Senate Study Bill 1186 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON FEENSTRA) 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, repealing and creating funds within the 5 state treasury, and including effective date and transition 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 2318XC (4) 87 tr/rj

S.F. _____ Section 1. NEW SECTION . 15.221 Keep Iowa beautiful fund. 1 1. a. A keep Iowa beautiful fund is created in the state 2 treasury under the control of the authority. The fund shall 3 consist of moneys appropriated to the authority and any other 4 moneys available to and obtained or accepted by the authority 5 for placement in the fund. 6 b. Repayments and recaptures of financial assistance issued 7 in accordance with section 455C.8 and this section shall be 8 credited to the fund. Moneys in the fund are not subject 9 to section 8.33. Notwithstanding section 12C.7, interest or 10 earnings on moneys in the fund shall be credited to the fund. 11 2. Moneys in the fund are appropriated to the authority 12 and, with the approval of the administrator of the keep Iowa 13 beautiful fund, shall be used to financially support litter 14 control and community enhancement initiatives as set forth in 15 section 455C.8. 16 Sec. 2. NEW SECTION . 455C.1 Definitions. 17 1. “Applicant” means a person with an interest in or 18 responsibility to manage solid waste in this state. 19 2. “Beverage” means wine as defined in section 123.3, 20 subsection 47, alcoholic liquor as defined in section 123.3, 21 subsection 5, beer as defined in section 123.3, subsection 7, 22 mineral water, soda water, and similar carbonated soft drinks 23 in liquid form and intended for human consumption. 24 3. “Beverage container” means a sealed glass, plastic, 25 cardboard, or metal bottle, can, jar, or carton containing a 26 beverage. 27 4. “Commission” means the environmental protection 28 commission. 29 5. “Consumer” means a person who purchases a beverage in a 30 beverage container for use or consumption. 31 6. “Core recyclables” includes aluminum or steel cans, 32 plastic bottles designated with society of plastics industry 33 resin codes one through seven as determined by ASTM (American 34 society for testing and materials) international, glass 35 -1- LSB 2318XC (4) 87 tr/rj 1/ 10

S.F. _____ bottles and jars, newspapers, magazines, junk mail, corrugated 1 cardboard, boxboard, mixed paper, beverage cartons, and 2 additional materials designated periodically by the department. 3 7. “Dealer” means a person who engages in the sale of 4 beverages in beverage containers to a consumer. 5 8. “Department” means the department of natural resources 6 created in section 455A.2. 7 9. “Director” means the director of the department. 8 10. “Distributor” means a person who engages in the sale 9 of beverages in beverage containers to a dealer in this state, 10 including any manufacturer who engages in such sales. 11 11. “Financial assistance” means monetary assistance in 12 the form of grants, loans, or forgivable loans awarded to an 13 applicant pursuant to this chapter. 14 12. “High-value materials” means aluminum, plastic, paper, 15 and cardboard products that qualify as core recyclables. 16 13. “Manufacturer” means a person who fills beverage 17 containers with beverages for sale to distributors or dealers. 18 14. “Recycling” means the same as defined in section 455D.1. 19 Sec. 3. NEW SECTION . 455C.2 Duties of the director. 20 The director shall do all of the following: 21 1. Unless otherwise specified in this chapter, recommend 22 rules to the commission necessary to administer this chapter. 23 2. Administer the recycling program created by this 24 chapter. 25 3. Enter into contracts and agreements with local units of 26 government, other state agencies, governments of other states, 27 governmental agencies of the United States, other public and 28 private contractors, and other persons as may be necessary or 29 beneficial in carrying out the department’s duties under this 30 chapter, with commission approval required for contracts or 31 agreements in excess of twenty-five thousand dollars. 32 4. Organize an application review team to review proposals 33 submitted to the department in accordance with this chapter. 34 Sec. 4. NEW SECTION . 455C.3 Rules. 35 -2- LSB 2318XC (4) 87 tr/rj 2/ 10

