Reader issue #673 When Governor Chet Culver in his January 15 "Condition of the State" address proposed reworking Iowa's container-deposit law - popularly known as the "Bottle Bill" - his core idea was strong.

If you believe that deposits on beverage cans and bottles are an effective way to reduce litter and encourage recycling, his proposal would address two key shortcomings of the current law. For one thing, the handling fee for grocery stores and redemption centers hasn't been increased in the 30 years the law has been in existence. And the program - which applies only to carbonated beverages, wine, and spirits in aluminum, glass, and plastic containers - leaves out a slew of drinks, from bottled water to tea to sports drinks.

And the program does work, with an 86-percent redemption rate in Iowa on more than 1.9 billion containers a year, according to the state's Department of Natural Resources.

Culver proposed expanding the types of containers covered, and he proposed doubling the handling fee. According to the Iowa Department of Natural Resources, an additional 335 million containers would be covered by an expanded Bottle Bill.

Those reforms would be hard enough to pass considering the opposition of grocery and beverage interests, but Culver also added several other wrinkles that made his proposal a harder legislative sell. His initial plan included:

• Increasing the deposit from 5 cents to 10;

• Only returning 8 cents back to consumers; and

• Funding the state's Resource Enhancement & Protection program with one of the unreturned pennies from each deposit. The other unreturned penny would be given to redemption centers and grocery stores, doubling the handling fee from its current 1 cent.

Culver's proposal was earlier this month declared dead-on-arrival by Senate Majority Leader Mike Gronstal. According to the Des Moines Register, Gronstal and House Majority Leader Kevin McCarthy (both Democrats) last year received several thousands of dollars apiece in campaign contributions from the beverage-industry lobby and the political action committees of specific retailers, such as Wal-Mart and Hy-Vee.

The governor has backed off doubling the deposit - and has promised to return the full deposit to consumers - but is still pushing for Bottle Bill expansion.

Brad Anderson, Culver's communications director, said last week: "His preference from day one has been expanding the Bottle Bill. He believes there are 330 million bottles and cans that are not covered under the current bottle bill, and he has said whatever deal we can come to ... to expand the Bottle Bill, that's what he supports. Whether it's keeping the 5-cent redemption or increasing it to 10, that's up to the legislature to decide."

Culver's initial proposal served to muddy the waters about the Bottle Bill, but it's still worth exploring the pros and cons of doubling the program's handling fee, doubling the deposit, and expanding it to new containers.


Different Systems

Up-front, it's critical to understand the basic outcomes of different recycling systems.

According to a 2002 report by Businesses & Environmentalists Allied for Recycling, deposit systems such as Iowa's have the highest return rates (78 percent of eligible containers) and the highest per-container net costs (2.21 cents), including revenue from material sales. (In other words: gross costs minus revenue from the sale of recovered aluminum, plastic, and glass.)

Curbside recycling has lower per-container net costs (1.72 cents) but a lower capture rate (50 percent of containers).

Drop-off recycling has the lowest per-container net cost (0.3 cents) but a capture rate of between 5 and 10 percent.

By this calculation, costs and recycling rates mirror each other; the more spent on a system, the more effective it is at capturing the recyclable material.

When unredeemed bottles and cans are factored in, however, deposit systems are less expensive than curbside, according to the report: "Based on a comparison of net costs that includes revenue from material sales and (for deposit systems) revenue from unredeemed containers, curbside programs are most costly (1.72 cents per container), followed by manual traditional deposit systems (0.80 cents per container) and residential drop-off programs (0.30 cents per container)."

In Iowa, unredeemed deposits are retained by distributors and total more than $13 million a year.

Another key difference between programs is that the expenses of deposit systems are borne by users; ultimately, the costs are passed along by manufacturers, distributors, and grocers to the people who buy eligible beverages. Curbside and drop-off programs, on the other hand, are typically funded by taxpayers.

And, lastly, the higher the deposit, the higher the participation. Michigan, with its 10-cent deposit, has a 97-percent return rate - nearly 20 percentage points higher than the national average.


"Where Did This Come From?"

Part of the problem with Bottle Bill expansion in Iowa is that many interests are still trying to kill the existing law. The beverage and grocery lobbies have periodically tried to ax the law, and they're obviously opposed to making it bigger.

The Iowa Beverage Association has set up a Web site to fight Culver's proposal ( One background document from the group calls the initial expansion proposal "a new $40-million tax."

Rose Shepard, founder of the Iowa Bottle Bill Coalition, said she was surprised by elements of Culver's Condition of the State proposal. Her organization represents the state's roughly 100 remaining redemption centers - down from a high of 400 - and has pushed the governor to increase the handling fee.

"We only asked him to help get a raise," she said. "We sent literally thousands of postcards to his desk, asking for help." When the governor proposed doubling the deposit, returning only 8 cents to consumers, and funding a state environmental program, "we're all going, 'Where did this come from?'" Shepard said. "That's not what we asked for."

