HB1684

SECTION 1. The legislature finds that recycling programs in the State are designed and intended to help protect Hawaii's precious, finite natural resources by reducing the amount of solid waste that enters the State's landfills. However, most, if not all, of the costs of operating recycling programs falls on the government and, thus, the taxpaying public.

The legislature further finds that nearly fifty years ago, the Organisation for Economic Cooperation and Development adopted the polluter pays principle, meaning that a polluter should bear the costs of "measures decided by public authorities to ensure that the environment is in an acceptable state". The concept of "extended producer responsibility", which is based on this principle, holds that producers bear responsibility for the environmental costs associated with a product, throughout its life cycle. The premise is that companies that sell products pay fees that help cover the cost of recycling packaging, shifting the financial burden from taxpayers and government to those who are sending these materials onto the market. Extended producer responsibility is a modern type of waste management policy created to safely and responsibly dispose of difficult-to-recycle products and materials.

In the United States, packaging waste, including plastics, accounts for approximately thirty per cent of the waste stream. Recycling rates have stagnated over the past two decades as the amount of packaging, the complexity of materials, and costs have all increased. On July 12, 2021, Maine became the first state in the nation to enact extended producer responsibility legislation for packaging. In August 2021, Oregon became the second state to do so. Furthermore, nearly all members of the European Union, Japan, South Korea, and five Canadian provinces already have similar laws.

The legislature additionally finds that the benefits of extended producer responsibility legislation for packaging surpass simply recovering and reusing recyclable material at a higher rate. Such laws also inspire innovations in package design, from the increased use of recycled material to the simplicity of cutting back on weight or packaging elements. Plastic, which is the least recycled material, is ubiquitous in packaging; plastic pollution could be drastically curtailed by extended producer responsibility legislation for packaging. The legislature further finds that Hawaii would benefit from a law that shifts the financial burden of recycling packaging from government and taxpayers to the companies that are responsible for producing the potential waste.

Therefore, the purpose of this Act is to establish a packaging stewardship program within the department of health to reduce the amount of packaging material that becomes solid waste.

SECTION 2. Chapter 342G, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part

PACKAGING STEWARDSHIP PROGRAM

§342G-A Definitions. (a) As used in this part, unless the context otherwise requires:

"County" means the city and county of Honolulu, county of Hawaii, county of Maui, and county of Kauai.

"Department" means the department of health.

"Low-volume producer" means a producer that sold, offered for sale, or distributed for sale in or into the State during the prior calendar year products contained, protected, delivered, presented, or distributed in or using more than one ton but fewer than fifteen tons of packaging material in total.

"Packaging material" means a discrete type of material, or a category of material that includes multiple discrete types of material with similar management requirements and similar commodity values, used for the containment, protection, delivery, presentation, or distribution of a product, including a product sold over the Internet, at the time that the product leaves a point of sale with or is received by the consumer of the product. "Packaging material" does not include a discrete type of material, or a category of material that includes multiple discrete types of material, that is:

(1) Intended to be used for the long-term storage or protection of a durable product and that can be expected to be usable for that purpose for a period of at least five years;

(2) A beverage container under part VIII;

(3) Covered under chapter 339D;

(4) Covered under chapter 342I; and

(5) Covered under chapter 342J.

"Packaging stewardship contract" means the contract entered into by the department and the stewardship organization pursuant to section 342G-C.

"Packaging stewardship fund" or "fund" means a privately held account established and managed by the stewardship organization pursuant to section 342G-L.

"Packaging stewardship organization" or "stewardship organization" means the entity contracted by the department under section 342G-C to operate the packaging stewardship program.

"Packaging stewardship program" or "program" means the program implemented under this part by the stewardship organization to assess and collect payments from producers based on the weight of packaging material sold, offered for sale, or distributed for sale in or into the State by each producer and to reimburse participating counties for certain county recycling and waste management costs.

"Post-consumer material" means new material produced using material resulting from the recovery, separation, collection, and reprocessing of material that would otherwise be disposed of or processed as waste and that was originally sold for consumption. "Post-consumer material" does not include post-industrial material or pre-consumer material.

