Deposit Nightmares

The folks at NYPIRG who are so eager for an expansion of the bottle bill, really don't understand what dangers they would wrought if the bill should pass in its current incarnation. Of particular concern, is its call for the state to grab the unredeemed deposits: "Generate new funding for local environmental needs by requiring beverage distributors to transfer any unclaimed deposits to the State Environmental Protection Fund. Currently, beverage companies are keeping an estimated $140 million a year in unclaimed deposits from bottles and cans that are not returned. New York is out of step with many other states, which require beverage companies to return unclaimed bottle deposits to benefit the public."

Does these advocates really understand just how the deposit system works? Or are the being purposely disingenuous? The unredeemed deposits are income that the bottlers and distributors use to pay for the cost of the recycling system. Just examine how much it costs the NYC Department of Sanitation to pick up and process recyclables-it comes to better than $300 per ton. So if you remove this revenue stream what is likely to occur is that the cost of redemption will be further passed on to beverage consumers; in other words a tax on soda and beer drinkers.

Than there's the problem of empty container tansshipment. As the NY Balance web site points out: "The millions of new bottles and cans in the system will mean longer lines at stinky, sticky recycling centers and grocery stores, as well as storage and handling headaches for retailers across the state. And that's just the legal returns. But it will also certainly fuel an entirely new, multimillion dollar industry in lucrative, underground "bottle-legging" by unscrupulous amateurs and professional crooks eager to mine refunds from bottles they purchase deposit-free from outside the state."

But what this commentary misses is even more foreboding than even an active underground economy. You see, under the current system, the deposit initiator redeems and accounts for the returned container. This is a fiduciary responsibility that is zealously undertaken because every container redeemed is a nickel (plus 2.5 cents handling) that the initiator must fork over to the retailer or redemption center-it comes right off of the bottom line.

If, however, the state becomes the ultimate repository of these unredeemed nickels, than there's no real interest for the wholesalers and bottlers to act as scrupulously in the accounting for the unredeemed containers-and all kinds of sleight-of-hand behavior is likely to occur. Even if initiators aren't purposefully looking to game the system, which we believe they won't do, there will be many others who will act to take advantage of a less vigilant review process.

Ultimately, in our view, this will result in the worst of all worlds: increased prices for beer, soda and all of the newly included drinks; and a redemption rate that rises close to 100%-thus depriving the EPF of any real new revenue. In order to avoid the latter, the state would need to add hundreds of new inspectors to the DEC, and even then, we don't believe it would do much good at detecting the gaming process.

All of this needs to be seen in the context of what the increased number of containers in the redemption system will mean to the beleaguered food retailers in NYC. Make no mistake, the bottle bill-and particularly an expanded version-is an expensive regulatory mandate that increases the cost of doing business at a time when supermarkets can no longer afford to operate in certain areas, places where a good market is crucial to the health of neighborhood residents.

So for a whole host of reasons, the expansion of the deposit law makes little sense. It will abet the decline of urban supermarkets, while at the same time adding additional costs for consumers at a time when unemployment is rising and incomes are falling. The measure needs to be defeated.