THIRD READING  

Bill No: SB 372

Author: Wieckowski (D)

Amended: 1/23/20

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 4-1, 1/15/20

AYES: Allen, Hill, Stern, Wieckowski

NOES: Dahle

NO VOTE RECORDED: Bates, Skinner

SENATE APPROPRIATIONS COMMITTEE: 5-1, 1/23/20

AYES: Portantino, Bradford, Durazo, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

SENATE FLOOR: 17-10, 1/29/20 (FAIL)

AYES: Allen, Atkins, Beall, Durazo, Lena Gonzalez, Hertzberg, Hill, Hueso, Jackson, Leyva, Mitchell, Monning, Roth, Skinner, Stern, Wieckowski, Wiener

NOES: Borgeas, Dahle, Dodd, Galgiani, Hurtado, Jones, Moorlach, Morrell, Nielsen, Wilk

NO VOTE RECORDED: Archuleta, Bates, Bradford, Caballero, Chang, Glazer, Grove, McGuire, Pan, Portantino, Rubio, Umberg

SUBJECT: Beverage Container Recycling Act of 2020

SOURCE: Author

DIGEST:

This bill establishes the Beverage Container Recycling Act of 2020 and creates an industry-run bottle and can recycling program by January 1, 2024, to replace the current California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which the bill revises and sunsets January 1, 2024.

ANALYSIS: Existing law, the California Beverage Container Recycling and Litter Reduction Act, requires beverage containers, as defined, sold in-state to have a California redemption value (CRV) of 5 cents for containers that hold fewer than 24 ounces and 10 cents for containers that hold 24 ounces or more, and requires distributors to pay a redemption payment to the Department of Resources Recycling and Recovery (CalRecycle) for every beverage container sold in the state. These funds are continuously appropriated to CalRecycle for the payment of refund values and processing fees. (PRC §14500 et seq.).

This bill establishes the Beverage Container Recycling Act of 2020. Specifically, this bill:

1. Increases, beginning January 1, 2021, and until January 1, 2024, the total number of exemptions, which may be granted by the CalRecycle director from 35% to 50%, from the requirement that there must be at least one certified recycling center or location within every convenience zone that accepts and pays the refund values.
   
2. Revises, beginning January 1, 2021, the definition of “supermarket” by increasing the gross annual sales from $2,000,000 to $4,000,000 for a full-line, self-service retail store that sells a line of dry grocery, canned goods, or nonfood items and some perishable items.
   
3. Requires, on or before April 1, 2021, CalRecycle to appoint an advisory committee for consultation purposes including forming the Beverage Container Stewardship Organization (BCSO) and creating a beverage container stewardship plan.
   
4. Requires, on or before July 1, 2021, each distributor to register with CalRecycle.
   
5. Requires, on or before October 1, 2021, distributors to form a BCSO to develop, implement, and administer the beverage container stewardship program. Requires BCSO to establish a stewardship fee to be paid by the distributor members.
   
6. Prohibits, on and after October 1, 2021, a distributor or dealer from selling, distributing, or offering for sale a beverage in a beverage container in the state unless the distributor or dealer is in compliance with the stewardship program.
   
7. Requires, on or before November 1, 2021, and at least annually thereafter, CalRecycle to post and update on its Internet Web site a list of distributors and whether each one is in compliance with the stewardship program.
   
8. Requires, on or before April 1, 2022, BCSO to develop and submit to CalRecycle a plan for the redemption and recycling of empty beverage containers, which must include specified goals and elements including increasing consumer redemption and increasing the quantity and quality of beverage containers recycled or remanufactured.
   
9. Requires, on or before July 1, 2022, and annually thereafter, BCSO to submit to CalRecycle a proposed budget for the stewardship program for the following calendar year.
   
10. Requires, on or before January 1, 2023, CalRecycle, in consultation with BCSO and other interested stakeholders, to adopt regulations for the orderly transition from the requirements of the current Bottle Bill program to the stewardship program. On or before July 1, 2022, if CalRecycle finds that it is unable to develop regulations to make an orderly transition from the current Bottle Bill program to the stewardship program, requires CalRecycle to report that finding to the Legislature.
    
11. Requires, beginning January 1, 2023, CalRecycle to begin the transition from the current Bottle Bill program to the stewardship program. On January 1, 2024, repeals the current Bottle Bill program and requires, on that date, the stewardship program to begin in full.
    
12. Requires, on July 1, 2023, and quarterly thereafter, BCSO to reimburse CalRecycle for costs directly related to implementing and enforcing BCSO’s activities.
    
13. Authorizes, on and after January 1, 2024, a recycling center to pay the refund value based on the weight or quantity of returned containers.
    
14. Revises, on and after January 1, 2024, the definition of “beverage” to include wine and distilled spirits.
    
15. Establishes the Beverage Container Recycling Program Fund that shall become operative on January 1, 2024. Requires fees received by CalRecycle to be deposited into the fund. Provides that moneys in the fund may be expended by CalRecycle upon appropriation by the Legislature for purposes of the beverage container redemption and recycling program.
    
    1. Requires unredeemed refund values to be retained by BCSO and be used for specified purposes relating to beverage container recycling, including payment to curbside programs.
       
    2. Creates the Penalty Account in the Beverage Container Recycling Program Fund and requires CalRecycle to deposit civil penalties or fines collected pursuant to this program into the account.
       
16. Requires, on or before March 1, 2024, and annually thereafter, BCSO to submit to CalRecycle, and make available on its internet website, a report that includes specified information about the stewardship program for the previous calendar year including BCSO’s costs and revenues, the quantity of beverage containers disposed of in solid waste landfills, the quality of beverage containers collected for recycling under the plan, and the total volume, number, and weight of beverage containers collected and recycled during the preceding year.
    
17. Requires, on or before January 1, 2026, CalRecycle to establish state beverage recycling goals, review every four years, and update as necessary.
    
18. Requires, on or before January 1, 2026, CalRecycle to establish minimum content standards for beverage containers that are constructed of metal, glass, or plastic or other material, or any combination thereof.
    
19. Requires, beginning 2026 and 2027, if the aggregate recycling rate for beverage containers is less than 75% for two consecutive years, CalRecycle to provide recommendations to the Legislature within six months of that determination on ways to increase the recycling rate.
    
20. Authorizes CalRecycle to impose administrative civil penalties on any distributor, BCSO, or dealer in violation with the stewardship program.
    

Background

1. Background on the Bottle Bill program. The Bottle Bill was established by AB 2020 (Margolin, Chapter 1290, Statutes of 1986). The purpose of the program is to be a self-funded program that encourages consumers to recycle beverage containers to prevent littering. The program accomplishes this goal by requiring consumers to pay a deposit for each eligible container purchased. Then the program guarantees consumers repayment of that deposit, the CRV, for each eligible container returned to a certified recycler. Statute includes two main goals for the program: (1) reducing litter; and, (2) achieving a recycling rate of 80% for eligible containers.
   
   Over the years, various concerns about the program have been raised such as the structural deficit, the effectiveness of some supplemental programs supported by the program, fraud, and whether some offsets support the goals of the program.
   
2. Recent recycling center closures. In August 2019, rePlanet closed all 284 of its recycling centers in California. Before its closure, rePlanet was the largest recycling network in California. Following the closures, rePlanet stated, “With the continued reduction in State fees, the depressed pricing of recycled aluminum and polyethylene terephthalate (PET) plastic, and the rise in operating costs resulting from minimum wage increases and required health and workers compensation insurance, the Company has concluded that operation of these recycling centers is no longer sustainable.”
   

Various causes have attributed to the closure of these recyclers. One reason may be attributed to the drop in commodity prices, which have been declining over several years, Also, oil prices have declined significantly and reached historically low levels in 2016. Because new plastic is manufactured from oil, using recycled plastic instead of oil can be more expensive because it has to be sorted and cleaned.

Additionally, changes to processing payments have not kept pace with the decline in scrap values. According to the Legislative Analyst’s Office, the state subsidizes recycling by making processing payments to recyclers and processors. Processing payments are intended to cover the difference between a container’s scrap value and the cost of recycling it (including a reasonable rate of return). Both the costs of recycling and the scrap value of beverage containers can fluctuate significantly based on changing market prices. As a result, processing payments vary over time. Some contend that processing payments have failed to keep up with real time prices, resulting in recycling centers receiving insufficient state payments to make up for the income they may lose from the decline in scrap value.

1. Declining Recycling Rates. When the program was first implemented, the recycling rate for eligible containers increased from 52% to 85%, exceeding the statutory goal of 80%. Additionally, the total number of containers recycled tripled due to higher recycling rate and several expansions in the types of eligible containers over the years. In the past, the high recycling rate combined with the large number of additional expenditures resulted in budgetary shortfalls within the BCRF. However, in recent years, the recycling rate for beverage containers has fallen from 85% to 75%, causing the BCRF to no longer operate in a budget deficit.
   
2. Limitations of the current Bottle Bill program. According to CalRecycle, the Bottle Bill program is limited in its abilities to adapt to changes in consumer products and behavior, developments in recycling systems, and fluctuations in the global commodities market. These limitations have created challenges and missed opportunities to maximize the benefits of recycling beverage containers, especially climate change benefits. To that end, in 2017 CalRecycle proposed a policy framework outlining key components of reform and based on the following principles:
   
   1. Improving recycling and remanufacturing. According to CalRecycle, the program has been successful in its initial goal of reducing litter by providing recycling collection opportunities for consumers. However, collection does not ensure that a product is recycled into a new commodity. Future investments should be dedicated to creating clean, recyclable streams of material to facilitate recycling and remanufacturing.
      
   2. Sharing responsibility. According to CalRecycle, historically, the consumer has shouldered most of the financial burden to sustain the program. Program responsibilities and financing should be rebalanced among all program participants. Under the current program, consumers pay $0.05 or $0.10 on each beverage container purchased, and in order to get their money back, consumers must travel to a recycling center to return the container. In contrast beverage manufacturers pay $0.00024 for each PET container they sell in California.
      