"Producer" means a person that:

(1) Has legal ownership of the brand of a product sold, offered for sale, or distributed for sale in or into the State contained, protected, delivered, presented, or distributed in or using packaging material; or

(2) Imports into the State for sale, offers for sale, or distributes for sale in or into the State a product contained, protected, delivered, presented, or distributed in or using packaging material that is branded by a person that meets the requirements of paragraph (1) and has no physical presence in the United States.

"Producer" includes a low-volume producer and a franchisor of a franchise located in the State but does not include the franchisee operating that franchise. "Producer" does not include a nonprofit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.

"Readily recyclable" means, with respect to a type of packaging material, that the type of packaging material, as determined by the department by rule:

(1) Can be sorted by entities that process recyclable material generated in the State; and

(2) Has a consistent market for purchase. As used in this paragraph, "consistent market for purchase" means, with respect to a type of packaging material, that entities processing recyclable material are willing to purchase full bales of that type of fully sorted packaging material in quantities equal to or in excess of the supply of that fully sorted packaging material.

"Readily recyclable" does not include types of packaging material that entities that process recyclable material generally accept only in small quantities or that such entities typically sort out from other recyclable material during processing.

"Recycling" means the recovery, separation, collection, reprocessing, and sale or reuse of secondary resources that would otherwise be disposed of as county solid waste and is an integral part of a manufacturing process aimed at producing a marketable product made of post-consumer material.

§342G-B Producer exemptions. Notwithstanding any provision of this part to the contrary, a producer shall be exempt from the requirements and prohibitions of this part in any calendar year in which:

(1) The producer realized less than $2,000,000 in total gross revenue during the prior calendar year;

(2) The producer sold, offered for sale, or distributed for sale in or into the State during the prior calendar year products contained, protected, delivered, presented, or distributed in or using less than one ton of packaging material in total; or

(3) The producer realized more than fifty per cent of its total gross revenue in the prior calendar year from the sale of goods it acquired through insurance salvages, closeouts, bankruptcies, and liquidations.

A producer claiming an exemption under this section shall provide to the department sufficient information to demonstrate that the producer meets the requirements for an exemption under this section within thirty days of receiving a request from the department to provide such information.

§342G-C Selection of stewardship organization; contract. (a) Consistent with the requirements of this part, the department shall select and enter into a contract with a packaging stewardship organization to operate the packaging stewardship program under this part.

(b) No later than January 1, 2023, and consistent with applicable competitive bidding requirements under chapter 103D, the department shall issue a request for proposals for the operation of the packaging stewardship program by a packaging stewardship organization. The proposals shall be required to cover a ten-year operation of the packaging stewardship program by the successful bidder and shall include, at a minimum:

(1) A description of how the bidder will administer the packaging stewardship program, including:

(A) The mechanism or process, to be developed with input from producers, by which a producer may request and receive assistance from the stewardship organization in the reporting of required information and regarding methods by which the packaging material used by a producer may be modified so as to reduce the producer's payment obligations under section 342G-F; and

(B) The mechanism or process, to be developed with input from the counties, by which a participating county may request and receive assistance from the stewardship organization in the reporting of required information and regarding methods by which a county's recycling program may be modified so as to increase access to and participation in the program;

(2) A description of how the bidder, if selected, intends to solicit and consider input from interested persons, including producers, counties, environmental organizations, and waste management and recycling organizations, regarding the bidder's operation of the packaging stewardship program;

(3) A description of how the bidder intends to establish and manage the packaging stewardship fund consistent with section 342G-L, including:

(A) The staffing the bidder intends to use for management of the fund;

(B) A plan to ensure equity of access to the fund for financially challenged or otherwise disadvantaged counties or communities;

(D) A plan for administering payments to and reimbursements from the fund and the financial mechanisms, including investment types, if any, the bidder intends to use in managing the fund;

(4) A proposed financial assurance plan that ensures all funds held in the packaging stewardship fund are immediately and exclusively forfeited and transferred to or otherwise made immediately available to the department to support waste diversion, reuse, or recycling programs when the packaging stewardship contract is terminated by the department or expires, unless the stewardship organization enters into a new packaging stewardship contract with the department in accordance with subsection (c) prior to the expiration of the stewardship organization's existing packaging stewardship contract;

