Inflation has driven hundreds of private bottle redemption centers out of business, putting pressure on states to bail out the businesses, despite signs consumers are increasingly disinterested in hauling their recyclables to the facilities.
Ten states have laws requiring consumers to pay deposits between 5 and 15 cents for every redeemable plastic, glass and metal bottle they buy: California, Connecticut, Hawaii, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont.
Consumers can redeem the deposit only by bringing cans and bottles to a redemption center or automatic sorting machine. In turn, states subsidize the centers with a “handling fee” that lawmakers set for each bottle.
Multiple reports now find those centers shuttering as shoppers return fewer bottles, apparently deeming the nickels and dimes not worth their time.
State subsidies have likewise failed to keep up with rising labor, land and transportation costs that have jacked up centers’ processing expenses.
“Redemption centers thrive when they receive adequate payments in the form of handling fees,” Susan V. Collins, president of the Container Recycling Institute advocacy group, told The Washington Times. “In contrast, when handling fees remain stagnant with respect to inflation, redemption centers suffer from being underpaid for their services.”
Inflation is likely a symptom rather than the cause of a decades-long decline in people using U.S. deposit-refund systems that worsened during COVID lockdowns, said economist Richard Belzer, who served in the federal Office of Management and Budget’s Office of Information and Regulatory Affairs from 1988 to 1998. Mr. Belzer, who wrote his Harvard University doctoral dissertation on deposit refunds, said the days when consumers dutifully saved and returned bottles to claim a 5-cent deposit seem to be long past.
States and retailers will have to jack up prices on the front end in order to make recycling more attractive for consumers on the back end, he said.
“To get a high redemption rate, they’ll have to charge huge deposits on each case of Bud Light — and that’s after giving it away,” Mr. Belzer, now an independent corporate consultant, told The Times.
Several reports have shown bottle redemption centers closing in recent years as states prove reluctant to hike deposit fees and subsidies:
- In Maine, local media reports show that at least 40 redemption centers have closed since 2020. In response, the state passed a law that will gradually raise the deposit fee to 6 cents in September.
- More than half of all bottle redemption centers have closed in the state of New York since 2008, the Times Union in Albany has reported.
- In California, beverage recycling rates fell from 81% in 2015 to 70% last year and nearly 1,000 recycling centers closed over the same period, according to a letter that 16 bottling companies, retail groups and waste disposal services sent to state lawmakers in May.
This last document asked state lawmakers to divert budget surplus funds to the California Refund Value program, claiming more centers will close by the end of the year if handling fees don’t increase.
Many areas of the state no longer have functional bottle recycling programs, according to the letter. Signatories included the American Beverage Association, the nation’s largest trade group of bottling companies.
“It is true that the redemption centers are struggling and have been since COVID hit them with closures,” Sally Houghton, executive director of the Plastic Recycling Corporation of California, told The Times. “Deposit programs work and they are worth investing in to keep them successful.”
She added that California’s high minimum wage, complex requirements for plastic recycling content and the fluctuating value of deposited scrap containers made it harder for redemption centers to stay out of the red even as pandemic lockdowns eased.
Billing itself as the oldest and most successful bottle redemption program in the U.S., Ms. Hougton’s plastic recycling company supports a bill pending in the California Legislature that would add large fruit and vegetable juice bottles to the program. It also would increase potential profits for redemption centers by recalculating the subsidy formula.
The growing number of bottle centers closing since the pandemic ended suggests the programs are no longer sustainable financially in a struggling economy, said Howard Husock, a domestic policy analyst at the conservative American Enterprise Institute.
“The whole recycling model has broken down economically,” Mr. Husock said in an email. “Bottle and can deposit laws are money losers when cost of collection is considered. Landfilling makes more economical sense.”
In New York, former Democratic Gov. Andrew Cuomo proposed in his 2019-2020 executive budget that the state expand the list of containers eligible for refunds and increase the deposit fee to 10 cents per bottle by 2026.
The Empire State has not increased the handling fee it pays to redemption centers since bumping it from 2 to 35 cents a bottle in 2009, said Chris Lonneville, the founding director of the Warsaw Redemption Center in rural western New York.
“I don’t think that most small businesses can afford to stay in business and wait for another three years,” Mr. Lonneville told The Times.
Mr. Lonneville, a Christian pastor, started the center in 2007 to support the ministries of his Family Life Church. He noted in an email that with beverage prices also rising and the state’s minimum wage on track to hit $26 an hour in 2026, the future of redemption centers like his own is highly uncertain.
Advocates of container redemption programs say they are a cleaner and faster way to collect bottles and cans than curbside pickup. States began implementing them in the 1970s to remove litter from highways and vacant lots.
According to the Container Recycling Institute, which supports a 10-cent minimum for all bottle deposits, several states have considered bills this year to adopt the system. They include Illinois, Maryland, Minnesota, Pennsylvania, Rhode Island, Texas and Washington.
None of these states have acted on the bills, although Rhode Island lawmakers approved a study.
“Container deposit programs dramatically increase recycling rates for beverage containers,” said Ms. Collins, the recycling institute’s president. “They are key to reducing the use of virgin materials and the associated energy use and greenhouse gas emissions.”
Congressional proposals to nationalize the bottle redemption programs have stalled for decades.
States have likewise been slow to invest more money. Connecticut will raise its deposit to a dime in January, following similar increases by Oregon and Michigan.
Critics say the programs, which cost consumers untold billions of dollars in deposit fees and taxpayer subsidies, have become a tougher sell as families struggle to digest pandemic-era increases in the cost of living.
“After a period marked by significant government handouts and skyrocketing inflation, the will to sort, travel, wait in line, and deposit bottles for a few cents is significantly less attractive,” said Joe Trotter of the American Legislative Exchange Council, a network of conservative state lawmakers and investors.
• Sean Salai can be reached at ssalai@washingtontimes.com.
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