Senate File 2378 - Reprinted SENATE FILE 2378 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 2122) (As Amended and Passed by the Senate March 29, 2022 ) A BILL FOR An Act relating to beverages, including the barrel tax 1 and the acceptance of beverage containers for refund 2 value, providing penalties, and including effective date 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 SF 2378 (3) 89 js/ns/mb

S.F. 2378 Section 1. Section 123.136, subsection 1, Code 2022, is 1 amended to read as follows: 2 1. In addition to the annual permit fee to be paid by 3 all class “A” beer permittees under this chapter there shall 4 be levied and collected from the permittees on all beer 5 manufactured for sale or sold in this state at wholesale and 6 on all beer imported into this state for sale at wholesale and 7 sold in this state at wholesale, and from special class “A” 8 beer permittees on all beer manufactured for consumption on the 9 premises and on all beer sold at retail at the manufacturing 10 premises for consumption off the premises pursuant to section 11 123.130, subsection 4 , a tax of five and eighty-nine four and 12 three hundredths dollars for every barrel containing thirty-one 13 gallons, and at a like rate for any other quantity or for the 14 fractional part of a barrel. However, no tax shall be levied 15 or collected on beer shipped outside this state by a class “A” 16 beer permittee or special class “A” beer permittee or on beer 17 sold to a class “A” beer permittee by a special class “A” beer 18 permittee or another class “A” beer permittee. 19 Sec. 2. Section 455C.1, subsections 1 and 6, Code 2022, are 20 amended to read as follows: 21 1. “Beverage” means wine as defined in section 123.3, 22 subsection 54 , alcoholic liquor as defined in section 123.3, 23 subsection 5 , beer as defined in section 123.3, subsection 24 7 , high alcoholic content beer as defined in section 123.3, 25 subsection 22, canned cocktail as defined in section 123.3, 26 subsection 11, mineral water, soda water , and similar 27 carbonated soft drinks in liquid form and intended for human 28 consumption. 29 6. “Dealer agent” means a person who solicits or picks 30 up empty beverage containers from a participating dealer for 31 the purpose of returning the empty beverage containers to a 32 distributor or manufacturer. 33 Sec. 3. Section 455C.1, Code 2022, is amended by adding the 34 following new subsections: 35 -1- SF 2378 (3) 89 js/ns/mb 1/ 9

S.F. 2378 NEW SUBSECTION . 11A. “Mobile redemption system” means a 1 redemption center location at which a consumer may return empty 2 beverage containers on which a refund value has been paid that 3 uses innovative technology to process empty beverage containers 4 and return the amount of the refund value to consumers. 5 NEW SUBSECTION . 12A. “Participating dealer” means a dealer 6 who accepts the return of empty beverage containers from a 7 consumer. 8 Sec. 4. Section 455C.2, Code 2022, is amended to read as 9 follows: 10 455C.2 Refund values. 11 1. A refund value of not less than five cents shall be paid 12 by the consumer on each beverage container sold in this state 13 by a dealer for consumption off the premises. Upon return of 14 the empty beverage container upon which a refund value has 15 been paid to the a participating dealer or person operating 16 a redemption center and acceptance of the empty beverage 17 container by the participating dealer or person operating a 18 redemption center, the participating dealer or person operating 19 a redemption center shall return the amount of the refund 20 value to the consumer within a reasonable time not to exceed 21 ten days . A person who attempts to redeem two thousand or 22 more empty beverage containers in one transaction with a 23 participating dealer or a redemption center shall provide proof 24 of residency prior to receiving refund value. 25 2. In addition to the refund value provided in subsection 26 1 of this section , a dealer, or person operating a redemption 27 center who redeems empty beverage containers or a dealer agent 28 shall be reimbursed by the distributor required to accept 29 the empty beverage containers under section 455C.3 shall 30 provide reimbursement in an amount which that is one cent per 31 container , except that the reimbursement amount shall be three 32 cents per container for empty beverage containers accepted by a 33 redemption center . A dealer, dealer agent, or person operating 34 a redemption center may compact empty metal beverage containers 35 -2- SF 2378 (3) 89 js/ns/mb 2/ 9

