Most people don’t spend much time thinking about the deposits they pay on beer, wine, water, juice and soda containers – just as long as they get their nickels back at the corner redemption center.

Maine’s bottle and can redemption law, adopted in 1978, works. A glance alongside any roadway confirms it – no empties strewn in the weeds. The law also has helped to cut back the waste stream by about 5 percent.

The state Department of Agriculture, charged with oversight of the redemption system, estimates that 720 million containers are returned for recycling in Maine each year, probably more than 90 percent of the total number purchased.

But inside the bottle and can redemption system, there are still a few kinks that might need hammering out.

A bill voted out of the Legislature’s Business and Economic Committee, LD 985, proposes changes that target those in the business, but that would probably go mostly unnoticed by the consumer if finally adopted by the Legislature.

The bill recently was approved by the committee, 7-6, on a party-line vote, with Democrats in favor and Republicans against. At the heart of the bill is a carrot-and-stick mechanism that would nudge beverage distributors into creating a simpler sorting process for redemption center owners. If the distributors fail to do so, the handling fee they pay to the redemption centers would be increased by a half-penny per container.

To understand the arguments for the proposed changes, one must first understand the process.

The cycle

The cycle starts when, for example, the distributor for Budweiser beer delivers five 12-packs of Bud Lite to the neighborhood convenience store. The storeowner pays for the beer, and the 5 cent deposit on each bottle.

A consumer – let’s call him Joe Guzzler – then comes in to buy a 12-pack. He forks over the price of the beer, plus the 60 cent deposit. At this point, the retailer has been reimbursed and is removed from the cycle.

After Joe consumes his Bud Lite, he hauls his empties to a place we’ll call Anytown Redemption Center. The Department of Agriculture reports there are more than 350 redemption centers across the state. In the northern half of the state, those centers are likely to be small, mom-and-pop operations.

Joe gets his 60 cents back from Anytown and heads home.

Anytown then must sort all of the returnables it has collected into as many as 200 separate categories, based on product, brand, size, and what each container is made of – plastic, aluminum or glass.

Later, the distributor who sells Budweiser – the same company that delivered the 12-packs to the corner store – arrives at Anytown and picks up all the Budweiser product containers which the owner has carefully sorted. The distributor pays Anytown 8 cents for each bottle or can he picks up.

The extra 3 cents above the nickel deposit is a handling fee distributors must pay and represents Anytown’s gross profit. The amount of the handling fee is set by the state and was last increased in 1989 by 1 cent.

The distributor then sells the glass, plastic and aluminum to recycling companies. Aluminum fetches the most, but the market on the three commodities fluctuates. Both distributors and redemption center owners agree the distributors are probably not making back all of the money they’ve paid out in handling fees.

Redemption center owners like Peter Welch, who owns and operates RSVP Discount Beverage & Redemption Center in Portland, believe beverage distributors are passing that cost on to the consumer anyway.

“They’ve already figured that in [to the price of their merchandise],” he said.

Debate over the proposed changes mostly involves how much the redemption centers are paid for their services.

Redemption center owners like Ron and Sherry Dodge of Lincolnville, who own centers in Belfast, Lincolnville and Camden, want an increase in the handling fee they are paid. They say the cost of doing business has increased since 1989, while their gross revenue rate has not.

The Dodges employ five people, with $7 per hour being the highest wage they can afford to pay.

“I can’t afford health insurance for myself, let alone my employees,” Ron Dodge said.

He said he often works seven days a week to keep labor costs down. While working at the Belfast store on a recent Saturday, Dodge said he doubts distribution company managers and owners work the kind of schedule he must work to make ends meet.

Sherry Dodge testified before the legislative committee earlier this spring in favor of increasing the handling fee.

Distributors like Coca-Cola of Northern New England – which handles Coke, Sprite, Dasani, Minute-Maid and about 175 other brands – oppose the increase. General Manager Oakley Jones noted the 3 cent handling fee Maine and Vermont impose on distributors is the highest in the nation for states with redemption laws. California pays the lowest rate in the country at 1.7 cents per container.

In 1989 when the rate was increased in Maine, more entrepreneurs jumped into the redemption business, Jones said, increasing the total number of centers about threefold.

“Redemption centers didn’t make more money,” Jones said, but rather the revenue spread out among more businesses. He and others – such as Rep. Harold Clough, R-Scarborough, who served on a commission that studied the issue for two years – argue another raise would cause yet more people to go into the redemption business, creating competition for existing businesses.

