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Updated: California’s Biggest Bottle Redemption Center Chain Closes

Updated: California’s Biggest Bottle Redemption Center Chain Closes

Consumer Watchdog is calling on the governor to tackle reform and require grocery chains to redeem bottles and cans.

rePlanet, California’s largest operator of recycling redemption centers, has shut down due to a surge in business costs and falling prices of recycled aluminum and polyethylene terephthalate (PET) plastic. The company has closed all 284 of its centers, resulting in the layoff of 750 employees.

According to the Los Angeles Times, the move comes three years after Ontario, Canada-based rePlanet closed 191 of its recycling centers and laid of nearly 300 employees.

Nonprofit group Consumer Watchdog said the closure of rePlanet requires the governor to prioritize recycling reform in the coming months. rePlanet closed its last 284 centers on August 5, leaving consumers with few places to receive bottle and can deposit refunds.

Consumer Watchdog called for California Department of Resources and Recovery (CalRecycle), the state agency in charge of recycling, to immediately require every grocery and convenience store chain to begin redeeming bottles and cans.

“We warned just months ago that the bottle deposit program was in crisis, and today’s closure shows consumers are being left in the lurch by the failure of the state to keep recycling centers open,” said consumer advocate Liza Tucker in a statement. “Governor Newsom needs to tackle this problem personally and make reform of the broken bottle deposit system a top priority this fall. CalRecycle has failed to deal with the problems we have raised, and they have now become a full-blown crisis for consumers and recycling in California.”

However, a spokesperson from CalRecycle said requiring all retailers in California to redeem beverage containers would require a change in statute. CalRecycle has no position on that, the agency explained.

A March report by Consumer Watchdog found that consumers get only about half of their nickel and dime bottle and can deposits back each year, despite paying $1.5 billion in 2018.

The investigation of California’s bottle deposit law pins the problem on lack of access to recycling centers, grocery stores that refuse to take empties, as well as state payments and policies that benefit politically connected trash haulers, beverage distributors and grocery stores rather than the public. Consumer Watchdog recommends making it mandatory for bottles and cans to be redeemed at any retailer that sells them.

CalRecycle points out that the Consumer Watchdog talking point is based on a disputed claim that consumer loss is $732 million. "This claim is inconsistent with audits findings and reporting," noted the agency.

CalRecycle also noted the following:

  • $126 million paid to curbside haulers, not consumers: "True, per statute curbside programs can receive CRV [California redemption value] for beverage materials when consumers opt to donate the CRV material through their curbside program, rather than redeem themselves. This revenue stream is typically taken into account when local jurisdictions enter into contracts with haulers and establish rates for waste generators."
  • $92 million paid to bulk collectors, not consumers: "Bulk collectors include Boy Scouts, nonprofit and church organizations that use this to supplement their work. Consumers can choose to donate to these collectors or to redeem themselves."
  • $206 million missed based on Container Recycling Institute 2014 report about universe of containers not being captured: "This claim has never been substantiated."

Moreover, a survey by Consumer Watchdog found that two-thirds of all retail stores that promised to recycle if redemption centers closed don’t follow through on their obligation.

CalRecycle pointed out that Consumer Watchdog conducted a survey of 50 stores. "To take that and claim two-thirds of all retail stores don’t follow through is a bit misleading," said the agency.

Eight out of nine other states require beverage retailers to take empties back in store along with redemption centers. Some states make the beverage industry responsible for running the programs and offering consumers convenient ways to redeem empties.

“It is time for California to join other states and European countries that make bottle deposit systems work by making the beverage industry responsible for the products they make, package, distribute and sell,” said Tucker.

In the last five years, more than 40 percent of all redemption centers have closed. Consumer Watchdog and the Container Recycling Institute (CRI) predicted in March that hundreds more closures were on the way due to severe underpayments by the state to support redemption centers in the face of plummeting prices for commodities such as aluminum and PET plastic. rePlanet has operated in California since 1984. At its peak, it operated more than 600 redemption centers. In 2016, it closed 191 recycling centers and let 300 employees go, leaving smaller California communities with no place for consumers to redeem empties.

One major reason for the closures is that the formula for calculating state payments to centers is “fatally flawed,” noted Tucker. CalRecycle averages costs to run centers across the state when operating centers in grocery store parking lots—a big consumer convenience—generally costs more. As payments shrink over time, centers fall into a death spiral and cannot afford to stay afloat in a brutal commodities market.

In addition, Tucker said that California allows waste haulers to collect bottles and cans in single recycling bins and redeem them for up to $190 million a year in consumer deposit money when haulers also hold lucrative trash hauling contracts at the same time.

