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The Fate of Unclaimed or “Abandoned” Deposits

What are “unclaimed deposits”?

In ten U.S. states,1 beverage distributors and retailers are required by law to collect small deposits (usually a nickel) on certain packaged beverages—typically carbonated soft drinks and beer.2 When the consumer returns these beverage containers to a retailer or redemption center, the deposits are returned. When a consumer chooses not to return a deposit container, the deposit money is considered “unredeemed.” Other terms are “abandoned” and “unclaimed.”

In the states where the deposit is 5 cents, 15 to 30 percent of beverage containers sold are not returned for their refund value. Since all of the deposit states also have municipal recycling programs, some of the unredeemed containers are recycled either through curbside programs or drop-off sites.

Redemption rates vary widely depending on a variety of factors, but they are primarily a function of the deposit amount. A higher deposit results in a higher return rate and fewer unclaimed deposits. In Michigan, the only state with a dime deposit, only 5 percent of containers sold are not redeemed. In California, where the deposit ranges from 2.5 to 5 cents, approximately 38% of the containers were not redeemed in 2000.

Who keeps the unclaimed deposits?

Currently California, Massachusetts, and Michigan collect 100% of the unclaimed deposits, although the mechanism for retaining these deposits varies. In California and Hawaii, the state collects the deposits from distributors when the beverages are sold to retailers. The bottler or distributor pays the deposit directly into a state-managed fund and collects the deposit from the retailer. The retailer then collects the deposit from the consumer. Any unclaimed deposits simply remain within this state-managed fund.

In Massachusetts, distributors and bottlers are required to turn over all unclaimed deposits to the state. The unclaimed deposits are said to “escheat” to the state. Michigan escheats 75% of unclaimed deposits, and allows retailers to keep the other 25% as a way to offset their handling costs. In all other deposit states,3 distributors and bottlers keep all of the abandoned deposits. In 2000, abandoned deposits amounted to $84.7 million in New York, $28.5 million in Massachusetts, and $23.5 million in Michigan.4

Why have unclaimed deposits been increasing in recent years?

Redemption rates have been declining slowly in recent years, and as a result, the amount of unclaimed deposits available to the state or to the beverage and grocery industries has been increasing. For example, unclaimed deposits in Massachusetts went from $20 million in 1997 to $31 million in 2001, as the state’s redemption rate dropped from 78.3% to 69.8%.

Similar trends are occuring in all other bottle bill states, primarily because deposits have failed to keep pace with inflation. In 1971, Oregon adopted the nation’s first deposit law, setting the refund value at a nickel per container. Because the enabling legislation did not tie this deposit value to any measure of inflation or purchasing power—such as the Consumer Price Index (CPI) or the minimum wage—it has remained unchanged to the present. Oregon’s nickel refund served as the standard for most of the nation’s other deposit states.5


Like Oregon, none of the other deposit states have tied their refund values to an inflationary index. Seven years after Oregon’s bottle bill was enacted, the nickel was worth 3.1 cents in 1971 terms—62% of its original value. In 2005 it was worth only one cent, as the figure shows.



The effect of the declining value of a nickel can be seen in the sliding redemption rates in several bottle bill states. In Michigan—the only state with a 10-cent refund—the redemption rate has also declined slightly, but still remains well above the other states.

Who should keep unclaimed deposits?

Beer distributors and soft drink bottlers argue that these unredeemed deposits should be utilized to help offset their costs of managing the container deposit return system. Others argue that the beverage industry is already keeping revenue from the sale of scrap container materials (aluminum, plastic and glass) as well as the “float” (deposits collected from retailers that can be invested for short-term returns), and that unclaimed deposits are tax-free, windfall profits for the bottler/distributor. They argue that unclaimed deposits, like other types of abandoned property, should belong to the state and be used for public benefit. Nearly every deposit state has attempted to escheat the unclaimed deposits as a source of revenue, usually to fund environmental programs.

