California Beverage Retailers Face Hard Choices After Recycling Center Closures

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By Chase Difeliciantonio, NORTH BAY BUSINESS JOURNAL

August 16, 2019

If you are in the grocery business, guess what? You might also soon be in the recycling business.

That is after rePlanet, California’s largest recycling chain, ceased operations, closing all of its 284 recycling centers and processing facilities and terminating its entire workforce throughout California. The closures included five locations in Solano County, one in Napa County and two in Sonoma County.

Beyond limiting the spots where consumers can get a payment for each bottle and can received, there are significant impacts from the closures for business.

Many California and North Bay grocery and beverage retailers could soon be required to pay a $100 per day fee or become recycling redemption centers themselves to compensate for the closed facilities.

California’s Beverage Container Recycling and Litter Reduction Act, or “Bottle Bill,” established so-called “convenience zones” throughout California. A convenience zone is typically a half-mile radius around a beverage retailer in an urban or suburban area with annual sales of $2 million or more, according to California’s Department of Resources Recycling and Recovery, or CalRecycle, the state agency charged with regulating and enforcing recycling statewide.

If a certified recycling center like those closed by rePlanet — many of which were essentially trailers in shopping center parking lots — is operational within a convenience zone, beverage dealers within that radius are not required to redeem bottles and cans for 5 and 10 cents apiece.

If there is no center, however, all beverage retailers in a convenience zone, regardless of annual sales, have two options, according to CalRecycle:

Option A is to redeem beverage containers in-store, paying customers nickels and dimes for their recycling items and storing and bringing them to a disposal facility themselves.

Option B is to pay a $100 per day fee.

Some of that came as news to Giovanni Ferrari, the front end manager at Lira’s Supermarket in Rio Vista in Solano County, where a rePlanet resale site recently closed. Ferrari said he was aware of the potential fee — and called it an impossible burden — but said his store planned to document that they could not find a new recycling partner and seek an exemption from the state.

He was not aware, however, of the possibility that his store could choose to begin redeeming bottles and cans on site.

“That would definitely not (work)” he said. “We’re already shorthanded as it is, we already have enough trouble getting people to stay…. If it came down to it, to save us $100 per day, it would come about, but that’s last resort.”

The situation retailers like Ferrari and others find themselves in is because the original Bottle Bill never accounted for large recycling companies suddenly shutting down, said Aaron Moreno, the senior director of government relations for the California Grocers Association, which represents about 600 large and small grocery stores statewide.

“When the law was written back then there was no mechanism in place for instances where it’s the recycler that goes away,” Moreno said. He said the stores he represents are hoping for a legislative fix statewide before the end of the current legislative session in Sacramento in September.

“The main thing that grocers are planning is hoping the legislature can come up with a fix before the end of session, whether it be temporary or permanent.” He floated the idea of giving the director of CalRecycle more discretion to act in situations like these.

“Any fix has to anticipate instances in which the retailers didn’t cause the recycling center to close and give more discretion to the director to act more quickly when emergencies happen.” Moreno added.

Not everyone agrees that is the right fix however.

In a letter sent to California Gov. Gavin Newsom earlier this month, the head of the nonprofit Consumer Watchdog lambasted CalRecycle and said it had failed to enforce retailers’ obligations to redeem bottles and cans when they chose that option, prevent the closures, and live up to its obligation to issue financial reports required by the legislature for the last thirteen months, creating a crisis.

Liza Tucker of Consumer Watchdog also said large companies like Walmart routinely underreport the actual deposits they pay out and keep the difference and are not fined by CalRecycle.

“CalRecycle has failed to save the redemption centers, to force the retailers to live up to their legal obligations, to hold beverage companies accountable for bilking the state and to honestly present the financial ledger of the recycling program” the group’s President Jamie Court wrote in a letter to Newsom. “Instead, the entirety of CalRecycle’s response has been to quibble with our numbers in the media and ignore the crisis.”

In the short term, recycling drop off centers that are continuing to operate will likely see an increase in business, according to Lance Klug, a public information officer with CalRecycle.

“Current recycling centers probably aren’t going to be affected other than that they’ll get more business,” Klug said.

Several North Bay recycling companies did not return calls requesting comment including Global Materials in Santa Rosa, Marin Sanitary Service, and Recycling Zone in American Canyon.

In a follow up email Sydney Fong, also a public information officer at CalRecycle, wrote affected beverage retailers within the newly unserved recycling areas would receive a notice from the agency within 30 days advising them there is no longer a recycling center in their zone and therefore all beverage dealers in that zone are required to redeem beverage containers.

A second notice is mailed to the store 30 days after the first notice is sent and 30 days after the second notice is mailed a final notice with an affidavit is sent via certified mail that includes the A and B options.

Klug said the rePlanet closures, some of which also took place in 2016, are a result of market forces beyond a state recycling agency’s control however.

“They are mainly attributable to the low cost of oil and the declining value of recycled plastic,” Klug said. “When virgin plastic is more cost competitive with a petroleum based product, it is cheaper to make virgin plastic than recycled plastic” he added.

Other trends have cut into the recycling industry’s bottom line as well.

In January of last year China’s National Sword policy declared it would no longer accept mixed paper recycling, which can be anything from newspaper to office paper, as well as certain plastics due to contamination.

The Business Journal previously reported that in the fallout of the refusal, some companies say they plan to raise rates on customers and have even sent recyclable material to landfills because it is less expensive.

Back at home, Moreno of the Grocers Association painted a bleak picture of the choice retailers face if the state does not act.

“Those sanctions were meant to be the encouragement to have supermarkets find recyclers to go into their parking lots,” he said, noting most retailers could not afford to pay the $100 daily fee and would face sanitary and manpower challenges in becoming redemption centers themselves.

“If there’s no recyclers to come into your parking lot literally there’s no way to truly comply with the law. It’s like a Kafka novel.”

Consumer Watchdog
Consumer Watchdog
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