Vermont Legislature SmartTranscripts:

[Rep. Ela Chapin]: Good

[Rep. Amy Sheldon, Chair]: afternoon and welcome to the House Environment Committee this afternoon. We are taking up committee bill from last session, twenty five-nine ninety one. Updates to the Bottle Bill. We'll hear from BPIRG first.

[Paul Burns, Executive Director, VPIRG]: Thank you, Madam Chair and members of the committee. For the record, my name is Paul Burns. I'm the Executive Director of BPIRG, the Vermont Public Interest Research Group. It is my pleasure to be with you here today as you take up once again legislation around the bottle bill. I should say just as a reminder that my organization is the largest environmental and consumer advocacy group in the state. We have more than 30,000 members and supporters all across the state, including members in every single legislative district in the state. The PERG and the bottle bill both came to be in 1972. And so while we were not around to lobby for the creation of the bottle bill as early as 1973, we began to be associated with the legislation as we worked to ensure its effective implementation and funding for the program. So we go back with the bottle bill a long ways. Over the years, we've worked to try to ensure that the program continues to work effectively for the environment, for consumers who are directly affected by the legislation, and for the many businesses that have a stake in it. I would say that the bottle bill is one of the environmental laws that probably has where people in Vermont have the greatest connection to it on an almost daily basis. Whether they take their bottles and cans back for redemption or not, they are paying a deposit on containers on carbonated beverages like soda and beer, liquor. A good many of Vermonters, many thousands of Vermonters every single day are taking back these containers for redemption. And so they are participating actively in this environmental program, this important environmental law that has been on the books now for more than fifty years, as much as almost any law that you can think of in that respect. They're touching it, they're thinking about it, and they're participating in it. And shortly I'll talk about how people feel about the bottle bill in the state. Seven years ago, we supported a change in the law that made sure that any deposits that were unclaimed by consumers went to the state rather than to beverage distributors. Currently unclaimed deposits in the state, also known as escheats, are typically in excess of more than $3,000,000 a year. And we have consistently supported efforts to make sure that our law is keeping up with the times, and we have not always been successful in that effort, but that is an important feature of the work that we've continued to do on the bottle bill. Vermont's bottle bill, as you probably recall, does not cover as many types of beverages as most other states with a similar program cover. So Maine, for instance, covers 90% or so of all the beverage containers sold there, and our program covers about half that. Less than half of all beverages sold in the state, therefore, are covered by the bottle bill. You'll recall that the General Assembly passed legislation to modernize our law expand its scope in the last biennium. Governor Scott vetoed that legislation, and while the House overrode it successfully, the Senate fell short of overriding that veto. I want us to be very clear here. VPERC's position is that the bottle bill still works. The bottle bill, as we have it today, is still tremendously successful at collecting beverage containers at an impressive rate. Those containers are clean and high quality. That makes them particularly valuable and allows them to be recycled for their highest and best use. In many cases, that means turning a glass bottle into another glass bottle. That highest and best use not only retains the highest value, but brings the greatest environmental benefit. If you can make a glass bottle out of glass that came from another glass bottle, you use less energy in that process. You save on water pollution and air pollution and climate impacts as well. And it is a cheaper way to make a glass bottle if you can make it from a previously used glass bottle. I will say even better is a reuse program, and so as everybody around the table probably remembers, we used to have containers beverage containers that were reused perhaps many times, and that's not envisioned currently on any legislation before you, but there are significant environmental benefits that come from reuse even ahead of recycling. But our law does have a redemption rate that is still remarkably strong, especially given that the deposit has not increased since the law was passed in 1972. And as you all know, the value of a nickel has diminished significantly if it were to keep up with inflation. I don't know what the current numbers are, but somewhere something in excess of 30¢ would be the equivalent of what 5¢ was in 1972. Again, nobody is proposing raising the deposit to 30¢, or indeed anything other than $05 for most of the beverages covered by the program, which is the current law. So tens of thousands of Vermonters use this regularly, and I would say in two polls that BPRG commissioned over the last fifteen years, the last one was now five years ago and fifteen years ago, we found that approximately nine out of 10 Vermonters supported at that time the bottle bill. And more than eight in 10 supported the idea of expanding its scope to include more containers. So while there is a burden placed on consumers, you could argue by having this program in place, modest though it may be, that does not deter support for the underlying program. Vermonters feel good about doing this, and they view it, I think, as a tangible action that they take to kind of benefit the environment. So, that's the most recent information that I