STATEMENT OF
HONORABLE JOHN R. QUARLES, JR.
DEPUTY ADMINISTRATOR
ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE
SUBCOMMITTEE ON THE ENVIRONMENT
COMMITTEE ON COMMERCE
UNITED STATES SENATE
MAY 7, 1974
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to appear before you
this morning to discuss the views of the Environmental
Protection Agency on S. 2062, "a bill to prohibit the
introduction into interstate commerce of nonreturnable
beverage containers." This measure would impose a mandatory
two cent deposit on containers which could be used inter-
changeably by various beverage manufacturers and bottlers
and a 5 cent deposit on all other beverage containers for
sale or shipment in the United States. While the bill
would not prohibit the use of metal cans, it would ban
those metal containers with detachable tab tops.
S. 2062 is modeled after the beverage container law
which was enacted by the State of Oregon in October 1972.
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As a Nation, we Americans consume more bottled soft
drinks and malt beverages than any other people in the world.
Indeed, there are few national habits more typically American
than taking time out for "the pause that refreshes." Bottled
beverages, whether we like it or not, are truly part of the
American life style.
While the soft drink and beer industries have grown over
the last twenty years in response to the demands of a growing
and thirsty population, the consumption of beverage containers
has also increased - but at a rate in considerable dispro-
portion to both population trends and beverage consumption.
Between 1959 and 1972, the quantity of beer and
soft drinks consumed in the United States increased 33% per
capita. During this same time period, the number of beer
and soft drink containers consumed skyrocketed by 221% — from
15.4 billion units in 1959 to 55.7 billion units in 1972.
This dramatic increase in container consumption can be traced,
in large part, to an increase in the use of the non-refillable
container.
To borrow another phrase from the beverage industry,
we Americans have adopted over the years a "no deposit, no
return" attitude about our resources which has become
increasingly troublesome now that energy and materials are
in short supply.
Nowhere is our "throw away" style of life more apparent
than along the streets and highways of this country.
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Beer and soft drink containers form a large and highly
visible segment of roadside litter. According to a privately
commissioned study, in 1969, discarded beverage containers were
estimated to comprise 19.7% of highway litter by item and
between 54 and 70 percent by volume, based on observations
of the Oregon State highway department.
Relating these figures to the broader solid waste picture,
we find that approximately 8.2 million tons of beer and soft
drink containers were produced and discarded in the U.S.
in 1972. This figure represents 21% of all packaging wastes
and approximately 8% of the total product waste generated
by business and commercial establishments, households and
institutions. Beverage containers are the most rapidly
growing segment of all municipal waste with a growth rate
of approximately 8% per year.
While a concern for the environment and the problems of
litter and solid waste disposal serves as the more obvious
incentive to reduce the burgeoning number of discarded
beverage containers, we have found that a return to refillables
has undeniable materials and energy benefits as well. Dis-
couraging the use of "throwaway" containers is indeed one
practice which fully satisfies the demands of both environ-
mental enhancement and energy conservation.
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In 1972, beverage container production resulted in the
use of 6 million tons of glass/ 1.6 million tons of steel,
and 575,000 tons of aluminum. Moreover, beverage container
consumption results in the use of approximately 1% to 2% of
energy used by all U.S. industries.
Our studies show that taking into account the energy
demands of both the manufacturing and refilling process, a
refillable bottle making 5 trips has been found to use one
third less energy than that required merely to produce one
nonrefillable glass or aluminum container. This is a signi-
ficant energy savings when we consider that most returnable
bottles make upwards of 10 trips, and 25 to 30 trips per
bottle is not unusual.
The trend toward increased use of nonrefillable con-
tainers is likely to continue over the next decade if steps
are not taken to slow this spiraling demand for throwaways.
By 1980, the 55.7 billion figure for containers consumed is
expected to rise to 80 billion units, with the greatest
growth anticipated for the aluminum beverage container.
Public officials and private citizens alike have watched
with increasing concern the proliferation of discarded bottles
and cans along our highways, parks and beaches. Aside from
local anti-litter laws and privately-sponsored clean-up
campaigns, efforts to come to grips with the problems
associated with the careless disposal of non-returnables
were ineffective until recently.
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In 1970, with the enactment of the Resource Recovery
Act, the Environmental Protection Agency was given authority
to investigate the beverage container situation. Section
205 of that Act directs EPA to study the recovery of
resources from solid waste and the reduction of solid waste
at the source. Beverage containers as well as other types
of packaging were among those areas studied under this
authority.
Our Second Report to Congress, transmitted in March of
this year pursuant to Section 205, discusses our work in the
area of beverage containers and outlines the major options
available to reduce the generation of disposable bottles and
cans.
Briefly, we found three major types of strategies that
have been proposed to either reverse the trend toward refillable
containers or reduce the beverage container portion of litter:
taxes on beverage containers to finance litter clean-up, a ban
on the manufacture and sale of non-refillable containers, and
a mandatory deposit system, such as that contained in S. 2062.
