California Chamber of Commerce Files Suit against State over Beverage Redemption Program

California Chamber of Commerce Files Suit against State over Beverage Redemption Program

Group calls for state of void the move to transfer money from redemption fund to general funds.

January 5, 2010

The California Chamber of Commerce has sued the state of California over its decision to transfer $566.7 million from the Beverage Container Recycling Fund (BCRF) to the General Fund and Air Pollution Control Fund, creating a shortfall in the BCRF.

That state refers to the transfers as “loans.” However, in the lawsuit the Chamber notes that at least $482 million of the loans have not been repaid.

In light of the shortage, the California Department of Conservation (DOC) increased the processing fees for glass and high-density polyethylene (HDPE) multiple times, resulting in total increases of more than 600 percent. Processing fees for PET (polyethylene terephthalate) containers increased more than 800 percent.

At the same time, the Chamber claims that the DOC sharply reduced the processing payments to recyclers.

The suit calls for the director of finance and the state controller to transfer back to the BCRF the unpaid loans and to compel the DOC director to adjust the processing fees paid by beverage manufacturers to a level commensurate with the revenue status of the BCRF after the loaned funds have been returned. The suit states that at least three of the loans “expressly state that they shall not interfere with the beverage container recycling program.”

The state has admitted that the BCRF will have a negative balance of at least $161 million by June 30, 2010.

The suit was filed Dec. 22, 2009, in the Alameda County Superior Court.

The chamber’s suit follows a lawsuit filed by a number of recyclers in the state, including Tomra Pacific, R.B. Recycling and Big Foot Recycling, over the state’s failure to reimburse recyclers for accepting containers.
The suit challenges the state’s decision to use money from the beverage container recycling funds. The lawsuit demands that California continue to pay recycler handling fees, as required by state law, to ensure that consumers may continue to redeem their deposits on beverage containers.
While California’s redemption program has been a successful model in the past, “recent actions by the state threaten to dismantle the program, destroying one of California’s landmark environmental achievements,” says Adrian White, president of Tomra Pacific, Corona, Calif.