have, at least, in terms of how Vermonters feel about it. So, number one, it still works remarkably well, but number two, it does need to be updated. It is more than 50 years old now, and even if we don't talk now about expanding the scope of the law or increasing the deposit, because I don't think there is sufficient support in the General Assembly right now to make that possible, at least with gubernatorial opposition. But there's still many things that can happen here that would help the program work more efficiently and effectively. Work almost better for everybody with a stake in it. And in this way, I think it is maybe not unique, but it's a rare bill that may come before you where there's a broad area of agreement from many, many of the stakeholders who have an interest in this. If we think about ways to make the law more efficient, we can recognize a number of those elements are in the draft that you were working on a year ago, and that you all have before you. Again, I want to stress that VPERG in this case is in agreement with the Agency of Natural Resources that the program that there should be this year changes made to improve the efficiency of the program. The Producer Responsibility Organization, or PRO, was a suggestion that industry made and that we ultimately agreed to as part of negotiations on this idea of modernizing the bill. Those negotiations took place in the last biennium. But I want be clear, the PRO was never our idea. That was industry's idea about how they could take a more of a leading role in ensuring that the program works works effectively, that there can be somebody who's thinking about a vision for the program and how it will work better over time. How can we increase redemption rates? How can we increase convenience for consumers and reduce some of the burden on other businesses that currently are part of the program? So the PRO idea came from businesses. We remain open to this approach, even as we agreed to supporting the legislation with that end in the last biennium. We remain open to it as long as there are benchmarks to ensure that we're achieving continued success with the program and that there's a backup plan in case the PRO does not succeed, in case industry doesn't do the things they need to do to make this a successful approach. So, while we've agreed with the interests also of small retailers who have argued that they would prefer not to participate in the program, not to take back cans and bottles for redemption, and the bill that you are considering right now would exempt small retailers from having to participate. So, it would remove an administrative or bureaucratic burden on small retailers. Now, again, we kind of recognize that they generally don't take back that many containers. People are typically not bringing back bags and bags of cans and bottles to their corner bodega. And so, it really, you know, as part of a negotiation, makes sense that they could be taken out of the program. So, as we look out for large and small business interests, we of course want to ensure that any update also considers the interests of everyday shoppers and our environment, too. We therefore support provisions in the bill that would have all points of redemption be redemption centers. So if you remain in the program, you're a larger retailer or an existing redemption center, you would have to take back any of the beverages that are sold in the state. And it would no longer be the case where you would only take back the beverages that you sell. And this, again, is something where we are in agreement with the Agency of Natural Resources on this. The legislation would ensure that people in all parts of the state have reasonable access to redemption locations. People in municipalities of 7,000 or more must have a convenient redemption center. That would be a requirement under this legislation. In addition to the number of redemption center locations, there are standards of service that should be required as well. Some of these are in the bill. Others, I think, could be added. That would include hours of operation, accessibility particularly for people with mobility issues, opportunity for immediate redemption at a certain number of locations, etcetera. There are some finer points there, but you want to make sure that you're not just saying we have three redemption centers per county if they aren't open a certain number of hours per week. You want to make sure that they are truly accessible for folks. We may also be entering an era where there are different ways to return your redeemables. Some people will want to get their deposit back immediately, and we should retain opportunities, convenient opportunities for them to do so. But for others, a convenient drop off location where you drop off a bag full of redeemable containers and you have an account, and that account is later credited for the total number of cans and bottles you're dropping off there, that works better for other folks who don't care so much about getting immediate redemption but go for the convenience of dropping that off, setting up an account, having the account fulfilled later. So that's a concept that we can support as well. And I think you will find that there is, again, pretty broad support for moving in a direction where we have more of those greater number of opportunities for redemption. More redemption locations and technologies, along with reduced sorts for redemption centers, should make for a more efficient experience for everybody, for the people running these facilities, and for consumers who are waiting in line just to drop off their redeemables. As the process becomes more convenient, we would expect to see an increase in the rate of redemption, and indeed, the law the bill that you're considering would have benchmarks in place so that we would ensure that we're reaching higher rates of redemption over