Blue bins piled high with gleaming cans and pink plastic bags bulging with plastic jugs snaked up to the recycling center outside a Foods Co. on a recent Wednesday morning, with customers lined up to cash in their containers.
A homeless man named Aaron Viramontes said he stops by two to three times a week in search of cash. Another customer who arrived in a minivan loaded with boxes full of bottles said he always brings his empties to the center – “I paid for it in the store,” he noted, “so I should get my money back.”
But completing that transaction could get tougher. The company that runs the facility, RePlanet, has already closed scores of California locations amid a financial crunch that has gotten the attention of policymakers in Sacramento. Nearby centers had already stopped accepting items, and some customers had noticed.
“The question is, where would we recycle” if the closures continue? said John Viernes, a 29-year-old physical therapist who said he got into the habit of bringing his cans and bottles to recycling centers in Hawaii, where “the soil is sacred.” “It would be tough.”
The shuttering of hundreds of recycling centers around California has reduced opportunities to cash in bottles and cans while stirring anxiety for grocery store owners who may be forced to start accepting reusable materials themselves. As interest groups press policymakers for a solution, the situation has again illuminated the ongoing challenges facing California’s labyrinthine recycling system.
“This is a crisis for consumers who aren’t going to be able to get their money back on the containers they’ve purchased,” said Californians Against Waste executive director Mark Murray, “it’s a crisis of the stores who aren’t fond of taking containers back inside the store, and it’s a crisis for recycling centers who want to be in the business of taking back containers but can’t make it work in this financial market.”
Recycling facilities like those you see in grocery store parking lots receive subsidies from the state. Those payouts – determined either by subtracting the average value of scrap materials from the average cost of recycling or by using a survey to determine the average per-container cost of recycling, depending on the type of facility – help recycling centers stay financially viable.
Grocery stores and other places that sell recyclable materials like beverage containers, meanwhile, rely on those recycling centers. State law mandates that sellers either have on-site recycling facilities or sit within a half mile of one. If not, they are on the hook to either accept reusable items themselves or pay a $100-a-day fine.
Citing lower payments from the state and increased labor costs, the recycling giant RePlanet announced in January it had shut down 191 centers (a representative did not respond to requests for comment). According to CalRecycle, 298 went offline in the first quarter of this year. The per-container cost survey compels the state to slash payments to supermarket-based centers another 11 percent on July 1.
Legislators pressing for a response say constituents are already feeling the strain.
“Rural communities, in many cases in Northern California, have few if any locations to be able to recycle their cans and bottles,” said Sen. Mike McGuire, D-Healdsburg, and in more urban areas, “the public is having to wait sometimes upwards of two hours to be able to have their recyclables processed.”
A complex system of interlocking fees and payments, California’s recycling system has been undermined by its own popularity.
It’s funded largely by upfront fees on each container sold in California. But as more people recycle, more money leaves the system – both from people cashing in bottles and cans and from curbside collectors gleaning payments, among other transactions. As a result, in recent years the system has allocated more than it takes in by the tens of millions.
Global commodity prices largely explain the current woes of recycling centers. The plummeting scrap value of recyclable materials like aluminum and glass has hurt their bottom line, and the number of centers statewide has dipped from around 2,100 to under 1,800 in recent years.
“Falling commodities prices” have “really had an impact on the health of our industry,” said Joe Pickard. chief economist for the Institute of Scrap Recycling Industries. “2015 was the worst year we’ve seen, probably, in not just a decade but in a generation.”
To a large extent, Pickard said, tempering that volatility is “really beyond or government or our industry’s control” given the system’s reliance on global economic forces. But some California policymakers want to give CalRecycle the flexibility to respond more rapidly to how shifting prices determine what recyclers get paid.
“The program ... is not nimble enough to deal with changes in the commodity market,” said Assemblyman Rich Gordon, D-Menlo Park.
An alarmed grocery industry has pleaded with Sacramento for assistance as the wave of closures has unfolded.
“The choice is to either take that garbage at a checkout line, which we would fear health inspectors coming in and saying no to that (or) the alternative is paying $36,500” each year, said Aaron Moreno, a lobbyist for the California Grocers Association. “Grocery stores should get some kind of relief, because this is a situation where we literally did nothing wrong.”
Gov. Jerry Brown’s administration has pushed back on calls for a short-term fix, declining to get behind a stopgap budget proposal – backed by the grocers and by Murray’s organization – that would have frozen the processing payment and handling fee rates and given grocery stores an 18-month reprieve from the proximity-to-recyclers mandate.
Better than a short-term fix that would have cost the state recycling fund around $22 million a year, said a spokesman for the state Department of Finance, would be an overarching deal that looks broadly at how to reshape California’s recycling program.
“We’ve been pushing for a comprehensive solution, going back a couple years, to get the (recycling) fund on an even keel,” said spokesman H.D. Palmer.
A working group headed by McGuire has been negotiating a larger deal. Ideas kicked around so far have included increasing the processing fee levied on beverage manufacturers or limiting how much the program offsets what they pay; reducing the amount consumers can claim; letting CalRecycle more easily adjust what it pays recycling centers to reflect the shifting global commodities market; and expanding the universe of containers the program accepts.
But forging a deal could take time, and meanwhile, McGuire and others are pushing for a temporary fix.
“It is going to be a long, challenging summer if grocers are having to take in recyclables from residents within their communities,” McGuire said.