House File 2571 - Introduced HOUSE FILE 2571 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 2524) (SUCCESSOR TO HSB 709) A BILL FOR An Act relating to beverage containers control provisions, 1 including handling fees, refund value, applicability to 2 certain beverages, and acceptance of beverage containers, 3 providing penalties, and including effective date 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5260HZ (4) 89 js/ns

H.F. 2571 Section 1. Section 455C.1, subsections 1 and 6, Code 2022, 1 are amended to read as follows: 2 1. “Beverage” means wine as defined in section 123.3, 3 subsection 54 , alcoholic liquor as defined in section 123.3, 4 subsection 5 , beer as defined in section 123.3, subsection 5 7 , high alcoholic content beer as defined in section 123.3, 6 subsection 22, canned cocktail as defined in section 123.3, 7 subsection 11, mineral water, soda water , and similar 8 carbonated soft drinks in liquid form and intended for human 9 consumption. 10 6. “Dealer agent” means a person who solicits or picks up 11 empty beverage containers from a dealer for the purpose of 12 returning the empty beverage containers to a distributor or 13 manufacturer. 14 Sec. 2. Section 455C.1, Code 2022, is amended by adding the 15 following new subsections: 16 NEW SUBSECTION . 11A. “Mobile redemption system” means 17 a location at which a consumer may return empty beverage 18 containers on which a refund value has been paid that uses 19 innovative technology to process empty beverage containers and 20 return the amount of the refund value to consumers. 21 NEW SUBSECTION . 12A. “Participating dealer” means a dealer 22 who accepts the return of empty beverage containers from a 23 consumer. 24 Sec. 3. Section 455C.2, Code 2022, is amended to read as 25 follows: 26 455C.2 Refund values. 27 1. A refund value of not less than five cents shall be paid 28 by the consumer on each beverage container sold in this state 29 by a dealer for consumption off the premises. Upon return of 30 the empty beverage container upon which a refund value has 31 been paid to the participating dealer or person operating 32 a redemption center and acceptance of the empty beverage 33 container by the participating dealer or person operating a 34 redemption center, the participating dealer or person operating 35 -1- LSB 5260HZ (4) 89 js/ns 1/ 13

H.F. 2571 a redemption center shall immediately return the amount of 1 the refund value to the consumer. Upon return of the empty 2 beverage container on which a refund value has been paid to a 3 mobile redemption system, the mobile redemption system shall 4 return the amount of the refund value to the consumer within a 5 reasonable time not to exceed ten days. 6 2. In addition to the refund value provided in subsection 7 1 of this section , a participating dealer, dealer agent, or 8 person operating a redemption center or mobile redemption 9 system who redeems empty beverage containers or a dealer agent 10 shall be reimbursed by the distributor required to accept the 11 empty beverage containers an amount which a handling fee that 12 is one cent per container , except as provided in subsection 3 . 13 A participating dealer, dealer agent, or person operating a 14 redemption center or mobile redemption system may compact empty 15 metal beverage containers with the approval of the distributor 16 required to accept the containers. 17 3. a. Upon delivery of beverages from a distributor to a 18 dealer, the dealer shall pay a handling fee of one-half cent 19 per container to the distributor. This paragraph is repealed 20 July 1, 2027. 21 b. A distributor shall pay an additional one-cent handling 22 fee for each nonalcoholic beverage container accepted. 23 c. A distributor shall pay an additional one-half-cent 24 handling fee for each beverage container accepted that 25 contained beer, including high-alcoholic content beer. A 26 distributor who pays an additional handling fee pursuant to 27 this paragraph may claim a refund of the barrel tax established 28 in section 123.136 paid by the distributor in the amount 29 of one-half cent for each applicable beverage container 30 accepted. The department of revenue shall prescribe forms for 31 a distributor to use to claim a refund under this paragraph. 32 Sec. 4. Section 455C.3, subsections 1, 2, and 4, Code 2022, 33 are amended to read as follows: 34 1. A participating dealer shall not refuse to accept from a 35 -2- LSB 5260HZ (4) 89 js/ns 2/ 13

