Topic:
BOTTLE BILLS;
Location:
CONTAINERS, BEVERAGE;

OLR Research Report


November 5, 1999

 

99-R-0940

BOTTLE DEPOSIT PROGRAMS

 

By: Matthew Ranelli, Associate Attorney

You asked for information regarding bottle bill laws in other states especially Maine. You also asked for a description of how the deposit process works generally.

SUMMARY

Ten states have bottle deposit laws (generally referred to as bottle bills). Eight have "traditional bottle bills" and two have "expanded bottle bills". Traditional bottle bills cover beverage containers that were commonly used for single serving beverages in the late 1970's and early 1980s when most of the bills were passed. Expanded bottle bills broaden the types of containers covered to include a variety of beverage products that have increased in popularity since that time (sometimes referred to as new-age beverages such as ice teas and fruit drinks).

Although most bottle bills have similar deposit values, the bills differ in significant ways. California, for example, is very involved in the deposit-return process. They collect the initial deposit, certify the redemption centers, pay the recyclers, and keep the unclaimed deposits. Most other states leave the mechanics of the program up to the bottlers, distributors, and retailers.

All of the states with bottle bills, except Delaware, have meaningful curbside recycling programs. Of the eight states that have curbside programs serving more than 75% of their population three (Connecticut (100%), New York (95%), and Massachusetts (77%)) are bottle bill states. (For a chart of curbside programs in all states see The State of Garbage in America, BioCycle, April 1999; Attachment 1.)

TRADITIONAL BOTTLE BILLS

Bottlers initially introduced bottle deposits as a way to ensure that their bottles were returned for refilling. As beverage distribution systems expanded and container technology and alternatives improved the practice of refilling bottles declined. Beverage containers increasingly became part of the general waste stream and contributed to roadside litter.

As early as 1965 states, motivated by a desire to reduce litter, began considering bottle bills. In 1971 Oregon passed the nations first bottle bill. Over the next 15 years nine other states passed bottle bills. Most are modeled on Oregon's law (see Table 1 for a description of each states bottle bill).

Traditional bottle bills require all sales of common single serve drinks (e.g., beer and soda) to carry a deposit (usually a nickel). Typically the distributor (for beer) or the bottler/distributor (for soda) initiates the deposit on each container (i.e., collects the initial deposit from the retailer). The retailer recovers the nickel on each container by collecting a deposit from the customer. The customer returns the empty container to a retailer or a redemption center and recovers the nickel. Finally the nickel comes full circle when the distributor or bottler (or hired third party) collects the returned containers and pays the retailer or redemption center a nickel plus a handling fee for each container (see Attachment 2 for a chart of Flow of Deposits).

At the end of the deposit-return process the retailers and consumers are both "even." That is they have paid and recovered the deposit for each container. The retailer also receives a handling for receiving the returned containers. The distributor or bottler is either "even" or "up" The distributor could be "up" as a result of unclaimed deposits (i.e., bottles that are not returned) and any investment return on the deposits before the bottles are redeemed (sometimes called the "float").

Deposit money from unreturned bottles (sometimes inaccurately referred to as escheats) generally remains with the bottler or distributor. However, three states (California, Massachusetts, and Michigan) have designed their systems so the state receives or keeps the unclaimed deposit money. In California the state initiates the deposit so it has the deposit money from the outset and simply keeps any unclaimed amounts. In Massachusetts and Michigan, the bottlers or distributors initiate the deposit, but the state requires them to turn over the unclaimed deposits in a periodic accounting. Massachusetts receives approximately $14-16 million per year in unclaimed deposits.

At least two other states (Maine and Iowa) had provisions to escheat a portion of the unclaimed deposits but both have been repealed.