S.F. _____ The commission may adopt rules pursuant to chapter 17A 1 necessary to administer this chapter. 2 Sec. 5. NEW SECTION . 455C.4 Recycling program planning. 3 1. An applicant may submit a recycling program proposal to 4 the department on or before January 1, 2019. 5 a. The department may provide proposal guidance and funding 6 assistance to an applicant. 7 b. The department may encourage and reward regionalized 8 and public-private partnership efforts through its recycling 9 program proposal funding assistance decisions. 10 c. The department may encourage and reward applicants 11 who create recycling services in areas of the state without 12 recycling services or in underserved areas of the state that 13 would benefit from additional access to recycling services. 14 2. A proposal submitted by an applicant must include all of 15 the following: 16 a. An inventory of the applicant’s existing recycling 17 programs and infrastructure. 18 b. New investment and personnel required to comply with 19 recycling program requirements. 20 c. Planned recycling education and outreach initiatives. 21 d. Projected landfill diversion results from the expenditure 22 of the requested funding assistance. 23 e. Projected economic benefits to cities and counties. 24 f. A business plan to ensure successful operation after 25 funding assistance ends. 26 g. Planned initiatives to encourage innovation regarding use 27 of recycling materials. 28 3. Proposals submitted by applicants must prioritize the 29 recovery of high-value materials from the waste stream and 30 emphasize the highest and best use for recovered materials 31 given economic and logistic constraints. 32 4. The department shall review and may approve submitted 33 proposals according to criteria developed by the department. 34 The department shall return unsatisfactory proposals to 35 -3- LSB 2318XC (4) 87 tr/rj 3/ 10

S.F. _____ applicants for revision and resubmission. Applicants whose 1 proposals are not approved by the department are not eligible 2 for assistance from the recycling program. 3 5. Proposals must include a means of collecting core 4 recyclables based on best practices for improving accessibility 5 and convenience in the applicant’s region of the state, and 6 may include special handling or exclusion of glass containers. 7 Applicants are encouraged to pursue revenue-sharing clauses in 8 contracts for the sale of recyclables that allow for incentives 9 to maintain high-volume and high-value materials recycling 10 streams. 11 Sec. 6. NEW SECTION . 455C.5 Recycling program —— 12 utilization. 13 The recycling program shall do the following: 14 1. Provide financial assistance to applicants for the 15 preparation of recycling program proposals submitted under 16 section 455C.4. Funding assistance for recycling proposals 17 submitted in accordance with section 455C.4 may be awarded 18 beginning January 1, 2018, subject to availability of funds. 19 2. Include review by the department of recycling proposals, 20 conducting baseline recycling research, and enforcing 21 provisions of this chapter, including enforcement of the 22 payment of the recycling program fee. 23 3. Provide financial assistance for capital investment 24 needed for collection, transportation, processing, or marketing 25 of core recyclables and other recyclables. Priorities for this 26 financial assistance include all of the following: 27 a. Projects and proposals that increase convenience and 28 accessibility in locations for residents and businesses to 29 recycle core recyclables. 30 b. Projects and proposals demonstrating cost-effective solid 31 waste diversion programs. 32 c. Projects and proposals from businesses dependent upon the 33 beverage containers control program prior to January 1, 2018, 34 to transition into recycling system entities including but not 35 -4- LSB 2318XC (4) 87 tr/rj 4/ 10

S.F. _____ limited to redemption centers, collectors, and transportation 1 providers. 2 d. Projects and proposals demonstrating a public-private 3 partnership. 4 e. Projects and proposals that establish local markets and 5 end uses in this state for core recyclables. 6 Sec. 7. NEW SECTION . 455C.6 Recycling program fee. 7 1. As of January 1, 2018, the department shall impose a 8 recycling program fee of one cent per beverage container on 9 distributors until recycling program fee revenues equal sixty 10 million dollars, at which point the recycling program fee shall 11 no longer be imposed. 12 2. Revenue generated from the recycling program fee shall 13 not be subject to appropriation and shall be deposited in the 14 solid waste account of the groundwater protection fund created 15 in section 455E.11, subsection 2, to be utilized as provided in 16 section 455E.11, subsection 2, paragraph “a” , subparagraph (1), 17 subparagraph division (f). 18 3. The department shall examine other more diversified 19 funding mechanisms to provide ongoing support for recycling 20 programs after the recycling program fee is no longer imposed. 21 4. Expenditures for recycling program administration and 22 support may be paid using moneys received for deposit in the 23 solid waste account under this section but shall not exceed 24 five percent of the total moneys received for deposit each 25 fiscal year. 26 5. Fees imposed by this section shall be paid by 27 distributors to the department on a quarterly basis with 28 payment due by no more than ninety days following the quarter 29 during which the fees were collected. The payment shall be 30 accompanied by a return which shall identify the amount of fees 31 to be deposited in the solid waste account of the groundwater 32 protection fund. 33 Sec. 8. NEW SECTION . 455C.7 Litter control and community 34 enhancement initiatives. 35 -5- LSB 2318XC (4) 87 tr/rj 5/ 10