   3. Enhancing adaptability and sustainability. According to CalRecycle, increases in the recycling rate have resulted in a structural deficit in the BCRF. In addition, the program does not respond quickly to fluctuations in the global commodities market. The program must be both nimble and fiscally sustainable to advance the state’s economic and environmental goals. A comprehensively reformed program must be fiscally stable and include a mechanism preventing future structural deficits.

Comments

1. Purpose of Bill. According to the author,
   

“SB 372 provides a comprehensive reform to California’s antiquated beverage container redemption and recycling program, known as the Bottle Bill. This bill establishes a new streamlined stewardship program that places redemption and recycling responsibilities on those who are distributing beverages inside California.

Created in 1986, the current Bottle Bill system has prevented billions of single-use beverage containers from becoming litter on our streets and going into landfills. But after three decades, the system is slow to adapt to changes, often has significant structural deficits, and relies too heavily on consumers for financing. After more than 30 years, the Bottle Bill has become convoluted.

In 2017, Governor Brown first called for a comprehensive solution to the problems plaguing today’s outdated system. SB 372 builds on the recommendations that came out of the Governor’s stakeholder meetings, the Legislative Analyst’s Office report, and the Senate Environmental Quality Committee oversight hearing on beverage container recycling that year. This bill requires distributors to form a stewardship program (similar to California’s mattress recycling program), which must be approved by CalRecycle.

SB 372 will reduce the state’s bureaucratic function by creating a distributor stewardship program and allowing CalRecycle’s focus to be where it is most efficient – on oversight and enforcement – of the beverage container redemption and recycling program.”

1. Wine and distilled spirits. Almost one billion (approximately 974 million) bottles of wine and liquor are sold in California annually. Although the current Bottle Bill program includes beer, it does not include wine or liquor. SB 372 adds wine and liquor into the proposed beverage container stewardship program. Stakeholders note that wine and liquor bottles are currently being recycled at a high rate by consumers via curbside recycling; and industry estimates the recycling rate of wine and liquor bottles at approximately 70%. In 2016, curbside programs received approximately $129 million from the current Bottle Bill program. If wine and liquor bottle recycling is handled primarily through curbside, which is part of the beverage container recycling program, a question arises as to why these bottles do not contribute financially to the program from which they benefit.
   
2. Mixed results for California extended provider responsibility (EPR) programs. To date, the Legislature has enacted 4 EPR programs – paint, carpet, mattresses, and pharmaceutical and sharps waste – showing varying degrees of success. While CalRecycle does not appear to have oversight issues with the paint stewardship program, CalRecycle was subject to an audit for its oversight of the mattress recycling program. The carpet recycling program has encountered the most challenges of the EPR programs. According to the CalRecycle website, the enforcement history between CalRecycle and CARE, the organization in charge of the carpet recycling program, is extensive and complicated. Only enacted in 2018, the pharmaceutical and sharps waste program is still in development.
   
3. Interaction with Senate Bill 54 (Allen) and Assembly Bill 1080 (Gonzalez). Identical bills, SB 54 and AB 1080, would require CalRecycle, by January 1, 2024, to adopt regulations requiring producers of single-use packaging and priority single-use products to source reduce to the maximum extent possible and to ensure, by 2030, that all single-use packaging and priority single-use products offered for sale, sold, distributed, or imported into the state are recyclable or compostable. Under SB 54 and AB 1080, beverage containers under the current Bottle Bill are not subject to those bills’ provisions until 2026.
   

If all three bills were to be enacted, would they be able to work in context of one another? Although SB 54 and AB 1080 are much broader in scope than SB 372, all three bills have significant overlap, and sometimes duplicate or conflict with one another. If all bills proceed, the authors will need to consider how the bills would interact with each other.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, this bill is estimated to cost $1 million and nine positions in 2021, $1.4 million and twelve positions in 2022 and 2023, and unknown costs, likely in the low millions of dollars, after 2024. These costs would be reimbursed by the stewardship organization. Additionally, unknown savings, likely around $40 to $50 million dollars annually, will result due to the reduced role of the state in administering the new program. Finally, collection of the CRV deposits and redemption payments would be transferred to the stewardship organization, resulting in $1.3 billion decrease in revenue and $1.1 billion in savings to the Beverage Container Recycling Fund.

SUPPORT: (Verified 1/28/20)

Californians Against Waste

Consumer Watchdog

Environment California

Eunomia

National Stewardship Action Council

The Story of Stuff Project

TOMRA Americas

1 individual

OPPOSITION: (Verified 1/28/20)

Allan Company

California Artisanal Distillers Guild

California Association of Winegrape Growers

California Beer and Beverage Distributors

Distilled Spirits Council

Family Winemakers of California

Institute of Scrap Recycling Industries, West Coast Chapter

Plastic Recycling Corporation of California

Protect CRV

Wine and Spirits Wholesalers of California

Wine Institute

ARGUMENTS IN SUPPORT: According to The Story of Stuff Project,
“While the California bottle bill has yielded positive results since its inception, the system has gone through chronic decline over a number of years and has shown itself unable to address these issues sufficiently. … The results show that the state’s recycling rate has dropped from a high of 85% in 2013 to 80% in the years since, and with the latest round of [recycling center] closures, we expect these figures to deteriorate further. Furthermore, retailers are not fulfilling their legal responsibility to act as a fallback option. Indeed, retailers do not even have a legal way to efficiently process and be paid for the bottles and cans whose deposits they refund to consumers. These cumulative problems mean that the legislation is effectively serving as a tax rather than a deposit for consumers across the state.”

ARGUMENTS IN OPPOSITION: According to a coalition letter, “It is unrealistic to expect beverage distributors to create and implement a distributor run program in the short time-frame called for by the bill. However, the beverage industry does see value in shifting administrative responsibility from CalRecycle to an industry-led organization to ensure our containers are recycled at a high rate. … Wine and spirits are heavy, bulky, and are already being recycled through curbside recycling at a high rate. It is extremely unlikely that consumers of wine and spirits will take these heavy, bulky bottles to a redemption center.”

Prepared by: Genevieve M. Wong / E.Q. / (916) 651-4108

1/30/20 8:25:38

**** END ****

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: SB 372

SUBJECT: Beverage Container Recycling Act of 2020

DIGEST: Establishes the Beverage Container Recycling Act of 2020 and creates an industry-run bottle and can recycling program by January 1, 2024, to replace the current California Beverage Container Recycling and Litter Reduction Act (Bottle Bill), which the bill revises and sunsets January 1, 2024.

ANALYSIS:

Existing law:

1. Under the California Integrated Waste Management Act of 1989, requires each city or county source reduction and recycling element to divert 50% of solid waste on and after January 1, 2000. (Public Resources Code §41780). It is a policy goal of the state that not less than 75% of solid waste be source reduced, recycled, or composted by 2020, and annually thereafter. (Public Resources Code (PRC) §41780.01).
   
2. Under the California Beverage Container Recycling and Litter Reduction Act (Act), requires beverage containers, as defined, sold in-state to have a California redemption value (CRV) of 5 cents for containers that hold fewer than 24 ounces and 10 cents for containers that hold 24 ounces or more, and requires distributors to pay a redemption payment to the Department of Resources Recycling and Recovery (CalRecycle) for every beverage container sold in the state. These funds are continuously appropriated to CalRecycle for the payment of refund values and processing fees. (PRC §14500 et seq.).
   

This bill establishes the Beverage Container Recycling Act of 2020. Specifically, this bill:

1. Beginning January 1, 2021, and until January 1, 2024, increases the total number of exemptions, which may be granted by the CalRecycle director from 35% to 50%, from the requirement that there must be at least one certified recycling center or location within every convenience zone that accepts and pays the refund values.
   
2. Beginning January 1, 2021, revises the definition of “supermarket” by increasing the gross annual sales from $2,000,000 to $4,000,000 for a full-line, self-service retail store that sells a line of dry grocery, canned goods, or nonfood items and some perishable items.
   
3. On or before April 1, 2021, requires CalRecycle to appoint an advisory committee for consultation purposes including forming the Beverage Container Stewardship Organization (BCSO) and creating a beverage container stewardship plan.
   
4. On or before July 1, 2021, requires each distributor to register with CalRecycle.
   
5. On or before October 1, 2021, requires distributors to form a BCSO to develop, implement, and administer the beverage container stewardship program.
   
6. Within 60 days of receipt of request for certification of BCSO, requires CalRecycle to notify distributors of its decision whether to certify BCSO.
   
7. On and after October 1, 2021, prohibits a distributor or dealer from selling, distributing, or offering for sale a beverage in a beverage container in the state unless the distributor or dealer is in compliance with the stewardship program.
   
8. On or before November 1, 2021, and at least annually thereafter, requires CalRecycle to post and update on its internet website a list of distributors and whether each one is in compliance with the stewardship program.
   
9. On or before April 1, 2022, requires BCSO to develop and submit to CalRecycle a plan for the redemption and recycling of empty beverage containers, which must include specified goals and elements including methods to increase the quantity and quality of empty beverage containers recycled or remanufactured and procedures for consumers to redeem beverage containers if there is not a recycling center located within the convenience zone.
   
10. Within 90 days of receipt of the submitted plan, requires CalRecycle to approve, disapprove, or conditionally approve the plan. If CalRecycle fails to act in that time, the plan must be deemed approved. If CalRecycle disapproves the plan, BCSO must resubmit the plan and if the plan does not comply with specified requirements, then BCSO shall not be deemed in compliance until BCSO submits a plan that CalRecycle finds in compliance.
    
11. Within 90 days after approval or conditional approval of the plan, requires BCSO to implement the plan.
    
12. On or before July 1, 2022, and annually thereafter, requires BCSO to submit to CalRecycle a proposed budget for the stewardship program for the following calendar year. Requires CalRecycle to approve or disapprove the proposed budget, as specified.
    
13. Requires BCSO to establish a stewardship fee to be paid by the distributor members of the organization.
    
14. Requires BCSO to keep minutes, books, and records that clearly reflect the activities and transactions of the organization.
    
15. On or before January 1, 2023, requires CalRecycle, in consultation with BCSO and other interested stakeholders, to adopt regulations for the orderly transition from the requirements of the current Bottle Bill program to the stewardship program.
    
