A Beverage Container Deposit Lawfor Hawaii

How will container deposits benefit Hawaii?

    Increase Recycling

Container deposit systems operating in 10 states around the country achieve 80% recovery on average, which is greater than curbside systems (50%) and far greater than voluntary drop-off (20%). Hawaii state law established a goal to recycle 50% of the waste stream by 2000; the current statewide recycling rate is 24%.  There is an estimated 800 million beverage containers per year in Hawaii.  At an 80% recovery rate, approximately 50,000 tons of beverage containers will be recycled annually.

Reduce Litter

In states with container deposits, beverage container litter has virtually disappeared.  The few cans and bottles that are tossed on sidewalks, playgrounds and beaches are soon picked up when they are worth a nickel.  A 1990 U.S. Government Accounting Office report estimated that bottles and cans represent 40-60% of total litter nationwide.   States with deposit laws report reductions in beverage container litter ranging from 69-83%.  The Hawaii State Department of Business, Economic Development & Tourism reports that 20,000 beverage containers were picked up in just four hours during the annual "Get the Drift and Bag It" cleanup.

Promote Economic Development

Container deposit systems create jobs; net gains in employment have been shown in nearly every state with deposit systems.  A Michigan study showed that labor comprised 62% of the costs associated with system operations.  In Michigan an additional 4,684 jobs were added to the economy.  New York found that 3,800 new jobs were created in that state.  Massachusetts and Vermont gained 1,800 and 350 jobs respectively.
A container deposit system would reduce costs of disposal, recycling and litter clean-up currently paid for by local government and taxpayers.  In addition, Hawaii's tourist industry would benefit from an improved environmental image with cleaner roads, parks, beaches and a visible demonstration of our local commitment to keep Hawaii a paradise.

   Promote Environmental Education and Awareness

The 6^th graders from Molokai, who gave testimony to the legislature, provided the best example.  In their months of research on bottle bills and the states where these systems are in place, they found that other kinds of litter were reduced in addition to beverage container litter.  They could only assume that the container deposit had created a heightened public awareness to the environment and keeping our communities clean.

    Respond to Public Demand

Beverage container deposit laws have widespread public support nationwide, ranging from 70% in a 1990 poll by the U.S. General Accounting Office to 76% in a poll by Peter D. Hart Research Associates.  No state container deposit law has ever been repealed, even though the beverage industry has tried repeatedly.  A local poll conducted in February 2002 found Hawaii in line with the rest of the country with over 70% supporting container deposits.  The 6^th grade students on Molokai reported even greater public support in their poll -- 87% supported the law.

 

Summary of Hawaii's Container Deposit System

Hawaii's bottle bill would establish a refundable deposit of five cents on beverage containers (glass, plastic and aluminum), plus a one-cent fee to cover the operational costs.  Consumers redeem their five-cent deposit when they return the empty container to the store or independent redemption center.  The one-cent fee, which may be passed along to the consumer in the cost of the product, is not refunded to the consumer, and is used to pay for the redemption center operations.

All retailers of beverages are required to charge the deposit and to post signs informing customers of the nearest redemption area.   The large retailers in urban areas are required to provide redemption of the deposit for the consumer unless an independent redemption center is established within a one-mile radius of the retailer.  Small convenience stores are exempted from the redemption requirement, but may elect to do so voluntarily as a customer service.

Local distributors initiate the deposit when they sell their product to the retailer, and they are required to label all beverages sold in Hawaii with the deposit amount.  The distributors then transfer the deposit monies to the State of Hawaii, who administers the system.  Retailers recoup the deposit charged to them by the distributor when they sell the product to the consumer.

Redemption operations may be run by the stores themselves or by independent redemption centers established by local recycling companies or individuals.  Each redemption center is registered with the State and must accept all of the types of beverage containers included in the system.  Hawaii would likely see different types of redemption operations established to suit the different shopping areas.  Redemption centers can be manned, manual operations or automated reverse vending machines.  They may be set up on the store premises, in front of the store or out in the parking lot, but there must be one located within a mile of every large retailer that sells beverages.  The redemption center or store submits monthly invoices to the State for the containers they redeem.  In addition to the five-cent deposit, they are paid a handling fee of two cents per container to cover collection, transportation and handling costs.