H.F. 2571 consumer any empty beverage container of the kind, size , and 1 brand sold by the participating dealer, or refuse to pay to the 2 consumer the refund value of a beverage container as provided 3 under section 455C.2 . 4 2. A distributor shall accept and pick up from a 5 participating dealer served by the distributor or a redemption 6 center or mobile redemption system for a dealer served by 7 the distributor at least weekly, or when the distributor 8 delivers the beverage product if deliveries are less frequent 9 than weekly, any empty beverage container of the kind, size , 10 and brand sold by the distributor, and shall pay to the 11 participating dealer or person operating a redemption center 12 or mobile redemption system the refund value of a beverage 13 container and the reimbursement as provided under section 14 455C.2 within one week following pickup of the containers or 15 when the participating dealer or redemption center normally 16 pays the distributor for the deposit on beverage products 17 purchased from the distributor if less frequent than weekly. 18 A distributor or employee or agent of a distributor is not in 19 violation of this subsection if a redemption center or mobile 20 redemption system is closed when the distributor attempts to 21 make a regular delivery or a regular pickup of empty beverage 22 containers. This subsection does not apply to a distributor 23 selling alcoholic liquor to the alcoholic beverages division 24 of the department of commerce. 25 4. A distributor shall accept from a dealer agent any 26 empty beverage container of the kind, size, and brand sold by 27 the distributor and which that was picked up by the dealer 28 agent from a dealer within the geographic territory served 29 by the distributor and the distributor shall pay the dealer 30 agent the refund value of the empty beverage container and the 31 reimbursement as provided in section 455C.2 . 32 Sec. 5. Section 455C.4, Code 2022, is amended to read as 33 follows: 34 455C.4 Refusal to accept containers. 35 -3- LSB 5260HZ (4) 89 js/ns 3/ 13

H.F. 2571 1. Except as provided in section 455C.5, subsection 3 , 1 a dealer, a person operating a redemption center or mobile 2 redemption system , a distributor , or a manufacturer may refuse 3 to accept any empty beverage container which that does not have 4 stated on it a refund value as provided under section 455C.2 . 5 2. a. A dealer may refuse to accept and to pay the 6 refund value of any empty beverage container if the place of 7 business of the dealer and the kind and brand of empty beverage 8 containers are included in an order of the department approving 9 a redemption center under section 455C.6 any of the following 10 apply: 11 (1) The dealer sells less than three thousand five hundred 12 beverage containers each year . 13 (2) The dealer sells prepared foods or fresh produce. 14 (3) The dealer has entered an agreement with a mobile 15 redemption system and all of the following apply: 16 (a) The dealer provides adequate space, utilities, and 17 internet connection to operate the mobile redemption system. 18 (b) The agreement does not require additional payment to the 19 dealer or the mobile redemption system. 20 (4) The dealer’s place of business is in a county with a 21 population of more than thirty thousand and within ten miles 22 of a redemption center or mobile redemption system or if the 23 dealer’s place of business is in a county with a population 24 of thirty thousand or fewer and within fifteen miles of a 25 redemption center or mobile redemption system. 26 b. A dealer who refuses to accept and to pay the refund 27 value on any empty beverage container pursuant to this 28 subsection shall conspicuously display on the front door of 29 the dealer’s place of business a notice that the dealer does 30 not accept empty beverage containers. The notice shall also 31 provide the location of the nearest redemption center or mobile 32 redemption system to the dealer’s place of business. After the 33 department has made available an electronic method for locating 34 redemption centers and mobile redemption systems pursuant to 35 -4- LSB 5260HZ (4) 89 js/ns 4/ 13

