The California Beverage Container Recycling and Litter Reduction Act, administered by the Department of Resources Recycling and Recovery, is established to promote beverage container recycling. The act requires every Act requires a beverage distributor to pay to the Department of Resources Recycling and Recovery a redemption payment to the Department of Resources Recycling and Recovery for every beverage container for each beverage container, as defined, sold or offered for sale in the state. The act requires the department is required to deposit those amounts in the redemption payment into the California Beverage Container Recycling Fund. The moneys Moneys in the fund are continuously appropriated to the department for specified purposes, including paying to pay refund values, processing payments, administrative fees, and handling fees to certain types of recyclers to provide an incentive incentives for the redemption of empty beverage containers in the state. A violation of the act is a crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The California Beverage Container Recycling and Litter Reduction Act, administered by the Department of Resources Recycling and Recovery, is established to promote beverage container recycling. The act requires every beverage distributor to pay a redemption payment to the Department of Resources Recycling and Recovery for every beverage container sold or offered for sale in the state. The department is required to deposit those amounts in the California Beverage Container Recycling Fund. The moneys in the fund are continuously appropriated to the department for specified purposes, including paying refund values, processing payments, administrative fees, and handling fees to certain types of recyclers to provide an incentive for the redemption of empty beverage containers in the state.

The act requires the department to certify recycling centers and processors and makes them eligible for payments and fees from the fund under certain conditions. The act requires certified recycling centers and processors to comply with specified statutory requirements and implementing regulations, including the requirement that recycling centers accept empty beverage containers from all consumers. Existing law also requires that processors accept empty beverage containers from all recycling centers, and that they visually inspect containers. The act requires the department to conduct investigations and unannounced inspections of certified recycling centers and processors to determine that the acts requirements are satisfied. A violation of the act is a crime.

This bill would require the department to certify an operator of a recycling machine, as defined, as a processor and as a recycling center, subject to specified conditions, and would make the operator eligible for refund values, processing payments, and other program payments, thereby making an appropriation. The bill would impose a state-mandated local program by expanding the scope of a crime under the act.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1302 (Blakespear) - The California Beverage Container Recycling and Litter Reduction Act: recycling machines: pilot projects

Bill Summary:

This bill would authorize up to three recycling machine pilot projects under the California Beverage Container Recycling Program (BCRP).

Fiscal Impact:

• To the extent that the pilot projects extended by this bill result in the collection of more eligible containers under the BCRP, unknown but potentially significant ongoing costs (Beverage Container Recycling Fund [BCRF]) due to increased expenditures for repayment of the California Redemption Value (CRV) when consumers redeem the additional containers and other program payments made per container collected.
• Unknown, potentially significant ongoing costs (BCRF) for the Department of Resources, Recycling, and Recovery (CalRecycle) to administer the pilot program.

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.

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 authorize up to three recycling machine pilot projects under the BCRP. Specifically, this bill would:

1. Define “recycling machine” as a mechanical device that accepts empty machine acceptable beverage containers for redemption, as provided.
2. Authorize CalRecycle to select a jurisdiction for a pilot project based on certain criteria, and specify the requirements for the operation of a pilot project.
3. Authorize CalRecycle to issue probationary certificates of operation to operators of recycling machine pilot projects, as specified.
4. Make an operator of a recycling machine pilot project operator eligible for processing payments and handling fees.
5. By authorizing these additional expenditures from a continuously appropriated fund, the bill would make an appropriation.
6. By creating new requirements under the act, a violation of which would be a crime, this bill would impose a state-mandated local program.

Related Legislation:

SB 1113 (Newman, 2024) would extend the sunset for the Beverage Container Recycling Program’s pilot projects and extends the sunset for which previously appropriated funds can be spent for those projects.

SB 1013 (Atkins, Chapter 610, Statutes of 2022) adds wine and distilled spirits to the Bottle Bill) and, commencing January 1, 2025, authorizes dealers in unserved convenience zones to join a dealer cooperative to meet their redemption responsibilities.

AB 54 (Ting, Chapter 793, Statutes of 2019) expands the recycling pilot project program for 2 years, and provides funding to support those pilot projects.

Staff Comments:

By far, the largest expenditure from the BCRF is the CRV paid out when containers are returned. Total CRV expenditure amounts fluctuate based on the recycling rate but have made up more than 80 percent of all BCRF spending in recent years. Moreover, some supplemental programs—such as handling fees and processing payments—are paid on a per container basis, and therefore these expenditures increase as the number of containers redeemed increases.

