Even at 5 cents a can, millions at stake in Iowa bottle bill debate

DES MOINES - As certain as opening day promises of bipartisanship and adjournment day boasts of accomplishments, Iowa legislative sessions are marked by attempts to change the four-decade-old law that requires nickel deposits on pop and beer cans.

At least nine measures have been introduced this year proposing changes in the 'bottle bill” law that was enacted in the late 1970s to reduce roadside littering.

Legislators and lobbyists involved in the discussion cautiously suggest there's been progress this time.

'I think there are good prospects of getting this out of the Senate this year,” said Sen. Ken Rozenboom, R-Oskaloosa, who authored what is now Senate File 470.

'This was never on my bucket list of things to do, but I've grown weary of the annual debate,” he said. 'It's time to try to find a way to get us off dead center.”

At stake in the debate is to what length a consumer has to go to reclaim a deposit; whether grocery stores have to continue taking back the dirty empties; and whether the redemption operations should be paid a greater share.

And then there are these important questions: Just how much money is out there because of consumers who don't bother to reclaim their deposits, and who gets to control that cash?

In its current form, SF 470 lets grocers opt out of taking back empties if there is a redemption center with a 20-mile radius. And it establishes a fund to return the value of unclaimed empties to taxpayers. That could be worth millions.

Rozenboom believes that rather than a 'Rube Goldberg, fix-it-all, one-shot bill,” the fundamentals he's proposing will force the various parties to the bargaining table.

'If the big players get a sense that something is moving beyond what we've seen before, that will carry its own momentum,” he said. 'So I will remain optimistic until I can't be.”

Lobbyists for the 'big players,” including grocers, bottlers, wholesalers and redemption centers, haven't struck a grand bargain yet, but believe there has been movement toward one.

'I don't want to jinx it, but this is the farthest we've come,” said David Adelman, a lobbyist representing the Iowa Wholesale Beer Distributors Association, which opposes SF 470. The association and the Iowa Grocery Industry Association, which supports the bill, are meeting 'almost daily,” say both Adelman and Brad Epperly, who lobbies for the grocers.

The wholesalers have been satisfied with the status quo, 'but they've come off that and we just started working on what do we agree on,” Epperly said. It's too early to tell if they can agree on enough points that lawmakers will move forward.

Tim Coonan, a lobbyist who represents several long-term care facilities whose clients work at redemption centers, agree there's more energy behind SF 470 than previous attempts.

'From the outside looking in, it looks simple,” he said, but that's rarely the case.

More than one person used the analogy that updating the bottle bill is like a balloon - when you push on one side, you're pushing out on the other side.

'Passing legislation is hard no matter what it is,” Epperly said. And when one group, in this case the wholesalers, are content with the status quo, 'it's tough to get to a point of agreement.”

He credits wholesalers for being at the table 'and trying to put this in a place where we can stop talking about it, keep it in existence and address the funding issues.”

Wholesalers recognize that grocers and other retailers are their partners as it relates to their respective business operations, Adelman said.

'So we want to work in collaboration with them to try to find a solution,” he said.

Adding to the challenge is the indirect players - 4-H Clubs, Scout troops, youth sports teams, volunteer fire departments - that collect cans to redeem them and raise funds.

'We want to make sure that everybody who has been involved with the bottle bill is part of the solution,” Adelman said. 'I do think this year, we've made more progress, meeting those concerns.”

While he waits for the Legislature to act, Troy Willard is creating his own solutions.

Willard, who in a couple of weeks will celebrate the 24th anniversary of his Can Shed, has four redemption centers in the Cedar Rapids and Iowa City area and added a fifth in Manchester.

'It's my ‘Field of Dreams' plan - if we build it they will come,” Willard said.

The Can Shed has about 40 employees and processes 100 million containers a year. Willard has made agreements with retailers like Fareway and Hy Vee to process the containers they sell so consumers are not bringing empties back to grocery stores.

Allowing retailers to opt out of redeeming cans and bottles, which is part of SF 470, is appealing to grocers who object to taking the dirty empties at their stores.

But it could well mean that consumers have to travel much farther to claim deposits.

