Thursday, October 22, 2009

Bottle Bill Delayed Again

For those who thought that today's judicial hearing on the expansion of the state's bottle bill would end the current bottleneck, think again: "The potential start of the state's collection of 5-cent deposits on bottles of water was delayed Tuesday by a federal court judge. U.S. District Court Judge Deborah Batts delayed a Thursday hearing in Manhattan in which the state had hoped to get the go ahead to implement the program, which was approved in April."

There are, however, behind the scenes negotiations being conducted in order to end the stalemate-but the end, or, perhaps, the beginning, doesn't appear to be near: "Batts notified the parties that the hearing would be delayed because of an ongoing criminal trial she's overseeing. The sides are also working on a potential settlement that could end the court's involvement, officials said. Either way, the expectation that the new deposit on water could start Thursday has been washed away. There was no new hearing date set."

What is clear, is that the water distributors better gear up-and fast-if they want to avoid a disruption in their distribution system. As we have advised some of the impacted companies: "The expansion of the New York State Returnable Container Act to water creates some unique challenges for the new players in the redemption system.. The reason lies with the fact that the water companies-from the largest on down-are nor geared up to do this redemption work, and will need considerable help in order to simply avoid the kind of chaos that could easily spill over into their distribution network, and hurt sales."

And from where we're observing, it doesn't appear that these needed preparations have been made. Gearing up is complicated by the fact that the state's largest third party collector, Boro Recycling, is under an indictment cloud: "Five Long Island beverage dealers are among seven people who have been arrested as part of an elaborate scam to re-redeem bottle deposits at 7 cents a clip. The dealers, four operating in the town of Islip, made hundreds of thousands of dollars by redeeming beverage containers more than once. The scheme involves BORO Recycling NYC shipping bottles and cans they receive for recycling back to Long Island for re-redemption. Joseph Luzzi, owner of BORO Recycling, allegedly recruited beverage dealers to participate in the scheme, Suffolk County District Attorney Tom Spota said. It involved BORO employee Robert Grady scheduling deliveries and at times himself delivering truckloads of cans and bottles to the beverage dealers for re-redemption."

All of which underscores the need for the state to come up with a more sophisticated enforcement mechanism-particularly now since 80% of the unredeemed nickels are going to the public trough. In addition, in our view, this new reality opens up an opportunity for the state to set up rules that would encourage third part pick ups-and remove redemption from beer wholesalers and bottlers, freeing them up to concentrate on their core businesses.