Changes still needed to pending bottle bill

Michigan's 1976 bottle bill law, which provides for return of containers for carbonated drinks, could be on the verge of being updated to include non-carbonated drinks, like water and juices, updates long overdue to the voter approved initiative 46 years later. Hopefully lawmakers will consider further changes to now pending bills in both the state House and Senate before they are brought to a vote in Lansing to address the many long-standing issues surrounding the bottle bill program.

The law was first enacted by citizen initiative petition, with considerable support from the Michigan United Conservation Clubs, as a way to address bottle and can litter in the environment at the time. For the most part the goal was achieved, but in the ensuing years litter from containers for non-carbonated drinks (i.e. water) – estimated at 57 percent of total beverage containers today – have become the new problem.

As it stands now, the Michigan law providing for bottle and can deposits to incentivize consumers to return containers to retail outlets places a 10-cent deposit for such containers, one of the highest in the nation among the 10 states which now operate such programs. About 90 percent of containers get returned most years, except during the COVID-19 pandemic when Gov. Gretchen Whitmer, for a short period of time, suspended returns out of virus transmission concerns.

Deposits paid on containers that are never returned to stores are controlled by the state, where 25 percent of bottle deposit escheat revenues are distributed to retailers and 75 percent go to the state. Of the state total take each year, the first $1 million go to the Michigan State Police fund to support bottle bill enforcement. The remainder goes to the Department of Environment, Great Lakes and Energy (EGLE). Ten percent is retained in the Cleanup and Redevelopment Trust Fund until the balance reaches $200 million. Another 10 percent is deposited in the Community Pollution Prevention Fund, where $250,000 of the fund’s interest earnings are appropriated each year for pollution prevention grants to local communities. The remaining 80 percent is deposited in the Cleanup and Redevelopment Fund to support contaminated site cleanups. While the amount of escheat revenues varies from year to year, in 2019, for example, unclaimed deposits totaled $43 million.

As background, from day one there have been concerns expressed by retailers and distributors about the cost they incur by bearing the brunt of being the essential party to enact this environmental law. When the bottle return law was first enacted, retailers and distributors received 100 percent of the unclaimed deposits, but the act was amended in 1996 to provide for the current escheats split. Further, there was a time during the Gov. Jennifer Granholm administration that retailers and distributors were allowed a 33 percent tax credit for costs of handling enactment of the return law. But that tax credit was eliminated under the Gov. Rick Snyder administration.

Under the most recent bills proposed to change the bottle return law, introduced by Michigan state Sen. Sean McCann (D-Kalamazoo) and Michigan state Rep.Christine Morse (D-Kalamazoo), Senate Bill 167 and House Bill 4331 propose to expand the state’s current 10-cent deposit to include all other non-carbonated beverages, except for milk containers.

Among other reforms, the bills would permit universal redemption, allowing consumers to take any recyclable bottle to a large store while allowing smaller stores to maintain smaller take-backs; create a bottle handling fund to reimburse distributors and dealers on a per-bottle-basis; make funding available for audits and fraud enforcement. The proposed legislation also includes language to set a baseline of $25 million each year to address cleanup of the state’s contaminated sites.

Bill sponsors say they expect to continue negotiations with both retailers and distributors and environmental groups before they bring the proposed changes for floor votes in the House and Senate. That said, there are a few things that we think the new legislation should address as the law is expanded to include containers for non-carbonated drinks.

Most people would agree that 46 years after voter approval the 10-cent deposit amount has not kept pace with inflation. We say, raise the rate to 15 cents, both to reflect the inflationary considerations and as an added incentive to quickly change public behavior when it comes to the added requirement to return the new class of drink containers.

Second, take a serious look at the percentage split between the state and the retailers and distributors. After all, the success of this program relies on this group which should be more fairly compensated for the costs of added space required, added equipment that will be needed and the labor to keep the return system functioning.

As part of that review, consider – with increased revenue from a higher container deposits – imposing some environmental trust fund requirements to create protected endowments, the annual proceeds from which could be used for clean up projects.

Next, return the tax credit on new equipment that will be purchased to handle the expanded bottle return law.

We have one chance to update this important legislation so some added considerations and negotiations now will serve the state well into the future.