(D Litter Tax. The litter tax would require that a
minimal additional sum, perhaps $0.005 per container, be
paid on the sale of each container for beer or carbonated
soft drinks. The tax could be imposed at the point of
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purchase of the container by the beverage industry. Litter
taxes could be imposed at the State or local level, as in the
State of Washington. Where implemented at the state and
local level, the costs and benefits must be analyzed in
relation to the characteristics of the particular area.
While a low litter tax might not cause any change in the rate
of littering, it would raise revenue to be used for litter
collection. Such a tax would not affect the trend toward
non-refillables.
(2) Ban on Nonrefillable Containers. A ban on non-
refillable containers would prohibit utilization of any
container other than one which is refillable. Bottlers of
beer and soft drinks would probably place deposits on their
refillable beverage containers to retrieve them for refilling.
As for the drawbacks associated with such an approach, such
a ban would completely eliminate the beverage can manu-
facturing industry as well as the contract canning industry.
The uses of steel and aluminum for beverage cans would also
be eliminated. The State of South Dakota has recently
enacted a law prohibiting the sale of beverage containers
which are not reusable or biodegradeable.
(3) Mandatory Deposit. The mandatory deposit alternative
would require the retailer to pay anywhere from 2 to 10 cents
for every empty container of beer and carbonated soft drinks.
The retailer would be required to accept from the consumer
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any empty container of the kind, size, and brand sold by
that retail outlet. Retailers, in turn, could return empty
containers to the distributor who would also be required to
pay the stipulated refund.
Mandatory deposit legislation is now in effect in the
States of Oregon and Vermont. In Oregon, the law has been
upheld by the Oregon Supreme Court. The Vermont law has
also recently been upheld in the courts. However, the laws
that have been passed in Bowie, Maryland, Loudoun County,
Virginia, and Ann Arbor, Michigan, have not been implemented
due to legal challenges.
Data presently available from the operation of the
various State and municipal mandatory deposit programs reflect
both the merits and the drawbacks of such a system.
Studies by both Research Triangle Institute and Midwest
Research Institute indicate that mandatory deposit legis-
lation is likely to result in decreases of 60 to 95% in the
number of beverage containers discarded as litter. Preliminary
data from Oregon support these analyses as they illustrate
beverage container litter reductions of from 75 to 85%. Such
a mandatory deposit system would be likely to result in a
decrease in solid waste of from 70-75% of the beverage con-
tainer portion of the amount of total product waste, or
5-6 million tons.
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Benefits produced by mandatory deposit legislation in
reducing energy consumption depend upon the mix of containers
available and the number of trips per container. Based
on the achievement of a 90% refillable bottle market in
which each container makes 10 trips, we estimate a reduction
in the energy required to produce beverage containers of
approximately 194 trillion BTU's of energy. This would be
equivalent to 92 thousand barrels of oil per day.
Turning now to the economic effects of mandatory deposit
legislation, predictions on beverage sales impacts range
from no sales decline to a decline of 8%. Preliminary
experience in Oregon indicates a drop in the beer growth
rate from 6% in previous years to 1.2% in 1973. However, it
is important to point out that an analysis of beer sales
trends over the past 10 years has indicated that sales in
1973 show no significant deviation from the trend line.
It would therefore be difficult to prove any adverse sales
impacts from the Oregon beverage container legislation.
No comprehensive data on soft drink sales in Oregon are
as yet available. A recent survey by Oregon State University
estimates a 10% rise in soft drink sales, a figure that
is consistent with previous years. Although comprehensive
beverage sales data are not yet available from Vermont, it
appears that the law in that State has resulted in some
sales decline.
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One major drawback of the implementation of a mandatory
deposit program is the potential for considerable temporary
industrial disruption. A study performed by Research Triangle
Institute estimates that in 1969, a deposit measure would
have resulted in a loss of approximately 60,500 jobs nationally,
primarily in the container manufacturing industries, and a
gain of 60,800 jobs, primarily in the retail and product
distribution sectors of the economy. This would mean a net
increase in total jobs. It is important to note, however,
that the jobs gained would be lower paying than those lost.
Thus such a measure might be likely to produce a net loss in
labor income.
Mandatory deposit legislation is also likely to result
in a decline in tax revenues during the period of transition
to a refiliable system. This would be due to the fact that
a majority of beverage can lines would become obsolete, as
would a large percentage of container handling equipment.
Estimates of losses in revenue from beer excise taxes and
corporate write-offs for obsolete equipment during the first
year of transition range from $271 to $803 million nationally.
These figures would probably decrease if beverage sales did
not decline, and if beverage cans continued to be sold.