The costs to operate this system -- including operating the redemption centers, collection, handling, transportation, administration and public education -- are supported through two funding sources:  the unredeemed deposits and a beverage container fee. Recovery rates are expected between 70% and 90%, which means there will be a pool of unredeemed deposits available to fund system costs, but one that fluctuates with recovery. A beverage container fee of one cent per container is included in Hawaii's system to supplement the unredeemed deposits to cover payments of the two-cent handling fees to the redemption centers.  The distributors pay the beverage container fee to the State along with the deposit.

The beverage container fee will increase to 1½ cents should recovery rates go above 70%.

The monies generated by these two funding sources are deposited in a special fund and can only be expended to support recycling.  In subsequent years, the State along with the counties would report to the legislature and recommend any needed changes in the fee structure.

Glass containers have been subsidized with an advance disposal fee (ADF) since 1990, currently at one and one-half cents per container.  With the proposed deposit system, this glass ADF would be amended to apply to non-beverage containers only, once the beverage container fee takes effect.

The deposit system start date is set for January 1, 2005, allowing time to establish rules and to prepare for start up.  Administrative rules governing the operations and administration of the system would be promulgated by the end of December 2003, providing 18 months for the process to be completed.  Payment of a ½ cent beverage container fee began October 1, 2002 and will increase to one cent October 1, 2004 to allow the state to prepare for start-up, including hiring personnel and establishing a sufficient start-up fund. 

 

Questions and Answers

Container deposit laws have been proposed many times in Hawaii over the last 10 years and have not been successful.  What's different now?

1.     The system being proposed has been well-designed through a cooperative effort among the leaders in recycling in state and county government, the recycling industry and local environmental organizations, and all are in agreement that the proposed system will be effective and operate efficiently.

2.     The responsibilities assumed by the beverage distributors and retailers have been minimized.  Distributors are not required to take back returned containers and retailers can opt out of handling on-premises redemption if an independent redemption center is established within a mile of their store.

3.     The timing is right for Hawaii to move forward with a container deposit law.  Comprehensive recycling programs have been developing throughout the state over the past 12 years, targeting cardboard, office paper, glass, metals, green waste, food waste, tires, batteries, used oil.  These materials have either been banned or restricted from disposal or commercial sector mandates to recycle them have been established (on Oahu). Voluntary efforts in community recycling have achieved their full potential. In order to add beverage containers to this comprehensive plan, the container deposit system is being proposed as the most effective and cost-efficient method to achieve high recovery rates and public participation.

 

Who supports and who opposes the container deposit law for Hawaii?

Generally, container deposit laws are supported by environmental and public interest groups and opposed by the beverage industry.  The proposed container deposit system is supported by all of Hawaii's leaders in recycling and our environmental organizations.  The system being proposed has been well-designed through a collaborative effort among the leaders in recycling in state and county government, the recycling industry and local environmental organizations, and all are in agreement that the proposed system will be effective and operate efficiently. 

The supporters and collaborators include:  State Department of Health; State Office of Environmental Quality Control; City & County of Honolulu, County of Maui, County of Kauai, County of Hawaii, Island Recycling Company; TOMRA Recycling Network; Honolulu Recovery Systems; Recycling Systems Hawaii; Aloha Plastic Recycling; Aloha Glass Recycling; Sierra Club; Life of the Land; UH Sea Grant; Citizen Action Project; The League of Women Voters.  And the list continues to grow.

The opposition includes members of the Hawaii Food Industry Association, including retailers and distributors.

 

Why does the beverage industry object to container deposit laws?

