State audit recommends diverting unclaimed Bottle Bill funds
Oregonians recycle lots of bottles and cans, but those that are picked up curbside, or are just lost, are never redeemed for their deposit.
State auditors now say Oregon has a chance to collect those deposits and use the money for environmental and recycling programs.
That's according to a report issued Tuesday, Nov. 10, by the Secretary of State's Audits Division, which called for a modernization of the groundbreaking Bottle Bill, produced nearly 50 years ago. Those deposits could add tens of millions of dollars to the state's budget.
Under the current system, beverage distributors keep unredeemed deposits. The proposed changes would allow the state to collect the deposits as uncollected property — a potential boon for government environmental programs but, at the same time, a financial hit for beverage distributors.
The changes stem from Oregon's bottle bill, a landmark program developed in 1971 to help combat rampant litter piling up in forests and along highways. Lawmakers at the time saw the idea of a deposit as the best incentive to get Oregonians to return their cans and bottles.
The 5-cent deposit per can was significant in 1971, when a six-pack of beer cost around $1.05, or about 39% of the sales price. A six-pack of beer today averages around $10, so the existing 10-cent deposit per can represents only around 6% of the sales price.
Nine other states and British Columbia have since followed Oregon in implementing their bottle deposit rules.
But Oregon is facing budget cuts in upcoming years, according to the audit, and it recommends that the Oregon Liquor Control Commission work with the unclaimed property division to pursue unclaimed property related to the Bottle Bill.
According to the state audit, $30.6 million in unredeemed deposits were collected last year by beverage distributors. Bryant Haley, alcohol spokesperson for the state's Liquor Control Commission, said most of that went to the Oregon Beverage Recycling Cooperative, and the remaining funds were collected by other distributors.
Of the 10 states that have a bottle bill, eight collect unredeemed deposits to support environmental programs or the general fund. The state auditors also recommended expanding the scope of the bottle bill to include wine and liquor sales.
"Oregon has an opportunity to enhance state revenues by adopting the practices of other states by collecting unredeemed container deposits," according to the audit. "Natural resource programs are facing budget shortfalls and unredeemed containers could help solve some of the gap."
The cooperative, which operates the Bottle Drop recycling centers, is largely funded by the current system and has the most at stake if changes are made to the way unredeemed deposits are handled. Around 10% of bottles are not redeemed, according to the cooperative.
In 2019, the recycling cooperative had a $44 million budget and received $18.2 million in funding from unredeemed deposits in Oregon, said Jules Bailey, chief stewardship officer for the recycling co-op. That shortfall required co-op members to pay nearly $26 million into the system.
"If the state had taken all those unredeemed deposits, it would have increased costs in the system by 69% for our members," Bailey said.
"Frankly, our members would not be able to absorb that, and they would have to pass it on to their customers. All in all, it would mean the end of the Bottle Drop system as we know it and that Oregonians have come to rely on," he said.
The cooperative, which has more than 200 members including Columbia Distributing and Bigfoot Beverage, argues that states that claim unredeemed deposits achieve less success compared to Oregon, with lower can and bottle return rates.
"Most of those systems are struggling, with return rates below 70%. California just announced their redemption rate has fallen to almost 60%. As a result, other states are looking to copy Oregon's success and program, not the other way around," according to a statement from the cooperative.
Mark Pettinger, spokesperson for the Liquor Control Commission, said the commission's role in changing the rule is limited to compliance and enforcement of the Bottle Bill.
"The audit provides an opportunity to stand back and assess how one of Oregon's most iconic laws could continue to evolve," Pettinger said. "At the governor's direction, we will work with other stakeholders regarding existing unclaimed property laws."
Larry Sidor, co-founder of Bend-based Crux Fermentation Project, said if the cooperative is not funded at its current amount, Oregon's recycling program is likely to fail and brewers, retailers and others in the beverage industry would need to bail it out.
"That would be a big financial burden," Sidor said. "In short, the funds collected should go directly to ORBC, not the State of Oregon."
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