Mandatory deposit legislation would also affect the con-
suming public. While the average price paid by consumers
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for beer and soft drinks should decrease because the higher
price nonrefillable containers would not be available,
increased handling costs and costs related to equipment
changes in the brewing and soft drink industries are likely
to be passed on to the consumer. Nevertheless, it is likely
that the consumer could pay slightly less on the average for
beer and soft drinks under a mandatory deposit system.
In this regard, it is interesting to note that the
price of soft drinks in the State of Washington where no
mandatory deposit law is in effect rose 12% as compared
with only an 8% rise in the neighboring State of Oregon,
which had a mandatory deposit law in effect during that
same period.
Mandatory deposit legislation may result in limitations
on both brands and sizes of beverage containers available to
the consumer. Preliminary data from Oregon support this
indication as many foreign beers and some soft drink brands
cannot be obtained in the same sizes in which they were
available before the law went into effect.
It should be emphasized that these considerations are
based upon a fairly broad-brush national macro-economic
assessment. There are a number of other micro-economic
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effects that could occur which are much more difficult to
predict, and have not been the subject of analysis to date.
These include shifts from regional to local beverage
distribution systems and other inter-firm and inter-product
effects.
Based upon our observations in the States and localities
which have enacted mandatory deposit laws, we believe that
a mandatory deposit program results in conservation of
energy and materials and a reduction in solid waste and litter
caused by beverage containers. We would therefore favor the
adoption on a nationwide scale of a mandatory deposit system
to eliminate differences in beverage container programs from
State to State and to assure a uniform and equitable program
for manufacturer, bottler, laborer, and consumer alike.
Associated with a sudden shift to refillable systems,
however, is the likelihood of some economic disruption and
unemployment. In order to achieve the resource and energy
recovery benefits of such a program while at the same time
minimizing the adverse economic repercussions, we would
recommend that such a nationwide system be implemented over
an extended period of time and with proper controls. Such
a phasing-in would greatly reduce industrial dislocation.
If an immediate shift to a national mandatory deposit
system went into effect in 1975, based on the achievement of
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a 90% refillable bottle market, we estimate that approximately
57,000 employees in the metal and glass container industries
would be affected.
Phasing in such a system by 1980, however, would reduce
the employment dislocations by 32%, thereby affecting 39,000
employees rather than 57,000. This would mean an average of
less than 7,000 employees dislocated per year. Further
reductions in dislocation could be achieved by an even more
lengthy phase-in period. If, for example, a 90% refillable
bottle market were to be achieved by 1985, an estimated
16,000 employees would be affected, less than 3,000 per year.
These dislocations must also be viewed in light of
job opportunities available for the displaced workers within
their occupational category and industry. Assuming a 90%
refillable market by 1980, we have been advised by the
Bureau of Labor Statistics that for each job lost, a
minimum of 70 job opportunities would become available in
the same occupational category. For certain job categories,
several thousand job opportunities would be made available
for every dislocated employee. These job opportunities do
not take into account the large number of jobs that would
be created in the beverage manufacturing, retail, and
distribution sectors of the economy by a return to a
refillable system.
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As to the specific provisions of S. 2062, we would offer
several observations. We have considerable difficulty with
the failure of the bill to provide for a phase-in period.
Without some equitable and efficient technique for phasing-
in the deposit requirements, we would anticipate severe
economic disruptions and dislocations. We are not sure in
our own minds how a "phase-in" could best be accomplished.
Another problem stems from a provision in the bill which
might be construed as drawing a distinction between inter-
state and intrastate beverage shipments. Such a distinction
could well defeat a national program, and it would clearly
result in inequities.
Since the success of any program of mandatory deposits
depends on public awareness and response, we believe the
approach taken must be simple and unmistakably clear. The
multiple definitions of a variety of beverage containers
could be confusing.
However, aside from the difficulties we have with many
of the specific provisions of S. 2062, we are in accord with
the basic idea of the bill.
Mr. Chairman, we could go on and on in the collection
and examination of data, and in the analysis and re-analysis
of probable effects from any regulatory approach to the
problems of beverage container consumption and litter. We
have studied this matter intensively and we believe that we
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now have a reasonably reliable body of data concerning the
problem. We have the benefit of the Oregon experience. We
also have the prospect of a proliferation of State and local
laws addressing the problem with differing and perhaps
contradictory approaches.
As I mentioned earlier, we do lack some economic data
concerning possible market effects of a mandatory deposit
requirement. On the other hand, the information and data
we have concerning the environmental effects of such a
requirement we believe are persuasive.
Because of the difficulties we have with the provisions
S. 2062 we do not recommend its enactment. However, we do
endorse its underlying premise—that a national requirement of
mandatory deposits for beverage containers can make a signi-
ficant contribution toward the solution of the environmental
problems associated with no-deposit, no-return containers.
Thank you.
*U.S.Government Printing Office: 1974 — 758-495/1232
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