    1. On or before July 1, 2022, if CalRecycle finds that it is unable to develop regulations to make an orderly transition from the current Bottle Bill program to the stewardship program, requires CalRecycle to report that finding to the Legislature.
       
16. Beginning January 1, 2023, requires CalRecycle to begin the transition from the current Bottle Bill program to the stewardship program.
    
17. On July 1, 2023, and quarterly thereafter, requires BCSO to reimburse CalRecycle for costs directly related to implementing and enforcing BCSO’s activities.
    
18. On January 1, 2024, repeals the current Bottle Bill program unless a later statute is enacted before January 1, 2024, deleting or extending the repeal date; and requires, no later than that date, the stewardship program to begin in full.
    
19. On and after January 1, 2024, authorizes a recycling center to pay the refund value based on the weight or quantity of returned containers.
    
20. On and after January 1, 2024, revises the definition of “beverage” to include wine and distilled spirits.
    
21. Establishes the Beverage Container Recycling Program Fund that shall become operative on January 1, 2024. Requires fees received by CalRecycle to be deposited into the fund. Provides that moneys in the fund may be expended by CalRecycle upon appropriation by the Legislature for purposes of the beverage container redemption and recycling program.
    
    1. Requires unredeemed refund values to be retained by BCSO and be used for the following purposes in the following priority:
       
       1. Implementation of the beverage container recycling program and provides that BCSO administrative costs may not exceed 2% of the projected unredeemed refund values for the calendar year.
       2. Activities to improve the quality of postconsumer beverage container material that is used for recycling purposes.
       3. Activities that encourage the remanufacturing of beverage containers.
       4. Activities to encourage in-state manufacturing of recycled beverage containers.
          
    2. Creates the Penalty Account in the Beverage Container Recycling Program Fund and requires CalRecycle to deposit civil penalties or fines collected pursuant to this program into the account.
       
22. On or before March 1, 2024, and annually thereafter, requires BCSO to submit to CalRecycle, and make available on its internet website, a report that includes specified information about the stewardship program for the previous calendar year including BCSO’s costs and revenues, the quantity of beverage containers disposed of in solid waste landfills, the quality of beverage containers collected for recycling under the plan, and the total volume, number, and weight of beverage containers collected and recycled during the preceding year.
    
23. On or before January 1, 2026, requires CalRecycle to establish state beverage recycling goals, review every four years, and update as necessary.
    
24. On or before January 1, 2026, requires CalRecycle to establish minimum content standards for beverage containers that are constructed of metal, glass, or plastic or other material, or any combination thereof.
    
25. Beginning 2026 and 2027, if the aggregate recycling rate for beverage containers is less than 75% for two consecutive years, requires CalRecycle to provide recommendations to the Legislature within six months of that determination on ways to increase the recycling rate.
    
26. Authorizes CalRecycle to impose administrative civil penalties on any distributor, BCSO, or dealer in violation with the stewardship program.
    

Background

1. Background on the Bottle Bill program. The Bottle Bill was established by AB 2020 (Margolin, Chapter 1290, Statutes of 1986). The purpose of the program is to be a self-funded program that encourages consumers to recycle beverage containers to prevent littering. The program accomplishes this goal by requiring consumers to pay a deposit for each eligible container purchased. Then the program guarantees consumers repayment of that deposit, the California Redemption Value (CRV), for each eligible container returned to a certified recycler. Statute includes two main goals for the program: (1) reducing litter; and, (2) achieving a recycling rate of 80% for eligible containers.
   
   Over the years, various concerns about the program have been raised such as the structural deficit, the effectiveness of some supplemental programs supported by the program, fraud, and whether some offsets support the goals of the program.
   
2. Eligible beverage containers. Only certain beverage containers containing certain beverages are part of the CRV program. Most containers made from glass, plastic, aluminum, and bimetal (consisting of one or more metals) are eligible. Wine, spirits, milk, fruit juices (over 46 ounces), vegetable juice (over 16 ounces), and soy drinks are not eligible for CRV. Container types that are not included in the CRV program are cartons, pouches, and any container that holds 64 ounces or more.
   
3. Participants in the Bottle Bill program. The various stakeholders in the Bottle Bill program include:
   
   1. Consumer. Every person who, for his or her use or consumption, purchases a beverage in a beverage container from a dealer.
      
   2. Dealer. A retail establishment which offers the sale of beverages in beverage containers to consumers. However, any lodging, eating, or drinking establishment, or soft drink vending machine operator who engages in the sale of beverages in beverage containers to consumers shall not be deemed a dealer for purposes of the Bottle Bill program.
      
   3. Distributor. Every person who engages in the sale of beverages in beverage containers to a dealer in the state, including any manufacturer who engages in these sales. “Distributor” includes any person who imports beverages from outside of this state for sale to dealers or consumers in this state.
      
   4. Beverage Manufacturer. A person who bottles, cans, or otherwise fills beverage containers, or imports filled beverage containers, for sale to distributors, dealers, or consumers.
      
   5. Container Manufacturer. A person who produces beverage containers for filling by beverage manufacturers, including any person who imports these beverage containers from outside of this state for filling by beverage manufacturers.
      
   6. Recycler. A recycling center, dropoff or collection program, or curbside program.
      
   7. Processor. A person, including a scrap dealer, certified by the Department of Resources Recycling and Recovery (CalRecycle), who purchases empty aluminum beverage containers, bimetal beverage containers, glass beverage containers, plastic beverage containers, or any other beverage containers, including any one or more of those beverage containers, which have a refund value established pursuant to the Bottle Bill, from recycling centers in this state for recycling, or, if the container is not recyclable, not for recycling, and who cancels, or who certifies to the department the cancellation of, the refund value of these empty beverage containers by processing empty beverage containers, in any manner which the department may prescribe.
      
   8. CalRecycle. State agency which administers, oversees, and enforces the Bottle Bill program.
      
4. Flow of CRV containers and payments. The Bottle Bill involves the flow of beverage containers and payments between several sets of parties, including consumers, retailers, recyclers, and manufacturers. At each stage, beverage containers and CRV are exchanged between participants. The Beverage Container Recycling Fund (BCRF) is used to collect and distribute payments for the CRV program.
   
   Consumers generally have three options to recycle: return container to a recycler at a convenience zone (CZ) recycling center; return to an “old line” recycler; or, “donate” the container to a curbside collector. Once collected, the containers are sold to a processor.
   
   Processors sort, clean, and process the containers into materials ready to be recycled, such as glass cullet or plastic flake, which they are able to sell to manufacturers for use in new beverage containers or other types of products. Beverage manufacturers that use glass and aluminum containers combine the recycled material with virgin material to create new containers and fill them with beverages. Plastic beverage containers generally contain no recycled content.
   
5. Flow of CRV. When beverage containers are exchanged, there is a corresponding CRV exchange. When consumers purchase beverages, they pay CRV to retailers. Retailers pass the CRV to beverage distributors. Beverage distributors pay CRV on all new beverage containers they sell in California to the BCRF after keeping 1.5% (about $18M/year) for administrative costs. The BCRF is then used to pay CRV to processors for the containers they process. Processors pass the CRV on to the recyclers who collected the empty containers. Recyclers, in turn, pay CRV to consumers who redeem their beverage containers at a recycling center. In this way, consumers are able to recoup their CRV from the recycler.
   
6. Ways to redeem containers. Consumers have three different avenues in which they may redeem containers:
   
   1. Return the container to a “convenience zone” recycling center located within ½ mile radius of a supermarket. These are generally small centers that only accept beverage containers and receive handling fees from the BCRF. CZ recyclers collect about 25% of CRV containers, but are utilized by 60% of consumers.
      
   2. Return the container to an “old line” recycling center, which refers to a recycler that does not receive handling fees and usually accepts large quantities of materials, frequently by truckload from municipal or commercial waste collection services. Traditional recyclers collect slightly more than half of all CRV containers (54%).
      
   3. Consumers can also “donate” their containers to residential curbside recycling collection. Curbside programs collect about 10% of CRV containers. Curbside programs keep the CRV on these containers.
      
7. Additional Expenditures. In the past, lower recycling rates resulted in a half-billion dollar surplus in the BCRF, and previous Governors used the surplus to fund several loans to the General Fund. In an attempt to increase recycling and reduce the surplus, the Legislature amended the Bottle Bill a few times between 2000 and 2003 to include additional beverages, reduce the processing fees paid by manufacturers, establish the processing fee “offset” (reduced processing fees based on the “recycling rate” of a material), increase the CRV, increase handling fees to larger CZ recyclers, and establish and increase funding for a number of additional recycling programs. These programs are not directly related to the CRV, but they are intended to help achieve broader recycling goals. In 2006, AB 3056 (Committee on Natural Resources, Chapter 907, Statutes of 2006) increased the amounts of many of the additional programs, adjusted handling fees, and increased distributors’ administrative fees.
   
   The funding amounts for the supplemental programs are set in statute. A provision within the section that establishes the bulk of the BCRF expenditures requires CalRecycle to “reduce all payments proportionally” if it determines that there are insufficient funds to make any of the payments. Stakeholders refer to this reduction in funding as “proportional reduction.”
   
   Supplemental programs funded by CRV include:
   
   1. Processing Payments, Fees, and Offsets. For many material types, the cost of recycling containers is greater than the value of the recycled material, which is referred to as the “scrap value.” This means that, absent some additional financial support, accepting these containers from consumers and recycling them would be unprofitable for recyclers and processors. In order to close that gap, the state subsidizes recycling by making “processing payments” from the BCRF to recyclers and processors. CalRecycle determines processing payment amounts by estimating recycling costs through surveys of recyclers every two years and calculating scrap values based on monthly reports from processors.
      
      The cost to the BCRF of making processing payments is partially covered by the beverage manufacturers who produce these containers when they pay “processing fees” into the BCRF. The processing fees are calculated based on the number of containers each manufacturer sells. While processing fees were established to cover the full cost of making processing payments to recyclers and producers, over time the Legislature has reduced the processing payment by creating the “processing fee offset.” Since 2003, processing fee offsets have been determined on a sliding scale based on recycling rates (the amount of material collected for recycling, not the amount of material actually being recycled into new containers). As recycling rates for specific materials increase, beverage manufacturers that produce containers from those materials pay proportionally less in processing fees.
      
