First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0156.01 Kate Meyer HOUSE BILL 11-1247 HOUSE SPONSORSHIP Pabon, Court, Duran, Gardner D., Vigil SENATE SPONSORSHIP Schwartz, House Committees Senate Committees State, Veterans, & Military Affairs A BILL FOR AN ACT Concerning implementation of a deposit beverage container program. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates a deposit beverage container program (program), which will be fully implemented by January 1, 2013. A "deposit beverage container" is an individual, separate, polythylene terephthalte or high-density polyethylene or glass container with a total capacity less than or equal to 64 fluid ounces that contains beer, ale, or other drinks produced by fermenting malt; mixed spirits; mixed wine; tea and coffee drinks; soda; noncarbonated water; and all nonalcoholic drinks in liquid form and intended for internal human consumption. Deposit beverage distributors. A "deposit beverage distributor" (distributor) is a person who manufactures beverages put into deposit beverage containers or who imports and engages in the sale of filled deposit beverage containers to a dealer or consumer. Beginning September 1, 2011, distributors must register with the department of revenue (department), maintain records regarding the manufacture, importation, and exportation of beverage and deposit beverage containers (containers), and make such records available to the department. Beginning October 1, 2011, distributors will be required to pay to the department a beverage container fee for each deposit beverage container that the distributor manufactures in, or imports into, the state. Consumers. By January 1, 2013, the bill requires consumers to pay to the dealer (a person who engages in the sale of beverages in deposit beverage containers to a consumer for off-premises consumption) from whom the consumer purchases a deposit beverage a deposit on each deposit beverage container. Consumers will be able to recover the amount of such deposits by turning in containers to redemption centers. Dealers. The bill requires a dealer to redeem deposits unless the dealer, among other things: Is located within 2 miles of a redemption center in a highly populated area; Sells refundable containers through vending machines only; or Has less than 5,000 square feet of retail space. Redemption centers. With regard to a "redemption center", which is defined as a person or facility that accepts from consumers, in exchange for the refund value, empty deposit beverage containers intended for recycling, the bill: Requires redemption centers to apply for certification by the department prior to operation and to ensure that each collected container is recycled; Allows redemption centers to use reverse vending machines for the purpose of redeeming deposits; and Directs the department to pay each redemption center a handling fee of not less than the prevailing container fee in addition to the refund value of each redeemed container. Program administration. In order to implement, administer, and oversee the program, the bill: Requires the department to adopt rules to implement the program; Allows the department to contract the services of a third party in order to administer the program; Requires the department to convene an advisory committee to aid in the implementation of the program; Authorizes the department and the state auditor to inspect the records of distributors, dealers, redemption centers, and recycling facilities; and Directs the state auditor to conduct an audit of the program on or before July 1, 2014. Deposit beverage container fund. The bill creates the deposit beverage container fund (fund), which fund will be used to finance the program and will consist of container fees, deposits, and interest earned. The bill requires that a portion of the moneys in the fund resulting from any unredeemed deposit refund values be transferred as follows: 10% to the recycling resources economic opportunity fund; 40% to the state education fund to defray the costs of K-12 education; and The remaining 50% for administrative costs, including recycling education. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly finds and declares that: (a) Return deposit laws create environmental benefits, including litter reduction and energy and resource conservation; (b) Return deposit systems are effective and necessary recycling programs, and they complement other types of recycling programs, such as curbside programs and aluminum can buy-back centers; (c) Return deposit laws correct a false economic price signal by appropriately placing the costs of recycling and waste disposal on the producers and consumers of beverage containers who incur these costs, rather than on government and taxpayers who do not; (d) Return deposit systems produce energy cost savings because it takes less energy to produce beverages in returnable, reusable containers; and (e) Local governments also benefit from a substantial reduction in the amount of roadside litter and lower handling costs on recyclable materials. (2) Therefore, it is the intent of the general assembly to implement a deposit beverage container program in Colorado, to be administered by the department of revenue. SECTION 2. Article 35 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: PART 7 DEPOSIT BEVERAGE CONTAINER PROGRAM 24-35-701. Definitions. As used in this part 7, unless the context otherwise requires: (1) "Beverage container" means an individual, separate, polythylene terephthalte or high-density polyethylene or glass deposit beverage container with a total capacity less than or equal to sixty-four fluid ounces. (2) "Consumer" means a natural person who buys a beverage in a deposit beverage container for use or consumption and pays the deposit. (3) "Dealer" means a person who engages in the sale of beverages in deposit beverage containers to a consumer for off-premises consumption. (4) "Department" means the department of revenue created in section 24-1-117. (5) "Deposit beverage" means beer, ale, or other drinks produced by fermenting malt; mixed spirits; mixed wine; tea and coffee drinks; soda; water, regardless of carbonation; and all nonalcoholic drinks in liquid form and intended for internal human consumption. "Deposit beverage" does not include milk or other dairy-derived products, but does not include tea and coffee drinks that the department, acting by rule, determines contain only trace amounts of dairy products. (6) "Deposit beverage container" means a beverage container that is used for or contains a deposit beverage. (7) (a) "Deposit beverage distributor" means a person who: (I) Manufactures beverages in deposit beverage containers; (II) Imports and engages in the sale of filled deposit beverage containers to a dealer or consumer; or (III) Prior to January 1, 2013: (A) Is a manufacturer of beverages in beverage containers; or (B) Imports and engages in the sale of filled beverage containers to a dealer or consumer. (b) "Deposit beverage distributor" includes federal agencies and military distributors, but does not include airlines and shipping companies that merely transport deposit beverage containers or beverage containers. (8) "Person" means an individual, partnership, firm, association, public or private corporation, federal agency, trust, estate, or any other legal entity. "Person" includes the state and any of its political subdivisions. (9) "Recycling facility" means all contiguous land and structures and other appurtenances and improvements on the land used for the collection, separation, recovery, and sale or reuse of secondary resources that would otherwise be disposed of as municipal solid waste. A recycling facility is an integral part of a manufacturing process aimed at producing a marketable product made of postconsumer material. (10) "Redeemer" means a person, other than a dealer or deposit beverage distributor, who demands the refund value in exchange for an empty deposit beverage container. (11) "Redemption center" means a person or facility that accepts from redeemers, in exchange for the refund value, empty deposit beverage containers for recycling and that is certified by the department pursuant to section 24-35-710. (12) "Reverse vending machine" means a mechanical device that accepts one or more types of empty deposit beverage containers and issues a redeemable credit slip with a value not less than the refund value of each container that is accepted. The refund value payments must be aggregated and then paid if more than one container is redeemed in a single transaction. (13) "Unredeemed refund value" means the difference between the total amount of deposits paid by consumers pursuant to section 24-35-707 and the total amount paid at a later time to redeemers pursuant to section 24-35-709. 24-35-702. Deposit beverage container fee. (1) (a) (I) Beginning October 1, 2011, and ending October 1, 2013, every deposit beverage distributor shall pay to the department a deposit beverage container fee of one-half cent on each deposit beverage container manufactured in or imported into the state. (II) Beginning October 1, 2013, and ending January 1, 2014, every deposit beverage distributor shall pay to the department a deposit beverage container fee of one cent on each deposit beverage container manufactured in or imported into the state. (III) On and after January 1, 2014, the deposit beverage container fee must be based on the previous calendar quarter's recycling rates. The rate is as follows, based on the number of containers sold and number recovered during the previous quarter: (A) If the recovery rate is seventy percent or less, one cent per container; or (B) If the recovery rate is greater than seventy percent, one and one-half cents per container. (b) The deposit beverage container fee required under this subsection (1) shall be imposed only once on the same beverage container. (2) A county or local government shall not impose or collect a fee assessment on deposit beverage containers for the same or similar purpose that is the subject of this part 7. 24-35-703. Deposit beverage distributors - registration - record-keeping requirements. (1) On or before September 1, 2011, all beverage distributors and deposit beverage distributors operating within the state shall register with the department, using forms prescribed by the department, and shall notify the department of a change in address or other information previously submitted. After September 1, 2011, a person who desires to conduct business in this state as a beverage distributor or deposit beverage distributor shall register with the department no later than one month prior to the commencement of the business. (2) All beverage distributors and deposit beverage distributors shall maintain records reflecting the manufacture of their beverages in beverage containers and deposit beverage containers as well as the importation and exportation of such containers. Upon request by the department, the records must be made available for inspection. The department shall keep confidential and not disclose to any other person any proprietary information obtained by the department, except: (a) As may be reasonably required in an administrative or judicial proceeding to enforce the provisions of this part 7 or rules adopted pursuant to this part 7; or (b) Under an order issued by a court or administrative agency hearings officer. 24-35-704. Deposit beverage container fund - use of funds. (1) There is hereby created in the state treasury the deposit beverage container fund. All revenues generated from the deposit beverage container fee pursuant to section 24-35-702, all revenues generated from the deposit beverage container deposit pursuant to section 24-35-707, and all accrued interest shall be deposited into the fund. All moneys remaining in the fund at the end of any fiscal quarter shall remain in the fund and shall not revert to the general fund or any other fund. (2) Moneys in the deposit beverage container fund shall be allocated to the department for the purposes of this part 7. Ten percent of the moneys in the fund resulting from any unredeemed refund values paid by the consumer shall be transferred to the recycling resources economic opportunity fund created in section 25-16.5-106.5, C.R.S. Forty percent of the moneys in the fund resulting from any unredeemed refund values paid by the consumer shall be transferred to the state education fund created in section 17 (4) of article IX of the state constitution, to be used for kindergarten through twelfth grade education purposes, as determined by the state department of education created under section 24-1-115. The department shall use the remaining fifty percent of the moneys in the fund to: (a) Fund administrative, audit, and compliance activities associated with collection and payment of the deposits and handling fees of the deposit beverage container program; (b) Conduct recycling education and demonstration projects; (c) Promote recyclable market development activities; (d) Support the handling and transportation of the deposit beverage containers to end markets; (e) Hire personnel to oversee the implementation of the deposit beverage container program, including permitting and enforcement activities; and (f) Develop, print, and distribute signs that dealers are required to post under section 24-35-709 (3). 24-35-705. Inventory report - payment. (1) Beginning October 1, 2011, the department must make monthly payment of the deposit beverage container fee and deposits, as described in section 24-35-707, based on inventory reports of the deposit beverage distributors. All deposit beverage distributors must submit to the department documentation in detail sufficient to identify: (a) The number of beverages in deposit beverage containers, by container size and type, manufactured in or imported into the state; and (b) The number of such deposit beverage containers, by container size and type, exported and intended for consumption outside the state during the reporting period. (2) The amount due from deposit beverage distributors is the net number of deposit beverage containers imported into or manufactured in the state multiplied by the sum of the prevailing deposit beverage container fee and the refund value of five cents. Payment must be made by check or money order, payable to the department. All inventory reports and payments must be made no later than the fifteenth day of the month following the end of the payment period of the previous month. 24-35-706. Contract administrator. The department may contract the services of a third party to administer the deposit beverage container program under this part 7. 24-35-707. Payment and application of deposits - sale of beverages in deposit beverage containers. (1) (a) Beginning January 1, 2013, every deposit beverage container sold in this state has a refund value of five cents. Each container must have the refund value clearly indicated on it as provided in section 24-35-708. (b) The refund value is equal to the amount of the deposit required. Once a refund has been applied to a deposit beverage container, the deposit on that container must not be changed and must be paid to the state. (c) The deposit beverage distributor who manufactures or imports beverages in deposit beverage containers shall pay to the department the deposit on each filled deposit beverage container. Payment and reporting of the deposits must be in accordance with section 24-35-705. The department shall deposit the deposits into the deposit beverage container fund created in section 24-35-704. (d) A deposit beverage distributor who shall pay a deposit shall pay a deposit beverage container fee and register with the department. (2) (a) Beginning January 1, 2013, every deposit beverage distributor who pays a deposit shall charge the dealer or consumer a deposit equal to the refund value for each deposit beverage container sold in the state. The deposit charge may appear as a separate line item on the invoice. (b) Each dealer shall charge the consumer the deposit beverage container deposit at the point of sale of the beverage, excluding sales for on-premises consumption. The deposit charge may appear as a separate line item on the invoice. 24-35-708. Deposit beverage container requirements - rules. Beginning January 1, 2013, every deposit beverage container sold in this state must clearly indicate the refund value of the container and the word "Colorado" or the letters "CO". The names or letters representing the names of other states with comparable deposit beverage container program statutes also may be included in the indication of refund value. Other indications may be required as specified by rules of the department. 24-35-709. Redemption of empty deposit beverage containers - rules. (1) Except as provided in subsection (2) of this section, a dealer shall: (a) Operate a redemption center by accepting all types of empty deposit beverage containers with a Colorado refund value; (b) Pay to the redeemer the full refund value for deposit beverage containers that bear a valid Colorado refund value; (c) Ensure that each deposit beverage container collected is recycled; and (d) Forward documentation necessary to support claims for payment as stated in section 24-35-714 or rules adopted under this part 7. (2) Subsection (1) of this section does not apply to a dealer: (a) Who is located in a high-density population area, as defined by the department by rule, and within two miles of a certified redemption center that is operated independently from a dealer; (b) Who subcontracts with a certified redemption center for operation on the dealer's premises; (c) Whose sales of deposit beverage containers are only through the use of vending machines; (d) Whose place of business has less than five thousand square feet of interior space; (e) Who can demonstrate physical hardship, financial hardship, or both, based on specific criteria established by the department by rule; or (f) Who meets other criteria established by the department by rule. (3) All dealers, regardless of the square footage of the dealer's place of business, shall post a clear and conspicuous sign at each public entrance to the dealer's place of business that specifies the name, address, and hours of operation of the nearest redemption center. The department shall, by rule, develop and provide signs to dealers. (4) If there is no redemption center within the two-mile radius of a dealer's place of business, the department shall determine the need for a redemption center in that area. If a redemption center is deemed necessary, the state, with assistance from the county, shall establish the redemption center using moneys drawn from the deposit beverage container fund created in section 24-35-704. 24-35-710. Redemption centers. (1) Prior to operation, a redemption center must be certified by the department. (2) An application for certification as a redemption center must be filed with the department on forms prescribed by the department. (3) The department may review the certification of a redemption center. After written notice to the person responsible for the establishment and operation of the redemption center and to the dealers served by the redemption center, the department, after it has afforded the redemption center operator a hearing in accordance with article 4 of this title, may withdraw the certification of the center if it finds that the redemption center has not complied with applicable laws, rules, permit conditions, or certification requirements. (4) A redemption center shall: (a) Accept all types of empty deposit beverage containers for which a deposit has been paid; (b) Verify that all containers to be redeemed bear a valid Colorado refund value; (c) Pay to the redeemer the full refund value for all beverage containers, except as provided in section 24-35-712; (d) Crush all plastic deposit beverage containers, or destroy all deposit beverage containers, that are accepted at the time of redemption; (e) Ensure that each deposit beverage container collected is recycled through a contractual agreement with an out-of-state recycler or an in-state facility permitted by the department; except that this paragraph (e) does not apply if the redemption center is operated by a recycler permitted by the department; and (f) Forward the documentation necessary to support claims for payment as stated in section 24-35-714. (5) A redemption center's redemption area must be maintained in full compliance with applicable laws and with the orders and rules of the department, including permitting requirements, if deemed necessary, under this part 7. 24-35-711. Reverse vending machines. A redemption center may use a reverse vending machine to comply with section 24-35-709, so long as the reverse vending machine accepts any type of empty deposit beverage container and pays out appropriate refunds through a redeemable voucher for those containers that bear a valid Colorado refund value. A redemption center shall routinely service the reverse vending machine to ensure proper operation and continuous acceptance of containers and payment of refunds. All deposit beverage containers accepted by a reverse vending machine must be either crushed or destroyed, as applicable, at the point of redemption. 24-35-712. Refusal of refund value payment for a deposit beverage container. (1) Redemption centers shall refuse to pay the refund value on a deposit beverage container that: (a) Is deemed, by rule of the department, to be in unacceptable or unsafe condition, including a container that is broken, corroded, dismembered, or flattened to such extent so as to be unacceptable; (b) Contains a free-flowing liquid; (c) Does not properly indicate a refund value; or (d) Contains a significant amount of foreign material. 24-35-713. Handling fees - refund values. (1) The department shall pay to each redemption center a handling fee of not less than the prevailing beverage container fee for each deposit beverage container redeemed by a consumer that is transported out of state or received by an approved in-state company for an approved end use for recycling or received by a department-permitted recycling facility. (2) Not less than thirty days before paying the handling fees required by this section, the department shall publish a notice statewide, in accordance with article 4 of this title, of the recovery rate for the calendar quarter for which the handling fee will be paid. Payments for handling fees must be made no later than six months after the completion of the calendar quarter to which the payments apply. (3) The handling fee must be paid in addition to the refund value of each empty deposit beverage container. The department may choose to pay the handling fee and refund value on the basis of the total weight of the containers received determined by material type and the average weight of each container type. (4) The handling fee and refund value may be paid only once for each container redeemed and claimed by a redemption center in accordance with section 24-35-709. 24-35-714. Redemption centers - reporting. (1) The department shall pay to a redemption center handling fees and refund values as described in section 24-35-713, based on collection reports submitted by the redemption center. A redemption center shall submit to the department information on forms prescribed by the department. The information shall include, at a minimum: (a) The amount and type of containers accepted and rejected; (b) The amount of refunds paid out; (c) The amount and weight of each type of container transported out of state or to a permitted recycling facility; and (d) Copies of out-of-state transport and weight receipts or acceptance receipts from permitted recycling facilities. If the redemption center and the recycling facility are the same entity, copies of out-of-state transport and weight receipts, or documentation of end use accepted by the department, also must be included. Requests for payment must be made no more frequently than twice per month. Beginning January 1, 2014, each center shall report the previous quarter's information no later than thirty days after the end of that quarter so that the handling rate can be calculated. Failure to timely submit the report will postpone payment for those containers until they are submitted for a subsequent quarter. 24-35-715. Audit authority. (1) The records of each deposit beverage distributor, dealer, redemption center, and recycling facility must be made available, upon request, for inspection by the department, a designated representative of the department, or the office of the state auditor. Any proprietary information obtained by the department, the department's representative, or the office of the state auditor must be kept confidential and shall not be disclosed to any other person, except: (a) As may be reasonably required in an administrative or judicial proceeding to enforce the provisions of this part 7 or rules adopted under this part 7; or (b) Under an order issued by a court or administrative agency hearing officer. (2) The state auditor shall conduct an audit of the deposit beverage container program on or before July 1, 2014. 24-35-716. Advisory committee - rules - repeal. (1) There is hereby created the deposit beverage container advisory committee. The department shall convene the committee to assist in developing rules to implement this part 7. The department shall select members of the committee to obtain input on the state level as well as to assess the impact on each individual county and on consumers, recyclers, and the beverage industry. The executive director of the department shall appoint the members of the committee. Members serve at the executive director's pleasure. A simple majority of the committee members constitutes a quorum for the purposes of recommending rules and providing input to the executive director of the department. (2) (a) This section is repealed, effective September 1, 2020. (b) Prior to such repeal, the advisory committee shall be reviewed as provided in section 2-3-1203, C.R.S. 24-35-717. Rules - program implementation deadline. The deposit beverage container program must be fully implemented on or before January 1, 2013. The department shall adopt rules as necessary to administer this part 7. SECTION 3. 2-3-1203 (3), Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PARAGRAPH to read: 2-3-1203. Sunset review of advisory committees. (3) The following dates are the dates for which the statutory authorization for the designated advisory committees is scheduled for repeal: (gg.5) September 1, 2020: (I) The deposit beverage container advisory committee to the department of revenue created in section 24-35-716, C.R.S. SECTION 4. The introductory portion to 25-16.5-106.5 (1) (a), Colorado Revised Statutes, is amended, and the said 25-16.5-106.5 (1) (a) is further amended BY THE ADDITION OF A NEW SUBPARAGRAPH, to read: 25-16.5-106.5. Recycling resources economic opportunity fund - creation - repeal. (1) (a) The recycling resources economic opportunity fund is hereby created in the state treasury, referred to in this section as the "fund". The fund shall consist consists of: (I.5) Moneys transferred pursuant to section 24-35-704, C.R.S.; SECTION 5. Act subject to petition - effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2011, if adjournment sine die is on May 11, 2011); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part shall not take effect unless approved by the people at the general election to be held in November 2012 and shall take effect on the date of the official declaration of the vote thereon by the governor.