Consequently, small changes in beverage sales (CRV paid in) or the recycling rate (redeemed CRV paid out) can have a significant effect on the BCRF fund condition. For example, a an increase in the recycling rate of 1 percentage point would increase CRV expenditures by $12 million. To the extent the extension of these pilot projects results in more eligible containers collected, payment of CRV and other per-container program payments on the additional containers could be significant.

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SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2023 - 2024 Regular

SUBJECT: The California Beverage Container Recycling and Litter Reduction Act: recycling machines

DIGEST: This bill would make changes to the bottle bill to require CalRecycle to certify an operator of a recycling machine, as defined, as a both a processor and as a recycling center. As such, the operator of the recycling machine would be eligible for refund values, processing payments, and other bottle bill program payments.

ANALYSIS:

Existing law:

1. 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 25 cents for boxes, bladders or pouches containing wine, distilled spirits, wine coolers, or distilled spirit coolers. The Act further:
   1. 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.)
2. Requires CalRecycle to certify recycling centers and processors that participate in the program. (PRC §§ 14538, 14539)
   
3. Requires there to be at least one certified recycling center or location within every Convenience Zone (CZ) that is open for business, as specified (PRC § 14571):
   
   1. Requires dealers in a CZ that do not have a certified recycling center or location to, and until one is established, either a) redeem empty beverage containers; or, b) pay CalRecycle an in-lieu fee of $100/day until a recycling location is established. (PRC §14571.6)
      
   2. Authorizes CalRecycle to grant an exemption for a CZ based on specified conditions, such as whether the CZ is within the curbside service area which collects CRV containers at least twice a month, whether there is sufficient number of recycling centers in the area, and whether the volume collected by the last recycler in the CZ was below 60,000 containers in the past 12 months. (PRC § 14571.8)
      
   3. Specifies that if a recycling center consists of Reverse Vending Machine (RVMs) or other unmanned automated equipment, the center is “open for business” if the equipment is properly functioning, accepting all types of empty beverage containers at the recycling location, and paying at least the minimum refund value. (PRC § 14571(e)(2))
   4. Authorizes up to 10 limited-term recycling pilot projects, subject to certain requirements, that are designed to improve redemption opportunities in unserved convenience zones, and makes the authorization provisions inoperative on June 30, 2026, and repeals them on January 1, 2027. (PRC §14571.9)
   5. Establishes the California Beverage Container Recycling Fund (BCRF) and continuously appropriates moneys in the fund to CalRecycle for specified purposes, including paying handling fees to recyclers to provide an incentive for the redemption of empty beverage containers in convenience zones. The Act makes a pilot project recycler eligible to apply for handling fees from the department. (PRC §14500 et seq.)
      

This bill:

1. Defines “Recycling machine” to be a mechanical device that accepts empty beverage containers for redemption recognizes, sorts, cleans, cancels, and processes empty beverage containers, renders those empty beverage containers in a form for demonstrated recycling end user, and provides documentation to CalRecycle for each container type, of the amount of empty or post-filled beverage containers received.
2. Requires CalRecycle to certify an operator of a “recycling machine” as both a processor and recycling center. Establishes transparency and record-taking measures for operators which include:
   1. The operator must make its computer and software systems available for inspection.
   2. CalRecycle may inspect, with 24-hour notice, any recycling machine.
3. The operator shall inspect and verify the loads of a recycling machine to determine the amount of empty beverage containers and eligibility for refund value before it pays any refund value. The department may require the operator to use machine vision approved by the department for that inspection, but a visual inspection shall not be required. Specifies that recycling machines will be self-contained and not accept bottles from other recycling centers or send material to other processes, or associated fees or payments.
4. Specifies that if a recycling machine is deployed in a private location, the operator of that recycling machine is not required to accept empty beverage containers from any other consumers.

Background

1. Bottle Bill Background. The Beverage Container Recycling Program, or bottle bill was established through legislation in 1986 (AB 2020 Margolin, Chapter 1290, Statutes of 1986) with the joint goals of reducing litter and achieving an 80% recycling rate for all beverage containers in the program. While the program does not encompass all containers, it does encompass most beverage containers made from glass, plastic, aluminum, and bimetal (consisting of one or more metals).

The bottle bill operates by adding a 5-25 cent CRV payment to beverage containers in the program. Beverage distributors pay CRV on all new beverage containers they sell in California into the BCRF. Distributors then pass the cost of the CRV on to retailers, who in turn pass that 5-25 cents per bottle on to consumers at checkout. Individuals and businesses are incentivized to return bottles to recycling centers where they can redeem the value of the CRV. Once a consumer is ready to dispose of a bottle, they can return bottles to a certified recycling center and redeem their CRV, or consumers can put their bottles in residential curbside recycling collection, wherein the curbside programs, not consumers, keep the CRV on these containers.

