California adopts minimum recycled content requirements for plastic beverage containers

Background

The California Beverage Container Recycling and Litter Reduction Act (Act) established a bottle deposit program in California to encourage the recycling of beverage containers.¹ The bottle deposit program applies to “beverages” sold in “beverage containers.” The term “beverage” includes carbonated water, including soda and carbonated mineral water; noncarbonated water, including noncarbonated mineral water; carbonated soft drinks; noncarbonated soft drinks and sport drinks; carbonated and noncarbonated fruit drinks; coffee and tea drinks; vegetable juice in containers of 16 oz. or less; 100% fruit juice in containers of less than 46 oz.; beer and malt beverages; and wine and distilled spirits coolers. “Beverage containers” include metal, glass, or plastic containers in which a beverage is sold.

Under the bottle deposit program, consumers pay the CRV (either US$0.05 or US$0.10, depending on the size of the container) when they purchase covered beverages from a retailer, and they receive CRV refunds when they redeem the containers at a recycling center. Beverage manufacturers, distributors, and retailers also have duties under the law to facilitate the operation of the program (e.g., ensuring containers are properly labeled, making processing payments, receiving or paying the redemption value, and submitting reports to the state).

The Act already requires glass container manufacturers to use a minimum 35% of postfilled glass (any container which had been previously filled with a beverage or food) when manufacturing glass food, drink, or beverage containers. The new law amends the Act to similarly require beverage manufacturers to use a minimum amount of postconsumer recycled plastic in the manufacture of plastic beverage containers subject to the CRV.

Summary of new recycled content requirements

The following is an overview of the new California requirements for beverage manufacturers.

• Scope: The postconsumer recycled content and reporting requirements apply to beverage manufacturers, which include any person who bottles or otherwise fills beverage containers, or imports filled beverage containers into California, for sale to distributors, retailers, or consumers. The types of plastic beverage containers subject to the postconsumer recycled content requirement are those that are subject to the CRV, detailed above.
• Exemptions: The new law includes two exemptions from the recycled content and reporting requirements: one for refillable plastic beverage containers and another for certain beverage manufacturers that pay low amounts of processing fees under the bottle bill.
  • Refillable plastic beverage containers: Refillable plastic bottle containers are exempt from the law. A refillable beverage container includes plastic beverage containers holding 150 oz. or less of beverage, which has a minimum deposit of US$0.03, and which ordinarily would be returned to the manufacturer to be refilled and resold.
  • Certain beverage manufacturers: There also is an exemption, essentially for low volume beverage manufacturers, based on the amount of processing fees they pay under the bottle bill. To qualify for the exemption, a beverage manufacturer’s processing fees may not exceed US$15,000 for a calendar year.
• Minimum postconsumer recycled plastic content: The bill establishes the following mandatory schedule for the average amount of postconsumer recycled plastic that must be contained in plastic beverage containers that are subject to the CRV and sold by a beverage manufacturer in the state. (The term “postconsumer recycled content” is not defined in the new law.) The minimum thresholds are as follows:
  • 1 January 2022: At least 15% average postconsumer recycled plastic;
  • 1 January 2025: At least 25% average postconsumer recycled plastic; and
  • 1 January 2030: At least 50% average postconsumer recycled plastic.
• Potential adjustments to the postconsumer recycled plastic content requirements: Beginning 1 January 2025, the Department of Resources Recycling and Recovery (Department or CalRecycle) may review and adjust the minimum postconsumer recycled content requirements. This review may take place no more frequently than once a year and may be initiated either by the Department or by a petition of the beverage manufacturing industry, defined as “an association that represents companies that manufacture beverages.” The Director may not increase the minimum postconsumer recycled plastic content percentages above those indicated above. When conducting its review, the Department must consider the following factors:
  • Changes in market conditions, including supply and demand for postconsumer recycled plastics, collection rates, and bale availability domestically and globally;
  • Recycling rates;
  • The availability of recycled plastic suitable to meet the minimum recycled content requirements, including the availability of high-quality recycled plastic, and food-grade recycled plastic from the state’s and other beverage container recycling programs;
  • The capacity of recycling or processing infrastructure; and
  • The progress made by beverage manufacturers in achieving the law’s goals.
    
    The Department may not reduce the minimum recycled content requirements while it is reducing payments made under the bottle deposit program to support recycling programs.
• Penalties for non-compliance with minimum recycled content requirements: Beginning 1 January 2023, beverage manufacturers that do not meet the minimum recycled plastic content requirements will be subject to an annual administrative penalty. The penalties will be assessed at a rate of twenty cents (US$0.20) per pound of postconsumer recycled plastic used below the relevant minimum threshold. The penalties will be invoiced beginning 1 March 2024, and annually thereafter, based on the previous calendar year. The Department may elect to reduce the penalties assessed, considering anomalous market conditions; disruption in, or lack of supply of, recycled plastics; and other factors that have prevented a beverage manufacturer from meeting the requirements. To receive a reduction in an administrative penalty, a beverage manufacturer must submit a corrective action plan detailing the reasons why it will fail or has failed to meet the minimum postconsumer recycled content standard and the steps the manufacturer will take to comply with the standard within the next reporting year. The Department may reduce the administrative penalty after it approves the corrective action plan.
• Reporting requirements: Beverage manufacturers already are required to report to the Department the amount of virgin plastic and postconsumer plastic used for plastic beverage containers subject to the CRV. The new law requires that this information be submitted in terms of pounds and by resin type. Additional reporting requirements will apply to plastic material reclaimers and manufacturers of postconsumer recycled plastic. This information must be submitted under penalty of perjury.
• Audits and investigations: The new law authorizes the Department to conduct audits and investigations and take enforcement action for the purpose of ensuring compliance with the minimum recycled content and reporting requirements.
• Preemption: The law prohibits any California city, county, or other local government from regulating the minimum recycled plastic content requirements for plastic beverage containers.

Next steps

The Department currently is developing regulations to implement the new law, and it plans to present a workshop in early 2021 to solicit feedback from interested parties. Comments and questions about the new law may be submitted via email to MarketInformation@CalRecycle.ca.gov. 

We will continue to monitor California’s implementation of the new postconsumer recycled content requirements. Please contact us if you have any questions.

References

1    Cal. Pub. Res. Code § 14500 et seq.; 14 Cal. Code. Regs. § 2000 et seq.

Authored by Martin Hahn, Veronica Colas, and Leigh Barcham.