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January 20, 2010 > California Trashing Bottle Recycling Program

California Trashing Bottle Recycling Program

By Steve Wyant

The last time you tossed a bottle of beer or liter of soda into your curbside-recycling bin, you probably weren't aware that you were inadvertently helping the State of California's deficit problems. That has been the net effect of the state borrowing from a recycling program fund that otherwise has been running a surplus. Now it's bankrupt.

Known as the Bottling Bill Program, it's the infrastructure created in 1986 that uses the nickels and dimes we pay for many glass or plastic bottles and aluminum cans, otherwise known as the California Redemption Value (CRV). The program is funded by the deposit we pay on top of the cost of the beverage, as well as fees charged to distributors. In theory, the deposit you pay is refunded when you bring the item in to a recycling center. Processing fees levied on distributors and manufacturers pay program administration expenses and costs to recyclers. The net balance should be $0.

When you toss the containers into your curbside pickup bin, you're not getting your deposit back. Much of that money remains in the program; a surplus the state couldn't resist tapping. However, the CRV you don't claim is also used to pay for additional costs and services. Additional payments are made to recyclers when the cost of recycling exceeds the value of the material. Grants are also provided to nonprofit organizations that support recycling efforts.

Since 2002, the state has borrowed over $400 million, and repaid none of it. And just like some of us who overdraw funds in a checking account, the state has borrowed more from the fund than it has to meet its obligations. In July, the program cut 85 percent of its processing payments to more than 2,400 recycling centers. On November 1st, the program was running more than a $150 million deficit and all processing payments were abruptly stopped.

"Because it ran surplus it was seen as free money," said Brian Early of Californians Against Waste (CAW), "If you borrow from the fund to the point that the program is not working, then that's illegal."

In a recent press release, the Department of Resources, Recycling and Recovery (CalRecycle), which runs the program, stated it was also looking at allegations of fraud but would not provide further comment.

According to CAW, the fallout from the state's handling of the program has already resulted in hundreds of recycling worker layoffs; closed/unserved recycling locations in the state now exceed 600. Folks who have relied on local recycling centers to redeem their containers may be suddenly faced without a convenient location. Many low-income, unemployed and homeless people rely on redemptions for spending money or subsistence. However, grocery outlets that do not have a drop off center nearby must provide for redemption at any checkout stand, a fact that's not well known by the general public or most retailers.

Last November Governor Schwarzenegger vetoed Senate Bill 402, a measure designed to restore the program and provide for a medium-term solution. It was widely supported by the recycling community and environmental groups. The Governor vetoed it on the grounds that it was a short-term fix, and did not incorporate his own solutions.

The future impact of the veto could be widespread. According to a report issued by CAW, the projected cost to consumers will be $100 million in increased fees for beverages, lead to the closure of 1,100 recycling centers, and put an estimated 5,000 people working in the recycling industry out of work. Many of those workers are employed by regional conservation groups, which employ at-risk youths.

In a January 8th budget proposal, Governor Schwarzenegger presented his plan to prop up the ailing program. It would repay the program $54 million this year and $98 million next year. An emergency regulation already adopted encourages voluntary accelerated payments of the collected CRV by beverage distributors to the state in 60 days rather than the required 90 days. This could result in an additional $60-$95 million this fiscal year. The governor's budget proposal also includes grant reductions to local governments, curbside programs, local conservation groups and others by about $60 million.

With the Governor's repayment plan, and if the accelerated CRV payments prove successful, the Department should be able to reinstate most suspended payments as early as March 1, according to CAW's news blog.

However, that's not the end of it. Three firms are suing the state in order to keep their businesses afloat. Tomra Pacific of Corona, Big Foot Recycling Centers of Anderson, and R.B. Recycling Enterprises of San Diego, who have all cut staff and closed locations, filed suit in Alameda County November 1st of last year. More recently the California Chamber of Commerce also brought suit against the state to return the borrowed funds. According to Adrian White of Tomra Pacific, the Chamber's suit and the recycler's suit were combined. The next hearing is scheduled for February 19, 2010.

Asked if the Governor's proposal to begin paying back the fund would affect the lawsuit, White said "until we see the money in the bank account . . . until we are completely sure that the funds that were taken from the bottle bill program are paid back, we will proceed with the lawsuit." He added ""The proposal made on the 8th of January by the Governor does give us hope that he is finally seeing the importance of the Bottle Bill Program . . . and there seems to be a willingness to fix it now."

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