S.F. _____ The keep Iowa beautiful fund created in section 15.221 may 1 be used to provide financial assistance to litter control and 2 community enhancement initiatives that do any of the following: 3 1. Conduct statewide surveys every ten years to allow 4 tracking of litter control and prevention progress. 5 2. Develop and utilize public relations campaigns primarily 6 focused on litter control and community enhancement. 7 3. Promote teachers-going-green-program lesson plans that 8 meet core federal and state education requirements. 9 4. Coordinate community service outreach grant programs 10 targeted at youth groups, elementary school fundraisers, 11 and religious and community improvement clubs, schools, or 12 specialized programs. 13 5. Develop and coordinate a litter control and community 14 enhancement grant program according to criteria determined by 15 the administrator of the keep Iowa beautiful fund. Inadequate 16 or incomplete proposals shall be returned to the applicant for 17 revision and resubmission. Applicants whose proposals are not 18 approved by the administrator of the keep Iowa beautiful fund 19 shall not be eligible for funding assistance from the keep Iowa 20 beautiful fund. 21 Sec. 9. NEW SECTION . 455C.8 Litter control and community 22 enhancement fee. 23 1. A litter control and community enhancement fee is 24 imposed effective January 1, 2019, as an excise tax collected 25 by the department of revenue at a rate of fifteen-thousandths 26 of one percent upon the sales price of beverages in beverage 27 containers from dealers. 28 2. All revenue generated from the litter control and 29 community enhancement fee shall be deposited into a separate 30 account in the keep Iowa beautiful fund. Revenue generated 31 from the litter control and community enhancement fee shall not 32 be used for any purpose other than those referenced in section 33 455C.7 and shall not be subject to appropriation for any other 34 purpose. 35 -6- LSB 2318XC (4) 87 tr/rj 6/ 10

S.F. _____ 3. Fees imposed by this section shall be paid to the 1 department on a quarterly basis with payment due by no more 2 than ninety days following the quarter during which the fees 3 were collected. The payment shall be accompanied by a return 4 which shall identify the amount of fees to be deposited in the 5 keep Iowa beautiful fund. 6 4. The director of revenue shall administer the litter 7 control and community enhancement fee as an excise tax on the 8 sale of beverages in beverage containers as nearly as possible 9 in conjunction with the administration of the state sales and 10 use tax law, except that portion of the law that implements the 11 streamlined sales and use tax agreement. The director shall 12 provide appropriate forms, or provide on the regular state tax 13 forms, for reporting the excise tax liability. 14 Sec. 10. Section 123.24, subsection 5, Code 2017, is amended 15 by striking the subsection. 16 Sec. 11. Section 123.26, Code 2017, is amended to read as 17 follows: 18 123.26 Restrictions on sales —— seals —— labeling. 19 Alcoholic liquor shall not be sold by a class “E” liquor 20 control licensee except in a sealed container with identifying 21 markers as prescribed by the administrator and affixed in the 22 manner prescribed by the administrator, and no such container 23 shall be opened upon the premises of a state warehouse. The 24 division shall cooperate with the department of natural 25 resources so that only one identifying marker or mark is needed 26 to satisfy the requirements of this section and section 455C.5, 27 subsection 1 . Possession of alcoholic liquors which do not 28 carry the prescribed identifying markers is a violation of this 29 chapter except as provided in section 123.22 . 30 Sec. 12. Section 123.187, subsection 4, paragraph b, Code 31 2017, is amended by striking the paragraph. 32 Sec. 13. Section 423.6, subsection 3, paragraph a, Code 33 2017, is amended to read as follows: 34 a. Any tangible personal property including containers which 35 -7- LSB 2318XC (4) 87 tr/rj 7/ 10