time. As you reach higher rates of redemption, you also have increased environmental benefits as well. So, there's something for almost everybody in this bill that you're considering. It doesn't go as far as I would want in terms of expanding the container. Doesn't do any expansion containers. Doesn't increase the deposit. But it does increase levels of convenience for shoppers and folks who want to redeem their containers. It reduces the burden on small businesses. It gives more authority and responsibility for the manufacturers, the producers here. That's something that they're interested in. ANR has somewhat fewer responsibilities in a lot of ways. They wanted to see the creation of a PRO so that the program could work more effectively. Again, I think those who are concerned about the environment see that there are environmental benefits here, too. So I think that's a lot to build on, and it's, to me, a very positive sign. It's early in the session. I'm still very positive about the opportunities that we have. There are some important questions that remain. One of those involves the unclaimed deposits. As noted, the industry used to keep the unclaimed consumer deposits for almost the first five decades of the program. And though we don't have official records for just how much money that amounted to, a conservative estimate might be about $2,000,000 per year. We're over $3,000,000 now, so there may have been a time where there was greater rates of redemption, fewer beverage containers sold, beverages sold. So maybe an average of $2,000,000 a year. That would suggest the industry collected somewhere near $100,000,000 in the first forty eight or forty nine years of the program from the unclaimed deposits. That's quite a lot of money before the law was changed about six years ago. Since then, since the state began keeping the unclaimed deposits again, those unclaimed deposits are money that the consumers put the nickel down, they just never went back to get it. If you pass away and you have a bank account and you don't have any relatives, the bank doesn't get to keep the money in that account. It will ultimately go to the state, for instance. And you see the state treasurer every so often trying to connect people to money that may belong to them. Over time, the state gets to use those dollars for something else if there's a belief that ultimately these people are not coming back for their money. Well, the unclaimed deposits is pretty clear after a certain period of time, those folks are not going to bring that container for redemption. And so we have these dollars, and we can pretty much count on a larger amount of money coming to the state now every year for that. As you know, I think that money is now used for clean water programs in the state. We understand that a PRO will take on important new responsibilities under the law as it is currently envisioned in the bill that you were working on last year. It'll be up to the PRO to make sure that we bring about opportunities that are called for and the rising redemption rates in the state. And there will be costs associated with those responsibilities. I will note again that in most, if not all cases where the state has created an extended producer responsibility program, you did one recently for household hazardous waste, we have them for electronics and paint and so forth, I'm not sure that there's any other program where the state pays the manufacturer to do that work of collecting the material that is called for. After all, it's called an extended producer responsibility program. The responsibility is supposed to be on the producers to do this thing as a matter of public policy. And at BPERG, we think that that's appropriate. Having said that, we have always believed that unclaimed deposits that are the result of the bottle bill program could and should be used to further waste reduction and recycling goals. That is a sensible use of any monies that are made available to the state under this program. We can imagine a path forward that would allow expenses up to a certain amount that would be paid for by the PRO and reimbursed by the state out of the unclaimed deposit fund, or a fund that would be created with the unclaimed deposits, at least for a certain period of time. So this is an important point because, again, right now all of the unclaimed deposits are going to clean water programs in the state. The PRO or representatives of industry will likely appear before you and say, if they're going to take on these new responsibilities, they need money for that. I may disagree with them about whether they need the money, but that's the argument that will be made. And I want to say that because we would be talking about using it to improve a bottle bill program and how it can work most effectively for consumers, for the environment, and for businesses, I'm open to the idea of using some of those funds at least for a period of time. So, for instance, they could request reimbursement for up to a million dollars a year for the first three years of taking on these new responsibilities to make sure that the updated bottle bill program works effectively. Those are not hard and fast numbers, it's an idea I'm suggesting I don't think you want to just say, Okay, you should take you, industry, the PRO, should take all of the money, of the unclaimed deposits forever. I don't think that's a great idea. I think you could say, For particular uses that are agreed upon and are advancing the goals of this program, we will allow you to take up to a certain amount, and the Agency of Natural Resources could run this kind of a program. That, I think, is sensible, and we would be perfectly willing to engage in any conversation about what makes sense there. But as a starting point, we're open to that conversation. The second major issue involves the handling fees that are paid to redemption