   2. Handling Fees. Supermarkets with more than $2 million in gross annual sales are required to have a recycling center within a ½ mile radius, which is referred to as the “convenience zone.” CZ recyclers receive a “handling fee” from CalRecycle based on the number of containers they redeem.
      
      Supermarkets that do not have a CZ recycler are required to take back containers themselves or pay an “in lieu” fee of $100 per day.
      
   3. Administrative Fees. Statute provides administrative fees to beverage distributors, recyclers, and processors to defray their costs of program participation. Since 2006, beverage distributors retain 1.5 % of the total CRV collected to cover administrative costs. CalRecycle pays processors 2.5% of their reimbursed CRV; processors then distribute 0.75% to recyclers.
      
   4. Curbside Supplemental Payments. $15 million is annually allocated to residential curbside recycling collection programs and neighborhood dropoff programs to encourage curbside recycling. The curbside supplemental payment is distributed to individual programs based on each program’s share of beverage containers collected over the previous year.
      
   5. Payments to Local Governments. $10.5 million is annually allocated to cities and counties for beverage container recycling and litter cleanup activities. Payments are distributed proportionally based on each jurisdiction’s population.
      
   6. Plastic Market Development (PMD) Payments. PMD payments are awarded to plastic processors and plastic product manufacturers for empty plastic beverage containers that are processed and recycled into new material in California.
      
   7. Quality Incentive Payments (QIP). $10 million is annually allocated for QIP in order to improve the quality and marketability of collected glass containers. Glass container recycling has significant GHG benefits and supports in-state bottle manufacturing. Curbside glass has significant issues with contamination and requires a great deal of processing prior to recycling. Glass collected at recycling centers is generally much higher quality and more easily recycled into new containers.
      
   8. Local Conservation Corp (LCC) Grants. LCCs are awarded grants to operate beverage container litter reduction and recycling programs.
      
8. Recent recycling center closures. In August 2019, rePlanet closed all 284 of its recycling centers in California. Before its closure, rePlanet was the largest recycling network in California. Following the closures, rePlanet stated, “With the continued reduction in State fees, the depressed pricing of recycled aluminum and PET plastic, and the rise in operating costs resulting from minimum wage increases and required health and workers compensation insurance, the Company has concluded that operation of these recycling centers is no longer sustainable.”
   

Various causes have attributed to the closure of these recyclers. One reason may be attributed to the drop in commodity prices, which have been declining over several years, Also, oil prices have declined significantly and reached historically low levels in 2016. In 2011, PET plastic scrap prices were at a peak of $500/ton and have steadily dropped to $200 in 2016; a decline of 60 percent. New plastic is manufactured from oil, so when the price of oil is very low, using recycled plastic can be more expensive because it has to be sorted and cleaned.

Additionally, changes to processing payments have not kept pace with the decline in scrap values. According to the Legislative Analyst’s Office, the state subsidizes recycling by making processing payments to recyclers and processors. Processing payments are intended to cover the difference between a container’s scrap value and the cost of recycling it (including a reasonable rate of return). Both the costs of recycling and the scrap value of beverage containers can fluctuate significantly based on changing market prices. As a result, processing payments vary over time. Some contend that processing payments have failed to keep up with real time prices and includes a minimum three-month gap, resulting in recycling centers receiving insufficient state payments to make up for the income they may lose from the decline in scrap value.

1. Declining Recycling Rates. When the program was first implemented, the recycling rate for eligible containers increased from 52% to 85%, exceeding the statutory goal of 80%. Additionally, the total number of containers recycled tripled due to higher recycling rate and several expansions in the types of eligible containers over the years. In the past, the high recycling rate combined with the large number of additional expenditures resulted in budgetary shortfalls within the BCRF.
   

However, in recent years, the recycling rate for beverage containers has fallen from 85% to 75%, causing the BCRF to no longer operate in a budget deficit.

1. Limitations of the current Bottle Bill program. According to CalRecycle, the Bottle Bill program is limited in its abilities to adapt to changes in consumer products and behavior, developments in recycling systems, and fluctuations in the global commodities market. These limitations have created challenges and missed opportunities to maximize the benefits of recycling beverage containers, especially climate change benefits. To that end, in 2017 CalRecycle proposed a policy framework outlining key components of reform and based on the following principles:
   
   1. Improving recycling and remanufacturing. According to CalRecycle, the program has been successful in its initial goal of reducing litter by providing recycling collection opportunities for consumers. However, collection does not ensure that a product is recycled into a new commodity. Future investments should be dedicated to creating clean, recyclable streams of material to facilitate recycling and remanufacturing. To facilitate recycling and remanufacturing, CalRecycle will focus on reform efforts on maintaining redemption opportunities for consumers and increasing the stream of clean recyclable materials.
      
   2. Sharing responsibility. According to CalRecycle, historically, the consumer has shouldered most of the financial burden to sustain the program. Program responsibilities and financing should be rebalanced among all program participants. Under the current program, consumers pay $0.05 or $0.10 on each beverage container purchased, and in order to get their money back, consumers must travel to a recycling center to return the container. In contrast beverage manufacturers pay $0.00024 for each polyethylene terephthalate (PET) container they sell in California.
      
   3. Enhancing adaptability and sustainability. According to CalRecycle, increases in the recycling rate have resulted in a structural deficit in the BCRF. In addition, the program does not respond quickly to fluctuations in the global commodities market. The program must be both nimble and fiscally sustainable to advance the state’s economic and environmental goals. A comprehensively reformed program must be fiscally stable and include a mechanism preventing future structural deficits.

Comments

1. Purpose of Bill. According to the author,
   

“SB 372 provides a comprehensive reform to California’s antiquated beverage container redemption and recycling program, known as the Bottle Bill. This bill establishes a new streamlined stewardship program that places redemption and recycling responsibilities on those who are distributing beverages inside California.

Created in 1986, the current Bottle Bill system has prevented billions of single-use beverage containers from becoming litter on our streets and going into landfills. But after three decades, the system is slow to adapt to changes, often has significant structural deficits, and relies too heavily on consumers for financing. After more than 30 years, the Bottle Bill has become convoluted.

In 2017, Governor Brown first called for a comprehensive solution to the problems plaguing today’s outdated system. SB 372 builds on the recommendations that came out of the Governor’s stakeholder meetings, the Legislative Analyst’s Office report, and the Senate Environmental Quality Committee oversight hearing on beverage container recycling that year. The bill requires distributors to form a stewardship program (similar to California’s mattress recycling program), which must be approved by CalRecycle.

SB 372 will reduce the state’s bureaucratic function by creating a distributor stewardship program and allowing CalRecycle’s focus to be where it is most efficient – on oversight and enforcement – of the beverage container redemption and recycling program.”

1. Wine and distilled spirits. Almost one billion (approximately 974 million) bottles of wine and liquor are sold in California annually. Although the current Bottle Bill program includes beer, it does not include wine or liquor. SB 372 adds wine and liquor into the proposed beverage container stewardship program. Stakeholders note that wine and liquor bottles are currently being recycled at a high rate by consumers via curbside recycling; and industry estimates the recycling rate of wine and liquor bottles at approximately 70%. In 2016, curbside programs received approximately $129 million from the current Bottle Bill program. If wine and liquor bottle recycling is handled primarily through curbside, which is part of the beverage container recycling program, a question arises as to why these bottles do not contribute financially to the program from which they benefit.
   
2. Other stewardship programs. Over the years, the Legislature has enacted various extended producer responsibility programs, requiring entities to take a shared responsibility in the management of their end-of-life products either individually or though a stewardship organization. A question has developed with regard to stewardship programs over the years - in the event a particular stewardship organization ceases to operate the program, what happens to the money that has been collected from the consumers by the stewardship organization? A similar question arises here – what happens if the department decertifies a BCSO or a BCSO decides to no longer administer the program? In the mattress and carpet programs, subsequent legislation has inserted contingency plans into the programs in such an event, providing for the transfer of liabilities, assets, and responsibilities to a subsequent organization, and, in some cases to the department. Moneys that are collected by the organization from the consumer for the purposes of implementing the program are also transferred.
   

However, this program is different than past EPR programs; in addition to the CRV deposit that is paid by consumers, which stays with the BCSO if the deposit is not redeemed and are used for purposes of recycling beverage containers, distributor members of the BCSO pay a stewardship fee to help cover the expenses of the program. The author may want to consider whether similar provisions would be appropriate for this EPR program or if, considering the contribution of distributor money into the fund, some other mechanism would be more appropriate.

1. Mixed results for California EPR programs. To date, the Legislature has enacted 4 EPR programs – paint, carpet, mattresses, and pharmaceutical and sharps waste – showing varying degrees of success. While CalRecycle does not appear to have oversight issues with the paint stewardship program, CalRecycle was subject to an audit for its oversight of the mattress recycling program. The carpet recycling program has encountered the most challenges of the EPR programs. According to the CalRecycle website, the enforcement history between CalRecycle and CARE, the organization in charge of the carpet recycling program, is extensive and complicated. Only enacted in 2018, the pharmaceutical and sharps waste program is still in development.
   
2. Success in Oregon. There are 10 states in the United States that have bottle deposit programs, with Oregon having one of the highest redemption rates. While other states have experienced declining redemption rates over the last several years, Oregon has instead seen an increase. In Oregon, the program is a type of stewardship program run by the Oregon Beverage Recycling Cooperative (OBRC), a cooperative cooperation owned by Oregon beverage distributors and grocery retailers. The OBRC manages the deposit flow, reimburses grocery retailers for refund values redeemed by the public, picks up and processes returned beverage containers across the state, and operates redemption centers.
   
3. Interaction with Senate Bill 54 (Allen) and Assembly Bill 1080 (Gonzalez). Identical bills, SB 54 and AB 1080, which are currently on the Assembly Floor and Senate Floor respectively, are bills that would also drastically impact the solid waste world in California. The bills would require CalRecycle, by January 1, 2024, to adopt regulations requiring producers of single-use packaging and priority single-use products to source reduce to the maximum extent possible and to ensure, by 2030, that all single-use packaging and priority single-use products offered for sale, sold, distributed, or imported into the state are recyclable or compostable. Under SB 54 and AB 1080, beverage containers under the current Bottle Bill are not subject to those bills’ provisions until 2026.
   