S.F. 2378 with the approval of the distributor required to accept the 1 containers. 2 Sec. 5. Section 455C.3, subsections 1, 2, and 4, Code 2022, 3 are amended to read as follows: 4 1. A participating dealer shall not refuse to accept from a 5 consumer any empty beverage container of the kind, size , and 6 brand sold by the participating dealer, or refuse to pay to the 7 consumer the refund value of a beverage container as provided 8 under section 455C.2 . 9 2. A distributor shall accept and pick up from a 10 participating dealer served by the distributor or a redemption 11 center for a dealer served by the distributor in the 12 distributor’s geographic territory at least weekly, or when the 13 distributor delivers the beverage product if deliveries are 14 less frequent than weekly, any empty beverage container of the 15 kind, size , and brand sold by the distributor, and shall pay 16 to the participating dealer or person operating a redemption 17 center the refund value of a beverage container and the 18 reimbursement as provided under section 455C.2 within one week 19 following pickup of the containers or when the participating 20 dealer or redemption center normally pays the distributor for 21 the deposit on beverage products purchased from the distributor 22 if less frequent than weekly. A distributor or employee or 23 agent of a distributor is not in violation of this subsection 24 if a redemption center is closed when the distributor attempts 25 to make a regular delivery or a regular pickup of empty 26 beverage containers. This subsection does not apply to a 27 distributor selling alcoholic liquor to the alcoholic beverages 28 division of the department of commerce. 29 4. A distributor shall accept from a dealer agent any empty 30 beverage container of the kind, size, and brand sold by the 31 distributor and which that was picked up by the dealer agent 32 from a participating dealer within the geographic territory 33 served by the distributor and the distributor shall pay the 34 dealer agent the refund value of the empty beverage container 35 -3- SF 2378 (3) 89 js/ns/mb 3/ 9

S.F. 2378 and the reimbursement as provided in section 455C.2 . 1 Sec. 6. Section 455C.4, Code 2022, is amended to read as 2 follows: 3 455C.4 Refusal to accept containers. 4 1. Except as provided in section 455C.5, subsection 3 , 5 a participating dealer , a person operating a or redemption 6 center , a distributor or a manufacturer may refuse to accept 7 any empty beverage container which that does not have stated on 8 it a refund value as provided under section 455C.2 . 9 2. A On and after July 1, 2023, a dealer may refuse to 10 accept and to pay the refund value of any empty beverage 11 container if the place of business of the dealer and the kind 12 and brand of empty beverage containers are included in an order 13 of the department approving a redemption center under section 14 455C.6 . 15 3. A dealer or a distributor may refuse to accept and to pay 16 the refund value of an empty wine or alcoholic liquor container 17 which is marked to indicate that it was sold by a state liquor 18 store. The alcoholic beverages division shall not reimburse 19 a dealer or a distributor the refund value on an empty wine or 20 alcoholic liquor container which is marked to indicate that the 21 container was sold by a state liquor store. 22 4. 3. A class “E” liquor control licensee may refuse to 23 accept and to pay the refund value on an empty alcoholic liquor 24 container from a participating dealer or a redemption center 25 or from a person acting on behalf of or who has received empty 26 alcoholic liquor containers from a participating dealer or a 27 redemption center. 28 5. 4. A manufacturer or distributor may refuse to accept 29 and to pay the refund value and reimbursement as provided in 30 section 455C.2 on any empty beverage container that was picked 31 up by a dealer agent from a dealer outside the geographic 32 territory served by the manufacturer or distributor. 33 Sec. 7. Section 455C.5, subsection 1, Code 2022, is amended 34 to read as follows: 35 -4- SF 2378 (3) 89 js/ns/mb 4/ 9

S.F. 2378 1. a. Each beverage container sold or offered for sale in 1 this state by a dealer shall clearly indicate the refund value 2 of the container by embossing or by a stamp, label , or other 3 method securely affixed to the container , the refund value of 4 the container . The department shall specify, by rule, the 5 minimum size of the refund value indication on the beverage 6 containers. 7 b. On and after November 15, 2023, the department of revenue 8 shall require the registration of the universal product code 9 for each beverage container using a method determined by the 10 department of revenue. 11 Sec. 8. Section 455C.6, subsections 1, 2, and 5, Code 2022, 12 are amended to read as follows: 13 1. To facilitate the return of empty beverage containers 14 and to serve dealers of beverages, any person may establish a 15 redemption center , subject to the approval of the department, 16 at which consumers may return empty beverage containers 17 and receive payment of the refund value of such beverage 18 containers. 19 2. An application for approval of a A person operating a 20 redemption center shall file written notice of the operation 21 of the redemption center shall be filed with the department. 22 The application notice shall state the name and address of the 23 person responsible for the establishment and operation of the 24 redemption center , the kind and brand names of the beverage 25 containers which will be accepted at the redemption center, 26 and the names and addresses of the dealers to be served by 27 the redemption center. The application notice shall contain 28 such other information as the director may reasonably require. 29 However, on and after July 1, 2023, a redemption center does 30 not need to provide in its notice the names and addresses of 31 dealers to be served by the redemption center. 32 5. All approved redemption centers shall meet applicable 33 health standards. 34 Sec. 9. Section 455C.6, subsections 3 and 4, Code 2022, are 35 -5- SF 2378 (3) 89 js/ns/mb 5/ 9