Shepard said her group doesn't have an opinion on Bottle Bill expansion; its interest is increasing the handling fee, and requiring it to come from beverage distributors.

Jerry Fleagle, president of the Iowa Grocery Industry Association, said his organization met with the governor earlier this month about Bottle Bill expansion. "I would say we've almost agreed to disagree," Fleagle said. "The governor seems pretty well set on what he wants to do, so I really don't think there's too much room for negotiation."

Culver spokesperson Anderson put a different spin on the meeting. The governor "had a great meeting with the grocers, and they did show a willingness to work with the governor on a bill that makes sense for everyone," Anderson said. "So yes, they did show a willingness to expand it. ... I don't know any specifics that they put on the table, but he [Culver] did make it clear that they were willing to work with him on this issue."

Fleagle made clear that the Iowa Grocery Industry Association will only support expanding the Bottle Bill if increased access to curbside recycling were shown to be infeasible or less effective.

"We'd like to look at the bigger solution ... and not isolate it to just the Bottle Bill," he said. "We need to worry about recycling all materials, not just beverage containers."


Fixing the Bottle Bill

The Iowa Bottle Bill Coalition's Shepard said increasing the handling fee is common sense. "Inflation says we're worth 3 cents, but we've only been asking for 2," she said. "We'd like to see a 1-cent increase and some kind of inflationary measure - whether it be a quarter percent every five years, whatever - just something so that we don't have to go through this every 30 years.

"We're going broke."

Shepard said the handling fee is the reason that three-quarters of redemption centers have closed in Iowa. "We make ends meet, but we make nothing extra," she said. "If you talk to almost any redemption-center owner, you'll find that we all have separate businesses on the side, too. ... We run a salvage yard" in Montezuma in addition to a redemption center.

According to the Connecticut-based Container Recycling Institute, handling fees in the 11 Bottle Bill states range from nothing (in Oregon) to 3.5 cents (in Vermont and Maine). "I don't know anybody who hasn't gotten a raise in 30 years," said Betty McLaughlin, the organization's executive director.

Similarly, expanding the Bottle Bill to energy drinks, teas, bottled water, and other noncarbonated beverages is a matter of common sense - at least in terms of consumer habits. (Cost is another matter entirely.) When the Iowa law took effect in 1978, people generally drank soft drinks, and single-serving bottled water certainly wasn't prevalent.

"The beverage market changed dramatically" over the past three decades, McLaughlin said. States "are seeing the same litter issues [with excluded containers] that they saw before [with soda], because beverages tend to be littered.

"Curbside recycling works well for things that people use at home - like mayonnaise and spaghetti sauce - but not so well for things people use on the go. And beverages tend to be one of those things that people use on the go."


Why Bottle Bills?

As unpopular as they are with grocers and beverage distributors, recycling advocates are enthusiastic about them because they're tremendously effective at their stated goals: litter control and recycling of beverage containers.

A 1993 report by the Congressional Research Service noted: "Deposit systems collect more of their target materials than do curbside programs. Return rates in deposit systems range from 72 percent to 98 percent. The best curbside programs collect less than 70 percent of the targeted material - in many cases, substantially less."

"It certainly is a very efficient way that's been around for 30 years," McLaughlin said. "In all those 30 years [that Bottle Bills have been around], I've never seen anybody come up with anything better. There's nothing that beats it in terms of litter. What else is going to get ordinary citizens to go out there on their own and just pick up litter on a regular basis? ...

"You can't argue with a 97-percent return rate in Michigan [with its 10-cent deposit] ... ," she continued. "You take that as your gold standard, and any other system that you want to devise, ... that's your starting point. ... Nothing else competes. I don't see how it can."

Furthermore, she said, it's a tax-free system. One of the attractive features of container-deposit laws is that they only directly affect users and producers of the eligible products. In the current Iowa system, consumers pay the 5-cent-per-container deposit, which is passed on to the beverage distributors. When consumers return a container, the retailer or redemption center gives back the full deposit. Beverage distributors then pay the retailer or redemption center 6 cents - the deposit that's been paid out plus the 1-cent handling fee.

"The people who are using the product are the ones who are paying for its recycling in the cost of the product, versus having the taxpayers foot the bill," McLaughlin said. Other forms of collection - such as curbside recycling or recycling drop-off - are generally funded by the citizenry, including people who don't use them.

McLaughlin added that Bottle Bills ensure that there's little waste in the recycling process. "In order for it [a can or bottle] to actually be part of a cycle, it has to get back into the manufacturing process," she said. "It's really like a raw material that needs to be provided to someone who wants to make something new out of it."

With the container-deposit system, she said, "You get this nice clean stock because it's not commingled at the curb with paper and all kinds of other materials. Even though they're all recyclable, you put them all together in the truck and compact it, start breaking the glass, and shredding the paper ... you end up with contamination. It's inevitable. The beauty of the bottle-bill system is you don't have that contamination in the first place."