1. Recyclers and processors. Recycling centers accept bottles and cans and redeem CRV to consumers. They do not make money off that CRV—instead, their profit comes from selling bottles and cans for scrap value. While some scrap material, like aluminum, is valuable, plastic and glass scrap is almost always worth less than the cost of recycling it. To make up this difference in the cost of recycling and value of scrap and keep recyclers in business, CalRecycle provides processing payments to recyclers. The processing payment is the difference between the cost of recycling, modified to account for the cost of living and a reasonable financial return, and the 12-month average scrap value for a given material.

Recyclers may also be eligible for handling fees if they meet certain conditions, including that the recycler redeem all types of beverage containers in the bottle bill and that the recycler is the only recycler in a convenience zone and that is located on site with a business that sells beverages.

Once material has been collected at a recycling center, it must be processed. 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. Certified processors can be eligible for supplemental funding from CalRecycle including Plastic Market Development (PMD) Payments, which are awarded by CalRecycle to plastic processors and plastic product manufacturers for empty plastic beverage containers that are processed and recycled into new material in California.

1. Recycling Centers. The bottle bill has long struggled with providing an adequate number of recycling centers for consumers wanting to return their bottles and receive CRV money. The BCRP requires CalRecycle to set convenience zones and requires that at least one certified recycling center be located in each convenience zone. A convenience zone is typically a one-mile radius circle around a large supermarket in an urban area and a 3-5mile radius circle in a rural area. Convenience zones without certified recycling centers are considered “unserved.” Dealers, such as large supermarkets, are required to collect and provide redemption for CRV if they are in unserved zones, or alternatively they can pay a $100 per day to CalRecycle.

Recycling centers can be entirely manually staffed, or may use RVMs.

RVMs work by having consumers feed bottles into the RVM which scans the containers’ barcodes, materials, or shapes, to identify the type of packaging and give the correct deposit refund. The RVM will then sort the containers by type, and print a receipt to the consumer which can usually be redeemed in stores where the RVM is co-located. To be considered “open for business”, an RVM recycling center must meet certain criteria including that they accept all beverage containers. Since RVMs cannot accept all sizes of beverage containers, the RVMs are often supplemented with in-person services.

1. Recycling center scarcity. California currently has only 1,200 recycling centers across the state. Many rural counties have only one or two recycling centers to service large geographic areas. Sierra County has none. While dealers are required to redeem CRV in unserved zones, these sellers often choose not to provide this service, either opting to pay the $100 per day to CalRecycle, or simply not providing service or payment and risking a lawsuit. This has exacerbated the dearth of redemption opportunities in the state.

The deficit of recycling centers has been exacerbated over the last decade. Between 2013 to 2022, more than 1,300 (about half) of California’s recycling centers closed. One major example was rePlanet, the largest recycling network in California at the time, which closed all 284 of its recycling centers in the state in 2019.

If recycling centers are scarce, not only do recycling rates decline, but consumers are left without an opportunity to recover the 5-25 cents per bottle they paid up-front at check-out.

1. BCRP Pilot Program. To address recycling center scarcity and to explore more flexible approaches for redemption opportunities, the Legislature enacted the Beverage Container Recycling Program Pilot Program (Program) in 2017 (SB 458 Wiener, Chapter 648, Statutes of 2017). The Program initially authorized up to five local jurisdictions and recycling center operators to collaboratively create CRV redemption pilot projects. These pilot projects included more flexible redemption opportunities, like mobile recycling collection projects and pop-up stationary drop-off locations for bottle collection. Pilot projects are only eligible to be deployed in zones that are currently unserved, and areas with operating pilot projects are considered ‘served’ areas.

There are currently ten certified pilot projects in the Program, which is the maximum number allowed under the law. These pilot projects include redemption opportunities such as mobile recycle, home pickup, bag drop and mobile, pop-up collection.

1. SB 1013: dealer cooperatives. In 2022, the Legislature passed and the Governor signed SB 1013 (Atkins, Chapter 610, Statutes of 2022). Among other changes to the bottle bill, SB 1013 changes bottle redemption opportunities by establishing “dealer cooperatives” to service unserved zones. Dealer cooperatives allow beverage dealers to jointly form an organization to make a plan and arrange for the redemption of beverage containers across an unserved zone. CalRecycle has currently released the draft regulations for dealer cooperatives, and dealers must either provide redemption services individually or be part of a dealer cooperative by January 1, 2025. SB 1013 also removes the option for dealers to pay $100 per day in lieu of providing redemption services. These changes are expected to significantly impact redemption opportunities and processes starting in 2025.