EXPANDED BOTTLE BILLS

Expanded bottle bill proposals are generally traditional bottle bills that expand the types of containers covered to include drinks that are popular now but were not common at the time most bottle bills were enacted such as bottled water, teas, and fruit drinks. According to State Recycling Laws Update, seven bottle bill states consider expanded bottle bill proposals in 1999. Most expanded bottle bill proposals have failed.

Maine and California have expanded bottle bills. Maine's program is broader and essentially covers all beverages other than dairy products and cider. California's expanded bottle bill, passed this year, covers most beverages other than wine and liquor (see Table 1 for a list of containers covered). In addition to having expanded bottle bills, Maine and California have other aspects of their programs that set them apart from other states and are discussed below.

OTHER VARIATIONSΧMAINE AND CALIFORNIA

California

California was the last state to enact a bottle bill. It made several distinctive changes to the traditional model. Most prominently, the state runs the program, initiates the deposit, and essentially eliminates the retailers for the redemption system (unless they choose to become certified recycling centers).

In California, bottlers or distributors pay the initial deposit on each container they sell to the California Department of Conservation for deposit in the California Beverage Container Recycling Fund. The fund is used to refund deposits for redeemed containers while any unclaimed deposits are used to subsidize the certified redemption center system and provide funds for recycling education, municipal recycle programs, and grants to nonprofits.

The deposit is passed along to the retailer and consumer as it is in other states. The consumer must return containers to a certified redemption center to recover the deposit. The redemption centers pay the refund and then sell the containers to certified recyclers who bill the fund for the refund amount plus any additional processing fee and administrative costs. If the scrap value of the redeemed containers is less than the recycling cost the state levies a processing fee on the bottlers or distributors for the difference.

Maine

Maine's program more closely resembles a traditional bottle bill program except that the deposit initiator may vary depending on whether the beverage distributor has an exclusive geographic distributorship or competes with other distributors over the same area.

For beverages sold through a geographically exclusive distributorship, the distributor initiates the deposit. In practice this is similar to other states because beer and soda tend to be distributed through exclusive distributorships. For beverages distributorships that are not geographically exclusive the bottlers generally initiate the deposit. Distributors without exclusive agreements are reluctant to initiate the deposits because of the increased possibility that they may end up refunding a deposit on a container sold (and deposit initiated) by another distributor. Non-exclusive distributorships tend to involve drinks that are not covered by most bottle bills such as fruit drinks, juices, and teas (see OLR Report 99-R-1380 for more information on Maine's program).

MASSACHUSETTS STUDY

In 1997, Massachusetts began considering a wide range of changes to its bottle bill including expanding it to cover new-age beverages, wine, and liquor. The Massachusetts Department of Environmental Protection (DEP) commissioned a study on the costs and benefits of expanding the state's bottle bill. The study analyzed the several variations of expanded bottle bill proposals and a second study analyzed the possibility of an alternative recycling system that could achieve similar recycling results without expanding the bottle bill coverage (for a summary of both studies see Economics of Expanding Bottle Bills, Resource Recycling, April 1999; see Attachment 3).

Among other things, the study found that expanding the bottle bill would result in a significant increase in the number of containers in the deposit system (21%) and the amount of material recovered (55%) (J. Stutz et al, An Analysis of the Costs and Benefits of Expanding the Scope of the Bottle Bill in Massachusetts, Tellus Institute, 1997). The second study compared the costs of an expanded bottle bill with the costs of achieving similar results with an alternative recycling system. The hypothetical alternative system relied on increasing the availability of recycling containers in public and work places, promoting the containers, and collecting the containers. The study concluded that the cost of the alternative system would be significantly higher because of the increased infrastructure costs, education costs, and hauling costs (J. Stutz et al, An analysis of the a Recycling System as An Alternative to Expanding the Scope of the Bottle Bill in Massachusetts, Tellus Institute, 1998).

Table 1

Bottle Bill Characteristics in Ten States

State (Year)

Bottles Covered

Initial Deposit

Deposit Value

Handling Fees

Redemption System

Escheats To

Comments

Paid By

Paid To

California

(1986)

Beer, malt beverages, distilled spirit and wine coolers, soda, and carbonated mineral water

Expanded to by SB 332 to include carbonated and non-carbonated water, non-carbonated soft drinks and sports drinks

Bottlers and Distributors

State

2.5 for containers less than 24 ounces

5 for containers 24 ounces and up

None (except potential processing fee assessed by the state)

State certified redemption centers

State

California keeps the escheats and uses the money to fund the redemption center locations. The state charges container manufactures an additional processing fee to cover the net cost of recycling their containers whenever the scrap value of the recycled material is too low to pay the cost of its recycling

Connecticut

(1978)

Beer, malt beverages, soda water, soda, and mineral water

Retailer

Distributor

5

1.5 for beer and malt

2 for soda and mineral water

Retailers must accept returns, but may sponsor, alone or in conjunction with others, a nearby redemption center

Bottlers or Distributors

 

Delaware

(1982)

Non aluminum containers of beer, ale, malt, soda, and mineral and soda water

Retailers or Distributors

Distributors or Bottlers

5

20% of deposit value

Retailers and Redemption Centers

Bottlers or Distributors

Delaware passed a bottle bill in 1978, but it was never implemented.

Delaware passed a second bottle bill in 1982 that did not cover aluminum cans

Iowa

(1978)

Beer, wine, liquor, wine coolers, soda, and soda and mineral water

Retailers or Distributors

Distributors or Bottlers

5

1

Retailers and Redemption centers

Bottlers or Distributors

Beer distributors created a company to collect redeemed containers from retailers and establishments.

Maine

(1976/1989)

Beer, ale, malt, wine, wine coolers, liquor, soda, soda water, non-carbonated water, non-alcoholic carbonated and non-carbonated drinks other than dairy products and cider (containers four liters or less)

Retailers and Distributors

Bottlers and Distributors

5 for containers other than wine and liquor

15 for wine and liquor over 50ml

3

Retailers and Redemption centers

Bottlers or distributors depending on who initiates the deposit

Until 1993 Maine attempted to recover 50% of the escheats.

Maine essentially has two systems for bottle deposits; generally companies with geographically exclusive distributorship areas initiate the deposit on their products and collect returned containers while companies that do not have exclusive areas have the manufacturer initiate the deposit and contract to collect the returned containers.

Massachusetts

(1982)

Beer, soda, and carbonated water

Retailers or Distributors

Distributors or Bottlers

5

2.25

Retailers and Redemption centers

State (since 1989)

Escheats go in part to fund the state Clean Environment Fund, which helps fund municipal recycling programs. The Massachusetts Supreme Court has upheld the escheats provision.

Massachusetts is currently considering several changes for its deposit system.

Michigan

(1976)

Beer, wine coolers, canned cocktails, soda, and mineral and carbonated water

Retailers or Distributors

Distributors or Bottlers

10 for non-refillable bottles

5 for refillable bottles

Retailers receive 25% of Escheats

Retailers

State (the state pays 25% of the escheats to retailers)

 

New York

(1982)

Beer, wine coolers, soda, soda water, and carbonated mineral water

Retailers or Distributors

Distributors or Bottlers

5

1.5

Retailers and Redemption Centers

Bottlers and Distributors

 

Oregon

(1971)

Beer, malt beverages, mixed wine drinks, soda, soda water, and mineral water

Retailers or Distributors

Distributors or Bottlers

5 for most bottles

3 for standard refillable bottles

None

Retailers

Bottlers or Distributors

 

Vermont

(1972)

Beer, malt beverages, liquor, mixed wine drinks, soda, and soda water

Retailers or Distributors

Distributors or Bottlers

5 for most bottles

15 for liquor bottles over 50ml

3

Retailers and Redemption centers

Bottlers or Distributors

Like Maine, Vermont's high handling fee has attracted a high percentage of redemption centers