This is a difficult question to answer in light of the fact that the beverage industry concerns have been addressed in the design of Hawaii's system.  In nine of the 10 bottle bill states, the full responsibilities for administering and running the system were placed on the shoulders of the distributors and retailers.  Not so in the system to be established in Hawaii.  The responsibilities assumed by the beverage distributors and retailers have been minimized.  Distributors are not required to take back returned containers and retailers, who complain about lack of space for handling and storing the returned containers, can opt out of handling on-premises redemption if an independent redemption center is established within a mile of their store.  Small stores restricted by space have been exempted.  However, the beverage industry still opposes this measure.  

Overall, their objection seems to be a question of responsibility.  The industry's position is that recycling is a government responsibility, not theirs.  This is clearly reflected in the beverage industry report to the Legislature in January, 2002 proposing their alternatives to the bottle bill, which included a combination of county-operated curbside and drop-off collection services funded by a volume-based refuse fee.  On the other hand, the proposed deposit system presupposes that there should exist some degree of producer responsibility - product stewardship -- and establishes shared responsibilities for getting the job done (increasing recycling and reducing litter) among government, the consumer and business.

The beverage industry has expressed unfounded fears that sales might decrease.  The Container Recycling Institute reports that the general pattern of beverage sales in deposit states has been an initial slight decline followed by a return to normal growth patterns.  Sales figures for a 3-5 year period after the laws were passed show sales increased at or above the national average in most of the states with deposit laws.

In fact, there may be possibilities for turning the deposit refund into a purchase incentive.  Consumers could be offered the option of a cash return or a coupon return.  The coupon could be applied to the purchase of beverage products and could be offered at a higher value than the straight return of cash.  This kind of creative marketing on the part of the beverage industry requires a more positive, solution-oriented perspective than they now have.

 

Do consumers support container deposits in the states where they have been established?

YES.  Beverage container deposit laws have widespread public support nationwide, ranging from 70% in a 1990 poll by the U.S. General Accounting Office to 76% in a poll by Peter D. Hart Research Associates.  No state container deposit law has ever been repealed.

 

Will a container deposit have a substantial effect on increasing recycling and reducing waste?

YES.  Beer and soda containers are recycled in container deposit states at an average rate of 80%.  In comparison, the national recovery rate for containers is 38%.  On Oahu, existing community recycling programs capture only 20% of the available containers.

 

Will a container deposit substantially reduce litter?

YES.  A 1990 U.S. Government Accounting Office report estimated that bottles and cans represent 40-60% of total litter nationwide.  The few cans and bottles that are tossed on sidewalks, playgrounds and beaches are soon picked up when they are worth a nickel.  States with deposit laws report reductions in beverage container litter ranging from 69-83%.  According to data from The Center for Marine Conservation, bottle and can debris makes up 7% of beach litter in container deposit states and 19% of beach litter in non-deposit states.

 

Who will administer the program?

The State Department of Health, Solid and Hazardous Waste Branch, will administer the program, including receipt and distribution of the deposit monies and beverage container fees; payments to the redemption centers; and inspections of stores and redemption centers.

 

Will a deposit system complement existing recycling programs?

YES.  Community drop-off systems on all islands can continue with minor adjustments.  For example, on Oahu there are 85 community recycling bins at schools and shopping centers for the collection of containers (plastic, glass, aluminum) and paper (newspaper, cardboard).  Revenue generated from the sale of these recyclable materials goes to the host/neighborhood schools.  The bins will continue to collect paper and can be restructured to collect deposit and non-deposit containers separately and allow residents the option to donate the container deposits to the schools.  States with existing container deposit systems find that community groups fund raise by collecting deposit beverage containers.

 

How will a container deposit system work in restaurants and bars?

Restaurant-goers would not be charged the deposit for beverages consumed on the premises.  The restaurant/bar pays the deposit to the distributor same as other retailers, but they are not required to charge it to their customers.  Restaurants/bars redeem the deposit value by returning the containers to a redemption center.  Because of the high volume they generate, it is most likely that local recycling companies will provide pickup service at no charge and that redemption could be calculated by weight so that counting containers would not be necessary.  The two-cent handling fee would cover the recycling company's collection costs. 

