October 2009
Plastics Recycling Update
Bottle bill veto could have severe results
California Governor Arnold Schwarzenegger's decision to veto Senate Bill 402 not only thwarts any possible expansion to the California Redemption Value (CRV) system, but it also could have dire consequences for the Golden State's 22-year-old deposit beverage container redemption program.
Supported by such entities as in-state retailers, bottled water groups, municipalities, environmental organizations and beer producers, SB 402 would have expanded the CRV program to, as of July1, 2010, include juices and other fruit drinks sold in paperboard and aseptic packaging; soy, nut, rice and other grain beverages, regardless of their container type; and large bottles of fruit juice. According to state officials, the move would have added an additional 1.5 billion beverage containers to the deposit program.
However, in his veto message, Schwarzenegger claimed that CRV would have been applied to products that likely would have ended up in landfill, as, according to the governor, "there are, at present, no known California end-users for the material types SB 402 adds to the program."
Most importantly, though, had the bill been approved, it would have helped bring the state's Beverage Container Recycling Fund (BCRF) back into balance – a fund that, since the turn of the century, has had nearly $500 million taken from it, with those monies being redistributed to other sources, including the state's General Fund and its Air Resources Board (for planning of the state's Global Warming Solutions Act). According to Susan Collins, executive director of the Container Recycling Institute, "Because SB 402 didn't pass, the fund is now looking at having $110 million less than it otherwise would've had in this fiscal year." This brings us to the real problem at hand.
The imbalance in the BCRF has already forced the state's Department of Conservation (DOC) to cut $131 million in funding for local governments, local conservation corps recycling efforts, payments for supermarket-based recycling and curbside recycling programs, recycling market development and other performance-based incentives for recycling. On top of that, because of Schwarzenegger's rejection of the measure, and in order to save money, the state may now be compelled to reduce processors payments by as much as 85 percent (the impact of the proportionate reduction on the various payments, fees, and other components of the CRV program can be found by going to http://tinyurl.com/CRVprogram). Not good news when 90 percent of all CRV material is handled by either traditional return centers (e.g., scrap yards) or supermarket-sited handling, and non-handling, fee return centers.
In California, traditional return centers, supermarket-sited handling, and non-handling, fee return centers, and even curbside programs, all receive payments from the DOC to compensate them for any of their operating costs that are above scrap value. According to Collins, "If the DOC cuts those payments by 85 percent, you can see pretty clearly how return center will be operating in the red, and in a hurry. That's the key issue here. Businesses will only bleed for so long before they're forced to shut down and move on." Continued Collins, "And, if return centers are forced to shutter because of the program, and consumers are using curbside to recycle these containers, then the social contract between the state and the consumers, under the deposit law, has been broken because those people have a right to receive the refund they paid for. We as a society, should not make it inconvenient for consumers to get the refund back, because then it's just a tax."
Upon hearing the news of the governor's veto, environmental advocacy organization Californians Against Waste (CAW) issued a press release detailing the severe program changes that will likely occur because of the 85-percent cut in funding. Those program changes include, in conjunction with the aforementioned program funding cuts, the elimination of 5,000 recycling-related jobs and the closing of nearly 1,200 supermarket-based recycling centers. This is unfortunate because, as stated by Collins, "some 600 California grocery stores are already unserved by recycling center and, without relief, they will be obligated to take containers inside their stores." Sources close to the situation are speculating that, if recycling centers are to close because of the lack of funding, then grocery stores will be forced to redeem used beverage containers at the register (which is already a fall-back option included in the current deposit law). To not, 5.5 billion containers were recycled via supermarket return centers in 2008.
One provision of SB 402, which would have helped diminish the $200 million deficit the fund is facing for fiscal year 2009-2010, involved accelerating the payment schedule made by distributors, from 90 days to 60 days. "Had the bill passed, in the year where that change would have occurred, you would get 13 payments in a 12-month period," said Collins. "That 13th payment amounts to around $100 million, giving the fund a one-time boost for that year." This proposal was one part of SB 402 that Schwarzenegger did endorse and, according to his veto message, he has directed his administration to pursue that in emergency regulations.
Another boost for the program would be to expand it to include wine and liquor, a move that, according to CAW Executive Director Mark Murray, has been proposed multiple times over the last several years. Unfortunately, "the votes have simply not been there, due to opposition from California's influential wine industry," said Murray. "And that continued to be the case this year." The ironic part about this is that, in his veto message, Schwarzenegger claimed that the bill's lack of recognition of wine and distilled spirits, "which are more like the products currently subject to the CRV and are typically paid for from consumer's disposable income," was another reason for his decision to deny the bill.
However, according to Murray, when asked earlier this year by the DOC for permission to sponsor legislation to add wine and liquor, Schwarzenegger denied that permission.
What happens from this point on is still anyone's guess. Schwarzenegger's administration has written a proposal that details several ways in which long-term relief could be provided to the fund. One of these plans includes having manufacturers pay a larger portion of the processing fees, because, currently, manufacturers only pay a small percentage of the full processing payment. Additionally, subsequent legislation will more than likely be introduced later this year, or during the 2010 regular session, of which addresses the above issues and, according to Schwarzenegger's message, "should contain provisions that prohibit any additional loans to the General Fund, in the future, and require the General Fund to repay past loans from this program."
However, according to Collins, "If changes aren't made quickly, many redemption centers may close. And, if legislation is passed in 2010 to address the financial situation, such a "fix" could come too late, as the closed centers may not be able to reopen."
Plastics Recycling Update, along with sister publication Resource Recycling, will continue to follow this developing story.