centers. The agency has, in this case, proposed eliminating a set handling fee and instead letting the PRO negotiate an appropriate handling fee with each individual redemption center. We understand that redemption centers will necessarily have different levels of cost per container depending on the technology they use, the location of their redemption center, the throughput, how many cans and bottles are going through there, how many employees they have. There are a lot of things that will change the amount per container of the cost, essentially, that the redemption center incurs. I think the agency would say, Well, recognizing the fact that could pay them each differently, depending on what makes sense for them. However, it's a little bit hard for me to imagine a sophisticated and experienced representative from a PRO going in to negotiate with every redemption center that is not as equipped, that has not up until now had to try to negotiate what they're going to get per container. And I think there would be a power imbalance in that process that I worry about. It's not likely the case that PRO will try to go for such a low handling fee that it would cause all the redemption centers to go out of business, that's not their interest. They don't want the whole program to fail. But suppose they wanted some redemption centers to go out of business. Do we really want to just give them the power to say, We will pay you such a small amount for a handling fee that, for all practical purposes, you couldn't survive as a business on that and allow it to just happen that way? I'm not sure that that makes the most sense. I'm wondering about I'm trying to think about guardrails, I guess, for a program like that instead of just giving all the power over to the PRO to negotiate with these smaller businesses. I know of no other state that deals with handling fees in this way. There are two states in The United States with bottle bill programs that don't have a handling fee. Those are Michigan and Oregon, but neither state has independently operated redemption centers. In Michigan, they have a kind of a pseudo handling fee for retailers, which is that they get a portion of the unclaimed deposits themselves. And in Oregon, the PRO is the owner and the operator of the redemption centers, so there is no need for a handling fee. The PRO just pays for all operations. But we don't have a model like what is envisioned here by Agency of Natural Resources in this case, where we would just allow the PRO to negotiate with these independently operated redemption centers without any kind of oversight in that process. And without a model to look to, without a functioning PRO here in Vermont at this time that has met benchmarks and that has established a record of success, we remain concerned about this particular part of the proposal. So again, maybe we can think about guardrails that would address these concerns. I just haven't figured out what they may be yet, but we're open to that kind of conversation. And I don't think by any means this is a showstopper, but I think you're going to want to hear from redemption centers, you're going to want to hear from the agency, the PRO, etcetera. I'm just kind of setting that up as an area of further need for some further consideration, I guess I would say. Also regarding the PRO, we believe it should be a nonprofit organization, and I'm not sure if that was in I think there's kind of broad agreement that that makes sense, but I'm not sure if that was in the latest version of the bill. Didn't get a chance to check that. I know it's something we've talked about in the past. I think any stewardship plan that is produced by the PRO, essentially saying how they're going to meet the various goals and responsibilities that are put upon them, that should be made available for public comment and review before being set for approval by the agency. And there are a number of criteria that must be met. Some that are envisioned in the bill, we might want to suggest a couple of others. But I think again, I would expect that there would be support for a proposal like that, that there should be some public involvement in that process. Reports on progress from the PRO should be done annually, not every other year. That's in the bill that you have before you, but I believe the agency may have or may propose going to an every other year reporting process. That's something that we don't believe happens in any other state with a bottle bill, and I don't think Vermont should be the first, especially as we embark on this kind of leap of faith with the PRO. I think that annual reporting from them makes sense. One of the deers is on the move, just so you know. It makes sense for the foreseeable future. For those at home, there are a couple of deer 20 feet from us here. Pretty neat. It's worth noting, because I would say that the PROs have not had the best rollout in a couple of states in our region, including Connecticut and Maine in recent years. And I'm hoping that they'll be more successful here in Vermont, but hope is not a plan. That's why we need clear goals and benchmarks as part of this proposal. Some of them are in there now, which we support. And again, I think annual reporting makes sense for the foreseeable future for this program. With that, and there may be some more details, and I haven't had a chance to put this in a format that I can share with you all right now, Madam Chair, but we'll do so, and we may have some additional smaller thoughts. But the big takeaway here, I think, is that have a program. It's working quite successfully in many ways, but it does need to be updated. And there's agreement around major elements of what can and should be done there. A couple of areas where some more negotiation and consideration is required, that's all very possible. So I'm quite hopeful and be happy to answer any questions that