Comments

1. Purpose of Bill. None provided.
2. Recycling for one? SB 1302 would require CalRecycle to certify recycling machines as recycling centers. Recycling centers are intended to provide take-back opportunities to consumer, and the more publicly accessible these centers are, the better. SB 1302, however, explicitly considers the case of a recycling machine being deployed in a private location, and specifies that the operator is not required to accept beverage containers from any other consumers. These private locations could extend to business and even homes. While the recycling machine technology could be useful to companies and individuals that want to take fewer trips to a recycling center, it is difficult to evaluate if the benefits to those few justifies allocating funding from the bottle bill in the form of processing payments, which are primarily intended to keep public-facing recycling centers open for business.

The potential micro-scale and private locations of recycling machines could also make inspecting these machines infeasible for CalRecycle. If a recycling machine is located in a person’s home or other private location, will CalRecycle have access to conduct an inspection? Even if the recycling machine is in a slightly more accessible location, like a school, the volume of material at such a localized sight may be low and insufficient to justify the expenditure involved in conducting an on-site inspection.

1. The wild west of RVM’s? The recycling machines described in SB 1302 seem analogous to existing RVMs, with additional processing capabilities. Processing beverage containers on site by shredding them would reduce the volume of the containers and make shipping logistics easier. However, in order to be considered a “recycling center,” RVMs in current law must meet certain requirements that ensure the RVMs are providing sufficient services that are comparable to more hands-on recycling centers. Specifically, in order to be certified, a recycling center that consists only of RVMs is only “open for business” if the equipment is properly functioning, accepting all types of empty beverage containers at the recycling location, and paying at least the minimum refund value. Under the current provisions of the bill, “recycling machines” are not required to meet any of these criteria. These criteria are important to ensure that customers are receiving adequate service and getting their CRV back.
2. Who gets the money, and how? SB 1302 requires operators of recycling machines to inspect and verify the amount of empty beverage containers before paying a refund value. While the language stipulates this can include “machine vision” approved by the department and doesn’t require a visual inspection, it is unclear if this inspection and verification happens as the consumer is feeding bottles into the machine, or later. If this process is not immediate, then it could be an additional roadblock for consumers to get their CRV from the recycling machine. It is currently unclear if providing CRV to consumers that return bottles to a recycling machine is a requirement for the recycling machine to be certified as a recycling center.
   
3. Are recycling machines ready for prime time? Recycling machines that are certified both as recyclers and as processors under SB 1302 would be eligible for funding streams, including processing payments and potentially handling fees or plastic market development payments or other monies from the Beverage Container Recycling Fund. However, without knowing how much volume these machines can handle or where they will be located, or the process in which they will reimburse consumers, it is unclear how significantly they will improve redemption opportunities or enhance processing infrastructure.

Since it is currently unclear how recycling machines would interface with and improve the existing infrastructure of the bottle bill, the author and committee may wish to instead follow the example of the existing bottle bill pilot program and create a new pilot program specifically for recycling machines.

The author and committee may wish to specify that in order to be a pilot project, recycling machines must act as recycling centers with RVMs, and accept all types of CRV containers, accept containers from all consumers, ensure equipment is properly functioning, and redeem CRV immediately onsite.

Finally, the author and committee may wish to specify that, in deference to the onboarding of requirements under SB 1013 for dealer cooperatives to provide recycling service in unserviced areas, deployment of a pilot project in an unserved area will not constitute ‘serving’ that area. The author and committee may also wish to add a sunset to the pilot program for recycling machines.

6) Committee amendments. Staff recommends the committee adopt the bolded amendments contained in comment 5 above.

Related/Prior Legislation

SB 1113 (Newman, 2024) extends the sunset for the Beverage Container Recycling Program’s pilot projects and extends the sunset for which previously appropriated funds can be spent for those projects. This bill is currently in awaiting hearing in the Senate Appropriations Committee.

SB 1013 (Atkins, Chapter 610, Statutes of 2022) adds wine and distilled spirits to the Bottle Bill) and, commencing January 1, 2025, authorizes dealers in unserved convenience zones to join a dealer cooperative to meet their redemption responsibilities.

AB 54 (Ting, Chapter 793, Statutes of 2019) expands the recycling pilot project program for 2 years, and provides funding to support those pilot projects.

SOURCE:

Author

SUPPORT:

None received

OPPOSITION:

None received

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