(5) A proposed budget outlining the anticipated costs of operating the packaging stewardship program, including identification of any start-up costs that will not be ongoing and a description of the method by which the bidder intends to determine and collect producer payments during the initial start-up period of program operation to fund the program's operational costs during that initial start-up period and to reimburse or require additional payments by those producers subsequent to that initial start-up period based on producer reporting of the actual amount of packaging material sold, offered for sale, or distributed for sale in or into the State by each producer during that initial start-up period; provided that the proposed budget under this paragraph may overestimate the cost of operating the program during its initial start-up period of operation but shall describe the method and basis for any overestimate;

(6) Certification that:

(A) The bidder will not share, except with the department, information provided to the bidder by a producer that is proprietary information and that is identified by the producer as proprietary information; and

(B) Includes a description of the methods by which the bidder intends to ensure the confidentiality of the information described in subparagraph (A);

(7) A description of how the bidder will conduct a statewide recycling needs assessment that, at a minimum, includes an evaluation of:

(A) Current funding needs affecting recycling access and availability in the State;

(B) The capacity, costs, and needs associated with the collection and transportation of recyclable material in the State;

(C) The processing capacity, market conditions, and opportunities in the State and regionally for recyclable material; and

(D) Consumer education needs in the State with respect to recycling and reducing contamination in collected recyclable material; and

(8) Any additional information required by the department.

(c) In accordance with applicable requirements of state purchasing laws, the department shall enter into a contract with a bidder that has submitted a proposal in accordance with the requirements of this section, the term of which shall cover ten years of operation of the packaging stewardship program by the stewardship organization. The contract shall, at a minimum, include provisions to ensure that the stewardship organization will operate the program in accordance with all applicable statutory requirements and any rules adopted by the department.

(d) If, at the close of the competitive bidding process under subsection (b), the department determines that no bidder has submitted a proposal that meets the requirements of this section, the department may reopen a new competitive bidding process.

§342G-D Prohibition; producer compliance information. (a) Beginning one calendar year following the effective date of the packaging stewardship contract:

(1) A producer shall not sell, offer for sale, or distribute for sale in or into the State a product contained, protected, delivered, presented, or distributed in or using packaging material for which the producer has not complied with all applicable requirements of this part; and

(2) A retailer shall not sell, offer for sale, or distribute for sale in or into the State a product contained, protected, delivered, presented, or distributed in or using packaging material if, based on the information made available by the department pursuant to subsection (c), the product is contained, protected, delivered, presented, or distributed in or using packaging material for which its producer has not complied with all applicable requirements of this part.

(b) At the department's request, the stewardship organization shall provide to the department a list of producers that are participating in the program and are compliant with the program's requirements and, if known to the stewardship organization, a list of producers that are not participating in the program and are not compliant with the program's requirements.

(c) Based on information provided to the department under subsection (b) and any other information considered by the department, the department shall make available on its publicly accessible website a regularly updated list of producers that the department has determined are compliant with all applicable requirements of this part and a list of producers and, where applicable, specific products for which the department has determined the producer has not complied with all applicable requirements of this part. The department shall conduct outreach to retailers to provide notification of the information made available under this subsection and any changes to that information.

§342G-E Annual reporting by stewardship organization. Beginning one calendar year following the effective date of the packaging stewardship contract and annually thereafter, the stewardship organization shall submit to the department and make available on the organization's publicly accessible website a report that includes, at a minimum, the following information:

(1) Contact information for the stewardship organization;

(2) A list of participating producers and the brands of products associated with those producers;

(3) The total weight of each type of packaging material sold, offered for sale, or distributed for sale in or into the State by each participating producer as reported pursuant to section 342G-G;

(4) As applicable, the total weight of each type of packaging material collected and managed by each participating producer through alternative collection programs approved by the department under section 342G-H;

(5) A complete accounting of payments made to and by the stewardship organization during the prior calendar year, including information on how the stewardship organization determined the amount of such payments in accordance with sections 342G-F and 342G-J and the rules adopted under sections 342G-M(b)(1) and (4);

(6) A list of producers that are required to participate in the program but are not participating in the program and any product-specific noncompliance, if known by the stewardship organization;

(7) A description of education and infrastructure investments made by the stewardship organization in prior calendar years and an evaluation of how those investments were designed to increase access to recycling in the State and to encourage the reuse of packaging material;

(8) A description of the results of the representative audits required pursuant to section 342G-C(b)(7) and (8);

(9) An assessment of the progress made toward the achievement of any program goals required by the department by rule pursuant to section 342G-M(b)(5);

(10) An assessment of whether the payment schedule for producer payments adopted by the department by rule pursuant to section 342G-M(b)(1) has been successful in incentivizing improvements to the design of packaging material as encouraged through the allowance of payment adjustments;

(11) Any proposals for changes to the packaging stewardship program or investments in education and infrastructure designed to reduce the amount of packaging material used, increase access to recycling, increase the recycling of or recyclability of packaging material, reduce program costs, or otherwise increase program efficiency, which may include an analysis of best practices for county recycling programs;

(12) The results of a third-party financial audit of the stewardship organization paid for by the stewardship organization; and

(13) Any additional information required by the department.