But if Bottle Bills are so positive, why do only 11 states have them, and why is it a perpetual struggle to keep the one already in place in Iowa? "It's a political reason," McLaughlin said. "The beverage industry doesn't want to do it, and the grocery industry doesn't want to do it."

Furthermore, "the hauling industry is really pushing this kind of what they call 'single-stream recycling' ... . The hauling industry is in favor of this because it keeps the business in their control and in their hands, as opposed to a container-deposit system, where they don't get to haul that material."

With grocers and haulers united, "it's two very powerful, very monied lobbies," McLaughlin said. "And so you're seeing in a lot of places that the grocery industry's number-one legislative item has all of a sudden become single-stream recycling. It's not because they're grand recycling advocates; it's because they don't want container-deposit legislation."


Beyond Bottle Bills

Grocers certainly have a lot of objections to Bottle Bills, and most of them have some basis in truth.

As the Iowa Grocery Industry's Fleagle said, one concern is cost: "Forty percent of Iowa's population lives in a county that borders another state, and Iowa is surrounded by states that do not have a bottle-deposit law."

He said because of the expense of the bottle-deposit system, the core price of beverages might be higher in Iowa than in surrounding states - without even considering the deposit itself. One Pepsi distributor charges more to Iowa retailers than to Missouri stores, he claimed.

And although a grocery store might keep the beverage price in Iowa the same as in neighboring states to remain competitive, the costs of other items might then be higher to make up the difference. Or the store (or the distributor) could just eat the cost, cutting into profit.

Presently, direct costs of the deposit system to distributors are minimal - about $3 million a year when you subtract handling fees from unredeemed deposits. And if Iowa were to adopt a 10-cent deposit, with 2 cents beyond the deposit going from distributors to handlers and the same participation rate, the cost would continue to be negligible, because revenue from unredeemed deposits would also double.

But if participation rises to Michigan levels, direct costs to distributors would jump significantly, as unredeemed deposits shrink.

And if the handling fee were increased to 2 cents and the deposit remains 5 cents, that could represent another $19 million or so in hard costs for distributors that would likely be passed on to consumers.

In that context, keeping a portion of the deposit to increase the handling fee - as Culver first proposed - makes sense. Other options hide the cost from consumers, while Culver wanted the cost known up-front.

"You're going to have Iowa consumers [who work in Illinois] ... shop stores on the Illinois side" to avoid the Iowa deposit law, Fleagle said. "And while they're over there, ... they're going to buy their other groceries over there, too."

Fleagle added that expansion of the Bottle Bill would increase handling costs significantly with a marginal benefit. While the number of containers covered would grow by roughly 20 percent under Culver's proposed expansion, the number of "sorts" for distributors would increase dramatically. "The workload sorting those containers basically goes tenfold for picking up 20 percent more containers," he said, citing a 1997 Massachusetts study of a similar expansion proposal. "So there's some huge additional costs."

In an e-mail, he added, "The average beverage container proposed under the expansion will cost an average of 12 cents each to handle! Iowa consumers will pay the additional costs! ... Expansion is not that; it is a whole new system with a whole new set of costs."

But all that obscures a bigger question: whether Bottle Bills are good approaches to recycling. They're phenomenally successfully at their modest aims, but they are sometimes barriers to a comprehensive approach to solid waste and recycling.

"If you have garbage pickup, there's no reason you can't have recycling pickup, if we're really going to be serious about this," Fleagle said.

One challenge with current curbside systems in Iowa is that aluminum is largely removed from the waste stream but is far more valuable than any other recyclable, Fleagle said. That makes it difficult to fund curbside-recycling programs, whose costs can be significantly offset by selling scrap aluminum. "When you take the most valuable item out of a potential curbside program ... you're significantly handicapping those curbside-recycling programs," he said. "We think single-stream curbside recycling is the way to go."

Many people agree that single-stream recycling is the wave of the future. Participation is higher than with traditional curbside programs because it doesn't involve sorting, and it captures a wider variety of recyclables than a container-deposit program.

But McLaughlin's concern about contamination is also valid, and many environmentalists support a combination of deposit and curbside programs. The economic incentive of a deposit system ensures a higher capture rate on eligible materials.

The Waste Commission of Scott County supports expanding the Bottle Bill and doubling the handling fee, said Communication Coordinator Erin Robinson. The litter and waste-diversion benefits offset revenue lost by other recycling programs, she said.

The point is that the debate about the Bottle Bill should be about more than the Bottle Bill.

"All options need to be looked at seriously, and not ... with a slanted point of view," Fleagle said. "We want to have a serious look at the curbside-recycling option. If ... it is proven that it won't work, at that time we would entertain looking at something [with an expanded bottle bill] then."

While recycling bottles and cans and diverting them from landfills is a noble goal, a Bottle Bill can never be a comprehensive recycling program. It will merely be an effective way to deal with one component of the waste stream - roughly 5 percent, according to the Iowa Beverage Association.

But in lieu of a comprehensive statewide approach to recycling, the Bottle Bill remains a valuable tool.

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