(January 13, 2010) The California Chamber of Commerce filed suit against the state of California on December 22, 2009, requesting that millions of dollars worth of unpaid loans taken from the Beverage Container Recycling Fund (BCRF) over the last eight years be refunded.
Since 2002, the state of California has “borrowed” a total of $566.7 million from the BCRF to make up for budget shortfalls in the General Fund.
Beverage manufactures are required to pay a processing fee on various beverage containers sold in California. Beverage distributors are required to make redemption payments known as the California Redemption Value (CRV). The CRV is later passed on to the consumer and the processing fees and CRV are deposited into the BCRF. BCRF revenues are then used to make “processing payments” to recyclers to cover a portion of the costs associated with collecting and sorting beverage containers.
The larger the amount of revenues in the BCRF, the smaller the fees paid by the beverage manufacturers and the larger the payments made to recyclers.
Because of state borrowing, BCRF revenues have shrunk and payments made to recyclers have dwindled.
Increased Fees
At least $482.7 million of the BCRF “loans” have not been repaid by the state, forcing some of California’s major recycling centers to either close or make severe staff and budget cuts.
The state Legislature’s Budget Conference Committee reported that by June 30, 2010, the BCRF would have a negative balance of $161 million. In 2009, the Department of Conservation increased processing fees for glass and polyethylene containers (HDPE) by more than 600 percent, and the fees for polyethylene terephthalate (PET) by more than 800 percent.
Consequently, processing payments to recyclers were substantially reduced.
Lawsuit
The purpose of the CalChamber lawsuit is to compel the Director of Finance and State Controller to transfer back to the BCRF the unpaid loans and to compel the Director of the California Department of Conservation to adjust the processing fees paid by beverage manufacturers to a level commensurate with the revenue status of the BCRF after the loaned funds are returned.
State law requires that recyclers be paid handling fees so that consumers are allowed to redeem their deposits on beverage containers. If the BCRF is not refunded by the state, the program will become insolvent and the state will lose revenue and jobs.
Staff Contact: Erika Frank