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Bottlers upset at 15-year audit proposal

Posted March 02, 2009, at 8:28 p.m.

AUGUSTA, Maine — Bottlers would be audited for their compliance with Maine’s bottle deposit law over the last 15 years under legislation sponsored by Rep. John Martin, D-Eagle Lake.

It’s a measure he said would return millions of dollars owed taxpayers.

“There is millions in unclaimed deposits that should go back to the citizens of Maine,” he said in an interview. “The issue is basically the amount of money people are paying for deposits that are staying with distributors.”

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Maine’s bottle deposit law requires consumers to pay a deposit on all beverage containers except dairy products and unprocessed cider. Consumers can turn in those used containers and get their deposit back. But every year millions of containers are not returned, and that money is supposed to come to the state.

Martin believes not all of the deposits on the estimated one billion containers sold in Maine every year are being accounted for. He said the audit he is proposing would provide answers to questions from lawmakers and officials at the Department of Agriculture that oversees the law.

The bottom line, Martin said, is who gets the unredeemed deposits. Current law allows distributors to keep those funds if the containers are part of a “commingling agreement” in which, for example, both Coke and Pepsi cans are collected together instead of being separated by brand.

“The Legislature either lets these people keep this money that doesn’t belong to them, or else we make an attempt to return the money to the people of Maine,” Martin said.

But Cheryl Timberlake, executive director of the Maine Beer and Wine Wholesalers Association, said any audit should be far broader than tracking the deposit money. She said the law was passed to address the problems of roadside litter and to assure the recycling of bottles and cans instead of adding them to the state’s waste problem.

“The state should do a complete, comprehensive review of the resource recovery program to verify that it is working successfully according to how they like to see it done,” she said.

Timberlake said Martin’s proposal is also overreaching. She said the commingling agreements have been in effect only “a few years” and not for the 15-year period of the audit that would be conducted by the Legislature’s Office of Program Evaluation and Government Accountability.

“If there are unclaimed deposits that are owed to the state and to Maine citizens, a number of those are coming from out of state entities that do not comply with Maine’s bottle deposit law,” she said.

But in a report to the Legislature’s Business, Research and Economic Development Committee last year, the Agriculture Department stated it could not answer the question after trying to obtain information from bottlers and distributors at the direction of the panel.

“The majority of the industry’s participation in responding to the survey questions was insufficient to reach any reliable conclusions. Many responses lacked sufficient data and there was no means to verify the data that was reported,” the study stated. “The Department is unable to make any recommendation based on the findings of this report.”

But Newell Augur of the Maine Beverage Association, which represents many bottlers and distributors in the state, said last year in response to the study that the survey accounted for “85 to 90 percent” of the containers in the state, and that most companies have complied with the law.

He said by allowing commingling agreements, lawmakers recognized there are costs to implementing the deposit law, and the cost of beverages would be higher if companies did not keep the unredeemed deposits.

The Agriculture Department audit indicated more containers are not being registered with the state. With an overall increase in the number of containers, the value of the unredeemed deposits is in the millions of dollars. The report stated Maine Revenue Services received $1.2 million in unredeemed deposits in 2006.

Randy Trahan, the department inspector assigned to enforcing the bottle law, said distributors are now being audited to make sure all the containers they are distributing have been registered with the state. He said in an audit last spring, one large distributor in southern Maine had 30 percent of their containers unregistered.

“The biggest problem seems to be with wine bottles,” he said. “We are working to educate people about the need to register with us.”

Trahan believes earlier estimates of how many containers are being sold in Maine are too low and believes the total was more than one billion containers in 2008.

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