There is a consensus that a key to the bottle bill's future includes raising the 1-cent handling fee to help redemption centers cover the increase in overhead over the past 40 years.

Redemption centers 'are not at all profitable at a 1-cent handling,” Rozenboom said, 'but we can rebuild that industry at two pennies.”

His plan would increase it to 2 cents per container before eventually dropping it to 1.5 cents, and redemption centers would keep the scrap value of the materials for recycling.

According to the Iowa Department of Natural Resources, there are 119 redemptions centers in the state. That doesn't included grocery stores and other retailers that also redeem containers.

While there is public support for expanding the deposit requirement to cover more containers - water, milk and energy drinks, for example - that doesn't seem to be in the current discussion.

One proposal to make the system work better is to capture the deposits on cans and bottles that aren't redeemed.

No one - other than the wholesalers, presumably - knows just how much that is. Sen. Pam Jochum, D-Dubuque, who is on the SF 470 subcommittee, estimates it's more than $20 million.

'I'd rather see that flow into the general fund,” she said.

Rozenboom agreed that the 'unredeemed nickel is going to someone's pocket and it's staying there.”

'That's why we have the annual battle between grocers and bottlers,” he said.

So his plan calls for the state Alcoholic Beverages Division, rather than wholesalers, to oversee the deposits. The proceeds from unredeemed bottles and cans would, eventually, flow into the Taxpayer Trust Fund 'so Iowans get the nickel back.”

But wholesalers don't see unredeemed containers as a windfall, Adelman said. They not only pay a nickel per container to retailers and redemption centers, but also a penny handling fee for a total of 6 cents.

The unclaimed nickels help them cover overhead expenses and the cost of cans that come in from other states - a significant problem in border cities, he said.

'We're completely out the 6 cents in those cases,” Adelman said.

Jochum is not convinced. She thinks the 'windfall” is significant - especially over the pandemic when emergency health orders exempted grocers from handling the empties.

The recovery rates, which include containers that were redeemed and recycled through traditional recycling programs, have fallen from 93 percent in 2005 to 71 percent in 2018, according to the Iowa DNR.

'I'm trying to get arms around how many people just threw cans in trash because of COVID-19,” Jochum said. 'If down to 50 percent because of the pandemic, that's a lot of money. That's a lot of money.”

Despite Rozenboom's optimism and the progress lobbyist see in bottle bill discussions, no bill signings are being planned so far.

SF 470, which was approved by the Senate Natural Resources and Environment Committee, now sits in the Ways and Means Committee. Chairman Dan Dawson, R-Council Bluffs, has been tied up with tax issues but said he hopes to focus on the bottle bill in the coming weeks.

Updating the bottle bill doesn't seem to be on the 'must-do” list, especially in a year when legislators already have tackled divisive legislation - expanding gun rights, free speech and diversity training issues, school funding, in-person education and election changes - and are talking about tax cuts and amending the state constitution to restore felon voting rights and restrict abortions.

'There's a ceiling on hard issues,” said Coonan, the lobbyist who is a former Senate staffer. 'Regardless of merits of the bottle bill, this may not rise to the level of hard things.”

There don't seem to be political consequences for inaction. There's bipartisan support for modifying the bottle bill as well as bipartisan support for making no change. For some legislators, changes to the program mean choosing between friends - the grocers, convenience stores, bottlers and wholesalers.

Although Rozenboom sees the status quo as the 'enemy of the bottle bill,” as long as it continues to be popular with the public, kicking the can down the road remains a viable option.

Comments: (319) 398-8375; james.lynch@thegazette.com

Key provisions of SF 470

' Grocery stores and other retailers could opt out of state requirements to accept empty, nickel-deposit beverage containers they sell effective July 1, 2022, if an authorized redemption center is within a 20-mile radius of the businesses.

' The bill also would change the redemption process for cans and bottles by temporarily doubling the handling fee to 2 cents per container.

' The state's Alcoholic Beverages Division would get the nickel deposits and be in charge of reimbursing redemption centers. Those nickel deposits now go to beer and beverage distributors.

' Starting in 2023, the handling fee would lower to 1.5 cents, but the centers would keep the scrap value of the materials for recycling.

' A separate fund would be set up to return proceeds of unclaimed containers to taxpayers.