If the handling fee is increased, Jones said, distribution companies like his reluctantly would pass the cost onto consumers.

Clough, Jones and Welch all served on the study commission composed of beverage distributors, recyclers, redemption center owners, grocery store managers, and legislators. The commission completed its work at the end of last year. Both Jones and Clough point out the commission voted 11-2 in favor of making changes to the system, but raising the handling fee was not among those recommendations.

Though the handling fee has remained fixed, Jones argued that with population and economic growth, the consumption of beverages has increased, “so there’s a revenue increase there” for redemption centers.

Commingling

The thrust of LD 985, however, is not to raise the handling fee as much as it is to push distributors into allowing redemption centers to commingle Coke cans with Pepsi cans, Bud bottles with Miller bottles, and so on, easing the labor burden. If distributors fail to come up with a way to set up a commingling system by Jan. 1, 2004, then the handling fee would increase by a half-cent.

Welch said labor costs in the redemption business account for between 25 and 50 percent of total expenses. By making sorting easier, the businesses could eliminate some jobs and save money, he said.

One scenario Welch imagines is that the seven or eight beer distributors and two or three soda distributors in Maine pool their resources and hire a company to pick up all the empties and sell them directly to a recycling company. The distributors could split the revenue based on their market share of sales, or come up with a system of tracking the breakdown.

“I’m sure they can come up with a way,” Welch said.

But Jones doesn’t see an easy solution.

“We’re all competitors,” he said. “That’s a very difficult situation.”

Float

Back to our Bud Lite drinker, Joe Guzzler. What happens if he drops his empties in the driveway and they shatter, or if he takes the beer along on an out-of-state fishing trip and leaves the empties there?

Remember, the beverage distributor got the deposit money on Joe’s beer from the retailer. If the distributor doesn’t have to “buy back” Joe’s empties, the distributor keeps that money, known in the business as the “float.”

Some of those studying the issue say distributors are pocketing $2 million to $4 million of “float” each year, according to John Murphy, clerk of the Business and Economic Development Committee. “But at the same time,” he said, “no one is really sure how much is out there.”

Welch has seen estimates that suggest the amount could be as high as $10 million annually.

But because the state doesn’t keep track of the number of redeemable containers bought and returned for deposit, there are no exact figures available.

Another of the provisions of LD 985 would require that the float be rolled back into the state’s general fund.

Jones said that back in 1978 when the system was first designed, it was understood that the float would help offset costs for distributors. In the 1980s, the state reclaimed the float and used it to fund oversight of the redemption system by the Department of Agriculture. But in 1994, Jones said, distributors were again allowed to keep the float.

Welch now wants the float to go back to the state.

He believes distributors would rather see the ranks of redemption centers thinned.

“It’s in their interest to run the thing out of economic gas, because they get to keep the deposit,” he said.

Phish and beer

And then there’s the Phish and Connecticut microbrewery connection.

Reportedly, some of the thousands of Phish fans who came from out of state to Limestone to see Phish play in 1997 and ’98 brought microbrewery beers purchased in Connecticut and other states. Those brands are not distributed in Maine.

Though some redemption centers accepted the returnables from concert-goers, the local distributors would not reimburse them for brands they did not sell.

Sen. John Martin, D-Eagle Lake, the primary sponsor of LD 985, said allowing commingling of products is important not because of the Phish phenomenon, but because of distribution: Many of his constituents buy beverages at retail centers such as Bangor and then can’t redeem the empties closer to home because the brands aren’t distributed there.

Stores like Wal-Mart carry brands not handled by any Maine distributor, so consumers are unable to redeem those containers.

Reverse vending machines

Technology may come to the rescue in the handling fee/commingling debate. A device called a reverse vending machine – it looks much like a soda vending machine – is being used increasingly in large grocery stores such as Shaw’s and Hannaford, and might one day be used even in mom-and-pop redemption centers.

The RVMs read the universal price code on a container and give the consumer back the deposit. The machines record which beverage containers it has accepted, so distributors can settle up without having to count containers.

Hal Prince, inspection program manager for the Department of Agriculture, said RVMs are not illegal, but neither are they expressly permitted in the current law. LD 985 would account for their use.

Prince said a redemption center handling a million containers a year could save enough in labor costs to afford an RVM.

The Republican minority on the Business and Economic Committee opposes any changes to the current law except for adding a provision expressly allowing the use of reverse vending machines.

The bill awaits votes by lawmakers in both the House and Senate.