S.F. 2378 amended by striking the subsections. 1 Sec. 10. Section 455C.6, Code 2022, is amended by adding the 2 following new subsection: 3 NEW SUBSECTION . 6. A mobile redemption system shall 4 not be considered to be in violation of any county or city 5 ordinance that would otherwise limit the operation of the 6 mobile redemption system as long as the mobile redemption 7 system operates in a location that is not zoned primarily for 8 residential purposes. 9 Sec. 11. Section 455C.12, subsections 2 and 3, Code 2022, 10 are amended to read as follows: 11 2. A distributor who collects or attempts to collect 12 a refund value on an empty beverage container when the 13 distributor has paid the refund value on the container to a 14 participating dealer, redemption center, or consumer is guilty 15 of a fraudulent practice. 16 3. Any person who does any of the following acts is guilty 17 of a fraudulent practice: 18 a. Collects or attempts to collect the refund value on the 19 container a second time, with the knowledge that the refund 20 value has once been paid by the distributor to a participating 21 dealer, redemption center , or consumer. 22 b. Manufactures, sells, possesses , or applies a false or 23 counterfeit label or indication which that shows or purports to 24 show a refund value for a beverage container, with intent to 25 use the false or counterfeit label or indication. 26 c. Collects or attempts to collect a refund value on 27 a container with the use of a false or counterfeit label 28 or indication showing a refund value, knowing the label or 29 indication to be false or counterfeit. 30 Sec. 12. Section 455C.12, Code 2022, is amended by adding 31 the following new subsections: 32 NEW SUBSECTION . 6. A person who attempts to redeem beverage 33 containers obtained outside the state commits a serious 34 misdemeanor and is also subject to a civil penalty of five 35 -6- SF 2378 (3) 89 js/ns/mb 6/ 9

S.F. 2378 thousand dollars per violation. 1 NEW SUBSECTION . 7. Except as provided in subsection 6, 2 a person who violates any provision of this chapter shall 3 be subject to a civil penalty of two thousand dollars per 4 violation, which shall be assessed and collected in the same 5 manner as provided in section 455B.109. Any civil penalty 6 collected under this chapter shall be deposited in the general 7 fund of the state. 8 Sec. 13. NEW SECTION . 455C.12A Administrative enforcement 9 —— compliance orders. 10 The director may issue any order necessary to secure 11 compliance with or prevent a violation of the provisions of 12 this chapter or any rule adopted or permit or order issued 13 pursuant to this chapter. The person to whom such compliance 14 order is issued may cause to be commenced a contested case 15 within the meaning of chapter 17A by filing within thirty 16 days a notice of appeal to the commission. On appeal, the 17 commission may affirm, modify, or vacate the order of the 18 director. 19 Sec. 14. NEW SECTION . 455C.12B Judicial review. 20 Judicial review of any order or other action of the 21 commission or director may be sought in accordance with the 22 terms of chapter 17A. Notwithstanding the terms of chapter 23 17A, petitions for judicial review may be filed in the district 24 court of the county in which the alleged offense was committed. 25 Sec. 15. NEW SECTION . 455C.12C Civil actions for compliance 26 —— penalties. 27 1. The attorney general, on request of the department, shall 28 institute any legal proceedings necessary to obtain compliance 29 with an order of the commission or the director, including 30 proceedings for a temporary injunction, or prosecuting any 31 person for a violation of an order of the commission or the 32 director, the provisions of this chapter, or any rules adopted 33 or permit or order issued pursuant to this chapter. 34 2. Any person who violates any order issued pursuant to 35 -7- SF 2378 (3) 89 js/ns/mb 7/ 9

S.F. 2378 section 455C.12A shall be subject to a civil penalty not to 1 exceed two thousand dollars for each day of such violation. 2 Sec. 16. Section 455C.13, Code 2022, is amended to read as 3 follows: 4 455C.13 Distributors’ Collection and disposal agreements 5 authorized. 6 1. A distributor , dealer, or redemption center may enter 7 into a contract or agreement with any other distributor, 8 manufacturer , or person for the purpose of collecting or paying 9 the refund value on, or disposing of , beverage containers as 10 provided in this chapter . 11 2. For purposes of this chapter, any contracts entered into 12 pursuant to this section for the collection or disposal of 13 empty beverage containers shall not be deemed to interfere with 14 the refund value pursuant to section 455C.2. 15 Sec. 17. 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 , 25 by a participating dealer, distributor, or manufacturer, or 26 person operating a redemption center in a sanitary landfill , 27 is prohibited. 28 Sec. 18. NEW SECTION . 455C.18 Unclaimed refund value and 29 handling fees. 30 Any amount of refund value or handling fees possessed by a 31 distributor after the distributor has made payments required 32 pursuant to this chapter shall be considered the property of 33 the distributor. 34 Sec. 19. REPEAL. Sections 455C.7 and 455C.10, Code 2022, 35 -8- SF 2378 (3) 89 js/ns/mb 8/ 9