If all three bills were to be enacted, would they be able to work in context of one another? Although SB 54 and AB 1080 are much broader in scope that SB 372, all three bills have significant overlap, and sometimes duplicate or conflict with one another. If all bills proceed, the authors will need to consider the following provisions, and more:

• 1. Which beverage container program will apply? The current program or the EPR program?
  2. Which recycling rates will apply? Would CalRecycle have authority to set different recycling rates under the EPR program?
  3. Is there duplicate reporting?
  4. Are the definitions consistent?
  5. What are the consequences for noncompliance?
     

Related/Prior Legislation

SB 168 (2017, Wieckowski), as heard in committee is nearly identical to this bill. The bill was later amended to impose minimum postconsumer content standards on plastic beverage containers.

SOURCE:

Author

SUPPORT:

Californians Against Waste

Consumer Watchdog

Eunomia

The Story of Stuff Project

Tomra

OPPOSITION:

California Beer & Beverage Distributors

Institute of Scrap Recycling Industries (ISRI), West Coast Chapter

Protect CRV

ARGUMENTS IN SUPPORT:

According to The Story of Stuff Project,
“While the California bottle bill has yielded positive results since its inception, the system has gone through chronic decline over a number of years and has shown itself unable to address these issues sufficiently. … The results show that the state’s recycling rate has dropped from a high of 85% in 2013 to 80% in the years since, and with the latest round of [recycling center] closures, we expect these figures to deteriorate further. Furthermore, retailers are not fulfilling their legal responsibility to act as a fallback option. Indeed, retailers do not even have a legal way to efficiently process and be paid for the bottles and cans whose deposits they refund to consumers.”

ARGUMENTS IN OPPOSITION:

According to Protect CRV,
“As written, SB 372 does not have provisions that would provide immediate financial support for existing recycling centers, nor provide a stimulus or incentive to open new recycling centers. As written, hundreds more recycling centers could close by the time SB 372 would go into effect.”

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SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 372 (Wieckowski) - Beverage Container Recycling Act of 2020

Bill Summary:

This bill would repeal the Beverage Container Recycling Program (BCRP) and replace it with an industry-run bottle and can stewardship program.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on January 23, 2020

Fiscal Impact:

• The Department of Resources Recycling and Recovery (CalRecycle) estimates that implementing this bill would cost of $1 million and nine positions in 2021, $1.4 million and twelve positions in 2022 and 2023, and unknown costs, likely in the low millions of dollars, after 2024 (special fund). These costs would be reimbursed by the stewardship organization.
• Unknown savings, likely around $40 to $50 million dollars annually (special fund), due to the reduced role of the state in administering the new program.
• Collection of California Redemption Value (CRV) deposits and redemption payments would be transferred to the stewardship organization, resulting in a $1.3 billion decrease in revenue and $1.1 billion in savings to the Beverage Container Recycling Fund (BCRF).

Committee Amendments:

The committee amendments would require the stewardship organization to use unredeemed redemption payments for payments to curbside recyclers of an amount sufficient to avoid any adverse impacts on consumers, curbside recyclers, and local governments, among other things. The BCRP currently provides $15 million annually to curbside recyclers. Staff assumes that the amendments would require the stewardship organization to provide a similar level of funding.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 372 (Wieckowski) - Beverage Container Recycling Act of 2020

Bill Summary:

This bill would repeal the Beverage Container Recycling Program (BCRP) and replace it with an industry-run bottle and can stewardship program.

Fiscal Impact:

• The Department of Resources Recycling and Recovery (CalRecycle) estimates that implementing this bill would cost of $1 million and nine positions in 2021, $1.4 million and twelve positions in 2022 and 2023, and unknown costs, likely in the low millions of dollars, after 2024 (special fund). These costs would be reimbursed by the stewardship organization.
• Unknown savings, likely around $40 to $50 million dollars annually (special fund), due to the reduced role of the state in administering the new program.
• Collecting California Redemption Value (CRV) deposits and paying out redemption payments would be transferred to the stewardship organization, resulting in a $1.3 billion decrease in revenue and $1.1 billion in savings to the Beverage Container Recycling Fund (BCRF).

Background:

The BCRP was established over 30 years ago with the enactment of Chapter 1290, Statutes of 1986 (AB 2020, Margolin). The purpose of the program is to be a self–funded program that encourages consumers to recycle certain beverage containers. The program accomplishes this goal by first requiring consumers to pay a deposit for each eligible container purchased. Then the program guarantees consumers repayment of that deposit—the California Redemption Value, or “CRV”—for each eligible container returned to a certified recycler. Statute includes two main goals for the program: (1) reducing litter and (2) achieving a recycling rate of 80 percent for eligible containers.

Flow of CRV containers and payments. The CRV program involves the flow of beverage containers and payments between several sets of parties, including consumers, retailers, recyclers, and manufacturers. At each stage, beverage containers and CRV are exchanged between participants. The Beverage Container Recycling Fund (BCRF) is the state’s fund used to collect and distribute payments for the CRV program.

Other program expenditures. Not all CRV–eligible containers are recycled, and therefore the CRV deposit paid when a consumer purchased these containers is never redeemed. This means that distributors pay more CRV into the BCRF than is claimed by consumers. In 2018–19, for example, the BCRF received roughly $1.3 billion in deposits, but only about $1.1 billion—or over 80 percent—was spent on redemption payments. State law requires that much of the unredeemed CRV be spent on specified recycling–related programs. These supplemental programs are not directly involved in the exchange of CRV, but they are intended to help achieve the programmatic goals of increased recycling and reduced litter.

Administrative costs. Administering California’s BCRP—including collecting and refunding CRV, tracking payments and containers, monitoring markets, setting rates, and enforcing program requirements—requires significant state resources. In 2018-19, CalRecycle had 212 PYs dedicated to beverage container recycling. The most recent BCRF condition statement estimates program administration costs nearly $60 million annually. Most other container deposit programs in other states place more administrative and financial responsibility on the private sector—especially beverage manufacturers, distributors, and retailers. These programs require only one or two state employees to provide oversight and enforcement.

Limitations of current BCRP. According to CalRecycle, the BCRP is limited in its abilities to adapt to changes in consumer products and behavior, developments in recycling systems, and fluctuations in the global commodities market. These limitations have created challenges and missed opportunities to maximize the benefits of recycling beverage containers, especially climate change benefits.

Recycling Center Closures. In August 2019, rePlanet closed all 284 of its recycling centers in California. Before its closure, rePlanet was the largest recycling network in California. Following the closures, rePlanet stated, “With the continued reduction in State fees, the depressed pricing of recycled aluminum and PET plastic, and the rise in operating costs resulting from minimum wage increases and required health and workers compensation insurance, the Company has concluded that operation of these recycling centers is no longer sustainable.”

Proposed Law: This bill would establish the Beverage Container Recycling Act of 2020. Specifically, this bill would:

1. Increase the total number of exemptions—from 35 percent to 50 percent—that the director of CalRecycle can grant for convenience zones not served by a recycler.
   
2. Revise the definition of “supermarket” by increasing the gross annual sales from $2,000,000 to $4,000,000 for a full-line, self-service retail store that sells a line of dry grocery, canned goods, or nonfood items and some perishable items.
   
3. Require CalRecycle to appoint an advisory committee for consultation purposes including forming the Beverage Container Stewardship Organization (BCSO) and creating a beverage container stewardship plan.
   
4. Require distributors to form a BCSO to develop, implement, and administer the beverage container stewardship program.
   
5. On or before April 1, 2022, require BCSO to develop and submit to CalRecycle a plan for the redemption and recycling of empty beverage containers, which must include specified goals and elements including methods to increase the quantity and quality of empty beverage containers recycled or remanufactured and procedures for consumers to redeem beverage containers if there is not a recycling center located within the convenience zone.
   
6. Within 90 days of receipt of the submitted plan, require CalRecycle to approve, disapprove, or conditionally approve the plan. If CalRecycle fails to act in that time, the plan must be deemed approved. If CalRecycle disapproves the plan, BCSO must resubmit the plan and if the plan does not comply with specified requirements, then BCSO shall not be deemed in compliance until BCSO submits a plan that CalRecycle finds in compliance.
   
7. Within 90 days after approval or conditional approval of the plan, require BCSO to implement the plan.
   
8. On or before July 1, 2022, and annually thereafter, require BCSO to submit to CalRecycle a proposed budget for the stewardship program for the following calendar year. Require CalRecycle to approve or disapprove the proposed budget, as specified.
   
9. Require BCSO to establish a stewardship fee to be paid by the distributor members of the organization.
   
10. On or before January 1, 2023, require CalRecycle, in consultation with BCSO and other interested stakeholders, to adopt regulations for the orderly transition from the requirements of the current Bottle Bill program to the stewardship program.
    
11. Beginning January 1, 2023, require CalRecycle to begin the transition from the current Bottle Bill program to the stewardship program.
    
12. On July 1, 2023, and quarterly thereafter, require BCSO to reimburse CalRecycle for costs directly related to implementing and enforcing BCSO’s activities.
    
13. On January 1, 2024, repeal the current Bottle Bill program unless a later statute is enacted before January 1, 2024, deleting or extending the repeal date; and require, no later than that date, the stewardship program to begin in full.
    
14. On and after January 1, 2024, revise the definition of “beverage” to include wine and distilled spirits.
    
15. Establish the Beverage Container Recycling Program Fund that shall become operative on January 1, 2024. Require fees received by CalRecycle to be deposited into the fund. Provide that moneys in the fund may be expended by CalRecycle upon appropriation by the Legislature for purposes of the beverage container redemption and recycling program.
    
    1. Require unredeemed refund values to be retained by BCSO and be used for the following purposes in the following priority:
       
       1. Implementation of the beverage container recycling program, provided that BCSO administrative costs may not exceed 2% of the projected unredeemed refund values for the calendar year.
       2. Activities to improve the quality of postconsumer beverage container material that is used for recycling purposes.
       3. Activities that encourage the remanufacturing of beverage containers.
       4. Activities to encourage in-state manufacturing of recycled beverage containers.
          