H.F. 2571 paragraph “c” , a dealer may direct consumers to such electronic 1 method instead of providing the location of the nearest 2 redemption center or mobile redemption system on the notice. 3 c. By December 31, 2022, the department shall make available 4 to the public an electronic method of locating redemption 5 centers and mobile redemption systems. 6 d. A dealer who provides space for a mobile redemption 7 system pursuant to paragraph “a” , subparagraph (3), shall not be 8 considered to be in violation of any county or city ordinance 9 that would otherwise limit the ability of the dealer to provide 10 such space. 11 3. A dealer or a distributor may refuse to accept and to pay 12 the refund value of an empty wine or alcoholic liquor container 13 which is marked to indicate that it was sold by a state liquor 14 store. The alcoholic beverages division shall not reimburse 15 a dealer or a distributor the refund value on an empty wine or 16 alcoholic liquor container which is marked to indicate that the 17 container was sold by a state liquor store. 18 4. 3. A class “E” liquor control licensee may refuse to 19 accept and to pay the refund value on an empty alcoholic liquor 20 container from a participating dealer , or a redemption center , 21 or a mobile redemption system or from a person acting on behalf 22 of or who has received empty alcoholic liquor containers from 23 a participating dealer , or a redemption center , or a mobile 24 redemption system . 25 5. 4. A manufacturer or distributor may refuse to accept 26 and to pay the refund value and reimbursement as provided in 27 section 455C.2 on any empty beverage container that was picked 28 up by a dealer agent from a dealer outside the geographic 29 territory served by the manufacturer or distributor. 30 Sec. 6. Section 455C.5, subsection 1, Code 2022, is amended 31 to read as follows: 32 1. Each beverage container sold or offered for sale in 33 this state by a dealer shall clearly indicate the refund value 34 of the container by embossing or by a stamp, label , or other 35 -5- LSB 5260HZ (4) 89 js/ns 5/ 13

H.F. 2571 method securely affixed to the container , the refund value of 1 the container . The department shall specify, by rule, the 2 minimum size of the refund value indication on the beverage 3 containers and require registration of the universal product 4 code for each beverage container in a format determined by the 5 department . 6 Sec. 7. Section 455C.6, subsections 1, 2, and 5, Code 2022, 7 are amended to read as follows: 8 1. To facilitate the return of empty beverage containers 9 and to serve dealers of beverages, any person may establish a 10 redemption center , subject to the approval of the department, 11 or mobile redemption system at which consumers may return empty 12 beverage containers and receive payment of the refund value of 13 such beverage containers. A participating dealer may act as a 14 redemption center for purposes of this chapter. 15 2. An application for approval of a A person operating 16 a redemption center or a mobile redemption system shall file 17 written notice of the operation of the redemption center shall 18 be filed or mobile redemption system with the department. The 19 application notice shall state the name and address of the 20 person responsible for the establishment and operation of the 21 redemption center , the kind and brand names of the beverage 22 containers which will be accepted at the redemption center, 23 or mobile redemption system and the names and addresses of 24 the dealers to be served by the redemption center or mobile 25 redemption system . The application notice shall contain such 26 other information as the director may reasonably require. 27 5. All approved redemption centers and mobile redemption 28 systems shall meet applicable health standards. 29 Sec. 8. Section 455C.6, subsections 3 and 4, Code 2022, are 30 amended by striking the subsections. 31 Sec. 9. Section 455C.12, subsections 2 and 3, Code 2022, are 32 amended to read as follows: 33 2. A distributor who collects or attempts to collect 34 a refund value on an empty beverage container when the 35 -6- LSB 5260HZ (4) 89 js/ns 6/ 13