 

Will a container deposit law increase the cost of beverages to the Hawaii consumer?

YES, by one cent per container.  The five-cent deposit is fully refunded to the consumer when the empty container is returned for redemption.  However, the beverage container fee paid by the distributors to help support the systems operating costs may be passed on to the consumer.

The distributors are required to pay a one-cent container fee on all beverage containers to provide monies to support redemption operations, collection, handling, transportation and administration.  Distributors have the option of passing these costs on to the consumer as part of the product cost.  Thereby, consumers could see an additional one cent on beverages, or six cents total on a six-pack.

 

Will a container deposit system benefit Hawaii economically?

YES.  Container deposit systems create jobs; net gains in employment have been shown in nearly every state with deposit systems.  A Michigan study showed that labor comprised 62% of the costs associated with system operations.  In Michigan an additional 4,684 jobs were added to the economy.  New York found that 3,800 new jobs were created in that state.  Massachusetts and Vermont gained 1,800 and 350 jobs respectively.

A container deposit system would reduce costs of disposal, recycling and litter clean-up currently paid for by local government and taxpayers.  In addition, Hawaii's tourist industry would benefit from an improved environmental image with cleaner roads, parks, beaches and a visible demonstration of our local commitment to keep Hawaii a paradise.

 

Will Hawaii be able to find viable markets to recycle all of the containers collected? 

YES.  Recycling markets are strong.  Hawaii will be able to successfully recycle all of the recovered aluminum, glass and plastic containers.  Materials will continue to be shipped out of state to regional markets.  Many states, especially on the West Coast, ship to the same markets in Asia as Hawaii does. There is no state in the country that remanufactures all of their recyclable materials within their own state.  Small-scale local remanufacturing businesses should be encouraged wherever they pop up.  However, on-island remanufacturing will not support the volume of containers that will be recovered in the deposit system.  Hawaii's volume is not sufficient to interest any large-scale processing operation.  The predominant markets for Hawaii's recovered materials are in Asia and on the mainland.

 

Can't we increase recycling through voluntary efforts?

Probably not.  Voluntary, low-cost efforts are not sufficient to get the job done.  Over the past 10 years, all of the islands have established voluntary community drop-off systems.  On Oahu, the City has established some very effective programs and policies to increase recycling.  Targeted recyclable materials have been banned/restricted from disposal sites, businesses have been required to recycle by law, curbside collection of yard waste is provided to almost every home on the island, and the community recycling drop-off program has been developed and expanded to its full potential.  The next logical step to move recovery rates significantly forward is a container deposit that provides sufficient economic incentive to the consumer to recycle.

The beverage industry has worked cooperatively with the City and State over the years to help enhance the effectiveness of the recycling programs, but they have not been able to commit the level of resources necessary to increase recovery rates and litter control to sufficient levels.

 

Do deposit systems and curbside collection systems work well together?

YES.  A beverage container deposit provides a more comprehensive system for our islands than curbside. The deposit system will recover recyclable containers from apartment dwellers, commercial properties and businesses, parks and beaches, military bases and all of our visitors, as well as those in single-family homes, plus reduce island litter by half. While curbside collection offers additional options and convenience for those in single-family homes, those communities with both curbside and deposit systems experience the very highest recycling rates in the country.

Deposits and curbside are complimentary systems. A curbside collection program will supplement the effectiveness of the deposits by offering additional options for recycling, and the deposit value can help to offset costs of operating the curbside service.

The City is discussing plans to roll out an island-wide curbside program this year (2004). In Portland, Oregon, 8% of their deposit containers are recovered through curbside collection. In San Francisco, it's almost 14%. If Honolulu recovers 10% of the deposit containers in curbside, that would contribute more than $2 million to offset operating costs.

If you have questions or comments, contact Suzanne Jones, Recycling Coordinator for the City & County of Honolulu (768-3420); Genny Salmonson, Director of the State Office of Environmental Quality Control (586-4185); Steve Chang, State Department of Health, Solid and Hazardous Waste Branch (586-4240).