May 17 - CalRecycle Contemplates Reduced Processing Payments

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CalRecycle contemplates an action that could cost California recyclers more than $12 million over the next 6 months.

Last week, CalRecycle staff reported that Statewide average scrap values for glass, PET and HDPE have all increased by more than 5% above the scrap value used to set 2011 Processing Payment levels.

While nothing has yet been decided, the Department is contemplating an ‘adjustment’ in processing payments (i.e. reduction to match current scrap values) as early as July 1. This issue is scheduled to be discussed at the Monthly CalRecycle Meeting today (Agenda Item 8). The adjustment could potentially reduce processing payment for PET by $12 million, HDPE and glass by more than $200,000 respectively.

CAW’s Perspective: While CalRecycle technically has the authority to adjust processing payments, we believe that doing so at this time would not further the objectives of the Beverage Container Recycling Act.

· Neither consumers or any program stakeholder will benefit from a mid-year reduction in processing payments.

· The rise in PET scrap prices over the last 6 months are largely tied to the rise in petroleum prices. High oil prices also means higher transportation costs for recyclers that are not reflected in the current recycling cost used to set processing payments.

· In 2009, Proportional Reductions in processing payments, handling fees and other program payments cost California recyclers and processors well in excess of $12 million—a funding reduction that has never been made up.

· In the current economy, scrap values are volatile and unpredictable, and the best available scrap data will be 3 months old by the time the Department is able to act.

What you can do:

1) Don’t Panic! This is not a done deal and CalRecycle is in the info gathering stage. But a decision will be made in 30 days.

2) If you are able, please try to attend today’s CalRecycle Meeting.

3) If you have information regarding how a mid-year reduction in processing payments may harm your program or business, please plan to voice that information and/or provide it to CAW.

4) If you have information on how rising gas prices or other costs have increased the cost of recycling in California this year, please plan to voice that information and/or provide it to CAW.

5) Stay updated on this and other issues on CAW’s website