As Connecticut prepares to introduce a 10-cent beverage container deposit beginning Jan. 1, 2024, concerns are rising about potential cross-border redemption challenges, particularly from neighboring states like Rhode Island, Massachusetts and New York — that all maintain a 5-cent deposit.
During the Nov. 20 meeting of the Bottle Bill Advisory Group, officials shed light on the cross-border redemption scheme. This involves bringing containers not originally sold in Connecticut into the state for higher redemption values, a maneuver that will affect multiple stakeholders in the process.
The Connecticut bottle bill, which was introduced in 1978 and officially implemented on Jan. 1, 1980, experienced a significant overhaul during the 2021 legislative session. This revision included the increase in deposits along with expanding the list of beverages subject to deposit. Distributors, responsible for covering handling fees for all redeemed containers, will now be entitled to a share of unclaimed deposits. This marks a change from the previous protocol, where 100% of unclaimed deposits were directed straight into the General Fund.
Among the ten states with a bottle bill, Connecticut is set to join Oregon and Michigan as the only states with a 10-cent deposit for all qualifying containers. California imposes a 10-cent deposit solely on containers equal to or exceeding 24 ounces, while those under this threshold have a deposit of 5-cents.
Meanwhile, Maine enforces a 15-cent deposit applicable to spirits and wine, while all other containers are set at 5-cents. Similarly, Vermont applies a 15-cent deposit exclusively to liquor containers, with all other types redeemable at 5-cents. It is noteworthy that Rhode Island currently does not have a bottle bill in place.
Attempts to replicate the memorable Seinfeld scene featuring Kramer and Newman transporting cans from New York to Michigan for an extra five cents will lead to a decrease in unclaimed deposit money in the General Fund, ultimately reducing the funds available for distributors. Furthermore, distributors are adversely affected by the obligation to cover handling fees for beverages not sold within the state.
Chris Nelson, supervising environmental analyst at Connecticut’s Department of Energy and Environmental Protection (DEEP), highlighted in his Nov. 20 presentation that it is “difficult to quantify the amount of cross-border redemption that’s actually happening either now or what we might see after January 2024” and acknowledged that “Connecticut has limited enforcement capabilities to investigate and mitigate cross-border redemption.”
The Bottle Bill Advisory Group also received a presentation from Patina Chacon, the recycling program enforcement branch chief at Cal Recycle, on addressing cross-border challenges in California. According to Chacon, recycling fraud is a multi-million-dollar business in California.
The presentation shed light on their collaborative efforts with the California Department of Justice to tackle recycling fraud and revealed significant instances of out-of-state material brought into the state from Arizona, Washington, Nevada and Mexico.
To provide context to the issue, Chacon stated that one pound of aluminum is equivalent to 30 cans. Subsequently, she presented visuals of box trucks stopped at checkpoints, attempting to transport 500 pounds of aluminum.
Chacon further detailed incidents involving 20 intercepted loads from Arizona, carried on 53-foot trucks, totaling 10,000 pounds of material valued at $320,000. These individuals engaged in regular monthly trips of a similar nature. In another case spanning three years, three semi-trucks per week from Arizona crossed the border, leading to a staggering $16,100,000 theft.
As fraudulent activities evolved, culprits started getting creative, utilizing vacation trailers to transport over 1,000 pounds. Over a span of three years, these deceptive practices equated to $748,000 in theft.
There have also been instances where material is stored in public storage containers and then brought to recycling centers in smaller loads. This method, albeit more time-consuming, allows fraudsters to operate with less notice, increasing their success rate.
Recycling fraud isn’t confined solely to the redemption side. There’s a huge opportunity for cross-border fraud on the sales end. This occurs when items are purchased in non-deposit states and subsequently resold in bottle bill states.
Unlike Connecticut, which lacks enforcement plans, California employs a multi-agency approach to address the issue, actively helping to operate and maintain already existing border stations. Additionally, the state conducts random mobile checkpoints and strategically places billboards along known smuggling routes. These billboards explicitly state that importing out-of-state containers is a criminal offense, potentially resulting in the loss of the vehicle and imprisonment, eliminating the possibility for criminals to claim ignorance of the law. Furthermore, they maintain a tip line, which, according to Chacon “gets quite a bit of those calls.”
Cal Recycle reports that despite their efforts and laws designating recycling fraud as a criminal offense, California cross-border redemption has increased over the last decade.
In contrast to California’s legislative stance deeming the practice illegal, Connecticut presently lacks such legal provisions. During the meeting, executive director of the Connecticut Beer Wholesalers Association pointed out that this has been an ongoing problem between Rhode Island and Connecticut. According to Malone, individuals in Rhode Island are stockpiling cans for the specific purpose of returning them to Connecticut and that its evolved into a growing “cottage business.”
Failure of the legislature to address this issue through the enactment of new laws prohibiting this type of fraud could potentially cost the states millions of dollars a year. Oregon and Michigan both have laws on the books punishing criminals for cross-border redemption but they both report that they still experience annual losses of $10 million each due to this illicit practice.