

o the TCEQ retains sufficient control over the grant to ensure the state receives a public benefit; and

o the grant complies with applicable eligibility requirements and applicable rules.

While both the introduced and the substitute require the recycling market development program administrator, in making a loan under the recycling loan program, to ensure the TCEQ retains sufficient control over the loan to ensure the state receives a public benefit, the introduced and the substitute differ as follows:

· the introduced required the program administrator to ensure the public purpose of developing recycling technology and infrastructure in Texas is accomplished, whereas the substitute requires the program administrator to ensure the loan provides a public benefit to the state by encouraging the development of recycling technology and infrastructure in Texas; and

· the substitute also requires the program administrator to ensure the loan complies with applicable eligibility requirements and applicable rules, which the introduced did not require.

Whereas the introduced required the TCEQ by rule to establish the eligibility requirements for a business entity to receive a loan under the recycling loan program, the substitute requires the TCEQ by rule to establish eligibility criteria and requirements for a grant or loan made under the bill's recycling innovation and market development provisions. The substitute retains the introduced version's conditions of eligibility requiring that a loan recipient be in good standing under state laws, not owe delinquent taxes to a taxing unit of the state, and have fully repaid any previous recycling loan program loan, but the substitute also applies those conditions to grant recipients and specifies that the full loan repayment condition applies only with respect to a loan that is past its maturity date, whereas the introduced did not include this specification. The substitute includes provisions that were not in the introduced requiring eligibility criteria established by the TCEQ to require an entity receiving a grant or loan to do the following:

· maintain sufficient financial assurance in accordance with TCEQ rules for a recycling facility;

· agree that the recipient may not use funds from an applicable grant or loan for financial assurance;

· demonstrate that a facility at which grant or loan funds may be used will comply with TCEQ requirements for the containment of odors or liquids; and

· demonstrate that the recipient holds any necessary facility permit or authorization under state or federal law by the time a grant or loan is made.

The substitute includes a provision that was not in the introduced requiring the requirements for recycling grants and loans to specify time limits for the storage and processing of material by a facility operated by an entity receiving a grant or loan. Whereas the introduced authorized a recipient to use a loan only for expenses needed to develop recycling infrastructure and technology in Texas in a manner that serves a public purpose, the substitute authorizes a recipient to use a grant or loan only for a recycling purpose approved under the bill's recycling innovation and market development provisions or TCEQ rule.