§342G-F Producer payments. (a) Pursuant to this section and the rules adopted by the department, no later than one hundred eighty days after the effective date of the packaging stewardship contract and annually thereafter, a producer shall make payments to the stewardship organization to be deposited into the packaging stewardship fund based on the net weight of each type of packaging material sold, offered for sale, or distributed for sale in or into the State by the producer and not managed by the producer under an approved alternative collection program.

(b) The department shall adopt rules setting forth the manner in which such payments shall be calculated, including:

(1) Requiring the amount of a producer's payment to include that producer's share of the:

(A) Program's operational costs as set forth in the proposed budget pursuant to section 342G-C(b)(5); and

(B) Administrative and enforcement costs incurred by the department pursuant to this part;

(2) Requiring the amount of a producer's payment to reflect the per-ton costs associated with the collection, processing, transportation, and recycling or disposal of the producer's packaging material by the counties and the costs associated with increasing access to recycling of that packaging material type through investments in infrastructure and education under section 342G-K;

(3) Allowing a low-volume producer to elect to pay a flat fee in lieu of a material-specific producer payment calculated pursuant to this part; provided that a producer seeking to pay a flat fee as a low-volume producer pursuant to this paragraph shall submit to the department the information necessary to demonstrate that the producer meets the definition of "low-volume producer"; provided further that the department may adopt rules that relieve a producer from paying fees under this paragraph with respect to packaging material acquired by the producer through insurance salvage, closeout, bankruptcy, or liquidation; and

(4) Through an adjustment of a producer's payment responsibility calculated in accordance with this section and section 342G-M(b)(1), encouraging:

(A) A reduction in packaging material waste;

(B) The reuse of packaging material;

(D) The reduction of the toxicity of packaging material;

(E) The use of post-consumer recycled material in packaging material; provided that such use does not increase the toxicity of packaging material;

(F) The reduction of litter from packaging material;

(G) The use of single-material packaging that includes prominent and easily understandable recycling or disposal instructions for consumers or other design characteristics intended to reduce consumer confusion regarding recyclability and to reduce recycling contamination; and

(H) Any other incentives designed to support the management of packaging material.

Unless otherwise approved by the stewardship organization, a producer, other than a low-volume producer, that makes a payment required pursuant to this section shall submit the payment to the stewardship organization at the same time that it submits its annual report to the stewardship organization required pursuant to section 342G-G.

§342G-G Annual reporting by producers. (a) Beginning no later than one hundred eighty days after the effective date of the packaging stewardship contract and annually thereafter, a producer shall report to the stewardship organization the total weight of each type of packaging material sold, offered for sale, or distributed for sale in or into the State by the producer in the prior calendar year.

(b) The report shall include:

(1) A description of the methods used by the producer in determining the amounts reported for each type of packaging material;

(2) A description of the characteristics of each type of packaging material reported that are relevant to the payment adjustment criteria adopted pursuant to section 342G‑F; and

(3) A list of all of the producer's brands associated with each type of packaging material.

(c) A low-volume producer that elects to pay a flat fee pursuant to section 342G-F shall not be required to submit an annual report to the stewardship organization under this section.

(d) The department shall adopt rules that authorize a producer that is unable to fully satisfy the reporting requirements of this section due to a failure to obtain sufficient information regarding the characteristics of the packaging material the producer sells, offers for sale, or distributes for sale in or into the State to alternatively report to the stewardship organization an estimate of the total weight of the producer's packaging material based on unit quantities; provided that such alternative reporting includes a description of the methods used by the producer to calculate such estimates.

