Deposit surplus on cans, bottles recycled

It was a welcome quandary: California’s bottle and can recycling program had a giant pile of unspent cash.

Consumers failed to reclaim their deposits on billions of bottles and cans in recent years, leaving $180 million in a state account that could be used only for recycling. So the Department of Conservation decided last year to return much of the cash to consumers -- and create a new incentive to recycle -- by paying an extra penny or two on every can or bottle redeemed.

Officials drafted a bill to increase the refunds and submitted it to the Legislature. Then the beverage industry and other interests got involved, and in a classic Capitol feeding frenzy, everything changed.

The Legislature eventually approved the kickback to consumers, effective through June, and the governor signed the measure into law. But by that time, beer and soft-drink makers and distributors had received $30 million from the fund and conservation officials had disowned their own proposal.

California’s landmark recycling program “has become less about recycling and more about handing out money to the various interest groups who have stuck their hands into the till,” said newly elected Secretary of State Debra Bowen, a Democrat from Marina del Rey. She refused to vote for the bill last summer as a state senator, saying it had been corrupted with “giveaways.”

The bill proposed by the Department of Conservation last year was modest. It included the extra redemption money and a small amount for programs to encourage recycling.

But the plan would have left tens of millions of dollars in abandoned deposits untapped, and lobbyists of every stripe quickly laid claim to it. The measure became a “gravy train,” according to a representative of the beverage industry, which is among the larger campaign donors to legislative races.

Environmental activists wanted lawmakers to use the money for local litter-reduction programs, new plastic recycling facilities and improved collection of recyclables at apartment buildings and condominiums.

Distributors who supply California stores with drinks and collect container deposits on those sales said they needed millions more from the state to cover the cost of that accounting burden. Beer companies demanded a reprieve from the cost of recycling the glass and plastic bottles they manufacture.

In the final bill, each of the groups received much of what they asked for. Beverage makers received $23 million, in the form of a one-year break from the cost of recycling their glass and plastic. Most of that will go to a handful of large corporate brewers and soft-drink manufacturers. And distributors received a $7-million boost in fees the state pays them for collecting bottle and can deposits.

About $57 million was allocated for new recycling programs, and $75 million was earmarked to beef up redemptions. About $18 million will remain in the deposits fund.

State regulators were chagrined. Officials at the Department of Conservation were troubled by the $30 million that went to the beverage industry; they could see no policy rationale for it.

Conservation Department Director Bridgett Luther said she was especially disheartened by the provision that excused the fees beverage companies would otherwise pay this year for using glass and plastic, a penalty for not using more easily recyclable materials.

“We wanted to give the message to industry that this is an important part of the program,” Luther said.

In a private meeting with environmentalists and beverage industry representatives, one of the department’s negotiators threatened to ask the governor to veto the bill. Ultimately, conservation officials withdrew support from their own measure.

The companies that lobbied most heavily for the beverage industry’s share of the money won’t talk about it. Representatives from Anheuser Busch Cos., Coors Brewing Co., Miller Brewing Co. and the California Beer and Beverage Distributors trade group either declined to comment or did not return calls.

All are major political donors, having spent a combined $570,000 on legislative races over the last two years. Of that, $12,500 went to state Senate leader Don Perata (D-Oakland), whose office shuttled the measure through the Senate, and $19,800 went to Assembly Speaker Fabian Nunez (D-Los Angeles). Separately, Republican Gov. Arnold Schwarzenegger received at least $71,000.

All three officials denied that the campaign contributions influenced their actions.

Industry officials say privately that their companies play a key role in making the recycling program work, and it is only fair that some of the extra cash be used to ease their burden. They point to the tens of millions in fees they’ve paid into the program to cover the recycling of their glass and plastic containers.

Environmentalists, who had been aligned with conservation officials in the push to promote recycling, disapproved of paying the money to the beverage industry. But they gave the bill their blessing because of the new recycling money it contained.

“I realized I was more likely to get what I wanted out of the bill by cutting a $30-million deal with the beverage industry than siding with the department,” said Mark Murray, executive director of the nonprofit Californians Against Waste, which made no contributions to lawmakers or the governor in 2005 or 2006.

Assemblywoman Loni Hancock (D-Berkeley), who advocated the proposal in the lower house, emphasized that in its final form it included millions in new spending on programs to promote recycling, as well as the extra redemption money for consumers.

She said the measure made sense at a time when the department was sitting on a giant surplus.

“We tried to very carefully balance the bill so it would take into account the legitimate needs of everyone, from the consumer to industry folks who participate in the program,” Hancock said. “I think we really negotiated something that is for the great benefit to people in California and a great benefit to the environment. That is what we wanted to end up with.”

Luther said she, too, is thrilled that more money is going to recycling programs and that consumers will get the extra redemption money. But the new law is not quite where she wanted to end up.

“I don’t think we knew on the front end that it was going to turn out like this,” she said. “Sometimes you just have to swallow hard.”

evan.halper@latimes.com

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(BEGIN TEXT OF INFOBOX)

Deposit surplus

Consumers have failed to reclaim their deposits on billions of bottles and cans in recent years, leaving the state with a $180-million surplus. Here is how the money will be spent:

* $75 million for consumer redemptions through June

* $57 million for recycling programs

* $23 million for beverage manufacturers

* $7 million for beverage distributors

* $18 million remains in fund

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Source: California Legislature

Los Angeles Times