This OLR Backgrounder discusses Connecticut's beverage container redemption law (CGS § 22a-243 et seq.), also known as the “bottle bill,” in light of the governor's recent proposal to have the state keep unclaimed bottle deposits (which currently go to distributors and bottlers) for budget deficit mitigation. It also addresses Connecticut's and other states' bottle bill laws.

GOVERNOR RELL'S DEFICIT MITIGATION PLAN

The governor is proposing that money from unreturned beverage containers escheat to the state as part of her FY 09 Deficit Mitigation Plan. As a result, the governor anticipates the state will collect $13.8 million in FY 09 (partial year) and $24.4 million per year beginning in FY 10.

CONNECTICUT'S BOTTLE BILL

Connecticut's bottle bill requires consumers to pay a 5¢ deposit fee on bottles and cans of beer and other malt beverages, soda water, and carbonated soft drinks (CGS § 22a-244). Connecticut's law is considered “regular” because it applies to select carbonated beverage containers, while “expanded” bottle bills typically apply to non-carbonated bottled drinks, including water and juice. Bills to expand or change the bottle bill are perennial in the Environment Committee.

The Nickel Deposit Process in Connecticut

The deposit system works as follows:

1. a retailer (dealer) pays beverage container distributors 5¢ for each beer or carbonated soft drink container that the distributors deliver;

2. the consumer pays the dealer 5¢ for each beer or carbonated soft drink container that he or she purchases from the dealer;

3. the dealer or redemption center pays the consumer 5¢ for each container that he or she returns;

4. the distributor reimburses the dealer or redemption center 5¢ for each beer and carbonated soft drink container returned, plus a handling fee of 1.5¢ on each beer container and 2¢ on each carbonated soft drink container; and

5. the distributor keeps the 5¢ for each unclaimed deposit.

The law defines a “distributor” as anyone who sells beverage containers to a state dealer, including (1) any manufacturer who also sells and (2) a dealer who sells beverages containers on which no deposit has been collected before retail sale (CGS § 22a-243).

Unclaimed Deposits

An unclaimed deposit refers to the nickel that a consumer chooses not to redeem (i.e., a consumer buys a soda bottle, but instead of returning it once empty to the retailer or redemption center for a nickel, he or she places it in a recycling bin or throws the bottle in the trash).

Under current law, distributors keep the unclaimed nickels. Representatives of the distributors state that they use the unclaimed deposits to offset expenses (e.g., trucking costs and handling fees) associated with collecting bottles that consumers have returned. For example, during a February 28, 2007 Environment Committee public hearing, Kevin Dietly, representing the Connecticut Food Association (CFA), stated in his testimony on SB 1289 that distributors use the unclaimed nickels “to offset the handling fee and their own trucking expenses, et cetera.” Dietly is a principal at Northbridge Environmental

Consultants in Westford, MA. The following link is to the February 28, 2007, Environment Committee public hearing testimony: http://search.cga.state.ct.us/dl2007/chr/doc/2007ENV00228-R001015-CHR.doc. 

Over the years, the legislature and the governor have looked at the funds from unclaimed deposits as a potential revenue stream (e.g., 1991's SB 766). To derive an estimated revenue amount, the governor's current deficit mitigation plan took historical data from Massachusetts (which has a bottle bill and keeps unclaimed deposits) on revenue it collected from unclaimed deposits. It adjusted the amount for the population and personal income differences between the two states, according to an October 30, 2008 report by the legislature's Office of Fiscal Analysis (OFA). In the past, OFA has done a similar computation for estimated deposit revenue from unclaimed deposits based on Massachusetts' numbers. In 2005, for example, OFA completed a fiscal note estimating $20 million per year from unclaimed deposits on SB 61, which sought to use unclaimed deposits for the state to fund a campaign finance reform proposal.

Although the governor's current plan does not specify costs to administer the program, OFA anticipates that there will be one-time and ongoing costs to administer this program. Similarly, in 2005, OFA estimated a one-time cost of approximately $275,000 for DEP to set up the program to account for unclaimed deposits. See the OFA fiscal note on 2005's SB 61 at:

http://search.cga.state.ct.us/dl2005/fn/doc/2005SB-00061-R02-FN.doc

To see OFA's report on the governor's FY 09 deficit mitigation plan, visit the following link:

http://www.cga.ct.gov/ofa/Documents/Misc/2008/Summary%20of%20Gov%20Deficit%20Mitigation%20Plan%20FY%2009.pdf.