How have unclaimed deposit funds been used?

The first escheat law was passed in Massachusetts in January 1989.6 In 1990, the first year of implementation, 10 percent of the unclaimed deposits went into the state’s Clean Environment Fund (CEF) and 90 percent went into the general fund. Over the next five years, the percent of unclaimed deposits accruing to the CEF increased, while the percentage going into the general fund decreased. As of FY 1995, 100 percent of the unclaimed deposits were earmarked for the CEF. In FY 2002, $35.1 million in unclaimed deposits were collected in Massachusetts.7

The intent of Massachusetts’ original law was to use the CEF exclusively for solid waste management, with specific proportions earmarked to providing support for recycling, composting, solid waste source reduction, and other environmental programs related to the bottle bill.8 However, the actual allocation of the funds is subject to appropriation by each subsequent legislature. Instead of receiving up to $226 million available from the CEF from FY 1990 to FY 2002, no more than $60 million (27%) has been used to stimulate and support recycling, the bottle bill, and other innovative solid waste programs.9 The other $166 million (73%) has gone toward Department of Environmental Protection (DEP) overhead costs unrelated to the original mandate of the law.10

Michigan’s escheat provision was also passed in 1989.11 The provision calls for 75% of the unclaimed deposits to be transferred into the Cleanup and Redevelopment Trust Fund, overseen by the Michigan Department of Treasury, and the other 25% to be distributed by the Treasury to retailers. Amended in 1996, the law specifies how the state must distribute its share of the unclaimed deposits. Eighty percent of this Cleanup and Redevelopment Trust Fund is immediately available for appropriation for municipal landfill cost-share grants, matching federal Superfund dollars, response activities addressing public health and environmental problems, redevelopment facilitation, or emergency response actions. Ten percent is deposited into the Community Pollution Prevention Fund, and the remaining 10% is deposited into and must remain in the Cleanup and Redevelopment Trust Fund until the amount accrues to a maximum of $200 million. In 2001, Michigan collected $17.5 million. From 1989 to 2003, the state collected a total of $126.7 million.12

Maine’s escheat provision was enacted in 1991.13 Unlike the provisions in Massachusetts and Michigan, Maine collected only 50% of the abandoned deposits, and the distributors and bottlers retained the other 50%. The revenue was used to fund the Maine Solid Waste Management Agency. Since the state received only half of all unclaimed deposits, and because Maine’s redemption rate for beverage containers was so high, the state chose to repeal the law in 1995, just a few years after it was implemented, because the State was afraid they might have to pay out more than it took in. A new escheat provision came into effect in 2004, which can be viewed at the bottom of the page.

In all three states, lawsuits were filed to contest the escheat provisions, and in all three states courts resolved the question in favor of the state.

In Massachusetts, Suffolk County Superior Court Judge William Bartlett ruled in October 1991 that the escheat law: a) did not cause an unconstitutional taking of the bottlers’ money; b) was a proper act of the legislature; and c) that refunds belong to the consumer until escheated to the state. The Massachusetts Wholesalers of Malt Beverages appealed this ruling, but the Supreme Judicial Court ultimately upheld the law in 1993.14

In Michigan, a lower court ruled in 1991 that the unclaimed deposits were the property of the beverage industry and that the law resulted in an unconstitutional taking by the state. The case was appealed by the Department of Treasury. The Michigan United Conservation Clubs (MUCC), the group that had spearheaded the original escheat campaign, put together an amicus brief for the Court. They were joined by several other organizations, including the Container Recycling Institute. The Court of Appeals, in 1994, overturned the lower court ruling, claiming that the amendment “constituted a valid exercise of legislative powers.”15 The State Supreme Court chose not to hear an appeal, effectively affirming the Court of Appeals’ ruling.

