House Study Bill 163 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON ENVIRONMENTAL PROTECTION BILL BY CHAIRPERSON PAUSTIAN) A BILL FOR An Act repealing the beverage containers control program, 1 creating a recycling program and a litter control and 2 community enhancement initiative, imposing certain recycling 3 program fees and litter control and community enhancement 4 excise taxes, modifying references to the waste volume 5 reduction and recycling fund, and including effective date 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 2318YC (7) 87 tr/rj

H.F. _____ Section 1. NEW SECTION . 455C.1 Definitions. 1 1. “Beverage” means wine as defined in section 123.3, 2 subsection 47, alcoholic liquor as defined in section 123.3, 3 subsection 5, beer as defined in section 123.3, subsection 7, 4 mineral water, soda water, and similar carbonated soft drinks 5 in liquid form and intended for human consumption. 6 2. “Beverage container” means a sealed glass, plastic, 7 cardboard, or metal bottle, can, jar, or carton containing a 8 beverage. 9 3. “Commission” means the environmental protection 10 commission. 11 4. “Consumer” means a person who purchases a beverage in a 12 beverage container for use or consumption. 13 5. “Core recyclables” includes aluminum or steel cans, 14 plastic bottles designated with society of plastics industry 15 resin codes one through seven as determined by ASTM (American 16 society for testing and materials) international, glass 17 bottles and jars, newspapers, magazines, junk mail, corrugated 18 cardboard, boxboard, mixed paper, beverage cartons, and 19 additional materials designated periodically by the department. 20 6. “Dealer” means a person who engages in the sale of 21 beverages in beverage containers to a consumer. 22 7. “Department” means the department of natural resources 23 created in section 455A.2. 24 8. “Director” means the director of the department. 25 9. “Distributor” means a person who engages in the sale of 26 beverages in beverage containers to a dealer in this state, 27 including any manufacturer who engages in such sales. 28 10. “Eligible applicant” means a person who submits a 29 completed application to the department under this chapter. 30 11. “Manufacturer” means a person who fills beverage 31 containers with beverages for sale to distributors or dealers. 32 12. “Recycling” means the same as defined in section 455D.1. 33 Sec. 2. NEW SECTION . 455C.2 Findings and policy. 34 The general assembly reaffirms its findings and statements 35 -1- LSB 2318YC (7) 87 tr/rj 1/ 11

H.F. _____ of policies set forth in sections 455D.2 through 455D.4. 1 Sec. 3. NEW SECTION . 455C.3 Duties of the director. 2 The director shall do all of the following: 3 1. Unless otherwise specified in this chapter, recommend 4 rules to the commission necessary to administer this chapter. 5 2. Administer the recycling program created by this 6 chapter. 7 3. Enter into contracts and agreements with local units of 8 government, other state agencies, governments of other states, 9 governmental agencies of the United States, other public and 10 private contractors, and other persons as may be necessary or 11 beneficial in carrying out the department’s duties under this 12 chapter, with commission approval required for contracts or 13 agreements in excess of twenty-five thousand dollars. 14 4. Organize an application review team to review proposals 15 submitted to the department in accordance with this chapter. 16 Sec. 4. NEW SECTION . 455C.4 Rules. 17 The commission shall adopt rules pursuant to chapter 17A 18 necessary to administer this chapter. 19 Sec. 5. NEW SECTION . 455C.5 Recycling program planning. 20 1. An eligible applicant may submit a recycling program 21 proposal to the department on or before January 1, 2018. 22 a. The department may provide proposal guidance and funding 23 assistance to an eligible applicant. 24 b. The department may encourage and reward regionalized 25 efforts through its recycling program proposal funding 26 assistance decisions. 27 2. A proposal submitted by an eligible applicant must 28 include all of the following: 29 a. An inventory of the eligible applicant’s existing 30 recycling programs and infrastructure. 31 b. New investment and personnel required to comply with 32 recycling program requirements. 33 c. Planned recycling education and outreach initiatives. 34 d. Projected landfill diversion results from the expenditure 35 -2- LSB 2318YC (7) 87 tr/rj 2/ 11

H.F. _____ of the requested funding assistance. 1 e. Projected greenhouse gas emissions avoided or reduced. 2 f. Projected economic benefits to cities and counties. 3 g. A business plan to ensure successful operation after 4 funding assistance ends. 5 h. Planned initiatives to encourage innovation regarding use 6 of recycling materials. 7 3. Proposals submitted by eligible applicants must 8 prioritize the recovery of high-value materials from the waste 9 stream and emphasize the highest and best use for recovered 10 materials given economic and logistic constraints. 11 4. The department shall review and may approve submitted 12 proposals according to criteria developed by the department. 13 The department shall return unsatisfactory proposals to 14 eligible applicants for revision and resubmission. Eligible 15 applicants whose proposals are not approved by the department 16 are not eligible for assistance from the recycling program. 17 5. Proposals must include a means of collecting core 18 recyclables based on best practices for improving accessibility 19 and convenience in the eligible applicant’s region of the 20 state, and may include special handling for glass containers. 21 Eligible applicants are encouraged to pursue revenue-sharing 22 clauses in contracts for the sale of recyclables that allow for 23 incentives to maintain high-volume and high-value recycling 24 streams. 25 Sec. 6. NEW SECTION . 455C.6 Recycling program —— 26 utilization. 27 The recycling program shall do the following: 28 1. Issue grants or no-interest, low-interest, or forgivable 29 loans to eligible applicants for the preparation of recycling 30 program proposals submitted under section 455C.5. Total 31 funding assistance for recycling program proposal grants and 32 loans for all years shall not exceed five million dollars. 33 2. Include review by the department of recycling proposals, 34 conducting baseline recycling research, and enforcing 35 -3- LSB 2318YC (7) 87 tr/rj 3/ 11

H.F. _____ provisions of this chapter, including enforcement of the 1 payment of the recycling program fee. 2 3. Issue grants or no-interest, low-interest, or 3 forgivable loans for capital investment needed for collection, 4 transportation, processing, or marketing of core recyclables 5 and other recyclables. Priorities for these grants and loans 6 include all of the following: 7 a. Start-up or transition costs for residential recycling 8 programs and for new initiatives to collect core recyclables 9 and other recyclables in conjunction with commercial recycling 10 programs. 11 b. Projects and proposals demonstrating cost-effective solid 12 waste diversion programs. 13 c. Costs for businesses dependent upon the beverage 14 containers control program prior to January 1, 2019, to 15 transition into recycling system entities including but not 16 limited to redemption centers, collectors, and transportation 17 providers. 18 Sec. 7. NEW SECTION . 455C.7 Recycling program fee. 19 1. As of January 1, 2019, the department shall impose a 20 recycling program fee of one cent per beverage container on 21 distributors as a temporary assessment that will remain in 22 place until recycling program fee revenues equal sixty million 23 dollars, at which point the recycling program fee shall no 24 longer be imposed. 25 2. Revenue generated from the recycling program fee shall 26 not be subject to appropriation and shall be deposited in the 27 solid waste account of the groundwater protection fund created 28 in section 455E.11, subsection 2, to be utilized as provided in 29 section 455E.11, subsection 2, paragraph “a” , subparagraph (1), 30 subparagraph division (f). 31 3. The department shall examine other more diversified 32 funding mechanisms, including modifications to the litter 33 control and community enhancement fee imposed under section 34 455C.9, to provide ongoing support for recycling programs after 35 -4- LSB 2318YC (7) 87 tr/rj 4/ 11

H.F. _____ the recycling program fee is no longer imposed. 1 4. Expenditures for recycling program administration and 2 support may be paid using moneys received for deposit in the 3 solid waste account under this section but shall not exceed 4 five percent of the total moneys received for deposit each 5 fiscal year. 6 5. Fees imposed by this section shall be paid by 7 distributors to the department on a quarterly basis with 8 payment due by no more than ninety days following the quarter 9 during which the fees were collected. The payment shall be 10 accompanied by a return which shall identify the amount of fees 11 to be deposited in the solid waste account of the groundwater 12 protection fund. 13 Sec. 8. NEW SECTION . 455C.8 Litter control and community 14 enhancement initiatives. 15 The keep Iowa beautiful fund created in section 314.28 may be 16 utilized to financially support litter control and community 17 enhancement initiatives that do any of the following: 18 1. Conduct statewide surveys every ten years to allow 19 tracking of litter control and prevention progress. 20 2. Develop and utilize public relations campaigns primarily 21 focused on litter control and community enhancement. 22 3. Promote teachers-going-green-program lesson plans that 23 meet core federal and state education requirements. 24 4. Coordinate community service outreach grant programs 25 targeted at youth groups, elementary school fundraisers, 26 and religious and community improvement clubs, schools, or 27 specialized programs. 28 5. Approve the funding of submitted litter control 29 and community enhancement proposals according to criteria 30 determined by the administrator of the keep Iowa beautiful 31 fund. Inadequate or incomplete proposals shall be returned 32 to the eligible applicant for revision and resubmission. 33 Eligible applicants whose proposals are not approved by the 34 administrator of the keep Iowa beautiful fund shall not be 35 -5- LSB 2318YC (7) 87 tr/rj 5/ 11

H.F. _____ eligible for funding assistance from the keep Iowa beautiful 1 fund. 2 Sec. 9. NEW SECTION . 455C.9 Litter control and community 3 enhancement fee. 4 1. A litter control and community enhancement fee is 5 imposed effective January 1, 2019, as an excise tax collected 6 by the department of revenue at a rate of fifteen-thousandths 7 of one percent upon the sales price of beverages in beverage 8 containers. 9 2. All revenue generated from the litter control and 10 community enhancement fee shall be deposited into a separate 11 account in the keep Iowa beautiful fund. Revenue generated 12 from the litter control and community enhancement fee shall not 13 be used for any purpose other than those referenced in section 14 455C.8 and shall not be subject to appropriation for any other 15 purpose. 16 3. Fees imposed by this section shall be paid to the 17 department on a quarterly basis with payment due by no more 18 than ninety days following the quarter during which the fees 19 were collected. The payment shall be accompanied by a return 20 which shall identify the amount of fees to be deposited in the 21 keep Iowa beautiful fund. 22 4. The director of revenue shall administer the litter 23 control and community enhancement fee as an excise tax on the 24 sale of beverages in beverage containers as nearly as possible 25 in conjunction with the administration of the state sales and 26 use tax law, except that portion of the law that implements the 27 streamlined sales and use tax agreement. The director shall 28 provide appropriate forms, or provide on the regular state tax 29 forms, for reporting the excise tax liability. 30 Sec. 10. Section 29C.8A, subsection 1, Code 2017, is amended 31 to read as follows: 32 1. An emergency response fund is created in the state 33 treasury. The first one hundred thousand dollars received 34 annually by the treasurer of state for the civil penalties 35 -6- LSB 2318YC (7) 87 tr/rj 6/ 11

H.F. _____ and fines imposed by the court pursuant to sections 455B.146 , 1 455B.191 , 455B.386 , and 455B.477 shall be deposited in the 2 waste volume reduction and recycling fund created in section 3 455D.15 . The next hundred thousand dollars shall be deposited 4 in the emergency response fund and any additional moneys shall 5 be deposited in the household hazardous waste account. All 6 moneys received annually by the treasurer of the state for the 7 fines imposed by sections 716B.2 , 716B.3 , and 716B.4 shall also 8 be deposited in the emergency response fund. 9 Sec. 11. Section 123.24, subsection 5, Code 2017, is amended 10 by striking the subsection. 11 Sec. 12. Section 123.26, Code 2017, is amended to read as 12 follows: 13 123.26 Restrictions on sales —— seals —— labeling. 14 Alcoholic liquor shall not be sold by a class “E” liquor 15 control licensee except in a sealed container with identifying 16 markers as prescribed by the administrator and affixed in the 17 manner prescribed by the administrator, and no such container 18 shall be opened upon the premises of a state warehouse. The 19 division shall cooperate with the department of natural 20 resources so that only one identifying marker or mark is needed 21 to satisfy the requirements of this section and section 455C.5, 22 subsection 1 . Possession of alcoholic liquors which do not 23 carry the prescribed identifying markers is a violation of this 24 chapter except as provided in section 123.22 . 25 Sec. 13. Section 123.187, subsection 4, paragraph b, Code 26 2017, is amended by striking the paragraph. 27 Sec. 14. Section 423.6, subsection 3, paragraph a, Code 28 2017, is amended to read as follows: 29 a. Any tangible personal property including containers which 30 it is intended shall, by means of fabrication, compounding, 31 manufacturing, or germination, become an integral part of other 32 tangible personal property intended to be sold ultimately at 33 retail , and containers used in the collection, recovery, or 34 return of empty beverage containers subject to chapter 455C . 35 -7- LSB 2318YC (7) 87 tr/rj 7/ 11