§342G-H Alternative collection programs. (a) Pursuant to this part and any rules adopted by the department, a producer or group of producers may develop and operate an alternative collection program to collect and manage a type or types of packaging material sold, offered for sale, or distributed for sale in or into the State by the producer or producers. A producer that manages a type of packaging material under an approved alternative collection program through reuse, recycling, and, where approved by the department, management of that packaging material through incineration may wholly or partially offset the producer's payment obligations under the packaging stewardship program with respect to that same type of packaging material only.

(b) Beginning on the effective date of the packaging stewardship contract, a producer or group of producers seeking to implement an alternative collection program shall submit a proposal for the establishment of that program to the department for approval.

(1) Approve or deny the proposal within one hundred twenty days of receipt of the proposal; and

(2) Provide an opportunity for public review and comment on the proposal prior to its approval or denial.

The department may approve an alternative collection program for a term of five years and, at the expiration of the term, the producer or group of producers operating the program may submit an updated proposal to the department for approval.

(d) In determining whether to approve a proposed alternative collection program, the department shall consider:

(1) Whether the alternative collection program will provide year-round, convenient, free, statewide collection opportunities for the types of packaging material to be collected under that program;

(2) To what extent the alternative collection program intends to manage those types of packaging material to be collected under the program through reuse for an original purpose, through recycling, or through disposal at an incineration facility; provided that the department shall not approve an alternative collection program that proposes management of a packaging material type through disposal at an incineration facility, unless that packaging material is not readily recyclable and the program proposes a process to begin reuse or recycling of that type of packaging material within a period of three years or less;

(3) Whether the education and outreach strategies proposed for the alternative collection program can be expected to significantly increase consumer awareness of the program throughout the State;

(4) How the alternative collection program intends to accurately measure the weight of each packaging material type collected, reused, recycled, disposed of at an incineration facility, or otherwise managed under the program; and

(5) To what extent approval of the alternative collection program may disproportionately impact any community in the State.

(e) A proposed modification to an approved alternative collection program shall be submitted to the department for written approval. The department shall approve or deny a proposed modification based on the criteria identified in subsection (d). The department may waive payment of any fees associated with review and approval of a proposed modification to an approved alternative collection program if the review of the proposed modification does not require a significant expenditure of time by department staff.

(f) Beginning no later than one hundred eighty days after the effective date of the packaging stewardship contract and annually thereafter, a producer or producers managing an approved alternative collection program shall report annually to the stewardship organization and to the department the following information:

(1) The total tons of each type of packaging material collected, reused, recycled, disposed of at an incineration facility, or otherwise managed under the alternative collection program in the prior calendar year, including a breakdown of the total tons of each type of material to be credited to each producer participating in the alternative collection program;

(2) A list of the collection opportunities in the State for the types of packaging material managed under the alternative collection program that were made available in the prior calendar year;

(3) A description of the education and outreach strategies implemented by the alternative collection program in the prior calendar year to increase consumer awareness of the program throughout the State; and

(4) Any additional information required by the department.

(g) If the department determines that an approved alternative collection program is not operating in a manner consistent with the proposal approved under this section, the department shall provide written notice to the producer or producers operating the alternative collection program regarding the nature of the deficiency, the actions necessary to correct the deficiency, and the time by which such actions shall be implemented. If the department determines that the producer or group of producers has failed to implement the actions described in the written notice within the required time, the department shall notify the producers or group of producers as well as the stewardship organization in writing that the producer or group of producers is ineligible to offset payment obligations under the packaging stewardship program based on packaging material managed under the alternative collection program.

§342G-I Requirements for participating counties. (a) Pursuant to this part and any rules adopted by the department, a county may elect to, but is not required to, participate in the packaging stewardship program under this part. To be eligible for reimbursement of costs under section 342G-J as a participating county, a county shall, at a minimum:

(1) Provide for the collection and recycling of packaging material that is generated in the county and is readily recyclable; and

(2) Annually report to the stewardship organization, on a form provided and approved by the department, all information necessary for the stewardship organization to determine the county's incurred costs associated with its collection, processing, transportation, and recycling or disposal of recyclable material and of county solid waste.

(b) Two or more counties, county-owned solid waste processing facilities, or quasi-county entities that manage waste materials on behalf of a county may elect to jointly report to the stewardship organization pursuant to subsection (a)(2) and to jointly receive reimbursement payments pursuant to section 342G-J from the stewardship organization.

