Michigan businesses want cut of millions from uncollected pop returnables

Retailers in Michigan resumed accepting returns of bottles and cans on June 15 after a shutdown aimed at preventing the spread of the coronavirus (Shutterstock)

As Michiganders continue to liquidate stockpiles of returnable bottles and cans amassed during the coronavirus shutdown, beverage industry officials are pushing for a cut of the deposits.

At a press event Wednesday, they advocated for legislation that would give beverage distributors a portion of the multimillion-dollar pool of uncollected returns that now goes mostly to state environmental programs.

Michigan retailers resumed accepting returns on June 15 after a shutdown aimed at preventing the spread of COVID-19. Since then, long lines and limits on per-customer returns have cropped at in-store recycling facilities.

Beverage distribution and processing industry representatives who hosted a call with reporters Wednesday estimated Michiganders stockpiled more than $80 million worth of returnable containers that will take six months to process.

They pushed for legislation that was moving in the House before the virus hit Michigan in March. The bills would change how Michigan spends the money it collects from beer and pop drinkers who never return their bottles to recoup their dimes.

Under current law, 75 percent of that pot — which last year totaled nearly $43 million — goes to the state Cleanup and Redevelopment Trust Fund, where much of it supports the Michigan Department of Environment, Great Lakes & Energy’s efforts to clean up and redevelop contaminated sites. The other 25 percent goes to retailers to offset their cost of collecting returns.

The legislation would dramatically tweak the formula, send 50 percent of the pool to the state, keep retailers’ share at 25 percent, give 20 percent to beverage distributors and allocate another 5 percent for law enforcement to combat recycling fraud.

The package of legislation would also increase criminal penalties for recycling fraud from $1,000 fines to up to $35,000 or higher fines and up to 20 years in prison for distributors engaged in fraud.

Speaking at a Zoom news conference Wednesday, industry representatives argued the system unfairly sticks them with the cost of implementing Michigan’s beverage recycling program.

“The current law doesn’t require [the state] to invest that money back into the infrastructure of the bottle bill,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association, pointing to trucks that collect returned bottles from retailers and equipment that sorts and crushes them for recycling.  

The COVID-19 shutdown and resulting backlog in the recycling system, he said, has shown that “the infrastructure is not there to handle that large of an influx of containers.”

Officials within the Michigan Department of Environment, Great Lakes and Energy oppose the legislation, which they say would leave them with fewer resources and staff to clean up contaminated sites across the state.

Michigan has approximately 24,000 contaminated sites, and resources to only fully address a small percentage of them,” a statement from agency officials to Bridge on Wednesday noted. “The loss of unclaimed deposit dollars will further diminish the state’s ability to protect the environment and keep Michiganders healthy.”

Environmental groups also oppose the package. 

Sean Hammond, policy director for the Michigan Environmental Council, said his group supports the general idea of providing funding for recycling infrastructure, but not if it strips money from the state’s cleanup program without a plan to backfill it. 

Citing the “green ooze” that seeped onto I-696 in Madison Heights from the closed Electro-Plating Services facility in December — an incident Gov. Gretchen Whitmer blamed in part on “critical underfunding” that has reduced the state’s ability to police industrial contamination — Hammond said the bottle return money is critical for cleaning up similar sites across Michigan. 

“We’re happy to talk about changes, but we need to make sure EGLE maintains the spending power of this money going forward,” Hammond said. 

The package’s supporters argued EGLE would recoup that lost revenue through new law enforcement efforts to address fraud that siphons untold dollars as some seek to cash in on Michigan’s highest-in-the-nation 10-cent deposit. 

Ten states nationwide have bottle returns, and those that do typically collect 5 cents per container although some collect 15 cents for liquor or wine bottles.

Bottle return fraud was made infamous in a “Seinfeld” episode where Kramer and Newman hatched a plan to transport cans from New York to Michigan, hoping to cash in on the state’s higher deposit.

Nevins could not quantify how much Michigan’s recycling system loses to fraud, nor how much more revenue Michigan stands to receive from unclaimed deposits by reducing fraudulent redemptions. But Derek Bajema, president and CEO of the Michigan Soft Drink Association, said Kramer-level fraud is "quaint" in comparison to today's fraud and abuse.

In one case that made headlines in 2017, a Flint man bought aluminum cans from Indiana, which has no bottle bill, and returned them to Michigan in a scheme prosecutors say netted him $10,000 over three years.

Some news sites have claimed returnables fraud costs Michigan $10 million per year, but the state itself has said the cost of fraud is unknown.

Hammond, of Michigan Environmental Council, said he wants to see an audit that quantifies fraud’s impact before diverting money.

“We haven’t seen numbers that would make us believe this fraud is so significant, it would change the [state revenue] numbers dramatically,” he said.

Separate legislation sponsored by Kalamazoo Democrats Rep. Jon Hoadley and Sen. Sean McCann would expand Michigan’s deposit to water bottles and other non-carbonated beverages. But Nevins argued the COVID-19 return backlog makes it clear that such an expansion would be impossible for current bottle return infrastructure to handle.

“Our view is, invest in the system, get the infrastructure built back up and healthy, get fraud under control, and then let’s sit down and have a discussion about expansion,” he said.

Neither piece of legislation has budged for months. It’s unclear whether either will regain traction as COVID-19 continues to dominate the legislative agenda.

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Comments

middle of the mit
Wed, 08/12/2020 - 9:08pm

[[[As Michiganders continue to liquidate stockpiles of returnable bottles and cans amassed during the coronavirus shutdown, beverage industry officials are pushing for a cut of the deposits]]]

Shorter, NO! Those aren't YOUR deposits! You aren't taking all of them in now, and WE are the ones storing them until you can get back into the swing of things. When do the citizens get a cut?