RECENT PROPOSALS

Since at least 1991, Connecticut legislators have debated bills to expand the application of the bottle bill law to non-carbonated beverage containers. More recently, see for example, SB 192 in 2006, SB 1289 in 2007, and sSB 357 in 2008. During this time the committee has also considered bills, or provisions within expansion bills, to (1) allow the state to keep unclaimed bottle deposits (also know as escheats, as discussed above) and (2) increase the deposit amount from 5¢ to 10¢ (see for example SB 1030 in 2003 and HB 6590 in 2007).

Most recently, during the 2008 legislative session, the Environment Committee considered sSB 357, AAC the Expansion of the Beverage Container Redemption Provisions to Include Noncarbonated Beverages. The bill proposed to expand the law to include non-carbonated drinks (e.g., non-carbonated water, and sports and tea drinks) and raise the handling fee to 3¢ for all redeemed containers except beer and other malt beverages.

The committee favorably reported the bill March 14, 2008, which died after the Senate passed a strike-all amendment that added a section on land use. Click the following links for a copy of the bill analysis and the text of the bill as JF'ed by the Environment and Planning and Development committees:

(1) http://cgalites/2008/BA/2008SB-00357-R000441-BA.htm and

(2) http://cgalites/2008/TOB/s/pdf/2008SB-00357-R02-SB.pdf.

Proponents of Bottle Bill Expansion

Advocates of an expanded bottle bill in Connecticut argue that doing so would decrease litter and increase recycling. They note that Connecticut's law only applies to beer and other malt beverages, soda water, and carbonated soft drinks because the law was passed 30 years ago (PA 78-16, which became effective, January 1, 1980), when Americans' beverage consumption patterns were different (i.e., before the widespread availability and popularity of non-carbonated bottled water and sports, fruit, energy, and tea drinks). See for example page 151 of the March 10, 2008 Environment Committee public hearing transcript that included SB 357 at: http://search.cga.state.ct.us/dl2008/chr/doc/2008ENV00310-R000930-CHR.doc.

Additionally, in 2007, Environment Connecticut estimated that adding non-carbonated beverage containers to the redemption law could result in 300 million more bottles being recycled annually in the state. (Environment Connecticut is a statewide, citizen-based environmental advocacy organization.)

Opponents of Expansion

Opponents of bottle bill expansion, on the other hand, argue that expanded curbside programs or anti-litter education would be more effective in reducing litter than expanding the bottle bill and (see page 250 of the March 10, 2008 transcript). Representatives of distributors have argued that the cost to distributors would be significant. Also, a large Connecticut recycling company testified that the potential loss of water and other bottles from the recycling stream would result in a loss

of rebates to the many towns that the company serves, and the company's revenue (see pages 166-168 of the March 10, 2008 transcript).

Additionally, many grocery stores also oppose an expansion because it would mean that customers would redeem many more bottles, which could create space and sanitary problems. (See page 40 of the March 10, 2006 Environment Committee public hearing transcript on SB 192 at: http://search.cga.state.ct.us/dl2006/chr/doc/2006ENV00310-R001900-CHR.doc.)

BOTTLE BILL LAWS IN OTHER STATES

Eleven states have bottle bill laws. Of these, three (California, Hawaii, and Maine) have expanded laws. Oregon will join these three states beginning January 1, 2009, when bottled water will be covered under its law (Or. Stat. § 459A.700).

Deposit Fees

The 11 states' bottle bill law deposit fees vary. Seven states have a straight 5¢ deposit fee. However, Michigan has a 10¢ fee on all bottles its law covers; California has a 10¢ fee on bottles that are larger than 24oz; Vermont has a 15¢ fee on liquor bottles, and Maine has a 15¢ fee on wine and liquor bottles, according to the Container Recycling Institute's (CRI) Bottle Bill Resource Guide. The other four bottle bill states not yet referenced are Delaware, Iowa, Massachusetts, and New York.

Unclaimed Deposits

For unclaimed deposits, California, Hawaii, Massachusetts, Maine, and Michigan keep the funds. California uses them for program administration and grants to nonprofits. Hawaii, Maine, and Massachusetts keep the funds for program administration and other costs, and Michigan retains 75% of the funds for environmental programs and the rest goes to retailers. For your reference, Table 1 below is a copy of the CRI's Bottle Bill Resource Guide, which breaks out information on the 11 states' bottle bill laws.

TABLE 1: CRI's 11 State Bottle Bill Law Comparison

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SOURCE: CRI's Bottle Bill Guide - http://www.bottlebill.org/legislation/usa/allstatestable.htm

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