Redeeming Value: The California Beverage Container Recycling and Litter Reduction Act And Enforcement Risks to Retail Markets

January 2023

Have you ever noticed the small CA CRV stamp on your soda can or bottled water and wondered what it meant? The CRV stands for “California Redemption Value” (sometimes called “California Refund Value”), and the program behind it has a multi-million dollar impact on distributors, retailers, and consumers across the state. Retail establishments such as supermarkets, gas marts, convenience stores, liquor stores, and health food stores are “Dealers” under the state’s CRV program. More of these Dealers, under broadened circumstances caused by recent changes in law, must redeem empty beverage containers and redeem consumers’ CRV in-store or pay a $100 per day statutory fee to the state.

Importantly, if the Dealer fails to comply, it risks an enforcement action by the California Department of Resources Recycling and Recovery (“CalRecycle”). Not only can CalRecycle seek to enforce payment from these supermarkets or convenience stores of the statutory fee for every day of nonpayment, but in addition the law allows the state to demand civil penalties of $100 for each initial separate violation, and up to $1,000 for each subsequent separate violation, per day. If a Dealer faces hundreds of days of nonpayment of the $100 fee, the potential daily penalties can bottle-rocket into the hundreds of thousands or even millions of dollars.

The “Bottle Bill”

The California Legislature passed Assembly Bill (AB) 2020, “The California Beverage Container Recycling and Litter Reduction Act,” in 1986. The measure, commonly called the “Bottle Bill,” aimed to be a self-funded program encouraging consumers to recycle beverage containers and prevent littering. Distributors selling eligible beverage containers–such as glass, plastic, aluminum, and bimetal–make redemption payments to CalRecycle.[1] Retailers pass on the cost to consumers at the point of sale. Consumers can then return the empty beverage containers to certified recycling centers in exchange for the CRV deposit, which is currently five cents for beverage containers of less than 24 ounces and 10 cents for each container of 24 ounces or more. The law created “Convenience Zones” to make it easier for consumers to redeem CRV recyclable containers. These zones are typically a half-mile radius around markets and convenience stores that must contain a recycling center. The recycling center does not have to be at a beverage dealer site. Still, the convenience zone must generally have a recycling center within its boundaries to comply with the law.

Over the past five-plus years, an estimated 40 percent of California’s redemption centers have shuttered their doors, with hundreds more closures likely. California’s recycling rate has fallen from a peak of 50% to 40%, which is well short of the legislatively mandated goal of 75%. As redemption centers continue to go out of business, consumers have fewer places to cash in their CRV. The state holds an estimated $600 million in unclaimed nickel and dime deposits on recyclable bottles and cans that Californians are entitled to get back. California law attempts to address this shortcoming by requiring that when the convenience zone lacks a certified recycling center, the stores selling the beverages must accept CRV containers or pay the $100 daily fee to CalRecycle. The latest iteration of the beverage container law adds almost $900 million in spending over the next six years but does little to improve redemption access. In effect, the retailers are becoming “the recyclers of last resort.”

The California Beverage Container Recycling and Litter Reduction Act contains significant criminal and civil penalties for noncompliance. For example, in late 2019, CalRecycle pursued a $3.6 million enforcement action against well-known retail chain CVS, for refusing to redeem CRV beverage containers and failing to pay required fees. Last year, the company settled the case by paying $1 million in restitution and agreeing to install CRV reverse vending machines in unserved areas across California.

Several new changes to the law, such as widened convenience zones, the January 1, 2023 expiration of exemptions for certain small Dealers, and increased recycling company closures will result in more markets falling within the CRV redemption radius. Additionally, the CRV program will expand on January 1, 2024, to add wine and distilled spirits to the list of redeemable beverage containers. The statute of limitations on an enforcement action against Dealers for noncompliance with the CRV program is five years from when CalRecycle discovers the alleged violation. Undoubtedly, more stores will become entangled in CRV compliance in the years to come.

How Hartman King PC Can Help

Hartman King PC actively represents numerous clients in litigation, compliance, and enforcement defense. We develop and help our clients implement compliance programs for complicated regulatory programs and navigate and defend our clients through enforcement actions brought by local or state regulators. We provide environmental law expertise and are one of the few firms in the country to specialize in weight and measurement matters. Please get in touch with our top environmental lawyers if you need litigation or regulatory compliance advice.

For more information on the California Redemption Value program, click here.

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[1] Originally the California Department of Conservation, Division of Recycling. In 2010, responsibility for the CRV program shifted to The California Department of Resources Recycling and Recovery (“CalRecycle”) within the California Environmental Protection Agency (“CalEPA”).