§342G-J County reimbursements. (a) In accordance with the rules adopted by the department pursuant to section 342G-M, the stewardship organization shall annually disburse to participating counties from the packaging stewardship fund:

(1) Reimbursement payments for the median per-ton cost of managing packaging material that is readily recyclable;

(2) Reimbursement payments for the median per-ton cost of managing packaging material that is not readily recyclable; and

(3) Per capita payments associated with packaging material disposed of by participating counties.

For the purposes of this section, the cost to a county of managing packaging material may include the costs associated with: the collection of packaging material, the transportation of packaging material to a recycling establishment or disposal facility, and the cleanup and abatement of packaging material litter.

(b) Pursuant to rules adopted by the department, the stewardship organization shall determine the amount of payments to participating counties under this section based on the following:

(1) Information provided by participating counties to the stewardship organization in accordance with section 342G-I regarding the costs incurred by those counties in recycling packaging material that is readily recyclable and packaging material that is not readily recyclable and the tons of county solid waste disposed of in those counties, including waste disposed of in public spaces and schools, which may include packaging material collected for recycling or disposal in public spaces and schools;

(2) Information provided to the department by recycling establishments and aggregated and made available by the department to the stewardship organization, including the tons of recyclable material received by each recycling establishment from each county and the tons of processed recyclable material sold by each recycling establishment;

(3) Information provided to the department by recycling establishments not located in the State or by participating counties and made available by the department to the stewardship organization regarding the tons of recyclable material brokered by those counties to those recycling establishments and processed and sold by those recycling establishments;

(4) Information obtained by the stewardship organization through the audits of facilities that process recyclable material generated in the State as required by section 342G-M; and

(5) Any other information required by the department by rule.

(c) Pursuant to rules adopted by the department, the stewardship organization shall use the information described in subsection (b) to determine the total tons of each packaging material type recycled by all counties at each recycling establishment and the percentage of those total tons attributable to each participating county.

In the case of two or more counties that jointly send recyclable material to a recycling establishment, the stewardship organization shall assume that an equal amount of the jointly sent material is attributable to each resident of each counties, unless those counties by agreement identify an unequal per capita division of that jointly sent material for the purposes of this section.

§342G-K Investments in education and infrastructure. (a) Pursuant to this section and as approved by the department, the stewardship organization shall provide every six months for the expenditure of funds within the packaging stewardship fund that are designed to improve recycling education and infrastructure in the State.

(b) The total amount of investments in education and infrastructure made by the stewardship organization pursuant to this section shall be directly proportional to the total amount of payments received from all producers for all packaging material that is not readily recyclable and is not actually recycled.

(c) Every six months, the department shall solicit proposals for investments in education and infrastructure. A county or group of counties, a business, or a recycling establishment may apply to the department to receive funding from the stewardship organization for a proposed investment in education and infrastructure.

(d) The department shall review investment proposals received pursuant to this section and shall solicit input on those proposals from producers, participating counties, and recycling establishments.

(e) After determining the total amount of funds required for investment in accordance with this section and considering the input received pursuant to subsection (d), the department shall direct the stewardship organization to award funds to applicants that submitted proposals pursuant to subsection (c).

(f) The department shall ensure that preference for funding is given to proposals that:

(1) Support the State's solid waste management goals;

(2) Promote a circular economy for packaging material types for which producers were required to make payments under section 342G-F;

(3) Increase the recyclability of packaging material that is not readily recyclable;

(4) Increase access to recycling infrastructure in the State;

(5) Improve consumer education in the State regarding recycling and recyclability; and

(6) Support recycling and education efforts in financially challenged or otherwise disadvantaged counties or communities and in other counties or communities that have received minimal or no prior funding pursuant to this section.

§342G-L Packaging stewardship fund; authorized expenditures. (a) Pursuant to this section and rules adopted by the department, the stewardship organization shall establish and manage a packaging stewardship fund.

(b) The stewardship organization shall deposit into the fund all payments received from producers under section 342G-F and shall expend those funds for the following purposes:

(1) To reimburse participating counties in accordance with the applicable provisions of sections 342G-I, 342G-J, and 342J-K and the applicable rules adopted by the department;

(2) To cover the operating costs of the stewardship organization, which shall be annually verified by a third-party financial audit paid for by the stewardship organization as required by section 342G‑E;

(3) To pay to the department all applicable fees required under section 342G-M, including reimbursement of any costs incurred by the department in adopting rules and in administering and enforcing this part prior to the effective date of the packaging stewardship contract; and

(4) To support investments in education and infrastructure made in accordance with section 342G-K.