H.F. 2571 distributor has paid the refund value on the container to a 1 participating dealer, redemption center, mobile redemption 2 system, or consumer is guilty of a fraudulent practice. 3 3. Any person who does any of the following acts is guilty 4 of a fraudulent practice: 5 a. Collects or attempts to collect the refund value on the 6 container a second time, with the knowledge that the refund 7 value has once been paid by the distributor to a participating 8 dealer, redemption center , mobile redemption system, or 9 consumer. 10 b. Manufactures, sells, possesses , or applies a false or 11 counterfeit label or indication which that shows or purports to 12 show a refund value for a beverage container, with intent to 13 use the false or counterfeit label or indication. 14 c. Collects or attempts to collect a refund value on 15 a container with the use of a false or counterfeit label 16 or indication showing a refund value, knowing the label or 17 indication to be false or counterfeit. 18 Sec. 10. Section 455C.12, Code 2022, is amended by adding 19 the following new subsection: 20 NEW SUBSECTION . 6. A person who violates any provision of 21 this chapter, or any rule, permit, or order adopted or issued 22 under this chapter, shall be subject to a civil penalty not 23 to exceed two thousand five hundred dollars for each day of 24 the violation. The department shall adopt rules establishing 25 a schedule of civil penalties based on the severity of the 26 violation. Any civil penalty collected under this chapter 27 shall be deposited in the bottle bill fund established in 28 section 455C.12C. 29 Sec. 11. NEW SECTION . 455C.12A Administrative enforcement 30 —— compliance orders. 31 1. The director may issue any order necessary to secure 32 compliance with or prevent a violation of the provisions of 33 this chapter or any rule adopted or permit or order issued 34 pursuant to this chapter. Any order issued pursuant to this 35 -7- LSB 5260HZ (4) 89 js/ns 7/ 13

H.F. 2571 section may impose a civil penalty authorized pursuant to 1 section 455C.12, subsection 6, for a violation of the order, 2 to be collected administratively by the department. The 3 person to whom the compliance order is issued may cause to be 4 commenced a contested case within the meaning of chapter 17A by 5 filing within thirty days a notice of appeal to the director. 6 Following a contested case hearing and a proposed decision 7 issued by the department, the commission may affirm, modify, or 8 vacate the proposed decision. 9 2. If a person continues an alleged violation during the 10 appeals process and the commission affirms that the person has 11 committed a violation, the department may assess penalties for 12 each day the violation continued through the appeals process. 13 Sec. 12. NEW SECTION . 455C.12B Civil actions for compliance 14 —— penalties. 15 1. The attorney general shall institute any legal 16 proceedings necessary to obtain compliance with the provisions 17 of this chapter, including any rule, permit, or compliance 18 order issued pursuant to this chapter, relating to the 19 redemption of beverage containers, including provisions 20 relating to the redemption of nonrefillable metal beverage 21 containers, and the duties and obligations of redemption 22 centers and mobile redemption systems. 23 2. Notwithstanding section 455C.12, subsection 6, any 24 person who violates a provision of this chapter, including 25 a rule, permit, or compliance order issued pursuant to 26 this chapter, relating to the redemption of beverage 27 containers, including provisions relating to the redemption 28 of nonrefillable metal beverage containers, or the duties 29 and obligations of redemption centers or mobile redemption 30 systems, as determined pursuant to a legal proceeding under 31 this section, shall be subject to a civil penalty not to 32 exceed ten thousand dollars for each day of such violation. 33 Moneys collected from civil penalties under this section shall 34 be deposited in the bottle bill fund established in section 35 -8- LSB 5260HZ (4) 89 js/ns 8/ 13

H.F. 2571 455C.12C. 1 Sec. 13. NEW SECTION . 455C.12C Bottle bill fund. 2 A bottle bill fund is established in the state treasury 3 under the control of the department. The fund shall consist 4 of moneys deposited in the fund pursuant to section 455C.12, 5 subsection 6, or section 455C.12B, subsection 2, and any other 6 moneys appropriated to or deposited in the fund. Moneys in 7 the fund are appropriated to the department for purposes of 8 administering and enforcing this chapter, including reimbursing 9 the attorney general for costs incurred by the attorney general 10 in enforcing this chapter. Notwithstanding section 8.33, 11 moneys in the fund that remain unencumbered or unobligated 12 at the close of a fiscal year shall not revert but shall 13 remain available for expenditure for the purposes designated. 14 Notwithstanding section 12C.7, subsection 2, interest or 15 earnings on moneys in the fund shall be credited to the fund. 16 Sec. 14. Section 455C.13, Code 2022, is amended to read as 17 follows: 18 455C.13 Distributors’ agreements authorized. 19 1. A distributor , dealer, or person operating a redemption 20 center or mobile redemption system may enter into a contract or 21 agreement with any other distributor, manufacturer , or person 22 for the purpose of collecting or paying the refund value on, or 23 disposing of, beverage containers as provided in this chapter . 24 2. For purposes of this chapter, any contracts entered into 25 pursuant to this section for the collection or disposal of 26 empty beverage containers shall not be deemed to interfere with 27 the refund value pursuant to section 455C.2. 28 Sec. 15. Section 455C.14, subsection 1, Code 2022, is 29 amended to read as follows: 30 1. If the refund value indication required under section 31 455C.5 on an empty nonrefillable metal beverage container 32 is readable but the redemption of the container is lawfully 33 refused by a dealer or person operating a redemption center 34 or mobile redemption system under other sections of this 35 -9- LSB 5260HZ (4) 89 js/ns 9/ 13

