EGLE averts financial crisis after stifled legislative negotiations temper bottle bill reform

With calls for a restructuring of Michigan’s bottle bill pre-COVID, the Michigan Department of Environment, Great Lakes and Energy faced a potential funding gap north of $20 million.

On March 3, a group of bipartisan state lawmakers introduced a new set of bills into the Michigan house. There was little fanfare or discussion.

At the time, the state, along with the rest of the country, slowly starting to pay attention to a growing pandemic that was ravaging parts of both Asia and Europe. Within weeks, the state would begin shutting down in response to rising coronavirus cases spreading rapidly across the U.S.

Detroit would be one of the hardest hit cities early in the pandemic.

The bills were an afterthought in the early days of the pandemic. Infighting between Democrats and Republicans over the shut down distracted the legislature for weeks.

But as the haze of the pandemic lifted slightly in the early summer months, and the bills found their way to committee.

They were aimed at reforming Michigan’s beverage container deposit program

The Michigan law was enacted through statewide referendum on November 2, 1976 and created a system for residents to pay a deposit on certain beverages that they could reclaim after the containers were returned.

This was meant to combat cripplingly low recycling rates in Michigan, clean up roadside litter and the environment in general, and preserve natural resources.

Since its implementation, the program has seen at least 90% of bottles and cans returned, only dipping after 2017.

In 2019, with 88.7% of deposits paid returned to Michiganders, there was still $43 million in abandoned deposits, or more than 430 million empty containers, according to the Office of Revenue and Tax Analysis in the Michigan Department of Treasury.

And now in 2020, the pieces of American lives left untouched by the coronavirus pandemic are scarce — even Michigan’s bottles and cans.

Retailers had closed their return centers to protect the safety of their employees when the initial lock down went into effect, and the state government urged people to keep their containers at home until it was safe to bring them back.

Three months later, return centers began a phased reopening on June 15. Estimates from beverage industry experts estimated Michganders could have anywhere from $50-80 million in unreturned bottles and cans stashed at home.

And the proposed legislation introduced right before the initial spike of coronavirus began to gain steam again.

With $43 million left behind by consumers in 2019, how much would be abandoned after a pandemic shut down the return center for a quarter of the year?

Industry experts claimed the deposits leftover at the end of 2020 would be enormous, and the influx of returns in June had already been difficult on retailers that had to process them and distributors that had to recycle them.

Under the current law, the Michigan Department of Environment, Great Lakes and Energy, or EGLE, is granted the first 75% of the abandoned deposits with the last 25% returned to retailers.

In 2019, this meant $32.2 million went to EGLE; $10.8 back to the retailers.

EGLE uses the awarded funds to clean up environmental hazards across the state by splitting the money between the Cleanup and Redevelopment Fund and the Community Pollution Prevention Fund.

In August, a new proposal began to circulate that dropped EGLE’s cut of the deposits down to 40%, retailers would retain their 25%, distributors would now get 20% and the Michigan State Police would receive the final 15% to assist in enforcement and fraud investigation.

An EGLE analysis of this proposal acquired through a public records request showed, if enacted, EGLE stood to lose around $20 million based on 2019 deposit estimates.

James Clift, the deputy director of EGLE, said the cut would have been “significant.”

The funds granted through the deposit program to EGLE, he said, are “dedicated primarily to the cleanup of contaminated sites in Michigan where the responsible party is unknown, has died or is bankrupt.”

But it wasn’t just money on the line. The Cleanup and Redevelopment Fund was also “the primary funding source for 130 staff responsible for the oversight of cleanup of contaminated sites,” according to the same EGLE analysis.

These staff members manage and administer 65 federal superfund sites, had chosen an additional 25 sites already to support direct contaminated cleanup for in 2020 and had another 88 sites to supervise as well.

One of the chosen 25 was an ordeal 30 years in the making.

Electro-Plating Services, formerly located at 945 E. Ten Mile Road in Madison Heights, dumped toxic waste into an open pit in their basement and for years evaded regulators’ demands to remediate the area.

The auto parts supplier was ordered to shutter their business and a Michigan judge sentenced its CEO to a one-year prison sentence.

So how would EGLE decide which sites had to maintain their priority status in the face of a $20 million shortfall?

“Sites that pose an immediate and present risk to human health or the environment are prioritized first for investigation and remediation,” Jill Greenberg said.

Greenberg, an EGLE spokesperson, also serves as the public information officer regarding the Electro-Plating Services site.

But EGLE had one thing on its side: the manner in which the original bottle bill became law. The law from 1976 is considered initiated due to Michigan voters supporting it through referendum as opposed to the Michigan legislature enacting it through the traditional approach to lawmaking; therefore, any changes must follow the same process.

“An initiated law requires a three-fourths majority vote for passage,” Clift said. “Therefore, agreement of all the parties is even more important than usual.”

After negotiations between the legislators, EGLE and representatives of the Beer and Wine Wholesalers and the Michigan Soft Drink Association, “The anti-fraud provision was the one area where we all agreed,” Clift said.

So now despite months of op-eds and budget analysis, the final proposal — which will most likely be voted on and make its way to the governor’s desk before the end of the year — remains almost wholly unchanged from the current law.

The only change will be $1 million will be subtracted from EGLE’s 75% of the abandoned deposits for the Michigan State Police to share with county and local law enforcement agencies.