In Maine in 1991, the beverage industry took the state to court over the escheat amendment. The law was upheld by a Superior Court, but the Maine Beer and Wine Wholesalers and the Maine Soft Drink Association appealed the ruling. In 1993, the State Supreme Court ruled in favor of the state.16 As mentioned above, however, the state voluntarily repealed the escheat provision in 1995.

The Future for Unclaimed Deposits

In the 2003 session, joint committees in the Connecticut and New York State legislatures are considering bills which would escheat unclaimed deposits to the state. These proposals have gotten farther than in years past because the fiscal crises faced by the states are more severe than in the past. Policymakers and activists in New York are hoping to pass escheat legislation that would make $80 to $170 million available to the state’s Environmental Protection Fund. Connecticut lawmakers are considering bills to escheat 50 to 100% of unclaimed deposits to the state, for use in the General Fund or a dedicated recycling or environmental fund. Estimates are that this could range from $15 to $30 million in potential state revenue. Delaware is even considering a bill which would retroactively escheat all unclaimed deposit monies that the industry has retained since the law’s inception in 1983. While the fate of these particular bills is uncertain, it seems clear that the nationwide move to allow states to benefit from unclaimed deposits will not soon disappear.

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Frequently Asked Questions About the Bottle Bill

Here are some of the more frequently asked questions regarding New York's Bottle Bill:

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What happens to the unclaimed deposits from containers that are not returned?

Previously, all unclaimed deposits were kept by the beer and soda distributors who initiated the deposits on beverage containers. The 2009 amendments require that 80% of the unclaimed deposits be remitted to the NYS Department of Taxation and Finance on a quarterly basis. Further information can be found on their website at: http://www.tax.ny.gov/bus/bev/bevcnt.htm

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New York collects $120M in unclaimed bottle deposits
November 5, 2010




New York, November 5, 2010 - October 31st marks the one-year anniversary of the expansion of New York's beverage container deposit law, known as the "Bottle Bill," to include bottled water.  While it is too early to measure the full benefits of the new law, state and national recycling advocates are hailing the first year as a success.

"Consumers have adjusted easily to the expanded bottle bill and it is already delivering on its promise of a cleaner and healthier environment," said Laura Haight, senior environmental associate with the New York Public Interest Research Group.  "It has also created new jobs for small businesses and generated critically needed revenue for the state."   Haight noted that:
•In its first year of implementation, the state of New York has collected over $120 million in unclaimed deposits from the expanded bottle bill, according to Taxation and Finance data, on target with the state's budget projections of $118 million;  


•A survey of supermarkets and convenience stores in February found that 93% of the stores surveyed were complying with the law's redemption requirements, and most of the water bottles sold were properly labeled;


•The number of registered redemption centers which take back empty containers grew by 113 in 2009 and an additional 131 as of October 2010.  Many of these small businesses have been able to expand and increase their employees' wages and benefits.

Nationally, plastic recycling got a significant boost in 2009 due to the expansion of bottle laws in New York, Connecticut and Oregon to include bottled water, most of which is sold in PET plastic bottles.

Adding water bottles to the list of containers New Yorkers can redeem for refunds has boosted the liquid assets of those who collect empties for a living.

According to Susan Collins, Executive Director of the Container Recycling Institute, "We are seeing excellent growth in recycling rates in the container deposit-refund programs around the country. The expansions in New York, Connecticut and Oregon added nearly four and a half billion containers to deposit programs, and have the potential to increase the nation's overall beverage container recycling rate by two percentage points."

Collins continued, "PET reclaimers in the U.S. are hungry for this material. They are busy building new plants in the U.S., and can staff them with new employees as long as the materials are available to them."
Source: wastemanagement.einnews.com

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http://www.dec.ny.gov/chemical/57687.html

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Adding water bottles to the list of containers New Yorkers can redeem for refunds has boosted the liquid assets of those who collect empties for a living.

