Chapter 1
CALRECYCLE HAS NOT PROVIDED THE OVERSIGHT NECESSARY TO ENSURE THE SUCCESS OF THE MATTRESS PROGRAM
Chapter Summary
CalRecycle has not done enough to ensure the success of the mattress program. For example, CalRecycle has not set any goals for the mattress program related to increasing convenience for consumers, reducing illegal dumping of mattresses, and encouraging source reduction—important areas that are necessary to fulfill the intent of the recycling act. Further, instead of establishing state recycling goals that include all used mattresses eligible for recycling, CalRecycle set a recycling baseline and goals based on the activity of the Mattress Council’s contracted recyclers only. As a result, CalRecycle’s goals will lead it to measure and monitor only the mattress program’s performance and not the true statewide recycling activity. In addition, CalRecycle did not require the Mattress Council to address in its recycling plan key concerns about waste management, nor did it always obtain information that would have provided greater transparency regarding the mattress program’s budget. Finally, CalRecycle has provided inadequate oversight of retailer compliance with the recycling act. Despite finding many retailers in violation of the recycling act, CalRecycle has not yet levied any administrative penalties, even if the cases involved multiple violations. For the five cases we examined, CalRecycle failed to assess penalties with a combined maximum amount of about $2.8 million.
The Goals That CalRecycle Has Established for Mattress Recycling Will Make Evaluating the Mattress Program’s Success and the State’s Recycling Efforts Difficult
Although CalRecycle could have set mattress program goals related to increasing consumer convenience, reducing illegal dumping, and encouraging source reduction, it did not do so. Because CalRecycle did not establish goals in these areas, the Legislature and the public may not have the information necessary to determine whether the mattress program is achieving the outcomes the State intended. Further, CalRecycle has set goals for mattress recycling that are inadequate for fully evaluating the State’s success in meeting waste diversion goals. Citing the poor quality of the available data, CalRecycle set a recycling baseline and related goals that did not take into account all eligible discarded, renovated, or recycled mattresses throughout the State. Instead, it limited these goals to the activity of the Mattress Council’s contracted recyclers. As a result, when it assesses progress, CalRecycle’s goals will lead it to measure and monitor only the mattress program’s performance and not the true statewide recycling activity.
CalRecycle Has Not Yet Set Key Goals for the Mattress Program
In addition to requiring CalRecycle to establish mattress recycling goals, which we discuss in the next section, the recycling act also identifies several priorities that the mattress program should address, including ensuring convenience for consumers, reducing illegal dumping, and developing program objectives that are consistent with California’s waste management hierarchy, which prioritizes source reduction. Although the recycling act does not explicitly require CalRecycle to establish goals in these three areas, legislative findings and declarations from the recycling act indicate the importance they held for the Legislature when it enacted the recycling act. Therefore, measurable goals in these three areas would significantly enhance CalRecycle’s ability to determine whether the mattress program is meeting its legislative intent.
Nonetheless, CalRecycle has not yet set goals related to these areas. When setting the state mattress recycling goals, CalRecycle initially proposed a goal related to the mattress program’s convenience but removed it before approving the final goals. CalRecycle did not propose any goals for reducing illegal dumping or encouraging source reduction in its initial goal‑setting documents. In December 2017, when CalRecycle approved the state mattress recycling goals, it stated that as part of the 2020 baseline‑ and goal‑setting process, it will consider establishing additional recycling goals, including goals related to increasing program convenience, reducing illegal dumping, and encouraging source reduction. According to the supervisor of the EPR unit (EPR supervisor), CalRecycle has not yet set goals in these areas because of insufficient data. She indicated that if CalRecycle were to set goals without accurate and complete data, it could result in arbitrary goals that were not realistic or achievable and therefore would not improve the mattress program’s performance. However, by not developing goals in these areas, CalRecycle missed an opportunity to establish accountability for the mattress program achieving the legislative intent of the recycling act.
We believe that CalRecycle could have set goals in key program areas to create more accountability for the program. For example, our review of the available information suggests that CalRecycle could have created a goal related to the convenience of the mattress program. In its 2016 annual report, the Mattress Council shared data with CalRecycle regarding the locations of its collection sites and collection events. In combination with publicly available census data, this information about the geographical distribution of the mattress program’s collection sites and events is sufficient for CalRecycle to set convenience goals. Moreover, CalRecycle initially proposed a convenience goal related to the number of counties with no‑cost mattress collection sites before deciding to remove it from the goals it announced in December 2017, which indicates that CalRecycle believed at one point that establishing a goal related to convenience was important and that it had enough data to establish such a goal. CalRecycle’s assertion that it had insufficient data to set this goal is therefore unconvincing. We discuss our assessment of program convenience in Chapter 2.
In addition, we believe that CalRecycle could also have set goals related to the Mattress Council’s illegally dumped mattress initiative. In 2016 the Mattress Council implemented an initiative to compensate approved participants—such as local governments—for collecting illegally dumped mattresses. As part of this initiative, the Mattress Council collected data to measure the number of illegally dumped mattresses that these entities collected and to determine whether those recovered mattresses were recycled. In 2016 the Mattress Council spent almost $238,000 of the $750,000 it budgeted for the illegally dumped mattress initiative. Its annual report for 2016 states that 40 participants collected 23,794 illegally dumped mattresses from March through December 2016.
Although the number of participants in the initiative and the number of illegally dumped mattresses that they recover annually are two key indicators for knowing whether the program is having the desired effect of reducing illegal dumping of mattresses, CalRecycle did not establish goals related to these indicators when it published the state recycling goals in December 2017. The supervisor of CalRecycle’s Product Stewardship and Innovative Technology Section (EPR manager) indicated that he believed the data the Mattress Council collected on illegally dumped mattresses were underreported and that CalRecycle had insufficient data for setting a baseline and goals to reduce illegal dumping. He further noted that measuring a reduction in illegal dumping activity can be challenging because entities such as local governments are not required to report data on illegal dumping and because no direct connection exists between the number of illegally dumped mattresses collected and the number that are illegally dumped. Nevertheless, CalRecycle could have increased the accountability of the Mattress Council’s initiative by establishing goals for the number of participants and the number of illegally dumped mattresses that the participants collect. Goals in these areas could have demonstrated whether the mattress program was making progress towards achieving its legislative intent and could have shown stakeholders the extent to which the mattress program addressed illegal dumping.
Finally, CalRecycle could have set source reduction goals, despite its belief that it lacked adequate data. As the Introduction describes, California’s waste management hierarchy identifies source reduction—preventing waste from being generated in the first place—as the highest‑priority activity for waste management. The EPR supervisor indicated that forming a source reduction goal at the start of the mattress program would have been challenging because source reduction efforts—such as using less material to manufacture mattresses—can be difficult to quantify. She further explained that CalRecycle has historically found it challenging to establish metrics for source reduction. However, establishing a source reduction goal could have been as simple as CalRecycle requiring the Mattress Council to spend a specific amount of money on research to find new ways to manufacture mattresses. Additionally, according to the EPR supervisor, mattress renovation may be considered source reduction for the purpose of the mattress program. As Table 2 shows, CalRecycle set a goal for mattress renovation that stays flat over time. It established this particular goal because it believed that it had an incomplete understanding of the number of mattresses that were renovated and decided that the flat goal would provide a mechanism for monitoring whether the mattress program adversely affected renovation. However, CalRecycle could instead have set a goal for mattress renovation that would encourage an increase over time. By setting such goals, CalRecycle can help ensure that the mattress program advances source reduction activities—the highest priority in the State’s waste management hierarchy.
| 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|
| Renovation goal (number of units) | 150,000 | 150,000 | 150,000 | 150,000 | 150,000 |
| Recycling goals: | |||||
| Mattresses collected for recycling (number of units) | 955,000 | 1,242,000 | 1,428,000 | 1,557,000 | 1,697,000 |
| Percentage of materials recovered from recycled mattresses (by weight) | 64% | 66% | 69% | 72% | 75% |
Source: CalRecycle’s approved state mattress recycling baseline and goals.
The Mattress Council believes that CalRecycle lacks the authority to set program goals for increasing convenience, reducing illegal dumping, and encouraging source reduction. In a September 2017 letter commenting on CalRecycle’s proposed recycling goals, the Mattress Council president stated that CalRecycle cannot set goals in these areas because state law requires CalRecycle to establish recycling goals, rather than program goals. He expressed his belief that the Mattress Council is responsible for establishing program goals in its recycling plan. Based on this perspective, the Mattress Council’s president asked CalRecycle to remove the convenience goal from its proposed recycling goals, and he further wrote that CalRecycle should not add goals related to reducing illegal dumping and encouraging source reduction. However, when CalRecycle approved the original recycling goals in 2017, it stated that it intended to consider adding goals in these areas when it reexamines the recycling goals in 2020. This indicates that CalRecycle believed at one time that it had the authority to set these goals. In discussion with us during our audit, an attorney from CalRecycle stated that CalRecycle’s authority to set program goals is not explicit in statute and has been disputed. A clarification to state law that explicitly directs CalRecycle to develop program goals would help to resolve any further dispute about CalRecycle’s authority and ensure that it develops goals that are critical to helping the mattress program fulfill all of its purposes.
CalRecycle’s Goals for Mattress Recycling Do Not Reflect Statewide Measurements of Recycling Activity
To ensure that CalRecycle can evaluate the success of mattress recycling activity in California, the recycling act required CalRecycle to establish state mattress recycling goals by January 2018. The recycling act required that CalRecycle consult with the Mattress Council before setting these goals; that CalRecycle base the goals on the Mattress Council’s methodology for determining the number of mattresses available for collection and the number recycled statewide, as well as information from the Mattress Council’s first annual report; and that CalRecycle consider relevant economic and practical considerations. The recycling act also establishes that the mattress program shall strive for the maximum feasible level of used mattress recovery and recycling in support of the statewide goal that at least 75 percent of all solid waste be recycled by the year 2020.
Although the recycling act requires CalRecycle to set goals related to statewide mattress recycling activity, CalRecycle chose to establish more limited goals instead. As Table 2 shows, the state mattress recycling goals—effective January 2018—include a baseline, a mattress renovation goal, and two recycling goals, one of which is based on the number of mattress units collected for recycling and the other on the percentage of material recycled from mattresses by weight. However, these goals are specific to the mattresses collected and recycled by the Mattress Council’s contracted recyclers only. Therefore, they do not reflect statewide mattress waste management.
When it announced the state mattress recycling goals, CalRecycle explained that it did not set a true statewide recycling rate because of poor data. The recycling act requires all mattress recyclers, solid waste facilities, and renovators—not just entities affiliated with the mattress program—to report annually to CalRecycle the number of mattresses they recycled, renovated, and disposed of in California in the preceding calendar year. However, not all required reporters submitted data to CalRecycle in 2016. In a presentation of its proposed goals, CalRecycle included information about the number of entities it believed were potentially required to report and the number that actually did report. According to that presentation, CalRecycle believed that most of the required mattress recyclers—11 of 13—had reported data, but that a significant number of required renovators and solid waste facilities—50 of 56 and 177 of 509, respectively—had not reported. Because of what it believed were low reporting levels as well as other concerns about data quality, CalRecycle decided to set a recycling baseline and related goals based on the data of only the entities affiliated with the mattress program instead of on the data that all mattress recyclers, renovators, and solid waste facilities statewide had reported.
As a result of its program‑specific goals, CalRecycle set public expectations for the growth of the mattress program for a three‑year period but not the total statewide progress towards recycling mattresses. Specifically, in 2016 the recyclers the Mattress Council contracted with recycled about 64 percent of the material by weight of the mattresses they handled. However, using the available 2016 data from the Mattress Council’s annual report, we calculated that the Mattress Council’s recyclers only recycled, at most, about 42 percent by weight of eligible discarded mattresses statewide. This difference shows why it is important for CalRecycle’s goals to reflect actual statewide measurements of mattress waste management rather than program measurements. Further, the gap between statewide activity and program activity will grow if mattress recyclers stop participating in the mattress program. According to the Mattress Council’s 2017 annual report, most recycling activity in the State at that time was likely occurring within the mattress program. However, if that is no longer the case in the future, CalRecycle’s goals will become even less relevant to the true level of statewide recycling activity. Until it revises its goals to reflect all mattress waste management, CalRecycle’s goals will not lead it to monitor whether the State is actually achieving its waste diversion goal with respect to mattresses.
When we discussed the gap between program performance and statewide performance with the EPR manager, he asserted that the current structure of the goals for the mattress program is appropriate at this time and that in the future, as better data on activities such as the number of units renovated become available, adjustments to the goals may be necessary. He further stated that because all California consumers pay the recycling charge when purchasing new mattresses, they should all have the opportunity to recycle their mattresses through the mattress program, which is funded through that charge. The EPR manager also indicated that the mattress program should be responsible for all eligible mattresses disposed of in the State. He stated that he believes that if a large percentage of mattresses were to be handled outside the program, CalRecycle would not consider the program successful. In other words, without an opportunity to recycle their mattresses through the program, consumers would have paid for a service they did not have the chance to use.
However, the EPR manager’s perspective does not reflect the intent of the recycling act. Although it is true that the recycling act requires each manufacturer, renovator, retailer, or distributor that sells a mattress to a consumer to remit the recycling charge to the Mattress Council, it does not require all mattress waste diversion to occur through the mattress program. In fact, for that reason, the Mattress Council requested during the goal‑approval process that CalRecycle clarify that numerical unit and percentage by weight recycling goals—as Table 2 shows—were statewide goals, not program‑specific goals. According to the Mattress Council, the mattress program plays a significant but not exclusive role in increasing the number of mattresses recycled. The Mattress Council also stated that it has no control over the growth of mattresses reused or renovated. In response, CalRecycle did not directly address the Mattress Council’s concern, express the viewpoint that the EPR manager shared with us, or clarify whether the Mattress Council is responsible for statewide recycling activity. Instead, CalRecycle indicated its intent to consider a statewide recycling rate once it has collected better data about discarded mattresses. As a result, CalRecycle missed an opportunity to clarify how it will use the goals in Table 2 when it assesses whether the Mattress Council is making a good faith effort to collect and recycle mattresses.
When it collected data about mattress waste management for 2017, CalRecycle obtained information from a greater number of renovators and solid waste facilities than it had in the previous year. CalRecycle staff took a series of actions to improve data reporting, including developing a document for reporting entities that answers frequently asked questions; surveying recyclers, renovators, and solid waste facilities to determine the challenges they face in data reporting; conducting a webinar instructing entities about their annual reporting requirements; coordinating with various groups to send out informational messages to members; and reaching out to individual reporting entities by phone and email. As a result, as of May 2018, CalRecycle had obtained data from 28 renovators and 355 solid waste facilities. In addition, CalRecycle significantly narrowed the number of renovators and solid waste facilities that it believed were required to report. Specifically, CalRecycle identified that only 30 renovators were required to report—down from 56 in the previous year—and that only 381 solid waste facilities were required to report—down from 509. According to the EPR supervisor, CalRecycle winnowed from its database entities not required to report based on information such as whether a solid waste facility accepted mattresses from the public, obtained through a range of activities, including direct phone calls to businesses. When we followed up with CalRecycle, the EPR supervisor explained that as of June 2018, CalRecycle was waiting on data from only two renovators and seven solid waste facilities. Further, CalRecycle told the Mattress Council that it had greater confidence in the 2017 data than in the 2016 data.
The recycling act requires CalRecycle to review and update as necessary the mattress recycling baseline and goals on or before July 1, 2020, to ensure that the mattress program advances the overall state recycling goal to divert 75 percent of waste from landfills. Although we acknowledge that poor data hindered CalRecycle from setting true statewide goals in December 2017, we believe that CalRecycle will be well positioned to update the goals by January 2020, which is earlier than the existing statutory deadline and would allow CalRecycle to establish a true state recycling goal before the start of 2020. By January 2020, CalRecycle’s update will be informed by two years of more completely reported data on mattress recycling and disposal statewide, as well as by the Mattress Council’s 2017 and 2018 annual reports. This should allow CalRecycle to set a baseline and recycling goals based on statewide data rather than on data from only entities affiliated with the mattress program, therefore ensuring that CalRecycle establishes an accurate means of assessing statewide recycling activity and measuring the progress the mattress program is making toward achieving state mattress recycling goals.
CalRecycle Has Not Ensured That the Mattress Council Prioritizes Source Reduction and Provides Budget Transparency
CalRecycle approved a recycling plan that does not ensure that the Mattress Council will operate the mattress program in a manner consistent with the State’s waste management hierarchy.The recycling act requires that the Mattress Council’s recycling plan contain program objectives that are consistent with the waste management hierarchy, which prioritizes source reduction. However, the Mattress Council originally submitted a recycling plan to CalRecycle that stated that implementing source reduction efforts was beyond the scope of both the recycling act and the plan. After reviewing this original recycling plan, CalRecycle pointed out that the plan was not consistent with the waste management hierarchy. Additionally, the Mattress Council’s advisory committee recommended that the Mattress Council formulate concrete plans for source reduction.1 CalRecycle asked the Mattress Council to remove the statement that source reduction was outside the scope of the recycling act and the plan. In response to CalRecycle’s direction, the Mattress Council removed this language but did not otherwise change its statements about how it would address source reduction. Nonetheless, CalRecycle approved the revised recycling plan.
In the section of the recycling plan related to source reduction, the Mattress Council argues that the mattress industry manufactures durable mattresses that reduce the rate at which mattresses are discarded. The Mattress Council then asserts that the purpose of the recycling act is “to divert discarded mattresses from the solid waste stream through recycling and to increase the volume of discarded mattresses that are recycled.” Federal law defines source reduction as any practice that reduces the amount of any hazardous substance, pollutant, or contaminant entering any waste stream or otherwise released into the environment before recycling, treatment, or disposal. In other words, recycling is not source reduction because recycling can only occur after waste is generated. Although recycling recovers raw material that is then used for other products, source reduction is important because it prevents waste from being generated in the first place.
Because it did not require the Mattress Council to clearly explain how it will advance source reduction, CalRecycle approved a recycling plan that lacks a strategy for addressing the State’s highest priority in terms of waste management practices. The Legislature implemented integrated waste management laws in order to preserve landfill capacity in California; to conserve water, energy, and other natural resources within the State; and to protect the State’s environment. The EPR manager and the EPR supervisor explained that to get the mattress program operating as soon as possible, CalRecycle has prioritized ensuring that the Mattress Council focuses on program basics, such as creating a recycling infrastructure, registering retailers, collecting remittances from retailers, and addressing illegal dumping. Further, they indicated that CalRecycle would work with the Mattress Council on source reduction efforts as the program matures. Although a focus on program basics is understandable, such an emphasis should not have precluded CalRecycle from ensuring that the recycling plan contained objectives that were consistent with the waste management hierarchy, as state law requires.
Further, CalRecycle’s ability to require the Mattress Council to describe how it will address source reduction is now limited. The recycling act required the Mattress Council to submit a recycling plan to CalRecycle. However, the recycling act does not specify an expiration date for the recycling plan. CalRecycle’s regulations require the Mattress Council to resubmit the recycling plan for approval if a significant or material change occurs. However, because this regulation applies when there are changes to the mattress program, it is not apparent to us how it could be used to improve the Mattress Council’s approach to source reduction—which is an issue that the recycling act already required the Mattress Council to address in its plan. Because CalRecycle approved the Mattress Council’s recycling plan, and the plan does not expire, CalRecycle would need to determine that the Mattress Council did not meet a material requirement of the recycling act to require the Mattress Council to resubmit the recycling plan. CalRecycle could find it difficult to conclude that the Mattress Council did not meet the requirement related to source reduction because it previously approved the recycling plan, which indicates that it found the plan compliant with state law. However, if the Mattress Council does not amend the recycling plan, CalRecycle and mattress program stakeholders cannot readily hold the Mattress Council accountable for taking action to address source reduction.
In addition, CalRecycle has not always ensured that the Mattress Council provides it with all of the financial information it requests. State law requires the Mattress Council to annually prepare and submit to CalRecycle a proposed mattress program budget for the following calendar year that includes anticipated revenues and costs of program implementation. When it reviewed and approved the Mattress Council’s 2016 budget, CalRecycle stated that the budget did not contain the level of detail that it would need in subsequent budgets. However, the Mattress Council did not add any of the requested additional detail to its 2017 budget. Nevertheless, CalRecycle approved the Mattress Council’s 2017 budget and directed the Mattress Council to include more detail in its 2018 budget. Although the Mattress Council generally provided most of this detail, it did not provide the level of detail CalRecycle requested related to its budgeted expenses for research activities. In its approval of the 2018 budget, CalRecycle noted additional areas in which it requested the Mattress Council to provide further budget detail in its 2019 budget.
According to the EPR supervisor, the primary reason CalRecycle requested that the Mattress Council provide it additional budget detail was to increase program transparency and to provide CalRecycle and stakeholders a better understanding of the mattress program’s activities. She elaborated that although CalRecycle considers the requested information valuable, these additional details are not required by law and are therefore optional for the Mattress Council to provide. The recycling act requires CalRecycle to approve or disapprove the Mattress Council’s mattress program budget, but our review of the recycling act found that it does not explicitly address how much detail the Mattress Council is required to provide when describing its costs. Further, unlike the portion of the recycling act related to the recycling plan, the section of the act that addresses the content in the Mattress Council’s budget does not require the Mattress Council to submit additional information that CalRecycle requests. Adding a provision to the recycling act that requires the Mattress Council to provide CalRecycle additional budget information that it requests would be beneficial because it would ensure that CalRecycle receives the information it deems necessary for its oversight of the mattress program.
Further, the recycling act does not address what would happen to the mattress program if CalRecycle were to disapprove the Mattress Council’s annual budget. Specifically, the recycling act does not indicate whether the Mattress Council could continue to spend funding to operate the mattress program. According to an attorney at CalRecycle, nothing in the recycling act automatically freezes mattress program funding upon budget disapproval. She stated that if CalRecycle were unable to work with the Mattress Council to produce an approvable budget, CalRecycle could use its enforcement authority to impose penalties on the Mattress Council, revoke its recycling plan, or require it to resubmit a new recycling plan. Although these available enforcement options may be sufficient to convince the Mattress Council to submit an approvable budget, they do not clearly address the question of whether the Mattress Council would be allowed to continue spending funds without approval of its budget.
Because the Mattress Council receives consumer funds directly, without any involvement from the State, it is important that the State has meaningful control over the Mattress Council’s spending. We believe that a clarification to the recycling act that defines the consequences if CalRecycle does not approve the annual budget would be beneficial. To address such a scenario, the Legislature could establish that the Mattress Council is prohibited from spending funds from recycling charges collected during any period of time for which it does not have an approved budget. Further, the Legislature could clarify that the Mattress Council is in violation of the recycling act if it operates without an approved budget during any period of time. These changes to the recycling act would benefit CalRecycle and the Mattress Council by making clear the consequences of a disapproved budget.
CalRecycle Has Not Adequately Enforced Retailer Compliance With the Recycling Act
Examples of Recycling Act Violations
- Retailer did not register with the Mattress Council.
- Retailer did not collect or remit recycling charges to the Mattress Council.
- Retailer did not maintain required records or did not provide CalRecycle staff with access to records.
- Retailer did not provide free mattress pickup with the delivery of a new mattress.
Source: CalRecycle inspection files.
CalRecycle’s compliance unit conducts enforcement inspections of mattress retailers, renovators, and manufacturers in California to verify and, if necessary, enforce compliance with key provisions of the recycling act. The text box shows examples of recycling act violations. From March 2016—when CalRecycle began conducting compliance inspections—through February 2018, CalRecycle discovered violations of the recycling act in 74 percent of the 285 inspections in which it made compliance determinations—the vast majority of which were inspections of retailers. In some instances, CalRecycle found multiple violations at a single retailer. The violations ranged in severity from retailers being unable to demonstrate that they were monitoring CalRecycle’s website for changes in the list of manufacturers that are compliant with the recycling act to retailers failing to register with the Mattress Council. CalRecycle’s Jurisdiction and Product Enforcement Section supervisor (enforcement manager) indicated that a retailer who has not registered with the Mattress Council may not be collecting recycling charges from consumers who purchase new mattresses or may be collecting but not remitting those charges to the Mattress Council. Both of those conditions would result in a loss of revenue for the mattress program.
State law allows CalRecycle to impose penalties on retailers that violate the recycling act. However, despite the frequency with which it identified violations, CalRecycle has not penalized retailers that fail to correct their noncompliance. When the compliance unit detects a violation, it requests that the retailer provide evidence of compliance within seven days. If CalRecycle is unable to determine compliance or if the retailer does not respond, CalRecycle’s procedure is to begin a multiphase, progressive enforcement process, the final stage of which can include levying a penalty for noncompliance. Although CalRecycle’s inspection data show that as of February 2018 it began the progressive enforcement process in 49 instances, its compliance unit supervisor (enforcement supervisor) confirmed that it had not assessed penalties on any retailers as of early July 2018. This is despite the fact that some retailers had not demonstrated that they were compliant with state law.
CalRecycle’s enforcement manager described this progressive enforcement process as emphasizing compliance rather than punishment. According to the manager of the Waste Evaluation and Enforcement Branch (enforcement chief), CalRecycle has been focused on conducting a large number of inspections to encourage retailers to register with the Mattress Council. The Mattress Council has also conducted outreach and education efforts to ensure that retailers understand their requirements. The enforcement chief noted that most retailers do not comply because they do not understand the requirements that apply to them. She also indicated that workload and staffing issues have contributed to cases not moving forward to the penalty phase. Nevertheless, she agreed that penalties can be an important part of gaining compliance from violators when a warning from CalRecycle is not enough.
Because it has not levied penalties, CalRecycle has allowed noncompliance to persist and has foregone potentially significant amounts of money that could have been used to fund its enforcement activities. The recycling act requires CalRecycle to use all penalty revenue it collects to administer and enforce the act’s provisions. To gain a better understanding of the amount of penalty revenue that CalRecycle could have collected, we analyzed a selection of five cases that had advanced to the last phase of CalRecycle’s enforcement process. Three of these cases involved retailers that had not registered with the Mattress Council, among other violations CalRecycle identified. We estimate that for these five cases, CalRecycle could have applied penalties with a total combined dollar value ranging from roughly $280,000, if each penalty were assessed at the maximum allowed by the recycling act of $500 per day for unintentional violations, to about $2.8 million, if each penalty were assessed at $5,000 per day for intentional, knowing, or reckless violations, which the act also allows CalRecycle to assess. State regulations require CalRecycle to consider certain factors that could lower these amounts, such as the size of the violator and the economic effect of the penalty on the violator. However, even if the penalty amounts had been lower than our estimates, CalRecycle has still foregone a significant amount of potential revenue, particularly considering that we derived our estimates from only five progressive enforcement cases. Additionally, if it had assessed penalties and then publicized that fact, CalRecycle might have gained compliance from retailers it has not yet inspected.
In one particularly egregious case, CalRecycle neither gained compliance nor levied a penalty, despite the fact that the retailer in question did not demonstrate that it had registered with the Mattress Council or remitted any recycling fees for over a year after CalRecycle initially made contact with it in January 2017. Based on the penalty amounts included in the recycling act and the length of time the retailer had been noncompliant as of late February 2018, CalRecycle could have assessed a maximum penalty of approximately $1.1 million. The enforcement supervisor indicated that the compliance unit needed time to gather evidence for this case and to prepare a document to proceed to the penalty phase. The compliance unit did not transmit this case to CalRecycle’s legal department for review until late June 2018, about 17 months after it began its inspection process and approximately three months after we questioned why the case had not yet progressed that far in CalRecycle’s process.
In addition to not assessing penalties, CalRecycle completed inspections without obtaining evidence that retailers had corrected their noncompliance. We reviewed 10 inspection cases to assess the thoroughness of CalRecycle’s compliance reviews and found that CalRecycle identified violations in six. However, it completed four of these six cases without obtaining evidence of compliance. In one instance, the compliance unit completed a case in which the retailer had neither registered with the Mattress Council nor collected or remitted recycling fees. The enforcement manager acknowledged that the compliance unit completed some inspection cases without evidence of compliance and explained that the unit intended to follow up on findings of noncompliance during reinspections of the same retailers, which its database indicates it began conducting in March 2018. In late April 2018, CalRecycle updated its procedures for enforcement field staff to indicate that in general, staff should not close inspection cases if the retailers have not registered with the Mattress Council. However, failure to register with the Mattress Council is not the only type of noncompliance that CalRecycle can identify during its inspections. Because CalRecycle did not ensure that all retailers it inspected were fulfilling the recycling act’s requirements, it will now have to reinspect retailers for which it initially found violations to ensure their compliance. According to the enforcement supervisor, after discussions with us about its failure to obtain evidence of compliance, CalRecycle reexamined all of its previous inspection cases and identified those in which it had not obtained evidence of compliance. According to an extract of CalRecycle’s enforcement database that we obtained in August 2018, CalRecycle identified over 180 cases in which it will need to reinspect to obtain evidence of compliance with the recycling act.
Finally, the compliance unit has not carried out enforcement actions in a timely manner, resulting in an inspection and enforcement process that is longer than CalRecycle’s procedures suggest. CalRecycle has established an initial period of seven to 15 days for retailers to demonstrate compliance, as well as a three‑phase progressive enforcement process. During the first phase, CalRecycle sends a violator a letter requiring a response within 30 days. If the entity does not respond, CalRecycle moves to the second phase in which it sends another letter to the violator, giving them an additional 30 days to respond. Although the compliance unit established an initial period and deadlines for retailers to provide evidence of corrective action in each of the first two stages of its progressive enforcement process, the unit has not progressed through its inspection and enforcement process in a timely fashion. In the five progressive enforcement cases we examined, the time CalRecycle took to progress through its process beyond the timelines included in its procedures ranged from more than two months to nearly 10 months.
Managers of the compliance unit explained that the delays throughout the progressive enforcement process were the result of a number of factors, including the time necessary for staff to prepare notices and reports and for managers to review inspection documents. The enforcement manager noted that CalRecycle has given staff discretion to decide how to track when follow‑up on inspection cases is necessary and that the supervisor reviews CalRecycle’s enforcement database to see if follow‑up has stalled. He also stated that CalRecycle has begun upgrading that enforcement database and that a component of that upgrade is the automation of reminders for staff and the supervisor about key impending dates, such as when to begin the next phase of enforcement. As the enforcement chief acknowledged, assessing penalties can be an effective means of gaining compliance, and therefore the longer that CalRecycle takes to progress through enforcement actions, the longer it allows retailer noncompliance with the recycling act to persist.
Moreover, at the time we began our audit, CalRecycle did not have any procedures in place for the third phase of progressive enforcement, which involves documenting a case history of the findings of the inspection and developing a recommended penalty amount, creating additional delays for cases that may require the imposition of penalties. CalRecycle’s procedures stated that it would establish the process for the penalty phase on a case‑by‑case basis. According to the enforcement manager, CalRecycle did not identify any retailer noncompliance in the paint or carpet programs. The enforcement supervisor indicated that CalRecycle had stated such cases should be handled on a case‑by‑case basis so that staff would know to work with their supervisor to finalize penalty documentation in a manner that met CalRecycle’s requirements. However, without formalized procedures for the penalty phase, the compliance unit did not have established guidance or an expected timeline for how long the penalty phase should last. Subsequent to our discussions with CalRecycle’s staff about procedures for the penalty phase, the enforcement supervisor provided us with a copy of CalRecycle’s new procedures for the penalty phase. The procedures generally describe the steps staff must take to document the noncompliance and proposed penalties and who within CalRecycle must review and approve the penalty documentation. However, they do not include a timeline for how long the penalty phase should last.
Recommendations
Legislature
The Legislature should amend the recycling act to require CalRecycle to establish goals for the mattress program that relate to increasing consumer convenience, encouraging source reduction, and reducing illegal mattress dumping, as well as for any other areas that CalRecycle identifies as critical to the mattress program achieving the intent of the recycling act. It should require CalRecycle to establish goals in the first three specified areas by July 2020.
The Legislature should amend the recycling act to limit the time period for which the recycling plan is valid and to require the Mattress Council to regularly submit new plans to CalRecycle that are subject to its review and approval.
The Legislature should amend the recycling act to require the Mattress Council to submit with its annual budget any additional details that CalRecycle determines are reasonable for its effective oversight of the mattress program. The Legislature should amend the recycling act to prohibit the Mattress Council from spending the recycling charges it collects in a year for which CalRecycle has not approved the mattress program’s budget. Further, the Legislature should clarify that the Mattress Council’s operating without an approved budget is a violation of the recycling act.
CalRecycle
By January 1, 2020, CalRecycle should update the baseline and goals for mattress recycling to reflect the most current available information it has related to the number of mattresses disposed of statewide. In addition, it should ensure that its recycling goals are statewide in scope by including information about recycling and renovation from entities that do not contract with the Mattress Council.
In order to bring violators of the recycling act into compliance and to ensure that its enforcement activities are timely, CalRecycle should do the following:
• Assess penalties for noncompliance with the recycling act.
• Publicize any penalties it assesses against violators of the recycling act as a deterrent to potential violators.
• Monitor inspection cases to ensure that it does not complete them before the retailers in question have remedied any instances of noncompliance.
• Execute a plan to verify compliance for all inspections in which it did not obtain evidence of compliance.
• Develop and implement a timeline for the penalty phase of the enforcement process.
• Regularly review the timeliness of its enforcement process and prioritize any overdue enforcement actions based on its enforcement timelines.