By Dustin Gardiner and J.D. Morris, SAN FRANCISCO CHRONICLE
April 5, 2022
When San Francisco launched its mobile recycling program at the start of the year, city officials hailed the “first-of-its-kind” effort as a way to make recycling easier for consumers struggling to redeem their empty cans and bottles for 5- and 10-cent deposits.
The concept for the pilot program, dubbed SF BottleBank, was simple: send mobile recycling trucks to different neighborhoods to make it convenient for people to return their empties for cash.
But some recycling advocates are blasting the program, which they say is collecting few bottles and cans and allege was shaped by consultants working for the grocery industry who sought to give retailers an easy way out of their obligation to redeem deposits in stores.
Since it launched, about 25 bags of bottles and cans have been recycled per day, on average, in a city of nearly 875,000 people, according to an analysis of the city’s figures. It’s too soon to know if overall bottle recycling is down in the city.
Part of the problem is access: The recycling trucks had been operating in just two locations — for four hours each day, mostly during business hours on weekdays. City officials launched a third redemption location on Monday.
Consumer Watchdog, an advocacy group that has pushed to overhaul the bottle deposit program statewide, recently sent city and state officials a letter demanding an investigation into the BottleBank program for alleged “misuse of public funds.”
In the letter, Consumer Watchdog revealed that the city paid more than $700,000 in fees to a handful of consultants who helped the city develop its plan for BottleBank at the same time they represented the San Francisco CRV Alliance, a group of grocery stores that pushed for the pilot program.
Jamie Court, president of Consumer Watchdog, said that presents a major conflict of interest because launching BottleBank let about 450 retailers and grocery stores across the city out of their obligation to redeem customers’ empty containers for nickel and dime deposits, commonly known as CRV refunds. It’s unclear how much it cost grocers to run the recycling programs.
“It feels like complete self-dealing,” Court told The Chronicle. “It’s absurd, the opposite of convenience.”
City officials strongly dispute the notion that they wasted funds on a recycling program that doesn’t work or needlessly deprived consumers of options to redeem bottles and cans for cash. They also dispute the notion that the work performed by the consultants presented a conflict of interest.
Under state law, stores that sell bottled beverages must collect deposits from consumers and also take back their empty containers, unless they are within a half-mile radius of a larger recycling center. Stores can get out of that obligation if they pay a $100 daily fee to the state per location.
But under a 2019 law, AB54, which legislators passed to help cities create mobile bottle recycling pilot programs, grocers and retailers no longer have to take back empties or pay the fee once the city launches a pilot program.
Consumer Watchdog wrote that San Francisco’s pilot program “was not designed to provide more convenience, but rather to get the members of the SF-CRV Alliance and all retail dealers in the city out of their recycling responsibilities. The deviousness of this plot is unforgivable.”
Consumer Watchdog provided The Chronicle with invoices showing that, between 2017 and summer 2021, the city paid more than $700,000 to consultants and legal and public-relations firms that were directly working with both the grocer-led San Francisco CRV Alliance and the city.
The San Francisco CRV Alliance declined to respond to Consumer Watchdog’s letter, and the group’s chairman canceled an interview with The Chronicle on Friday. On its website, the alliance includes the logos of Safeway, Costco, Whole Foods, Lucky Stores and Rainbow Grocery.
Several of the consultants who received payments from the city were listed as corporate officers for the CRV Alliance, according to public records. Among them: Tom Wright, the alliance’s CEO, was paid more than $380,200; and John Katovich, its former secretary, was paid $47,000 directly and $181,800 was paid to his law firm, according to Consumer Watchdog’s research.
Katovich, who stopped working for the alliance last fall, declined to comment. Wright did not respond to repeated requests for comment.
Officials with the Department of Environment told The Chronicle that the new recycling program is being rolled out as intended, expanding operations gradually and filling a need for more recycling services.
Recycling centers across California have closed in droves over the past five years, due to factors such as global tumult in the recycling market and soaring real estate prices. That has left consumers with few places to redeem their bottles and cans, aside from hauling them to grocery stores or tossing them in blue curbside bins (thereby forfeiting their deposits).
But city officials contend few stores were actually complying with the requirement to redeem empties, and enforcement from the state was lax, according to the city. The environment department disputes Consumer Watchdog’s claim that San Franciscans have been deprived of about 450 in-store redemption options.
“The status quo was inhospitable to consumers who wanted to recycle and redeem,” said Charles Sheehan, a spokesperson for the department. “There were not 450 options. There were very, very few options.”
San Francisco applied to CalRecycle, the state’s recycling agency, to launch the BottleBank program in 2019, and the program finally received its authorization last year, Sheehan said. The city has received $1.5 million in state grant funding for the program.
CalRecycle deemed the program operational on July 1, even though the mobile trucks didn’t start running until Jan. 5. The move allowed grocers and retailers to stop redeeming bottles and cans in-store or paying the daily opt-out fee last summer, six months before BottleBank opened to the public.
Consumer Watchdog estimates the state is now forgoing at least $2.7 million in annual revenue from the fee because about 130 stores in the city had opted to pay it.
City officials said it was appropriate to waive the fees starting last summer because San Francisco was preparing to launch a mobile recycling program.
“You can’t keep fining people while you put a new system in place,” said Kevin Drew, a specialist in the city’s environment department.
But Court said the decision to let stores off the hook six months before the mobile recycling trucks were operational shows BottleBank was designed to the benefit of grocers and retailers, not consumers.
San Francisco hired its recycling consultants in 2016 and 2017 as it began searching for a way to address the lack of sufficient options for bottle-and-can redemption. Sheehan, the city spokesperson, said part of the consultants’ job was to work with grocery stores. The CRV Alliance was formed in 2017, and he said only the grocers themselves — not the consultants who also worked for the city — have voting privileges on its board.
Assembly Member Phil Ting, a San Francisco Democrat who carried AB54, the bill that helped create the program, said the point of allowing pilot efforts like BottleBank is to explore new ways to make recycling convenient because the number of places where consumers could easily redeem cans was already dwindling.
“A pilot program means we are trying a new solution to see if it works,” he said in a statement. “Doing nothing is not an option.”
But the consulting fees raised red flags for state Sen. Bob Wieckowski, a Democrat from Fremont who’s carrying legislation to overhaul the bottle deposit program statewide. He said redemption sites need to be ubiquitous citywide to be successful.
“That’s an awful lot of money going to consultants rather than to provide better services for consumers,” Wieckowski said in a statement.
The city plans to have drop-off locations in all 11 city supervisor districts by year’s end, and to have 20 locations by the end of 2023.
With BottleBank, consumers must bring uncrushed bottles and cans to the two redemption sites across the city, and place them in plastic bags with scannable barcodes. The bags must be bought at grocery stores. After a bag is dropped off, the barcode will later be scanned while the containers inside are counted. Consumers can download an app so they can be reimbursed digitally.
“It’s much more modern,” Sheehan said.