Minor Bell Neal, PC, retained Bates White on behalf of the Carpet and Rug Institute (CRI) to analyze the impact on California carpet shipments of certain assessment fees levied under the California Carpet Stewardship Program (CCSP) administered by the Carpet America Recovery Effort (CARE). CARE, a nonprofit organization, operates under the stated mission “to advance market-based solutions that increase landfill diversion and recycling of post-consumer carpet, encourage design for recyclability and meet meaningful goals as approved by the CARE Board of Directors.”1 CARE manages the CCSP, which is responsible for “meeting the requirements for carpet recycling set by California statue (AB 2398), signed into law by the governor of California on September 30, 2010.”2 The California stewardship law is regulated by CalRecycle, a California state agency.3 Effective July 1, 2011, an assessment fee of $0.05 per square yard was levied on all carpet shipped to California. As shown in Figure 1, the assessment fee doubled to $0.10 per square yard effective April 1, 2015, and doubled again to $0.20 per square yard effective April 1, 2016. Effective January 1, 2017, the assessment fee increased further to $0.25 per square yard. Our analysis demonstrates that the assessment fee has had a significant, negative impact on California carpet shipments. In particular, our analysis demonstrates that the assessment fee reduced carpet shipments to California by more than 4% from April 2015 to March 2016 and by more than 6% through year-end 2016. As we explain further below, those figures represent conservative estimates of the impact of the assessment fee because, due to a data limitation, it does not include any reductions in California carpet shipments associated with the initial implementation of the assessment fee from July 1, 2011, to March 31, 2015. Our analysis also demonstrates that demand for carpet in California is highly sensitive to even small changes in price. In economic terms, the price elasticity of demand for carpet sold in California is approximately –3.5 to –3.8, which is highly elastic. Consequently, additional increases in the assessment fee would further reduce California carpet shipments significantly. For example, our elasticity estimates predict that an increase in the assessment fee from $0.20 to $0.40 would further reduce California carpet shipments by an additional 8.1% to 8.9%.