§342G-M Administration and enforcement; rulemaking; fees; department report. (a) The department shall administer and enforce this part and shall adopt rules as necessary to implement, administer, and enforce this part.

(b) Rules adopted by the department with respect to this part shall include, at a minimum:

(1) A process for annually determining a schedule of producer payments required under section 342G-F, which shall include a flat fee option for low-volume producers pursuant to that section; provided that:

(A) The payment schedule adopted under this paragraph shall be designed to ensure that the total amount of payments collected each year is equal to or in excess of the anticipated amount of expenditures required pursuant to section 342G-L; and

(B) The payment schedule adopted under this paragraph shall provide for a flat fee option to be assessed on a tiered basis such that a low-volume producer shall be required to pay no more than $500 per ton of packaging material and no more than $7,500 in total annual fees to the stewardship organization under this part;

(2) A process for determining on an annual basis those types of packaging material that are readily recyclable, which shall involve consultation with the stewardship organization and recycling establishments and shall include a transitional period between the time that a type of packaging material is determined to be readily recyclable or to be not readily recyclable and the time that such determinations will be effective for the purposes of calculating producer payments and county reimbursements in accordance with this part;

(3) A process for determining on an annual basis which counties shall be considered similar counties, which shall involve consultation with participating counties;

(4) For purposes of determining participating county reimbursements under section 342G-J, a process for determining the median per-ton cost of managing packaging material that is readily recyclable, the median per-ton cost of managing packaging material that is not readily recyclable, and the costs associated with the disposal of packaging material by participating counties, which shall involve consultation with participating counties;

(5) Requirements for the assessment of program performance by the stewardship organization, including the setting of program goals used to inform the producer payment schedule determined pursuant to paragraph (1) and the investments in infrastructure and education made pursuant to section 342G-K, which shall include:

(A) Program goals supporting an overall reduction by producers in the amount of packaging material used;

(B) An increased reuse by producers of packaging material and an increased amount of post-consumer recycled content in packaging material used by producers;

(D) Overall program and material-specific recycling rate goals;

(E) Packaging material litter reduction goals; and

(F) Any other goals required by the department;

(6) Requirements for the stewardship organization to conduct representative audits of recyclable material processed and sold by facilities that process recyclable material generated in the State, of municipal solid waste disposed of in the State and of waste littered in the State. The requirements shall include but are not limited to:

(A) Provisions regarding the sampling techniques to be used in those audits, which must include random sampling;

(B) For audits of recyclable material, provisions regarding:

(i) How those audits must be designed to collect information regarding the extent to which recyclable material processed and sold by those facilities reflects the tons of each type of packaging material collected in the State for recycling and the tons of each type of packaging material recycled in the State, as well as the ultimate destination of and intended use for that recycled material;

(ii) How those audits must be designed so that information collected through the audit of one facility will not be used to infer information about a different facility that uses different processing equipment, different sorting processes, or different staffing levels to conduct processing; and

(iii) The process by which a facility will be allowed to request and receive an audit if it can credibly demonstrate that an audit result being applied to its material output is not representative of its current operations;

(C) For audits of municipal solid waste, provisions regarding how the audits will be designed to collect information regarding the types and amount, whether by weight or volume, of packaging material in the waste stream and the percentage by weight and volume of the waste stream that is composed of packaging material; and

(D) For audits of waste littered in the State, provisions regarding how the audits will be designed to collect information regarding the packaging material type by amount, whether by weight or volume, in sampled litter, identification of the producer or producers of the packaging material in sampled litter, if identifiable, and an evaluation based on those audits regarding the areas of the State in which litter accumulation is greatest;

(7) A schedule by which the stewardship organization must annually report to the department pursuant to section 342G-E and a schedule by which a producer or group of producers operating an approved alternative collection program must annually report to the stewardship organization and to the department pursuant to section 342G-H; and

(8) A process by which the stewardship organization will develop and submit for department review, and a process by which the department shall review and approve or deny, a proposed investment in education and infrastructure pursuant to section 342G-K. The process shall set forth the manner in which the stewardship organization is required to solicit and incorporate input in the development of proposed investments from producers, recycling establishments, and participating municipalities.