H.F. _____ Sec. 15. Section 455B.313, subsection 1, Code 2017, is 1 amended to read as follows: 2 1. A distributor as defined in section 455C.1 , subsection 3 9 , shall not sell or offer to sell any beverage container 4 if the beverage container is connected to another beverage 5 container by a device constructed of a material which is not 6 biodegradable or photodegradable. 7 Sec. 16. Section 455D.6, subsection 2, Code 2017, is amended 8 to read as follows: 9 2. Administer and coordinate the waste volume reduction and 10 recycling fund created under section 455D.15 . 11 Sec. 17. Section 455D.15, subsection 1, Code 2017, is 12 amended to read as follows: 13 1. A waste volume reduction and recycling fund is created 14 within the state treasury. Moneys received by the department 15 from fees, including general revenue, federal funds, awards, 16 wills, bequests, gifts, or other moneys designated shall be 17 deposited in the state treasury to the credit of the fund. 18 Notwithstanding section 8.33 , any unexpended balance in the 19 fund at the end of each fiscal year shall be retained in the 20 fund. Any interest and earnings on investments from money 21 in the fund shall be credited to the fund, section 12C.7 22 notwithstanding. 23 Sec. 18. Section 455D.15A, Code 2017, is amended to read as 24 follows: 25 455D.15A Permitting of waste conversion technologies 26 operations —— fees. 27 A facility using waste conversion technologies, as defined 28 in section 455B.301 , shall annually obtain a permit from the 29 department. The department shall establish by rule an annual 30 fee for such permits, which shall be sufficient to cover 31 the costs of administering the permit program. The moneys 32 collected by the department shall be deposited in the waste 33 volume reduction and recycling fund established in section 34 455D.15 and shall be used for the purposes of administering the 35 -8- LSB 2318YC (7) 87 tr/rj 8/ 11

H.F. _____ permit program. 1 Sec. 19. Section 455E.11, subsection 2, paragraph a, 2 subparagraph (1), subparagraph division (f), Code 2017, is 3 amended to read as follows: 4 (f) The balance of the remaining funds shall be used by the 5 department to develop do the following: 6 (i) Develop and implement demonstration projects for 7 landfill alternatives to solid waste disposal including 8 recycling programs. These funds may also be used to assist 9 (ii) Assist planning areas which have not been designated 10 as environmental management systems in meeting the designation 11 requirements of section 455J.3 . 12 (iii) Provide financial assistance for recycling programs 13 described in section 455C.6 using revenue from fees imposed 14 under section 455C.7. 15 Sec. 20. REPEAL. Chapter 455C, Code 2017, is repealed. 16 Sec. 21. REPEAL. Section 455D.21, Code 2017, is repealed. 17 Sec. 22. TRANSITION AND IMPLEMENTATION. The department 18 of natural resources and the administrator of the keep Iowa 19 beautiful board may begin preparations to implement this Act, 20 including adoption of administrative rules, prior to January 1, 21 2018, to the extent necessary to transition from the beverage 22 containers control law to full implementation of the provisions 23 relating to the recycling program and litter control and 24 community enhancement initiatives. 25 Sec. 23. EFFECTIVE DATE. This Act takes effect January 1, 26 2018, except as otherwise provided in this Act. 27 Sec. 24. EFFECTIVE DATE —— TRANSITION AND 28 IMPLEMENTATION. The section of this Act providing for 29 transition and implementation takes effect July 1, 2017. 30 EXPLANATION 31 The inclusion of this explanation does not constitute agreement with 32 the explanation’s substance by the members of the general assembly. 33 This bill repeals current Code chapter 455C, the beverage 34 containers control law, and replaces it with new statewide 35 -9- LSB 2318YC (7) 87 tr/rj 9/ 11

H.F. _____ recycling, litter control, and community enhancement programs. 1 The bill requires an eligible applicant to submit a 2 recycling program proposal to the department of natural 3 resources on or before January 1, 2018, outlining its proposals 4 regarding recycling, litter control, and community enhancement 5 programs set forth in new Code sections 455C.5 and 455C.8. 6 Eligible applicants without approved proposals will not be 7 eligible for funding assistance from the new programs created 8 in the new Code chapter. 9 The bill deposits moneys into the solid waste account of the 10 groundwater protection fund created in Code section 455E.11(2) 11 for use by the recycling program collected through a recycling 12 program fee imposed by the department of natural resources. 13 The recycling program fee is a temporary assessment that will 14 remain in place until $60 million is raised, at which point the 15 recycling program fee is no longer imposed. 16 The bill requires eligible applicants to submit 17 litter control and community enhancement proposals to the 18 administrator of the keep Iowa beautiful fund. The keep Iowa 19 beautiful fund receives moneys from a new litter control and 20 community enhancement fee collected by the department of 21 revenue at a rate of fifteen-thousandths of 1 percent of the 22 sales price of beverages in beverage containers. 23 The bill authorizes the environmental protection commission 24 to adopt rules pursuant to Code chapter 17A necessary to 25 administer the new Code chapter 455C provisions. 26 The bill modifies the title of the waste volume reduction 27 and recycling fund created in Code section 455D.15 and updates 28 references to that fund throughout the Code. 29 The bill removes a statutory requirement that city councils 30 or county boards of supervisors that provide for residential 31 solid waste collection consider mandatory curbside collection 32 of recyclable materials as a proposed ordinance. 33 The bill takes effect January 1, 2018, except that the 34 department of natural resources and the administrator of the 35 -10- LSB 2318YC (7) 87 tr/rj 10/ 11