Wilmington News Journal
Lawmakers counting unclaimed nickels
Money could go to curbside recycling, Oberle says
By PATRICK JACKSON
DOVER -- Every time you buy a bottle of soda or beer in Delaware, you put a nickel into the pocket of beverage wholesalers as an incentive to keep that bottle from ending up on the side of the road or in a landfill.
You can get that nickel back if you return the bottles to the retail outlet. But most of you never do.
"Most people probably see the label on a bottle and don't even notice it or think about it, they just toss it into the trash," said Nicholas A. DiPasquale, former head of the Department of Natural Resources and Environmental Control.
The system has Delaware lawmakers asking about what happens to all those nickels that consumers put on deposit with wholesalers, but never reclaim.
Delaware is one of only 11 states that require refundable deposits on beverage bottles.
Lawmakers want to know why all that money should not be considered "abandoned property" and revert to the state treasury, as does money left unclaimed in bank accounts or unused portions of retail gift cards.
Officials estimate those unclaimed nickels could add up to $3 million a year -- or much more.
They don't know because the 1982 "bottle bill" required no accounting or reporting by wholesalers.
Bob Nedwick, owner of Steve's Discount Liquors on Centerville Road near Prices Corner, said the state ought to get the unclaimed money back from wholesalers such as NKS Distributors or Standard Distributing. "If nobody's getting the money back, then [the state] should take it back," he said. "Why should it stay at a place like NKS or Standard when it could do some good for all of us?"
The wholesalers object strenuously, just as they did five years ago when similar state inquiries went nowhere.
They maintain that there is no big pool of money for the state to claim. It's mostly eaten up by the costs of operating the bottle reclamation program.
"If Delaware decided to try to reclaim the money, it would cost consumers more because we're the people who run the program and we would need to recoup those costs," said Ellen Valentino, a lobbyist for the Maryland, Delaware and District of Columbia Soft Drink Association.
DiPasquale, now conservation director of the Delaware chapter of the Audubon Society, is among those who aren't buying that argument.
"I think that $3 million figure is probably conservative," DiPasquale said. "It's a scandal. There are millions of dollars -- we don't really know how many -- that we're giving them. ... We should take it back. ... We should be using it to underwrite recycling."
Could be much more
Whatever the amount is, it clearly is but a fraction of what it could be because the 1982 law hasn't been updated since enacted. It isn't applied to bottles larger than 2 liters and doesn't apply to aluminum cans. And it covers only alcoholic beverages and carbonated drinks.
It doesn't apply to bottles of water, juice or milk -- beverage categories that have seen explosive growth in the last 25 years.
Soft drink bottlers and beer wholesalers add the nickel charge per container to the price charged to retailers, bars and supermarkets.
When people bring back their bottles, the retailer refunds the nickel. When the retailer returns the bottles to the wholesaler or bottler -- normally through the trucker delivering new stock -- the merchant gets the nickel back, plus a penny handling charge.
Wholesalers and bottlers generally warehouse the returns and either sell them to companies that reclaim the glass or plastic, or send them to the Delaware Solid Waste Authority, which accepts the material without charge.
The authority adds those bottles to what it gathers in its many recycling igloos across the state and sells the material to glass and plastic reclaimers.
Chris Tigani, CEO of NKS Distributors, said he let the state look at the books during the last discussion of reclaiming deposits, in 2002-03, and there wasn't a lot in the accounts.
"We will be glad to step up and work with the state again," he said. "I can tell you that this isn't as easy as going around and collecting $3 million from the industry. This is a very effective recycling program, but it isn't free."
Tigani would not say how many bottles come back to his warehouse, but claimed the return rate is good.
Lawmakers and state officials say there is no comprehensive way to determine whether Tigani is correct. DSWA estimates that wholesalers and bottlers hold on to as much as $3 million a year in unclaimed deposit money.
Betty McLaughlin, executive director of the Container Recycling Institute, which supports bottle bills, said Delaware's laws are in line with most bottle-bill states. Many include aluminum cans, but most state laws don't cover nonalcoholic or noncarbonated drinks, or contain tight reporting requirements.
Only five of the 11 states allow wholesalers and bottlers to keep unclaimed deposits.
Matt Flechter, head of the program in Michigan, said his state keeps 75 percent of unclaimed deposits -- about $20 million last year. The balance goes to retailers to help cover costs.
Michigan's deposit is 10 cents, the nation's highest rate, and he said about 90 percent of deposits are claimed.
"We think it's an effective recycling program," he said. "The records are pretty good because all those retailers want their dimes back."
Delaware action
In June, Delaware's General Assembly required that unclaimed deposits be included in a study by budget officials of potential new revenues.
When state officials explored using abandoned property laws to pick up unclaimed deposits about five years ago, the idea met with strong opposition from wholesalers and bottlers and was quietly dropped.
Rep. William Oberle Jr., R-Beechers Lot, said he thinks the idea's worth freshening up.
"It's in the millions of dollars" and could go toward the costs of a mandatory statewide recycling program, said Oberle, a co-chairman of the Joint Finance Committee.
"Because we tend to think in hundreds of millions of dollars, there's a tendency to denigrate it, but it's real money that's out there," he said. "The big thing holding back curbside recycling is the consumer cost and if we can use all or part of this to help subsidize it, we should."
During budget hearings, DSWA said its curbside recycling program will cost about $10.3 million this year, with customers covering only about $864,000.
Lawmakers last month rejected a measure that would have added $3 per ton to landfill charges for trash haulers to provide a $3 million subsidy for curbside recycling.
Valentino, the soda lobbyist, said the whole bottle deposit notion is a poor way to arrive at comprehensive recycling.
"When you have a deposit system, you're taking products you could be using to help pay for a comprehensive program -- especially [plastic] -- out of the stream," she said.
If the state seized unclaimed deposits, she said, bottlers probably would charge more for their products, with retailers passing that on.
Contact Patrick Jackson at 678-4274 or pjackson@delawareonline.com.
THE LAW
Delaware's bottle bill was passed in 1982 and took effect in 1983. It imposes a 5 cents per bottle deposit on glass and plastic bottles of up to 2 liters.
The law covers only:
• Beer and other malt beverages.
• Carbonated soft drinks.
• Carbonated mineral water.
NOT COVERED
Unlike most states with deposit laws, Delaware does not include aluminum cans.
Liquor, wine and sports drink bottles weren't included in the original law.
The law also doesn't cover bottled water, coffee and tea beverages, and personal-size juice bottles.
HOW IT WORKS
Soft drink bottling companies or alcoholic beverage wholesalers add the 5 cent deposit into the price they charge a retailer.
When a customer returns a bottle, the retailer returns the 5 cents out of pocket and is later reimbursed 6 cents by the wholesaler or bottler. A wholesaler typically takes redeemed empties back in its delivery trucks.
Empties are returned to the wholesaler for disposition. Most ship bottles to the Delaware Solid Waste Authority, which ships them to Pennsylvania for recycling. There is not a similar arrangement with soda bottlers.
Wholesalers get to keep unreturned deposits. State law does not include reporting requirements for either the disposition of returned bottles or how much in unreturned deposits a wholesaler has.