H.F. 2571 chapter or rules adopted pursuant to these sections, the 1 container shall be accepted and the refund value paid to a 2 consumer as provided in this section . Each beer distributor 3 selling nonrefillable metal beverage containers in this 4 state shall provide individually or collectively by contract 5 or agreement with a dealer, person operating a redemption 6 center or mobile redemption system, or another person, at 7 least one facility in the county seat of each county where 8 refused empty nonrefillable metal beverage containers having a 9 readable refund value indication as required by this chapter 10 are accepted and redeemed. In cities having a population of 11 twenty-five thousand or more, the number of the facilities 12 provided shall be one for each twenty-five thousand population 13 or a fractional part of that population. Such facility may be 14 a mobile redemption system. 15 Sec. 16. Section 455C.16, Code 2022, is amended to read as 16 follows: 17 455C.16 Beverage containers —— disposal at sanitary landfill 18 prohibited. 19 Beginning July 1, 1990, the The final disposal of beverage 20 containers by a dealer, distributor, or manufacturer, or 21 person operating a redemption center, in a sanitary landfill, 22 is prohibited. Beginning September 1, 1992 , including the 23 final disposal of beverage containers that used to contain 24 alcoholic liquor as defined in section 123.3, subsection 5 , by 25 a participating dealer, distributor, or manufacturer, or person 26 operating a redemption center or mobile redemption system in a 27 sanitary landfill , is prohibited. 28 Sec. 17. LEGISLATIVE FISCAL COMMITTEE REVIEW. 29 1. The legislative fiscal committee established in 30 section 2.45 shall hold a meeting during the legislative 31 interim immediately preceding the 2025 regular legislative 32 session. During the meeting, the committee shall review the 33 enforcement of chapter 455C by the department of natural 34 resources, including the collection of civil penalties, the 35 -10- LSB 5260HZ (4) 89 js/ns 10/ 13

H.F. 2571 report submitted by the attorney general pursuant to subsection 1 2, whether and how many redemption centers, participating 2 dealers, and mobile redemption systems have filed a written 3 notice of operation with the department, and the adequacy of 4 the reimbursement amount under section 455C.2, subsections 2 5 and 3. The committee shall submit a report of its findings and 6 recommendations to the general assembly no later than January 7 31, 2025. 8 2. The attorney general shall submit a report to the 9 general assembly prior to the legislative fiscal committee’s 10 meeting under subsection 1. The report shall detail any legal 11 proceedings arising under chapter 455C since the effective date 12 of section 455C.12B, as enacted in this Act. 13 Sec. 18. REPEAL. Sections 455C.7 and 455C.10, Code 2022, 14 are repealed. 15 Sec. 19. EFFECTIVE DATE. The section of this Act enacting 16 section 455C.12B takes effect January 1, 2023. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to the beverage containers control law, 21 also known as the bottle bill. 22 Current law limits beverage containers subject to beverage 23 containers control deposit and refund provisions to any sealed 24 glass, plastic, or metal bottle, can, jar, or carton holding 25 wine, alcoholic liquor, beer, mineral water, soda water, and 26 carbonated soft drinks. When a distributor sells beverages 27 in eligible containers to a dealer, the distributor adds 28 5 cents per eligible container to the sale price. When a 29 dealer sells beverages in eligible containers to a consumer, 30 the dealer adds the 5-cent deposit to the sale price of each 31 beverage container. A consumer can take eligible beverage 32 containers to a dealer, dealer agent, or redemption center and 33 receive a 5-cent refund for every eligible beverage container 34 that the consumer returns. A distributor collects eligible 35 -11- LSB 5260HZ (4) 89 js/ns 11/ 13

