OAKLAND, Calif. (Legal Newsline) -California officials could be forced to return more than $480 million taken as loans from the Beverage Container Recycling Fund if the California Chamber of Commerce wins a lawsuit it filed last week.

The funds were illegally funneled into the state's General Fund and Air Pollution Control Fund at the expense of beverage manufacturers, the lawsuit argues.

In its lawsuit filed in Alameda County Superior Court, the Chamber of Commerce contends that a lack of money in the recycling fund has driven up manufacturers' processing fees by 700 percent for polyethylene terephthalate containers and 500 percent for high-density polyethylene containers.

Under the California Beverage Container Recycling and Litter Reduction Act, the processing fee that manufacturers pay is supposed to be offset by deposits to the Beverage Container Recycling Fund.
So, the more money that is in the fund, the less money beverage manufacturers have to pay in processing fees.

Since Fiscal Year 2002, the state has borrowed $566.7 million from the fund. At least $482.7 million of those loans has not been repaid to the fund, the Chamber's lawsuit alleges.

The lawsuit seeks to compel the state director of finance and the state controller to return the funds to the appropriate accounts.

"Based on the unauthorized nature of the loans and the express obligation imposed on the Director of Finance and the State Controller to ensure these loans do not interfere with the beverage container recycling program, the Director of Finance and the State Controller have a mandatory duty to return the loaned funds," the lawsuit said.

Once the money is returned to the funds, the lawsuit asks that processing fees be recalculated for beverage manufacturers. The state Chamber of Commerce is also asking the court to award it attorney and legal fees.

The Chamber is represented by Richard Martland of Nielsen, Merksamer, Parrinello, Mueller & Naylor, LLP, based in Sacramento.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.