Report Claims Californians Lose Half of Every Nickel Bottle Deposit

A new report by Consumer Watchdog claims that of the $1.5 billion California consumers pay in deposits, they leave $732 million behind. But CalRecycle says this claim is inconsistent with audits findings and reporting.

Waste360 Staff, Staff

March 1, 2019

6 Min Read
Report Claims Californians Lose Half of Every Nickel Bottle Deposit

Nonprofit group Consumer Watchdog just released a new investigative report on the state’s beverage container recycling system, claiming that for every nickel bottle or can deposit that California consumers pay in the grocery store checkout line, they only get back 2.65 cents, or 53 percent, of their deposit.

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.

“California’s bottle deposit law is broken, and both consumers and the environment are paying a big price,” said Jamie Court, president of Consumer Watchdog, in a statement. “Governor Newsom needs to make a priority of putting the pieces of California’s broken bottle deposit law back together to stop this half-billion dollar per year consumer rip-off and to combat climate change, which is one of his top priorities.”

Consumer Watchdog recommends that Newsom set a new 90 percent redemption target, require mandatory returns at all large grocery stores and align payments and incentives to the new 90 percent goal. It also urges the state to consider raising the deposit amount, which has helped achieve a 90 percent rate in Michigan and Oregon.

The report also points fingers at CalRecycle, the state agency charged with overseeing the recycling laws, claiming:

  • Forty percent of state-certified recycling centers have closed in the last five years, with hundreds more closings on the way. That leaves more bottles and cans unredeemed by consumers while increasing revenue for waste and curbside haulers.

  • Recycling center closures also hurt communities via job losses and critical income for families and individuals who gather discarded cans and bottles to earn extra cash.

  • Grocery and big box chains are not taking back bottles and cans despite a legal obligation to do so.

  • Accounting scams by big retailers and beverage distributors such as Walmart are prevalent. They are supposed to keep count and pass on the paid deposit for every bottle they sell. But they consistently underreport how much they owe consumers and keep the difference.

  • CalRecycle has not publicly imposed a fine against distributors that scam the system or retailers that deny access, according to a review of publicly posted press releases for the last five years.

  • Politically connected waste and curbside haulers cash in on the bottle and can deposits that are supposed to go to consumers. They are paid a state premium on top, even though the haulers’ lax processing leaves their recycling materials increasingly contaminated and landfilled.

  • CalRecycle has accumulated a vast reserve of roughly $300 million as of 2018 while failing to pay recycling centers enough to survive. This money should be used to preserve and grow recycling centers that produce clean, recyclable materials and to enforce the bottle law via audits and fines for companies caught holding back consumer deposits.

Waste360 reached out to CalRecycle regarding these claims and was provided with the following statement:

“Global recycling market variables have been trending downward over the past few years. Still, California prioritizes supporting its recycling programs, including the one covering beverage containers. CalRecycle has taken action to stabilize the program subsidies paid to beverage container buyback centers to help cover the cost of processing materials and will continue to explore ways to support the program. That said, beverage container recycling centers are private businesses, and many have decided to close in recent years, despite the subsidies they receive from the program, due to economic conditions affecting the industry as a whole. So, while the program has a history of success, improvements are needed to further assist existing buy-back locations and to reestablish them in certain areas. Overall, the program has been highly successful, but recent years have brought challenges.

It’s also important to remember that typically consumers have a choice of what to do with their empty beverage containers—they can take them to a recycling center for a refund of the fee paid at checkout, they can donate it via the curbside bin or another type of collection program or they can throw it away, which means nobody claims the refund. Although the recycling rate has declined in recent years, for many years prior it was above the statutory goal of 80 percent, which still leaves unclaimed refunds. Unclaimed refunds are allocated via statute to a number of recipients and programs that support beverage container recycling, including tens of millions of dollars each year in subsidies to recycling centers.”

CalRecycle also pointed out some inaccuracies in the report, stating:

  • Closures: From 2014 to 2019, there was a 36 percent decline due to a series of factors, including global market conditions, making it less profitable to run a recycling center.

  • Unredeemed deposits: There will always be unredeemed funds if the return rate is less than 100 percent. Currently, the program is at a 75 percent recycling rate. It is a $1.3 billion program, and of that amount, unredeemed funds totaled $272 million for FY 2017/18. The unredeemed funds are used to support program payments, including payments to recycling centers, cities, counties, conservation corps and remanufacturing.

  • The 75 percent beverage container recycling rate includes curbside collection and other collection programs: Per statute, nonprofits and other collectors are allowed to redeem containers. Consumers can choose to donate containers to these organizations or redeem containers themselves.

  • False claim of $300 million reserve: The $300 million figure is a fund condition balance and does not reflect the amount of unencumbered revenue and expenditures. The fund balance does reflect pending invoices, such as payments to recyclers that are due but have not yet been processed. CRV-In (California Redemption Value) totaled $1.34 billion for FY 2017/18, and total expenditures totaled $1.21 billion, leaving only $18 million in “surplus” or unencumbered funds for FY 2017/18 (see the Quarterly Report Q3 Structural Deficit sheets on pages 7 and 8).

  • Lack of enforcement and Walmart underreporting: A CalRecycle audit found the underpayment and restitution has been paid.

  • Lack of in-store redemption: Dealers in areas without a recycling center have paid millions in fees to opt-out of redeeming in-store.

  • False claim that actual consumer loss is $732 million: This claim is inconsistent with audits findings and reporting.

    • $126 million paid to curbside haulers, not consumers: True. Per statute, curbside programs can receive CRV for beverage materials when consumers opt to donate the CRV material through their curbside program rather than redeem themselves.

    • $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 CRI 2014 report about universe of containers not being captured: This claim has never been substantiated.

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