[Rep. Amy Sheldon, Chair]: you might have. Great. Thanks for your testimony. That was a great reorientation for us. I have a couple. I'm curious if you know other states do other states return their eschetes to a PRO or to the system?

[Paul Burns, Executive Director, VPIRG]: Yes. It is quite a varied approach with regard to the escheats or the unclaimed deposits. Most states I think it's fair to say that most states have a system where some goes to the industry and some goes to the state. And there are different percentages of how they figure that out. But it is not at all unusual, I can say with certainty, that there'd be some sort of split between how those monies are used. If you want, we could certainly follow-up with more clarity about how that happens in the other states.

[Rep. Amy Sheldon, Chair]: This may be a question for Michael, but I'll put it out there. Do you know how long we do wait before we determine if finished sheets has not been claimed? I never really understand that. It seems like a little bit of a black hole here.

[Rep. Michael “Mike” Tagliavia]: I don't have the answer to that, Ben.

[Michael O’Grady, Legislative Counsel]: The deposit initiator, which is generally the manufacturer of the distributor, has to report every month on on those deposits that haven't been redeemed.

[Rep. Amy Sheldon, Chair]: And so it's really just trued up by, like, the sales and the month to month? Okay. So there's gotta be a lot of kind of gray area.

[Michael O’Grady, Legislative Counsel]: There's flag. Definitely.

[Rep. Amy Sheldon, Chair]: Other members have questions? Representative Satcowitz?

[Rep. Larry Satcowitz, Ranking Member]: Paul, you said that Maine and Connecticut, I believe, had some issues standing up their PRO. And do we have a good sense of of what those were and how we might avoid the problems that they had if if we're trying to do something similar?

[Paul Burns, Executive Director, VPIRG]: I believe that in Maine, what's happening right now, I think that as I understand it and we're going want to go actually, I recommend that you speak with Brie Dietley, who has testified in front of this committee multiple times in the past, representing the industry here. There's a lot of information and has worked and continues as far as I know to work in these states. She would be an excellent witness to describe in greater detail. So, I don't want to get out too far over the skis, but I think in Maine, believe that the state may have to be stepping up to kind of run a PRO in the absence of industry, making that happen. And in Connecticut, they have had similar problems where the industry initially said, well, we could do it for this amount. It came back to the legislature, said we need more, we need more, and then ultimately failed to move forward with the program there. So, I think, again, I don't say that to suggest that it cannot happen here, that it won't happen here. But I think it's an area worthy of exploration with those who have been more involved. And they may have some ideas for how problems could be avoided. But I will say, and as the Agency of Natural Resources has said here, with the bill from the last biennium and this, that there should be a mechanism by which the state steps up to create and run the PRO in the absence of leadership by industry. And I think that is the right move. We appreciate and support that from ANR, and I think that's envisioned in the legislation that you have before you. So should you encounter some of those problems, there is a fall, there is a plan B. Nobody would prefer that, but you got to have that as a possibility, I think.