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New York State's Water Bottle Insurgency

by Paul Sterne    June 22, 2011



Just when we thought that terrorism had been brought to bay. Just when the world felt safe with Osama cornered and assassinated in his bedroom. Just when General Petraeus had the Taliban on the run, along comes another insidious attack on our government.


This threat started with a whimper, a barely audible creak. Slipped noiselessly into the 2009-10 NYS budget as a slight-of-hand revenue item, the five cent deposit on plastic water bottles became law on June 1, 2009. This stealth tax was greeted with applause by the good-hearted environmentalists from NYPIRG.  Perhaps a five cent deposit would show the consuming masses the error of their ways; perhaps the planet won’t be transformed into a huge receptacle of Poland Spring bottles and caps.


Prior to the expansion of the “Returnable Beverage Container Act”, the beverage companies were allowed to keep unclaimed deposits. This boon was granted as an offset for the cost of administering refunds and purchasing recycling machines. After the expansion of the Act, NYS is entitled to keep 80% of the unclaimed deposits. In 2010, NYS collected $120 million from unwitting taxpayers or just plain lazy consumers via unclaimed bottle deposits – that’s 2.4 billion bottles.


But the legislature had overlooked the most basic tenet of neo-classical economics – economic behavior changes at the margin. Prior to the expansion, the RBCA only applied to soda pop and beer. Most people don’t consume many of these ‘status’ beverages that can cost more than $1.00 at a deli, so the 5 cent deposit didn’t affect their pocket books on the margin. But with the expansion of the law to the most basic food group, bottled water, something that every suburbanite (and Frenchman) needs multiple times a day just to survive, behavior changed. Bottled water at Costco can cost as little as 11 cents per bottle, so the deposit tax represented a 45% price increase. [Surprisingly, bottle deposits are not factored in the Bureau of Labor Statistics basket of goods and services for determining inflation]. This massive price/tax increase came in the midst of the Great Recession shocking the consuming masses out of their stupor and sowing the seeds of resistance.


Just like the Tunisian Revolution was started by a single slap, the seemingly innocuous bottle deposit law started spreading ripples of civil disobedience throughout New York State. The first inklings were sporadic arrests of garbage pickers. People with wheelbarrows and carts were seen fishing water bottles out of bins on recycling day. Reported by vigilantes, these scofflaws were charged with stealing State property because “empty bottles carrying deposits become the property of New York State under RBCA once they have left private property and are in the right-of-way for collection. For the elimination of doubt, other government jurisdictions such as school districts, villages, towns and county are not allowed to seize the deposits; they are the property of New York State once they enter the recycling stream. ” Many of the arrested refused to pay their fines or appear in court and now are fugitives from the law; most got a lenient hearing by the overburden judiciary branch that doesn’t have the time or resources for such trifles.


Things started really heating up this Spring. The NYS legislature was shocked to learn that bottle deposit ‘recoveries’ were 30% below forecast, representing a $30 million hit to the budget. People were defying the stealth tax by actually returning their water bottles for a nickel; 600,000,000 bottles to be exact. Behavior was being influenced at the margin; a nickel tax on 11 cents of water was the psychological tipping point for many people. Don’t get me wrong, I don’t think that returning bottles for a nickel is rational. In fact, I rue the 312,500 eight-hour days of labor that New Yorkers wasted denying their government this stealth tax inserting dirty old bottles into filthy machines.


In an effort to stop the widespread defiance, NYS decided to follow the money and nip this revolution in the bud, at the cash register. The first checkout girl to be snared was at the Stop & Shop in April. A girl named Christina was caught refunding $18 of bottle deposit coupons to a single customer on a single trip to the supermarket. The store manager was summoned when her IBM cash registered locked up and started beeping. Alyssa had exceeded the “return limit of $12 per visit to an authorized deposit refund outlet”.


The man was outraged, “That’s my money. I earned it by putting 360 water bottles in that smelly machine. ” Some of the other patrons whispered, “Is everything okay at home? 360 water bottles; someone has drinking problem.” Other customers put down their unpaid tabloids and barked their outrage. “Give the guy his $6. I am missing the singing competition.”