H.F. 2571 containers from a dealer, dealer agent, or redemption center, 1 at which time the distributor pays the dealer, dealer agent, 2 or redemption center 5 cents per eligible container plus a 3 handling fee of an additional 1 cent per eligible container. 4 The bill adds high alcoholic content beer and canned 5 cocktails to the definition of “beverage”. The bill defines 6 the terms “mobile redemption system” and “participating 7 dealer”. 8 The bill requires a dealer to pay a .5-cent handling fee 9 to a distributor upon delivery of beverages prior to July 1, 10 2027, and increases the handling fee that a participating 11 dealer, dealer agent, or redemption center will collect from 12 a distributor from 1 cent to 2 cents for each nonalcoholic 13 beverage container accepted. A distributor shall pay a 14 handling fee of 1.5 cents for each beverage container accepted 15 that contained beer or high-alcoholic content beer, but may 16 claim a refund of the barrel tax in the amount of .5 cents for 17 each such container accepted. 18 The bill requires a participating dealer to accept and pay 19 the refund value of any empty beverage container, except as 20 currently provided by law. The bill requires a participating 21 dealer or a redemption center to immediately return the refund 22 value to a consumer upon the return and acceptance of an empty 23 beverage container for which the refund value has been paid. 24 However, a mobile redemption system must return the refund 25 value to a consumer within a reasonable time not to exceed 10 26 days. A dealer can choose to not be a participating dealer if 27 the dealer meets certain requirements provided in the bill. 28 The bill requires the department of natural resources (DNR) to 29 make available to the public an electronic method of locating 30 redemption centers and mobile redemption systems. 31 The bill requires the registration of the universal product 32 code for each beverage container in a format determined by DNR. 33 The bill requires a redemption center or mobile redemption 34 system to file a notice with DNR but does not require DNR’s 35 -12- LSB 5260HZ (4) 89 js/ns 12/ 13

H.F. 2571 approval to operate a redemption center or mobile redemption 1 system. The bill also provides that a participating dealer may 2 act as a redemption center for purposes of Code chapter 455C. 3 The bill removes provisions of Code chapter 455C that relate 4 to DNR’s authority to approve redemption centers. The bill 5 also allows a dealer or person operating a redemption center or 6 mobile redemption system to enter into contracts or agreements 7 for the collection or disposal of beverage containers. 8 The bill authorizes DNR to establish a civil penalty of 9 $2,500 for a violation of any provision of Code chapter 455C, 10 except for a violation determined through a civil action of 11 the attorney general. The bill allows DNR to issue compliance 12 orders that, on and after January 1, 2023, may be enforced 13 by the attorney general. A violation determined through a 14 civil action of the attorney general is subject to a civil 15 penalty of not more than $10,000 per day per violation. Civil 16 penalties collected shall be deposited into the bottle bill 17 fund established in the bill and are appropriated to DNR for 18 purposes of administering and enforcing Code chapter 455C, 19 including reimbursement to the attorney general. 20 The bill makes numerous changes throughout Code chapter 455C 21 to change instances of “dealer” to “participating dealer”, 22 include mobile redemption systems with regulations affecting 23 redemption centers, remove obsolete language, and stylistically 24 and grammatically update the Code chapter. The bill also 25 requires the legislative fiscal committee to hold a meeting 26 during the legislative interim immediately preceding the 2025 27 regular legislative session to review the enforcement and 28 operation of Code chapter 455C, and requires the legislative 29 fiscal committee and attorney general to submit reports to the 30 general assembly. 31 -13- LSB 5260HZ (4) 89 js/ns 13/ 13