[Rep. Amy Sheldon, Chair]: We do have very thorough submitted testimony from my friend, from Bree Deeply, that's available on our webpage. Further questions? Okay, Representative Austin.

[Rep. Sarah “Sarita” Austin, Clerk]: There was a lot of information your testimony. I never redeem my bottles because I always feel good about it going to the Clean Water Fund, and I think you were making an proposal to take some of that, a percent of that, and give it to the PRO. Is that correct? I'm just wondering what percent. I didn't know if you made a recommendation and how much would the takeaways be included in the lower tier?

[Paul Burns, Executive Director, VPIRG]: Representative, it was only for demonstration purposes that I would say, you know, just to understand what I'm saying, something short of the full amount, so not 3,000,000 or more. And that it would go to cover expenses that are actually incurred as opposed to just saying we're going to give you half of the Escheats for three years. But instead, to say you come to us to say how you have spent money, you the PRO, and if that is an agreed upon expense, they could be reimbursed for that. So I think that's an important feature here. I am not and frankly, none of us around this table are best placed to really put a number on that. I think it's really, I would argue, incumbent upon industry to come to this seat and say, we've looked at the expectations that would come to us under this kind of legislation, and we believe that a reasonable cost for that would be this amount. And we would need that for X number of years in order to successfully take on the responsibilities that are envisioned here. I would expect their number would be a little high. Is a process. But I have a lot of faith in the Agency of Natural Resources. I think they're approaching this thoughtfully and carefully. And so I think it would be interesting to see what you hear from others about how much they might need and for what period of time. And I just encourage you to make sure that it would be for a specific expense, that you're reimbursing them for an agreed upon thing, that it is not open ended forever, and it not be the whole deal. And this, of course, you're going to have competing interests because clean water programs are not solved. The challenges there have not been solved. And so you want to continue to support those programs to some degree. And so I don't have a number for you. It's the short answer, representative, but those are things that I would consider if that were you.

[Rep. Amy Sheldon, Chair]: Thank you. Representative Tagliavia?

[Rep. Michael “Mike” Tagliavia]: You mentioned reuse. I think you said it was even a better option than returnables. Curious why, if you think for the environment, reuse is better, you're not here advocating for a program or at least a study to see what we can do with reusables. I'm not so old. I'm trying to just remember having reusables, both in beer, soda, milk. I'm sure there are others. We got away from it. It turns out we we were onto a good idea, we walked away from it. If, you know, if we we we don't like plastic bottles, why not be advocating to move right toward reusables?

[Paul Burns, Executive Director, VPIRG]: Representative, I would be very interested in working with you, if you'd like, for what a study might look like. We don't have the bodily industry a good question for them. Know, what would it take? What would the technology be? What the facilities that they would require if we were to put such a program like that in place in Vermont? I will say that in the state of Oregon, there are some craft brewers who have looked at using reusable beer bottles again. That's an experiment. Honestly don't know where that is right now, but we could look into that, and I'm happy to get back to you. I think we need some demonstration. We know that it can work, but it needs a significant investment of capital if you were to do that.