They see that $80 million sitting there and they want as much of YOUR money as they can get THEIR legislators, and yes, they are businesses legislators, to put it into law. Are you going to be taken for a ride again like we did with insurance reform?

[[[The legislation would dramatically tweak the formula, send 50 percent of the pool to the state, keep retailers’ share at 25 percent, give 20 percent to beverage distributors and allocate another 5 percent for law enforcement to combat recycling fraud.]]]

There it is! That special, SPECIAL word..........FRAUD!!! But this time it is bottle fraud! And it is soooo pervasive that we need to take half the unclaimed money away from cleaning CONTAMINATED COMMERCIAL PROPERTIES so that we can fund a FRAUD watch for bottles!

Bottle return fraud was made infamous in a “Seinfeld” episode where Kramer and Newman hatched a plan to transport cans from New York to Michigan, hoping to cash in on the state’s higher deposit.

And it is all based on a episode of Seinfeld!!!!

This is how laws should be written!!

Shorter?

KEEP YOUR HANDS OF MI BOTTLE DEPOSITS!

Matt
Thu, 08/13/2020 - 8:25am

Michigan's bottle bill is and has been in need of updating. Giving money to the industry is not one of the issues to remedy! A dime in the 70's at the time of passing is not remotely 10cents today. Glass bottles, should as one who spends time biking on the roads, should pay even more. Food stamps should not cover bottle deposits!!! With today's tech, It is easily possible to mark Michigan sourced cans so they don't come from other states. And if these raise the cost of soda and beer and less are consumed we'll all be better off for it!

Doug L
Thu, 08/13/2020 - 9:16am

If I understand correctly, the beverage distributors have a monopoly on alcohol distribution in this state. And the beverage distributors receive all the deposit bottles and cans from retailers, and are able to sell the scrap aluminum and #1 plastic. And now, the beverage distributors want millions in bottle deposits. Instead of giving them an even bigger slice of the pie, perhaps the best thing to do here is eliminate the beverage distributors completely.

Le Roy G. Barnett
Thu, 08/13/2020 - 9:41am

At present, one of the biggest drains on our state's coffers is the Department of Corrections and its penal institutions. To reduce expenses, Michigan has lately been discharging early prisoners who committed minor, non-violent crimes. Now the bill mentioned in this story proposes to jail, for up to 20 years, people who commit fraud with returnable bottles. Because this idea is so stupid, there is no doubt in my mind it was proposed by Republicans.

Rex LaMore
Thu, 08/13/2020 - 10:26am

A disturbing element of this is how we "take for granted" that the State must absorb the cost of cleaning up abandoned contaminated sites. We need to end this practice of paying for these cleanups "after the fact" by adopting public policies that collect funds from companies before they close and go out of business to pay for clean up costs. Innovative forward thinking tools like a "green insurance policy" or existing tools like requiring a cleanup bond on existing businesses would shift the burden of clean up costs to the consumer of the good/service and not the general consumer/tax payer.

Yes we need to clean up the already abandoned sites, but we don't need to continue to support a system that does nothing to end the practice of relying on taxpayers to clean up private contaminated sites. For more on this and other policies/practices on abandonment check out https://domicology.msu.edu/

Al Warner
Thu, 08/13/2020 - 10:50am

“The current law doesn’t require [the state] to invest that money back into the infrastructure of the bottle bill,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association, pointing to trucks that collect returned bottles from retailers and equipment that sorts and crushes them for recycling.

So who owns/operates the can/bottle recycling infrastructure that he pointed to? This needs clarifying for me to arm chair quarterback whether the wholesalers deserve the new 25% cut.

Sounds to me like leave well enough alone and, yes, include all the other water/beverage containers in the $0.10 recycling fee. If it's so expensive to operate the collection operation, then the industry should come up with packaging that self destructs in a land fill.

Livid
Thu, 08/13/2020 - 10:57am

Just unbelievable.

Anonymous
Thu, 08/13/2020 - 11:02am

How about federal legislation?

Patricia Wilkins
Thu, 08/13/2020 - 6:05pm

Hundreds of non-profits, school sports boosters, charities are holding tens of thousands of bottles and cans collected as fundraisers. Stores are limiting the ability to return the cans because of capacity & labor issues. Beverage industry officials need to BACK OFF and swallow their greed.

David Frye
Mon, 08/17/2020 - 10:12am

Give our money to beverage distributors? That's the most ridiculous proposal I've ever heard. Any other random group deserves it just as much, if not more. Just keep the formula the way it is -- and increase the deposit. Ten cents from --when? 1970?-- must be at least 25 cents today, after inflation.

Cate
Mon, 08/17/2020 - 11:01am

The only reason the bottle deposit exists is because someone was making money off of it. Now that scrap aluminum and plastic prices have tanked, suddenly the system needs fixed. Why don’t we give the unclaimed deposit money back to the citizens that paid it in the first place? Earmark money to establish township-based recycling wherever it doesn’t exist and then kill the bottle deposit altogether. There is enough tax money wasted that could pay for more useful things like environmental clean up.

middle of the mit
Mon, 08/17/2020 - 8:02pm

The reason the bottle deposit exists was to give people an incentive to not litter.

https://www.bridgemi.com/michigan-environment-watch/pandemic-brings-reco...

You don't see anywhere near the cans on the sides of the roads, parks, beaches and rivers and trails. What you see now is water and juice bottles and of course fast food wrappers and bags.

Kill the deposit and those cans and bottles will be out there again.

Helene
Thu, 08/20/2020 - 6:47am

The picture with lighthouse & caption don’t match that’s not South Havens light
It’s either Holland or Grand Haven