Bottle industry leaders call for cut of unredeemed deposits

GRAND RAPIDS, Mich. (WOOD) — Leaders of Michigan’s beverage and bottle recycling industries say stress on the supply chain caused by the COVID-19 pandemic proves changes are needed to how Michigan’s bottle return system is funded.

Representatives from the Michigan Soft Drink Association, Michigan Beer & Wine Wholesalers Association, Schupan and Sons Inc. recycling and other industry groups held a virtual news conference Wednesday to voice their support for a set of bills that would alter Michigan’s bottle deposit law, shifting 20% of unclaimed deposits collected in a Michigan Department of Environment, Great Lakes, and Energy escheats fund to beverage distributors, based on the number of containers they handled.

Industry officials say state law currently does not require the state to reinvest in the bottle return system.

“The state of Michigan hasn’t invested in the infrastructure since 1989. That was the last time that there was money available to the people on the frontlines, distributors, to invest back into all the infrastructure required to process the containers. There is a lot of infrastructure— it’s trucks… it’s sorting lines, it’s can crushing, glass crushing lines, it’s binding lines, it’s warehouse space, additional trucks to get it over to the recyclers,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association. The vast cost of the bottle bill happens once the container’s returned to the retailer and that’s when distributors take over.”

“We hear a lot ‘those containers are your responsibility so you should take care of them. Well, the way the money’s being used was not created by us… (our) distributors didn’t create those brownfields,” said Darek Bajema, president of the Michigan Soft Drink Association.

“We aren’t taking it all away, we’re just trying to right-size it,” he added.

DEBATE OVER DOLLARS

Right now, about a quarter of the escheats fund is returned to retailers to offset the cost of the bottle return program. The remaining 75% in EGLE’s fund is primarily used for environmental cleanups.

EGLE opposes the proposals, saying the funding changes would hurt statewide efforts to clean up thousands of contaminated areas. The agency says this year, the funding is supporting 130 staff working on more than 100 sites statewide, including about three dozen in West Michigan.

“Michigan has approximately 24,000 contaminated sites, and resources to only fully address a small percentage of them. The loss of unclaimed deposit dollars will further diminish the state’s ability to protect the environment and keep Michiganders healthy,” EGLE stated in part.

Nevins says 130 employees for 113 sites “seems very excessive.”

“There’s this infrastructure that needs to be rebuilt. It’s been neglected for 30 years. There is more money there than anyone ever imagined. And it seems responsible that the state would want to invest in its most beloved and successful program ever while still having money to do these other things that are important,” he said.

EGLE says revenue uncertainty created by COVID-19 is making for “a challenging time to revisit this law and the allocations of unclaimed deposit money,” but the agency says it “looks forward to continued discussions on the matter.”

WHERE UNCLAIMED CHANGE WOULD GO

Under Michigan House Bills 5422, 5423, 5424 and 5425, EGLE would get half of the unredeemed deposits. Of the 25% taken away from EGLE, 20% would go to beverage distributors. The remaining 5% would go to law enforcement to crack down on bottle deposit fraud.

The bills would also require EGLE to divide its escheats fund in the following ways:

  • The first $25 million would go to the Cleanup and Redevelopment Trust Fund.
  • The next $5 million would go to the Renew Michigan fund to support local recycling programs.
  • Any remaining money would go to the Cleanup and Redevelopment Trust Fund.

FUND GROWS FROM FRUSTRATION

The bills were introduced to the Legislature in late January, before the COVID-19 pandemic took hold in Michigan. However, the push by the beverage distribution industry comes during an anticipated jump in money coming into the escheats fund. That’s because more people tossed their depositable containers into the trash or recycle bin during the 11 weeks bottle return areas were shut down.

Kristen Wieland with the Kent County Recycling & Education Center says since bottle returns closed, the center has been seeing 2.5 times more aluminum cans compared to earlier this year — mostly redeemable ones.

(A 2020 photo provided by the Kent County Department of Public Works shows baled aluminum cans that went through the county’s recycling center.)

And although bottle returns are back open, Wieland says the volume of returnables hasn’t diminished.

“We’ve had to add more staff to our sorting process specifically to address the aluminum can volume,” Wieland stated in an e-mail to News 8.

(A 2020 photo provided by the Kent County Department of Public Works shows baled aluminum cans that went through the county’s recycling center.)

Customers frustrated by lines, daily limits of 250 bottles or cans and closures of bottle return areas that have accepted the maximum daily amount of deposits are likely the culprit.

The state set the limits to prevent processors from being overwhelmed by recycled containers when some return areas reopened June 15.

Schupan and Sons, Inc. processes more than 75% of Michigan’s deposit containers at its facilities in Wyoming, Wixom and Kalamazoo.

Shayna Schupan-Barry said the company processed over 80 million recycled bottles and cans in the first week of reopening and that recycling rate has been “pretty consistent” since then. She said the company has been “very busy” processing 140% to 150% its normal load.

“It’s very taxing on our system. We built the infrastructure to handle the volume we knew was there. I mean, that’s a business decision. And to have that much extra volume, this is when we’re talking about needing more reinvestment. The more backup we have, the newer equipment we have, the better off we can service our customers,” she explained.

TACKLING FRAUD ‘HAPPENING ALL OVER THE PLACE’

The House bills also take aim at fraud, requiring distributors to record the deposits they collect from selling returnable containers to stores, increasing fines and possible prison time against distributors who bring in containers from another state to deposit in Michigan, and by creating a bottle bill enforcement fund that will be managed by the Michigan Department of Treasury.

The president of the Michigan Soft Drink Association says they don’t how much fraud is happening, but it’s growing and is more egregious than the 1996 episode of “Seinfield” when Kramer and Newman shuttled New York cans into Michigan to collect the deposits.

“You know, that kind of fraud, where it was the empties, is quaint compared to the fraud that’s happening today,” Bajema said.

“We know it’s coming across by the truckload. We know that we have found Diet Coke at a gas station across from Detroit Metro in French. And we trace that back to the Coke production in Brampton, Ontario. So as a border state, it’s happening all over the place and it is hard to quantify it, but we think it’ll be significant when we look at the volumes that’s coming across,” he added.

“I have one distributor who just recovered in one account… $1.7 million worth of fraudulent activity over the last three years,” said Nevins.

The bills are currently under consideration by the Ways and Means Committee.


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