[Rep. Michael “Mike” Tagliavia]: And

[Paul Burns, Executive Director, VPIRG]: I am not comfortable saying that that should be part of this because I believe that that would require a lot more negotiation and conversation with the industry side here. We would not be the problem in terms of support for that. Would love to see that. I genuinely think that there are a lot of benefits there. And there are some organizations that are pressing for the reintroduction of reusable, particularly talking about glass bottles in that case. And I think that I mean, I can say sometimes some studies have suggested that consumers are not as excited about reusable bottles out of a fear that it has not been sufficiently cleaned and so forth. You know, they worked for decades. I personally don't think that's a problem that couldn't be overcome with good education, etcetera. But that is something that sometimes industry points to now as a reason why they could not go back to that. I'm not going be your problem if you would like to move forward with either a study or something more. Think in practical terms, if you were to do anything as part of this legislation, I think it would be a study of some sort, perhaps. Rather than moving forward, I just don't think we're quite ready to do that.

[Rep. Amy Sheldon, Chair]: Alright. One more, and then we're gonna move on. Representative North.

[Rep. Rob North]: Yeah. Thanks, Paul, for your presentation. So you said that our current laws relative to redemption and recycling are extremely successful, I think was the term you used. So what problem are we trying to solve by making any changes at all to the current situation? And numerically, how bad are those problems and how numerically how much improvement do we see to those serious problems?

[Paul Burns, Executive Director, VPIRG]: I do think we're seeing a number of redemption centers going out of business, which creates real problems in local communities. Montpelier doesn't have a redemption center any longer. We lost that some years ago, and it requires people to travel greater distances, so it's much less convenient for consumers. And I think over time, consumers end up seeing a program that calls for redemption but doesn't offer reasonable redemption opportunities as being more of a tax than an opportunity for real redemption and bringing them back, and I don't think we want to see that. So I think we are what I am saying is that it's remarkable that we have a redemption rate something in excess of 70% still, still a nickel, and we are seeing fewer opportunities for redemption. I just I don't believe that the long term success, I don't believe that we remain viable forever as this trend continues of making it harder and harder for people to redeem their containers and to have the nickel, you know, really work less and less. That's not addressed in this bill, but I do think that over time we're going to want to make some updates to this program. I think that having, and there is it is true that there is no entity the staffing at the Agency of Natural Resources is very, very minimal right now by their own admission. If you had someone else in charge of the program and looking at how could we make it more successful, how could we make it work better for folks and achieve higher rates of redemption over time because that's what we want to do, not see it just continually manage the decline of a program. We want to see something that's really successful because we believe it works well. Then you need something like a PRO, at least somebody who's putting that time, thought, effort, resources into making definable improvements in the program. So I think all of those things are really necessary over time. I guess the point to start out with is that this is not a complete failure. This isn't something that people hate. This isn't something that has a 20% redemption rate. Not a failure in that way. It's remarkable, honestly, some ways that it continues to succeed as well as it is right now. So this is where I may disagree a little bit with Matt Chapin at ANR, where he might say, Oh, it's really not working. It is working, I would say, but I don't think that lasts indefinitely on the trends that we are seeing, and I think that there are improvements that we can make. Even to, again, the smaller, the mom and pop stores, why not let them out of it? There really is something for everybody in making some of these efficiency improvements that are available now.

[Rep. Rob North]: So lack of convenience would, in your mind, translate directly to a loss of redemption ratios, loss of redemption. Are seeing a numerical loss of redemption?

[Paul Burns, Executive Director, VPIRG]: I think there is a some decline. I think there is Some decline. Yeah. It's not and this may owe to Vermonters interest in, you know, their support they have for this, the value of the program. But in Massachusetts and Connecticut, you saw a much steeper decline approaching 50% redemption or in some cases even lower, I think. So we haven't had that happen here. And you may recall that you had a joint hearing with the Senate side and the report. There was a conversation about the report, and the authors the consultants on that report said there would be no they didn't put it into the model that there would be any increase in redemption even with more redemption center locations? It would go from 123 now to 170. That makes no sense to me. I mean, you make it that much more convenient for people, you're going to see higher rates of redemption. I can't imagine why you wouldn't, you know? But I think it just wasn't included. Just so you know, I think we will see higher rates of redemption with

[Rep. Rob North]: the We're not seeing a huge problem.