“Waste haulers would like nothing better than to have redemption centers close and capture the whole stream of recyclable material,” said Tucker. “The problem is the contamination rates for materials in single bins is high, so they get paid consumers’ deposits for dirtying bottles and cans that go into landfills and incinerators that they control. If consumers could just take their empties to stores and redemption centers were everywhere, consumers would get their refunds, and we would have less litter and more recyclable material to make new bottles and cans.”

The National Waste & Recycling Association issued the following statement about the rePlanet closing:

In response to the article on the closing of rePlanet, the primary takeaway is that recycling is not free. Even with the support of funds from deposits, it was challenging to run a recycling program, and ultimately, financially unsustainable. The article points out that consumers were redeeming only about half of the deposits that they pay and are instead utilizing their curbside recycling bins. From a sustainability perspective, this is a laudable choice as recycling is the ultimate objective of container deposit schemes. 

As pointed out, recycling commodity prices have dropped, and the market is “brutal.” Like rePlanet, many haulers relied on recycling commodities revenues to support the hauling contracts and are struggling under current conditions. Suggesting that these contracts are lucrative mischaracterizes the current reality.

Waste haulers would like to be able to capture recyclable materials because it ensures that the hauling costs can remain viable to municipalities and because it provides efficiencies not enjoyed by the container deposit redemption centers.

This week’s closure of 284 recycling redemption centers (RCs) by rePlanet marks the latest and most significant setback to the state’s container deposit system (referred to as a bottle bill), said CRI in a statement released on August 7.

CRI is now calling on California Gov. Gavin Newsom to work with the state legislature and CalRecycle to overhaul the bottle bill. CRI released the following:

“It is particularly troubling that this situation was entirely preventable,” stated CRI. “For the past three years, the Container Recycling Institute, a Southern California-based nonprofit recycling authority, has repeatedly drawn attention to the dire consequences caused by inadequate RC processing payments from CalRecycle, the state agency that administers and provides oversight for recycling programs.

Because of these underpayments that have prevented a significant number of RCs from remaining solvent, along with historically low scrap prices and minimum wage increases for RC employees, more than half of the state’s nearly 2,600 RCs in operation in 2013 have since closed, and California’s recycling rate has dropped 10 percentage points (from 85 percent to 75 percent for all beverage containers combined). In addition, the loss of RCs has meant fewer jobs—the termination of 750 in the case of the rePlanet RC closures alone.

While California strives to be ‘best-in-class’ on environmental issues—from addressing our climate crisis to keeping plastic out of our oceans—the state’s bottle bill actually remains one of the most inconvenient in the world. There are more than 50 container deposit programs across the globe, but only California employs a payment system that imparts such high levels of financial risk and uncertain and inadequate payments to RCs. Because other systems don’t have these flaws, none of them would allow—as California’s law has—one-fifth of their redemption locations to close in one week (part of over one-half during the last five years), with no realistic backup plan in place. 

The consequences for consumers and the environment are dire. Deposit systems typically result in beverage container recycling rates two to three times higher than the rates of other recycling programs—making structurally sound deposit systems crucial to reducing energy use and carbon emissions because fewer containers need to be made from virgin materials. Besides seriously impacting the environment, the availability of fewer RCs also means fewer opportunities for consumers to get back their bottle deposits.”

CRI also added that the solution to California’s bottle recycling crisis requires a significant overhaul of the current system and specific immediate actions by CalRecycle.

According to CRI, at a minimum, structural changes to the container deposit system should include:

  • An expansion of the system to also accept wine and spirit containers.
  • An increase in the container deposit from 5 cents to 10 cents to incentivize more bottle returns.
  • Predictable and sufficient funding for RCs.

“Regarding CalRecycle, CRI applauds the agency for taking swift action this week to update information on its website,” said CRI in its statement. “The newly closed RCs have been removed from the website and a list of retailers that redeem in-store has been added.”

Additionally, CRI believes CalRecycle should also immediately:

  • Prioritize enforcement of the “return-to-retail” commitment of the 1,000-plus beverage retailers (including supermarkets) that have pledged to accept back empty containers and provide refunds to consumers.
  • Instruct beverage retailers that are not currently return-to-retail sites to place signage directing consumers to the nearest location for redeeming containers.

“If the current downward commodity pricing trend continues without structural adjustments to California’s processing payment formula, RCs’ cumulative net losses will inevitably force even more of them out of business,” CRI pointed out. “Further closures will mean additional reductions in recycling opportunities, less recovered income for consumers, fewer jobs and significant harm to the sustainable economy and the environment.”

Correction: August 07, 2019
This article was updated on August 7 to reflect comments from CalRecycle and the Container Recycling Institute.
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