    2. Create the Penalty Account in the Beverage Container Recycling Program Fund and requires CalRecycle to deposit civil penalties or fines collected pursuant to this program into the account.
       
16. On or before March 1, 2024, and annually thereafter, require BCSO to submit to CalRecycle, and make available on its internet website, a report that includes specified information about the stewardship program for the previous calendar year including BCSO’s costs and revenues, the quantity of beverage containers disposed of in solid waste landfills, the quality of beverage containers collected for recycling under the plan, and the total volume, number, and weight of beverage containers collected and recycled during the preceding year.
    
17. On or before January 1, 2026, require CalRecycle to establish state beverage recycling goals, review every four years, and update as necessary.
    
18. On or before January 1, 2026, require CalRecycle to establish minimum content standards for beverage containers that are constructed of metal, glass, or plastic or other material, or any combination thereof.
    
19. Beginning 2026 and 2027, if the aggregate recycling rate for beverage containers is less than 75% for two consecutive years, require CalRecycle to provide recommendations to the Legislature within six months of that determination on ways to increase the recycling rate.
20. Authorize CalRecycle to impose administrative civil penalties on any distributor, BCSO, or dealer in violation with the stewardship program.
    

Related Legislation:

Interaction with Senate Bill 54 (Allen) and Assembly Bill 1080 (Gonzalez). Identical bills, SB 54 and AB 1080, which are currently on the Assembly Floor and Senate Floor respectively, are bills that would also drastically affect the solid waste world in California. The bills would require CalRecycle, by January 1, 2024, to adopt regulations requiring producers of single-use packaging and priority single-use products to source reduce to the maximum extent possible and to ensure, by 2030, that all single-use packaging and priority single-use products offered for sale, sold, distributed, or imported into the state are recyclable or compostable. Under SB 54 and AB 1080, beverage containers under the current BCRP are not subject to those bills’ provisions until 2026. It is unclear how these two bills would work with SB 372 should all three be enacted.

SB 168 (2017, Wieckowski). As heard in the Senate, SB 168 was nearly identical to this bill. SB 168 was later amended to impose minimum postconsumer content standards on plastic beverage containers. SB 168 failed on the Assembly floor.

Staff Comments:

This bill would repeal California’s BCRP and replace it with a new program that is similar to bottle bills in other states. Several other state programs involve greater use of in–store redemption, administration of the program by beverage manufacturers instead of the government, and higher reuse requirements for specified recyclable materials. The level of state involvement in bottle bill programs has trade-offs. While California’s current program requires greater state involvement and is much more costly to administer than programs in other states, it also performs additional activities such as data collection and enforcement, administers grant programs, and invests in the development of new recycling technology and collection methods. States with significantly fewer state staff report limited knowledge of beverage container recycling rates and rely on private data to determine program compliance and success.

Bottle bill programs in Oregon, Connecticut, Vermont, Massachusetts, Iowa, and Michigan each employ three or fewer state staff, usually as a point of contact for stakeholder information or to oversee the state’s receipt of unredeemed deposits. While state costs are much lower under other systems, however, the cost to the private sector tend to be greater.

Under the new program proposed in this bill, CalRecycle would retain some functions of the existing program, including recycling center certification, education and enforcement, and audits. The department expects that it would retain the current staffing levels for these units.

This bill would transfer some of CalRecycle’s current responsibilities to the stewardship organization, such as establishing convenience standards and administering recycler payments.

SB 372 would also establish new requirements for CalRecycle, such as adding wine and distilled spirit distributors to the program and determining distributor compliance. CalRecycle would redirect existing staff to implement these new responsibilities.

The bill would require the stewardship organization to reimburse CalRecycle for costs related to the stewardship organization, including the development of the regulations. It is likely that the Beverage Container Recycling Fund or Integrated Waste Management Account would fund the activities prior to the reimbursement.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: SB 372

SUBJECT: Beverage Container Recycling Act of 2020

DIGEST: Establishes the Beverage Container Recycling Act of 2020 and creates an industry-run bottle and can recycling program by January 1, 2024, to replace the current California Beverage Container Recycling and Little Reduction Act (Bottle Bill), which the bill revises and sunsets January 1, 2024.

ANALYSIS:

Existing law:

1. Under the California Integrated Waste Management Act of 1989, requires each city or county source reduction and recycling element to divert 50% of solid waste on and after January 1, 2000. (Public Resources Code §41780). It is a policy goal of the state that not less than 75% of solid waste be source reduced, recycled, or composted by 2020, and annually thereafter. (Public Resources Code (PRC) §41780.01).
   
2. Under the California Beverage Container Recycling and Litter Reduction Act (Act), requires beverage containers, as defined, sold in-state to have a California redemption value (CRV) of 5 cents for containers that hold fewer than 24 ounces and 10 cents for containers that hold 24 ounces or more, and requires distributors to pay a redemption payment to the Department of Resources Recycling and Recovery (CalRecycle) for every beverage container sold in the state. These funds are continuously appropriated to CalRecycle for the payment of refund values and processing fees. (PRC §14500 et seq.).
   

This bill establishes the Beverage Container Recycling Act of 2020. Specifically, this bill:

1. Beginning January 1, 2021, and until January 1, 2024, increases the total number of exemptions, which may be granted by the CalRecycle director from 35% to 50%, from the requirement that there must be at least one certified recycling center or location within every convenience zone that accepts and pays the refund values.
   
2. Beginning January 1, 2021, revises the definition of “supermarket” by increasing the gross annual sales from $2,000,000 to $4,000,000 for a full-line, self-service retail store that sells a line of dry grocery, canned goods, or nonfood items and some perishable items.
   
3. On or before April 1, 2021, requires CalRecycle to appoint an advisory committee for consultation purposes including forming the Beverage Container Stewardship Organization (BCSO) and creating a beverage container stewardship plan.
   
4. On or before July 1, 2021, requires each distributor to register with CalRecycle.
   
5. On or before October 1, 2021, requires distributors to form a BCSO to develop, implement, and administer the beverage container stewardship program.
   
6. Within 60 days of receipt of request for certification of BCSO, requires CalRecycle to notify distributors of its decision whether to certify BCSO.
   
7. On and after October 1, 2021, prohibits a distributor or dealer from selling, distributing, or offering for sale a beverage in a beverage container in the state unless the distributor or dealer is in compliance with the stewardship program.
   
8. On or before November 1, 2021, and at least annually thereafter, requires CalRecycle to post and update on its internet website a list of distributors and whether each one is in compliance with the stewardship program.
   
9. On or before April 1, 2022, requires BCSO to develop and submit to CalRecycle a plan for the redemption and recycling of empty beverage containers, which must include specified goals and elements including methods to increase the quantity and quality of empty beverage containers recycled or remanufactured and procedures for consumers to redeem beverage containers if there is not a recycling center located within the convenience zone.
   
10. Within 90 days of receipt of the submitted plan, requires CalRecycle to approve, disapprove, or conditionally approve the plan. If CalRecycle fails to act in that time, the plan must be deemed approved. If CalRecycle disapproves the plan, BCSO must resubmit the plan and if the plan does not comply with specified requirements, then BCSO shall not be deemed in compliance until BCSO submits a plan that CalRecycle finds in compliance.
    
11. Within 90 days after approval or conditional approval of the plan, requires BCSO to implement the plan.
    
12. On or before July 1, 2022, and annually thereafter, requires BCSO to submit to CalRecycle a proposed budget for the stewardship program for the following calendar year. Requires CalRecycle to approve or disapprove the proposed budget, as specified.
    
13. Requires BCSO to establish a stewardship fee to be paid by the distributor members of the organization.
    
14. Requires BCSO to keep minutes, books, and records that clearly reflect the activities and transactions of the organization.
    
15. On or before January 1, 2023, requires CalRecycle, in consultation with BCSO and other interested stakeholders, to adopt regulations for the orderly transition from the requirements of the current Bottle Bill program to the stewardship program.
    
    1. On or before July 1, 2022, if CalRecycle finds that it is unable to develop regulations to make an orderly transition from the current Bottle Bill program to the stewardship program, requires CalRecycle to report that finding to the Legislature.
       
16. Beginning January 1, 2023, requires CalRecycle to begin the transition from the current Bottle Bill program to the stewardship program.
    
17. On July 1, 2023, and quarterly thereafter, requires BCSO to reimburse CalRecycle for costs directly related to implementing and enforcing BCSO’s activities.
    
18. On January 1, 2024, repeals the current Bottle Bill program unless a later statute is enacted before January 1, 2024, deleting or extending the repeal date; and requires, no later than that date, the stewardship program to begin in full.
    
19. On and after January 1, 2024, authorizes a recycling center to pay the refund value based on the weight or quantity of returned containers.
    
20. On and after January 1, 2024, revises the definition of “beverage” to include wine and distilled spirits.
    
21. Establishes the Beverage Container Recycling Program Fund that shall become operative on January 1, 2024. Requires fees received by CalRecycle to be deposited into the fund. Provides that moneys in the fund may be expended by CalRecycle upon appropriation by the Legislature for purposes of the beverage container redemption and recycling program.
    
    1. Requires unredeemed refund values to be retained by BCSO and be used for the following purposes in the following priority:
       
       1. Implementation of the beverage container recycling program and provides that BCSO administrative costs may not exceed 2% of the projected unredeemed refund values for the calendar year.
       2. Activities to improve the quality of postconsumer beverage container material that is used for recycling purposes.
       3. Activities that encourage the remanufacturing of beverage containers.
       4. Activities to encourage in-state manufacturing of recycled beverage containers.
          
    2. Creates the Penalty Account in the Beverage Container Recycling Program Fund and requires CalRecycle to deposit civil penalties or fines collected pursuant to this program into the account.
       
22. On or before March 1, 2024, and annually thereafter, requires BCSO to submit to CalRecycle, and make available on its internet website, a report that includes specified information about the stewardship program for the previous calendar year including BCSO’s costs and revenues, the quantity of beverage containers disposed of in solid waste landfills, the quality of beverage containers collected for recycling under the plan, and the total volume, number, and weight of beverage containers collected and recycled during the preceding year.
    
23. On or before January 1, 2026, requires CalRecycle to establish state beverage recycling goals, review every four years, and update as necessary.
    
24. On or before January 1, 2026, requires CalRecycle to establish minimum content standards for beverage containers that are constructed of metal, glass, or plastic or other material, or any combination thereof.
    
25. Beginning 2026 and 2027, if the aggregate recycling rate for beverage containers is less than 75% for two consecutive years, requires CalRecycle to provide recommendations to the Legislature within six months of that determination on ways to increase the recycling rate.
    
26. Authorizes CalRecycle to impose administrative civil penalties on any distributor, BCSO, or dealer in violation with the stewardship program.
    

Background

1. Background on the Bottle Bill program. The Bottle Bill was established by AB 2020 (Margolin, Chapter 1290, Statutes of 1986). The purpose of the program is to be a self-funded program that encourages consumers to recycle beverage containers to prevent littering. The program accomplishes this goal by requiring consumers to pay a deposit for each eligible container purchased. Then the program guarantees consumers repayment of that deposit, the California Redemption Value (CRV), for each eligible container returned to a certified recycler. Statute includes two main goals for the program: (1) reducing litter; and, (2) achieving a recycling rate of 80% for eligible containers.
   
   Over the years, various concerns about the program have been raised such as the structural deficit, the effectiveness of some supplemental programs supported by the program, fraud, and whether some offsets support the goals of the program.
   
2. Eligible beverage containers. Only certain beverage containers containing certain beverages are part of the CRV program. Most containers made from glass, plastic, aluminum, and bimetal (consisting of one or more metals) are eligible. Wine, spirits, milk, fruit juices (over 46 ounces), vegetable juice (over 16 ounces), and soy drinks are not eligible for CRV. Container types that are not included in the CRV program are cartons, pouches, and any container that holds 64 ounces or more.
   
3. Participants in the Bottle Bill program. The various stakeholders in the Bottle Bill program include:
   
   1. Consumer. Every person who, for his or her use or consumption, purchases a beverage in a beverage container from a dealer.
      
   2. Dealer. A retail establishment which offers the sale of beverages in beverage containers to consumers. However, any lodging, eating, or drinking establishment, or soft drink vending machine operator who engages in the sale of beverages in beverage containers to consumers shall not be deemed a dealer for purposes of the Bottle Bill program.
      
   3. Distributor. Every person who engages in the sale of beverages in beverage containers to a dealer in the state, including any manufacturer who engages in these sales. “Distributor” includes any person who imports beverages from outside of this state for sale to dealers or consumers in this state.
      
   4. Beverage Manufacturer. A person who bottles, cans, or otherwise fills beverage containers, or imports filled beverage containers, for sale to distributors, dealers, or consumers.
      
   5. Container Manufacturer. A person who produces beverage containers for filling by beverage manufacturers, including any person who imports these beverage containers from outside of this state for filling by beverage manufacturers.
      
   6. Recycler. A recycling center, dropoff or collection program, or curbside program.
      
   7. Processor. A person, including a scrap dealer, certified by the Department of Resources Recycling and Recovery (CalRecycle), who purchases empty aluminum beverage containers, bimetal beverage containers, glass beverage containers, plastic beverage containers, or any other beverage containers, including any one or more of those beverage containers, which have a refund value established pursuant to the Bottle Bill, from recycling centers in this state for recycling, or, if the container is not recyclable, not for recycling, and who cancels, or who certifies to the department the cancellation of, the refund value of these empty beverage containers by processing empty beverage containers, in any manner which the department may prescribe.
      
   8. CalRecycle. State agency which administers, oversees, and enforces the Bottle Bill program.
      
4. Flow of CRV containers and payments. The Bottle Bill involves the flow of beverage containers and payments between several sets of parties, including consumers, retailers, recyclers, and manufacturers. At each stage, beverage containers and CRV are exchanged between participants. The Beverage Container Recycling Fund (BCRF) is used to collect and distribute payments for the CRV program.
   
   Consumers generally have three options to recycle: return container to a recycler at a convenience zone (CZ) recycling center; return to an “old line” recycler; or, “donate” the container to a curbside collector. Once collected, the containers are sold to a processor.
   
   Processors sort, clean, and process the containers into materials ready to be recycled, such as glass cullet or plastic flake, which they are able to sell to manufacturers for use in new beverage containers or other types of products. Beverage manufacturers that use glass and aluminum containers combine the recycled material with virgin material to create new containers and fill them with beverages. Plastic beverage containers generally contain no recycled content.
   
5. Flow of CRV. When beverage containers are exchanged, there is a corresponding CRV exchange. When consumers purchase beverages, they pay CRV to retailers. Retailers pass the CRV to beverage distributors. Beverage distributors pay CRV on all new beverage containers they sell in California to the BCRF after keeping 1.5% (about $18M/year) for administrative costs. The BCRF is then used to pay CRV to processors for the containers they process. Processors pass the CRV on to the recyclers who collected the empty containers. Recyclers, in turn, pay CRV to consumers who redeem their beverage containers at a recycling center. In this way, consumers are able to recoup their CRV from the recycler.
   
6. Ways to redeem containers. Consumers have three different avenues in which they may redeem containers:
   
   1. Return the container to a “convenience zone” recycling center located within ½ mile radius of a supermarket. These are generally small centers that only accept beverage containers and receive handling fees from the BCRF. CZ recyclers collect about 25% of CRV containers, but are utilized by 60% of consumers.
      
   2. Return the container to an “old line” recycling center, which refers to a recycler that does not receive handling fees and usually accepts large quantities of materials, frequently by truckload from municipal or commercial waste collection services. Traditional recyclers collect slightly more than half of all CRV containers (54%).
      
   3. Consumers can also “donate” their containers to residential curbside recycling collection. Curbside programs collect about 10% of CRV containers. Curbside programs keep the CRV on these containers.
      
7. Additional Expenditures. In the past, lower recycling rates resulted in a half-billion dollar surplus in the BCRF, and previous Governors used the surplus to fund several loans to the General Fund. In an attempt to increase recycling and reduce the surplus, the Legislature amended the Bottle Bill a few times between 2000 and 2003 to include additional beverages, reduce the processing fees paid by manufacturers, establish the processing fee “offset” (reduced processing fees based on the “recycling rate” of a material), increase the CRV, increase handling fees to larger CZ recyclers, and establish and increase funding for a number of additional recycling programs. These programs are not directly related to the CRV, but they are intended to help achieve broader recycling goals. In 2006, AB 3056 (Committee on Natural Resources, Chapter 907, Statutes of 2006) increased the amounts of many of the additional programs, adjusted handling fees, and increased distributors’ administrative fees.
   
   The funding amounts for the supplemental programs are set in statute. A provision within the section that establishes the bulk of the BCRF expenditures requires CalRecycle to “reduce all payments proportionally” if it determines that there are insufficient funds to make any of the payments. Stakeholders refer to this reduction in funding as “proportional reduction.”
   
   Supplemental programs funded by CRV include:
   
   1. Processing Payments, Fees, and Offsets. For many material types, the cost of recycling containers is greater than the value of the recycled material, which is referred to as the “scrap value.” This means that, absent some additional financial support, accepting these containers from consumers and recycling them would be unprofitable for recyclers and processors. In order to close that gap, the state subsidizes recycling by making “processing payments” from the BCRF to recyclers and processors. CalRecycle determines processing payment amounts by estimating recycling costs through surveys of recyclers every two years and calculating scrap values based on monthly reports from processors.
      
      The cost to the BCRF of making processing payments is partially covered by the beverage manufacturers who produce these containers when they pay “processing fees” into the BCRF. The processing fees are calculated based on the number of containers each manufacturer sells. While processing fees were established to cover the full cost of making processing payments to recyclers and producers, over time the Legislature has reduced the processing payment by creating the “processing fee offset.” Since 2003, processing fee offsets have been determined on a sliding scale based on recycling rates (the amount of material collected for recycling, not the amount of material actually being recycled into new containers). As recycling rates for specific materials increase, beverage manufacturers that produce containers from those materials pay proportionally less in processing fees.
      
   2. Handling Fees. Supermarkets with more than $2 million in gross annual sales are required to have a recycling center within a ½ mile radius, which is referred to as the “convenience zone.” CZ recyclers receive a “handling fee” from CalRecycle based on the number of containers they redeem.
      
      Supermarkets that do not have a CZ recycler are required to take back containers themselves or pay an “in lieu” fee of $100 per day.
      
   3. Administrative Fees. Statute provides administrative fees to beverage distributors, recyclers, and processors to defray their costs of program participation. Since 2006, beverage distributors retain 1.5 % of the total CRV collected to cover administrative costs. CalRecycle pays processors 2.5% of their reimbursed CRV; processors then distribute 0.75% to recyclers.
      
   4. Curbside Supplemental Payments. $15 million is annually allocated to residential curbside recycling collection programs and neighborhood dropoff programs to encourage curbside recycling. The curbside supplemental payment is distributed to individual programs based on each program’s share of beverage containers collected over the previous year.
      
   5. Payments to Local Governments. $10.5 million is annually allocated to cities and counties for beverage container recycling and litter cleanup activities. Payments are distributed proportionally based on each jurisdiction’s population.
      
   6. Plastic Market Development (PMD) Payments. PMD payments are awarded to plastic processors and plastic product manufacturers for empty plastic beverage containers that are processed and recycled into new material in California.
      
   7. Quality Incentive Payments (QIP). $10 million is annually allocated for QIP in order to improve the quality and marketability of collected glass containers. Glass container recycling has significant GHG benefits and supports in-state bottle manufacturing. Curbside glass has significant issues with contamination and requires a great deal of processing prior to recycling. Glass collected at recycling centers is generally much higher quality and more easily recycled into new containers.
      
   8. Local Conservation Corp (LCC) Grants. LCCs are awarded grants to operate beverage container litter reduction and recycling programs.
      
8. Recent recycling center closures. In August 2019, rePlanet closed all 284 of its recycling centers in California. Before its closure, rePlanet was the largest recycling network in California. Following the closures, rePlanet stated, “With the continued reduction in State fees, the depressed pricing of recycled aluminum and PET plastic, and the rise in operating costs resulting from minimum wage increases and required health and workers compensation insurance, the Company has concluded that operation of these recycling centers is no longer sustainable.”
   

Various causes have attributed to the closure of these recyclers. One reason may be attributed to the drop in commodity prices, which have been declining over several years, Also, oil prices have declined significantly and reached historically low levels in 2016. In 2011, PET plastic scrap prices were at a peak of $500/ton and have steadily dropped to $200 in 2016; a decline of 60 percent. New plastic is manufactured from oil, so when the price of oil is very low, using recycled plastic can be more expensive because it has to be sorted and cleaned.

Additionally, changes to processing payments have not kept pace with the decline in scrap values. According to the Legislative Analyst’s Office, the state subsidizes recycling by making processing payments to recyclers and processors. Processing payments are intended to cover the difference between a container’s scrap value and the cost of recycling it (including a reasonable rate of return). Both the costs of recycling and the scrap value of beverage containers can fluctuate significantly based on changing market prices. As a result, processing payments vary over time. Some contend that processing payments have failed to keep up with real time prices and includes a minimum three-month gap, resulting in recycling centers receiving insufficient state payments to make up for the income they may lose from the decline in scrap value.

1. Declining Recycling Rates. When the program was first implemented, the recycling rate for eligible containers increased from 52% to 85%, exceeding the statutory goal of 80%. Additionally, the total number of containers recycled tripled due to higher recycling rate and several expansions in the types of eligible containers over the years. In the past, the high recycling rate combined with the large number of additional expenditures resulted in budgetary shortfalls within the BCRF.
   

However, in recent years, the recycling rate for beverage containers has fallen from 85% to 75%, causing the BCRF to no longer operate in a budget deficit.

1. Limitations of the current Bottle Bill program. According to CalRecycle, the Bottle Bill program is limited in its abilities to adapt to changes in consumer products and behavior, developments in recycling systems, and fluctuations in the global commodities market. These limitations have created challenges and missed opportunities to maximize the benefits of recycling beverage containers, especially climate change benefits. To that end, in 2017 CalRecycle proposed a policy framework outlining key components of reform and based on the following principles:
   
   1. Improving recycling and remanufacturing. According to CalRecycle, the program has been successful in its initial goal of reducing litter by providing recycling collection opportunities for consumers. However, collection does not ensure that a product is recycled into a new commodity. Future investments should be dedicated to creating clean, recyclable streams of material to facilitate recycling and remanufacturing. To facilitate recycling and remanufacturing, CalRecycle will focus on reform efforts on maintaining redemption opportunities for consumers and increasing the stream of clean recyclable materials.
      
   2. Sharing responsibility. According to CalRecycle, historically, the consumer has shouldered most of the financial burden to sustain the program. Program responsibilities and financing should be rebalanced among all program participants. Under the current program, consumers pay $0.05 or $0.10 on each beverage container purchased, and in order to get their money back, consumers must travel to a recycling center to return the container. In contrast beverage manufacturers pay $0.00024 for each polyethylene terephthalate (PET) container they sell in California.
      
   3. Enhancing adaptability and sustainability. According to CalRecycle, increases in the recycling rate have resulted in a structural deficit in the BCRF. In addition, the program does not respond quickly to fluctuations in the global commodities market. The program must be both nimble and fiscally sustainable to advance the state’s economic and environmental goals. A comprehensively reformed program must be fiscally stable and include a mechanism preventing future structural deficits.

Comments

1. Purpose of Bill. According to the author,
   

“SB 372 provides a comprehensive reform to California’s antiquated beverage container redemption and recycling program, known as the Bottle Bill. This bill establishes a new streamlined stewardship program that places redemption and recycling responsibilities on those who are distributing beverages inside California.

Created in 1986, the current Bottle Bill system has prevented billions of single-use beverage containers from becoming litter on our streets and going into landfills. But after three decades, the system is slow to adapt to changes, often has significant structural deficits, and relies too heavily on consumers for financing. After more than 30 years, the Bottle Bill has become convoluted.

In 2017, Governor Brown first called for a comprehensive solution to the problems plaguing today’s outdated system. SB 372 builds on the recommendations that came out of the Governor’s stakeholder meetings, the Legislative Analyst’s Office report, and the Senate Environmental Quality Committee oversight hearing on beverage container recycling that year. The bill requires distributors to form a stewardship program (similar to California’s mattress recycling program), which must be approved by CalRecycle.

SB 372 will reduce the state’s bureaucratic function by creating a distributor stewardship program and allowing CalRecycle’s focus to be where it is most efficient – on oversight and enforcement – of the beverage container redemption and recycling program.”

1. Wine and distilled spirits. Almost one billion (approximately 974 million) bottles of wine and liquor are sold in California annually. Although the current Bottle Bill program includes beer, it does not include wine or liquor. SB 372 adds wine and liquor into the proposed beverage container stewardship program. Stakeholders note that wine and liquor bottles are currently being recycled at a high rate by consumers via curbside recycling; and industry estimates the recycling rate of wine and liquor bottles at approximately 70%. In 2016, curbside programs received approximately $129 million from the current Bottle Bill program. If wine and liquor bottle recycling is handled primarily through curbside, which is part of the beverage container recycling program, a question arises as to why these bottles do not contribute financially to the program from which they benefit.
   
2. Other stewardship programs. Over the years, the Legislature has enacted various extended producer responsibility programs, requiring entities to take a shared responsibility in the management of their end-of-life products either individually or though a stewardship organization. A question has developed with regard to stewardship programs over the years - in the event a particular stewardship organization ceases to operate the program, what happens to the money that has been collected from the consumers by the stewardship organization? A similar question arises here – what happens if the department decertifies a BCSO or a BCSO decides to no longer administer the program? In the mattress and carpet programs, subsequent legislation has inserted contingency plans into the programs in such an event, providing for the transfer of liabilities, assets, and responsibilities to a subsequent organization, and, in some cases to the department. Moneys that are collected by the organization from the consumer for the purposes of implementing the program are also transferred.
   

However, this program is different than past EPR programs; in addition to the CRV deposit that is paid by consumers, which stays with the BCSO if the deposit is not redeemed and are used for purposes of recycling beverage containers, distributor members of the BCSO pay a stewardship fee to help cover the expenses of the program. The author may want to consider whether similar provisions would be appropriate for this EPR program or if, considering the contribution of distributor money into the fund, some other mechanism would be more appropriate.

1. Mixed results for California EPR programs. To date, the Legislature has enacted 4 EPR programs – paint, carpet, mattresses, and pharmaceutical and sharps waste – showing varying degrees of success. While CalRecycle does not appear to have oversight issues with the paint stewardship program, CalRecycle was subject to an audit for its oversight of the mattress recycling program. The carpet recycling program has encountered the most challenges of the EPR programs. According to the CalRecycle website, the enforcement history between CalRecycle and CARE, the organization in charge of the carpet recycling program, is extensive and complicated. Only enacted in 2018, the pharmaceutical and sharps waste program is still in development.
   
2. Success in Oregon. There are 10 states in the United States that have bottle deposit programs, with Oregon having one of the highest redemption rates. While other states have experienced declining redemption rates over the last several years, Oregon has instead seen an increase. In Oregon, the program is a type of stewardship program run by the Oregon Beverage Recycling Cooperative (OBRC), a cooperative cooperation owned by Oregon beverage distributors and grocery retailers. The OBRC manages the deposit flow, reimburses grocery retailers for refund values redeemed by the public, picks up and processes returned beverage containers across the state, and operates redemption centers.
   
3. Interaction with Senate Bill 54 (Allen) and Assembly Bill 1080 (Gonzalez). Identical bills, SB 54 and AB 1080, which are currently on the Assembly Floor and Senate Floor respectively, are bills that would also drastically impact the solid waste world in California. The bills would require CalRecycle, by January 1, 2024, to adopt regulations requiring producers of single-use packaging and priority single-use products to source reduce to the maximum extent possible and to ensure, by 2030, that all single-use packaging and priority single-use products offered for sale, sold, distributed, or imported into the state are recyclable or compostable. Under SB 54 and AB 1080, beverage containers under the current Bottle Bill are not subject to those bills’ provisions until 2026.
   

If all three bills were to be enacted, would they be able to work in context of one another? Although SB 54 and AB 1080 are much broader in scope that SB 372, all three bills have significant overlap, and sometimes duplicate or conflict with one another. If all bills proceed, the authors will need to consider the following provisions, and more:

• 1. Which beverage container program will apply? The current program or the EPR program?
  2. Which recycling rates will apply? Would CalRecycle have authority to set different recycling rates under the EPR program?
  3. Is there duplicate reporting?
  4. Are the definitions consistent?
  5. What are the consequences for noncompliance?
     

Related/Prior Legislation

SB 168 (2017, Wieckowski), as heard in committee is nearly identical to this bill. The bill was later amended to impose minimum postconsumer content standards on plastic beverage containers.

SOURCE:

Author

SUPPORT:

Californians Against Waste

Consumer Watchdog

Eunomia

The Story of Stuff Project

Tomra

OPPOSITION:

California Beer & Beverage Distributors

Institute of Scrap Recycling Industries (ISRI), West Coast Chapter

Protect CRV

ARGUMENTS IN SUPPORT:

According to The Story of Stuff Project,
“While the California bottle bill has yielded positive results since its inception, the system has gone through chronic decline over a number of years and has shown itself unable to address these issues sufficiently. … The results show that the state’s recycling rate has dropped from a high of 85% in 2013 to 80% in the years since, and with the latest round of [recycling center] closures, we expect these figures to deteriorate further. Furthermore, retailers are not fulfilling their legal responsibility to act as a fallback option. Indeed, retailers do not even have a legal way to efficiently process and be paid for the bottles and cans whose deposits they refund to consumers.”

ARGUMENTS IN OPPOSITION:

According to Protect CRV,
“As written, SB 372 does not have provisions that would provide immediate financial support for existing recycling centers, nor provide a stimulus or incentive to open new recycling centers. As written, hundreds more recycling centers could close by the time SB 372 would go into effect.”

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