The final straw came down from the Department of Labor. Individuals were seen inserting large numbers of bottle in the machines at another Stop & Shop near the Tappan Zee Bridge and inconveniencing other customers. The Labor Department decided to investigate. Turns out these workers – some kids, mainly elderly -- were helping their family and friends who didn’t have the time to return their bottles became they needed to make a real living. The labor inspector informed them that the operation had to be shut down because it violated the Minimum Wage Law of $7.25 per hour. To make $7.25 per hour an individual needs to process more than 145 bottles per hour through the machine, which is one every 25 seconds, hard duty even when the machines are empty. Since the machines are only specified to process 120 bottles per hour or two per minute, and designed to clog every fifteen minutes, the simple act of returning the bottles violated Labor Law. Thankfully the perpetrators were not arrested and the labor inspectors went to a nice lunch. The next day the operation was back with the support of the community and the shopping cart rustler.


Some of these Poland Spring tax dodgers were seen later in the day buying $12 of powdered milk for their babies.


Such are the nuisance taxes that bring great empires to their knees -- as well as unaffordable pensions. New York State is the Empire State, after all

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New York, November 5, 2010 - October 31st marks the one-year anniversary of the expansion of New York's beverage container deposit law, known as the "Bottle Bill," to include bottled water.  While it is too early to measure the full benefits of the new law, state and national recycling advocates are hailing the first year as a success.

"Consumers have adjusted easily to the expanded bottle bill and it is already delivering on its promise of a cleaner and healthier environment," said Laura Haight, senior environmental associate with the New York Public Interest Research Group.  "It has also created new jobs for small businesses and generated critically needed revenue for the state."   Haight noted that:
•In its first year of implementation, the state of New York has collected over $120 million in unclaimed deposits from the expanded bottle bill, according to Taxation and Finance data, on target with the state's budget projections of $118 million;  

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Adding water bottles to the list of containers New Yorkers can redeem for refunds has boosted the liquid assets of those who collect empties for a living.

pretty soon they will say they need a raise.....d!ckheads.......

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What happens to the unclaimed deposits from containers that are not returned?

Previously, all unclaimed deposits were kept by the beer and soda distributors who initiated the deposits on beverage containers. The 2009 amendments require that 80% of the unclaimed deposits be remitted to the NYS Department of Taxation and Finance on a quarterly basis. Further information can be found on their website at: http://www.tax.ny.gov/bus/bev/bevcnt.htm

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Buried within the new rule to require a five-cent deposit on every bottle of water sold in New York is the fact that water bottles sold in the state must contain a New York-specific UPC symbol.

This is expected to add cost and complexity to the distribution process. For instance, a distributor can’t simply restock New York shelves with product from a New Jersey warehouse unless it bears the unique code.

According to the Albany Times Union, here are some other provisions of the new law, portions of which take effect June 1.
•Retailers may keep 3.5 cents of the handling fee, instead of 2 cents.
•Retailers with stores over 40,000 square feet are required to install a so-called “reverse vending machine” that allows consumers to trade in their used bottles.
•Distributors and bottlers must pay 80 percent of unclaimed deposits to the state.

An executive at Rotterdam-based Price Chopper is not happy with the new law, saying that in order to comply, the retailer will have to use separate handling, storage and distribution processes for the bottled water.

“If you just think about it from the perspective of our own brand alone, for the volume of Price Chopper 24-pack water that we do, to be working out of two slots and keeping the distribution of bottled water separate — and to ask our suppliers to do separate labels and separate runs of bottled water — it’s really ludicrous,” Mona Golub, vice president of marketing at Price Chopper, told the Times Union.

The reason for the separate UPC code is to prevent the public from using bottles purchased in other states for collecting deposit refunds in New York.

In California, a similar deposit process on aluminum cans is causing issues with fraud.