(c) To the maximum extent practicable, material-specific recycling rate goals adopted pursuant to subsection (b)(5) shall reflect the following recycling standards:

(1) Sorted glass is considered recycled if it does not require further processing before entering a glass furnace or before use in the production of filtration media, abrasive materials, glass fiber insulation, or construction materials;

(2) Sorted metal is considered recycled if it does not require further processing before entering a smelter or furnace;

(3) Sorted paper is considered recycled if it does not require further processing before entering a pulping operation; and

(4) Plastic separated by polymer is considered recycled if it does not require further processing before entering a pelletization, extrusion, or molding operation or, in the case of plastic flakes, does not require further processing before use in a final product.

(d) At the time that the stewardship organization submits its annual report to the department pursuant to section 342G-E, the stewardship organization shall pay to the department a reasonable annual fee established by the department, not to exceed $300,000, to cover the department's actual costs for review of the stewardship organization's annual report and the department's costs during the prior fiscal year for its oversight, administration, and enforcement of the packaging stewardship program.

(e) Pursuant to section 342G-L(b)(3), the annual fee required under subsection (d) may include reimbursement of any costs incurred by the department in adopting rules and in administering and enforcing this part prior to the effective date of the packaging stewardship contract.

(f) A producer or group of producers, when submitting a proposal to the department for the establishment of an alternative collection program or submitting a proposal to the department for modifications to an approved alternative collection program pursuant to section 342G-H, shall pay to the department a reasonable fee established by the department to cover the department's actual costs for review of the proposal or proposed modifications.

(g) A producer or group of producers operating an approved alternative collection program pursuant to section 342G-H shall pay to the department a reasonable annual fee established by the department, not to exceed $10,000 per participating producer, to cover the department's actual costs for review of the producer's or group's annual report and the department's costs for the oversight, administration, and enforcement of the alternative collection program, which may be waived by the department if those activities by the department do not require a significant expenditure of time by department staff.

(h) At least twenty days prior to the convening of the regular session of 2024, and at least twenty days prior to the convening of each regular session thereafter, the department shall submit a report to the legislature regarding the packaging stewardship program and alternative collection programs implemented pursuant to this part.

The report shall include, at a minimum:

(1) Data on the amount and type of packaging material associated with products sold, offered for sale, or distributed for sale in or into the State;

(2) Data regarding how that packaging material was managed; and

(3) Any proposed legislation to amend the packaging stewardship program and alternative collection programs implemented pursuant to this part, including:

(A) The establishment of new program goals; or

(B) The imposition of a prohibition on the sale, offer for sale, or distribution for sale in or into the State of products associated with packaging material that the department has determined:

(i) Is nonessential;

(ii) Is contaminating collected recyclable material;

(iii) Is a common source of litter; or

(iv) Exhibits toxicity, particularly if that toxicity is demonstrated to have a disproportionate impact on any community in the State.

(i) At least twenty days prior to the convening of the regular session of 2028, and at least twenty days prior to the convening of every fifth regular session thereafter, the report required under subsection (h) shall:

(1) Describe the results of a comprehensive review of the rules adopted by the department pursuant to this part; and

(2) Include recommendations by the department for any legislation or rules deemed necessary as a result of that review, including:

(A) Changes to the flat fee that may be paid by a low-volume producer pursuant to section 342G‑F(b)(3); and

(B) A description of any changes to rules that the department intends to propose.

§342G-N Antitrust exclusions. A producer or stewardship organization, including a producer's or stewardship organization's officers, members, employees, and agents who organize a packaging stewardship program or an alternative collection program under this part, shall be immune from liability for the producer's or stewardship organization's conduct under state laws relating to antitrust, restraint of trade, unfair trade practices, and other regulation of trade or commerce only to the extent necessary to plan and implement the producer's or stewardship organization's packaging stewardship program or alternative collection program consistent with this part.

§342G-O Proprietary information. Proprietary information submitted to the department pursuant to this part or rules adopted pursuant to this part that are identified by the submittor as proprietary information shall remain confidential and shall be handled by the department as required by law.

§342G-P Rules. All rules adopted by the department under this part shall be adopted pursuant to chapter 91."

SECTION 3. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1684
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII