While one fraternity thought it was helping save the environment with their recycling practices, beer distributors claim it was violating stolen property laws.
The deposit a person pays on a keg serves as an incentive to return the keg to the wholesaler. But with metal prices on the rise, many people are opting to forgo their deposits to turn a greater profit at scrap yards.
Cody Brightwell, finance sophomore, said his fraternity was unaware that beer distributors are prosecuting scrap yard recyclers for purchasing empty kegs.
Brightwell is on the fraternity’s recycling committee, and he said they received more than $500 for 15 to 20 empty Keystone kegs this past semester following St. Patrick’s Day. He said they were selling the empty kegs because, unlike other companies, Keystone does not offer customers the option of placing a deposit upon the initial purchase. If the fraternity returned the empty kegs to the wholesaler, they would not profit.
But at the end of October, the fraternity got a surprise.
“I went [October 30] to Southern Scrap, and they said they would not buy the kegs back,” Brightwell said. “They told [the fraternity] that the brewing company asked them not to buy them back anymore. I guess we will just throw them away now, but it seems like a big waste of metal.”
Chuck Carr, vice president of member services, meetings, marketing and communications for the Institute of Scrap Recycling Industries Inc., said when a customer acquires a keg from a beverage retailer, they are purchasing only the alcohol. The keg itself is only being rented. Every keg is stamped by the brewer’s company, indicating that it is the “property of” that brewer. Carr said if customers fail to return the keg and forgo their deposit, they still do not gain title to it.
“The keg remains the property of the brewer throughout,” Carr said. “Scrap recyclers should not purchase kegs from anyone other than the keg’s rightful owner. No one but the keg’s owner – the brewer – has the right to sell it.” Most beer kegs are made of an alloy of stainless steel containing significant quantities of nickel. Carr said both the price of nickel and the ferrous material in the alloy impact stainless steel prices. In 2005, the average price of nickel was $6.61 per pound. The price peaked in May 2007 at $22.29 per pound, but it decreased to $14.27 per pound in October.
Breweries concerned about their kegs being turned into cash are notifying customers of the legal ramifications for failing to return them to the wholesalers where they purchased them.
Many students said they thought they were doing more good than harm by recycling empty kegs, but the beer industry loses an estimated $50 million a year to illegal selling and purchasing of kegs by scrap yards and junk dealers. Jeff Becker, president of The Beer Institute said about 11 million kegs are in circulation, including kegs being transported to and from Europe. He said more than 350,000 of these kegs are leaving distributors’ supply channels annually.
“Any person engaging in the selling or purchasing of kegs for money is breaking stolen property laws,” he said. “They are selling merchandise that is the property of the brewer.”
Ernie Munster, draft manager and special events coordinator for Crescent Crown Distributing LLC, said keg recycling became a prominent national issue when the price of stainless steel skyrocketed after Hurricane Katrina.
“People were going behind alleys to steal kegs and other metal items to sell for money,” Munster said.
Munster said any recycling company in Louisiana buying a keg from an individual other than the brewer could be prosecuted by the beer company.
But there is no Louisiana law that specifically bans what these distributors claim are “illegal dealings.”
According to Louisiana law, it is not illegal for scrap yard recyclers to purchase empty kegs. But beer distributors are pushing for legislation that would outlaw the sale of kegs to scrap yards. Until the legislation becomes law, they claim scrap yard recyclers who purchase kegs for cash are violating Louisiana’s stolen property laws since kegs are the property of the distributor.
Murphy Painter, commissioner of Louisiana’s Alcohol and Tobacco Control, explained the Louisiana law. He said junk dealer and scrap recycler purchasers are required to record the name, address, identification card number, date and place of the purchase and motor vehicle license number of the vehicle used to deliver the keg. “Purchasers are required to provide a full description of the material purchased,” Painter said. “The individual engaged in the business must keep a log and be capable of readily providing reports to the police.” Painter said scrap recyclers break the law if they fail to generate electronic data reports with this information upon police request. He said these reports enable wholesalers to track down an individual with theft evidence that they sold the kegs. Twenty states have already enacted laws directly banning the sale and purchase of beer kegs. California enacted the law prohibiting scrap yards from purchasing kegs from anyone other than the distributor. On Oct. 8, the California Secretary of State filed a bill into law stating that “no junk dealer or recycler may purchase or receive refillable stainless steel or aluminum alloy beer kegs marked with an indicia of ownership from any person or entity other than the indicated owner.”
Chip Hunter, president of Southern Scrap Xpress Recycling in North Baton Rouge, said the company has purchased kegs from University students before. He confirmed the company used to purchase kegs but stopped buying them back within the past few months. “There were times we did purchase kegs from them,” Hunter said. “Kegs are the property of the beer distributor, and certain companies have asked us not to buy back kegs as scrap metal. We are honoring that request.” Members of five other campus fraternities said they sell their empty aluminum cans to scrap yards each semester. Despite profiting from these cans, they said they have never acquired enough kegs to be able to increase their profits from a scrap yard. They said they return empty kegs to the wholesaler to collect their deposit money. Jacques Frugé, accounting senior, who has six empty keg shells at his house, said he has considered taking his empty Keystone kegs to a scrap yard because he would not get any returns if he took them to a wholesaler. “If there is no Louisiana law against it, I think I would still go and try to sell them to a recycler,” he said. Carr said the Institute of Scrap Recycling Industries began a national education campaign with The Beer Institute two years ago making it clear that scrap recyclers should not buy used kegs under any circumstances, unless a brewer specifically asked the recyclers to continue buying them. They sent letters to recycling plants across the nation after Hurricane Katrina informing them of the regulations. “Many scrap metal dealers are becoming more informed of an issue they were not previously aware of,” Becker said. Scott Van Matre, general manager of the Baton Rouge Beer Agency, said Miller Brewing has urged other distributors to increase keg deposits charged to wholesalers. “We used to charge a $15 deposit but now charge $40 to offset the loss,” he said. “Therefore, the next time you have to purchase a keg of beer, plan on paying a nice premium.”
—-Contact Natalie Messina at [email protected]