S.F. _____ it is intended shall, by means of fabrication, compounding, 1 manufacturing, or germination, become an integral part of other 2 tangible personal property intended to be sold ultimately at 3 retail , and containers used in the collection, recovery, or 4 return of empty beverage containers subject to chapter 455C . 5 Sec. 14. Section 455B.313, subsection 1, Code 2017, is 6 amended to read as follows: 7 1. A distributor as defined in section 455C.1 , subsection 8 9 , shall not sell or offer to sell any beverage container 9 if the beverage container is connected to another beverage 10 container by a device constructed of a material which is not 11 biodegradable or photodegradable. 12 Sec. 15. Section 455E.11, subsection 2, paragraph a, 13 subparagraph (1), subparagraph division (d), Code 2017, is 14 amended to read as follows: 15 (d) Up to thirty percent of the tonnage fees remitted shall 16 be used for grants to environmental management systems as 17 provided in section 455J.7 . 18 Sec. 16. Section 455E.11, subsection 2, paragraph a, 19 subparagraph (1), subparagraph division (f), Code 2017, is 20 amended to read as follows: 21 (f) The balance of the remaining funds shall be used by the 22 department to develop do the following: 23 (i) Develop and implement demonstration projects for 24 landfill alternatives to solid waste disposal including 25 recycling programs. These funds may also be used to assist 26 (ii) Assist planning areas which have not been designated 27 as environmental management systems in meeting the designation 28 requirements of section 455J.3 . 29 (iii) Provide financial assistance for recycling programs 30 described in section 455C.5 using revenue from fees imposed 31 under section 455C.6. 32 Sec. 17. REPEAL. Chapter 455C, Code 2017, is repealed. 33 Sec. 18. REPEAL. Section 314.28, Code 2017, is repealed. 34 Sec. 19. TRANSITION AND IMPLEMENTATION. 35 -8- LSB 2318XC (4) 87 tr/rj 8/ 10

S.F. _____ 1. The department of natural resources, the economic 1 development authority, and the administrator of the keep Iowa 2 beautiful board may begin preparations to implement this Act, 3 including adoption of administrative rules, prior to January 1, 4 2018, to the extent necessary to transition from the beverage 5 containers control law to full implementation of the provisions 6 relating to the recycling program and litter control and 7 community enhancement initiatives. 8 2. Any moneys remaining in the keep Iowa beautiful 9 fund created in section 314.28 on June 30, 2017, shall be 10 transferred to the keep Iowa beautiful fund created in section 11 15.221. 12 Sec. 20. EFFECTIVE DATE. This Act takes effect January 1, 13 2018, except as otherwise provided in this Act. 14 Sec. 21. EFFECTIVE DATE —— TRANSITION AND 15 IMPLEMENTATION. The section of this Act providing for 16 transition and implementation takes effect July 1, 2017. 17 Sec. 22. CODE EDITOR DIRECTIVE. 18 1. The Code editor is directed to transfer section 455B.313 19 to section 455D.8. 20 2. The Code editor shall correct internal references in the 21 Code and in any enacted legislation as necessary due to the 22 enactment of this section. 23 EXPLANATION 24 The inclusion of this explanation does not constitute agreement with 25 the explanation’s substance by the members of the general assembly. 26 This bill repeals current Code chapter 455C, the beverage 27 containers control law, and replaces it with new statewide 28 recycling, litter control, and community enhancement programs. 29 The bill requires an applicant to submit a recycling program 30 proposal to the department of natural resources on or before 31 January 1, 2018, outlining its proposals regarding recycling, 32 litter control, and community enhancement programs set forth 33 in new Code sections 455C.4 and 455C.7. Applicants without 34 approved proposals will not be eligible for funding assistance 35 -9- LSB 2318XC (4) 87 tr/rj 9/ 10

S.F. _____ from the new programs created in the new Code chapter. 1 The bill deposits moneys into the solid waste account of the 2 groundwater protection fund created in Code section 455E.11(2) 3 for use by the recycling program collected through a recycling 4 program fee imposed by the department of natural resources. 5 The recycling program fee is a temporary assessment that will 6 remain in place until $60 million is raised, at which point the 7 recycling program fee is no longer imposed. 8 The bill requires applicants to submit litter control 9 and community enhancement proposals to the administrator of 10 the keep Iowa beautiful fund. The bill repeals the current 11 keep Iowa beautiful fund established in Code section 314.28 12 and creates a new keep Iowa beautiful fund within the state 13 treasury under the control of the economic development 14 authority. The keep Iowa beautiful fund receives moneys from a 15 new litter control and community enhancement fee collected by 16 the department of revenue at a rate of fifteen-thousandths of 1 17 percent of the sales price of beverages in beverage containers. 18 The bill authorizes the environmental protection commission 19 to adopt rules pursuant to Code chapter 17A necessary to 20 administer the new Code chapter 455C provisions. 21 The bill takes effect January 1, 2018, except that the 22 department of natural resources, the economic development 23 authority, and the administrator of the keep Iowa beautiful 24 fund may begin implementation on July 1, 2017, to the extent 25 necessary to transition from the beverage containers control 26 law to full implementation of the provisions relating to the 27 recycling program and litter control and community enhancement 28 initiative. 29 -10- LSB 2318XC (4) 87 tr/rj 10/ 10