[Paul Burns, Executive Director, VPIRG]: It's a problem worth addressing, but it's a law worth saving and improving.

[Rep. Amy Sheldon, Chair]: Thank you for your testimony.

[Paul Burns, Executive Director, VPIRG]: Thank you very much.

[Michael O’Grady, Legislative Counsel]: Good afternoon. This is Mike O'Grady with legislative council. First, I wanna correct something I just said. I said the deposit initiator process monthly. It's actually first enacted there more tight timelines, but that was subsequently revised. Though it's a quarterly deposit, not a monthly deposit.

[Rep. Amy Sheldon, Chair]: Thank you.

[Michael O’Grady, Legislative Counsel]: So, what does this bill do? You've just heard a lot of what it does, but I wanna treat it about what it does and what it does not do. It it requires the manufacturers and distributors of beverages in the state to establish a product response a product responsibility organization to run the collection and redemption of beverage containers subject to the beverage deposit. What it does not do is it does not expand the scope of the beverage containers subject to the deposit. So wine, bottled water, surf and sports drinks, iced tea, other noncarbonated beverages are not covered. This is not like the act or the bill that the governor vetoed in the last biennium does not expand the scope. It also does change the handling fee for those beverage containers that are not part of a commingling program. So right now, if you sell your container and it's subject to the deposit, you have the responsibility to go out and collect it unless you're participating in a commingling program such as TOMRA. And when top when you're participating in TOMRA, you pay a lower handling fee. The increased handling fee is an incentive for those manufacturers that aren't in a co mingling program to enter a co mingling program. Right now, deposit, the abandoned deposits are not addressed in the bill, they would continue to be deposited into the Clean Water Fund as has been established in statute for for almost eight years now. So that is really what the bill does. A large part of the bill is what the product stewardship organization needs to meet when they develop a stewardship plan. That is convenience. That is education. That is negotiating the cost to be paid to redemption centers. That is combined with environmental standards, etcetera. That's a large part of this bill, which is very common with any EPR program, extended producer responsibility program. Setting out what the stewardship plan is and what the manufacturers need to do is a large part of any EPR program. So with that generally said, I'll start walking through the specifics of the bill. You should have in front of you draft request 25Dash0991. Should have a draft number 1.1 and a date of 03/21/2025. The bill amends the requirements of 10 VSA chapter 53, which is the beverage container redemption system. The first section that's amended is the definition section. You will see that the definition of beverage is included, but it has not changed. This is important because it drives the scope of a program, so nothing is changing with regard to the scope of her products cover. On page two, you will see line three, subdivision three, the definition of container. This is changing what is considered a container, but it doesn't change the scope of the program except for on page two, line seven and eight. You are adding a size limit. So anything with a volume greater than three liters is not going to be part of the program. It's largely because of concern about how containers of that size would interact with some of the more automated technologies. I don't know if you've seen any of the automated technologies. The one that I've seen lately is basically looks like a huge laundry machine. You go and you throw your entire bag of bottles into the machine. It does a cycle, spits out ones that aren't covered, and then it spits out an invoice that you get or a receipt that you get to re be reimbursed or to go on to an account. It takes literally minutes.

[Rep. Amy Sheldon, Chair]: Where have you seen that?

[Michael O’Grady, Legislative Counsel]: I watch YouTube videos of this equipment.

[Rep. Amy Sheldon, Chair]: That you had that you went to.

[Michael O’Grady, Legislative Counsel]: Oh. It's a little sad, I know. But I only ate

[Rep. Rob North]: four months. So That's good. I grew up a facility in Montreal that had some had facilities that we got to look at, look at them and see and see how they work. It's pretty cool. Yeah.

[Michael O’Grady, Legislative Counsel]: So another thing about the definition container, it's basically any type of material being used to hold the beverage. It's gonna be anything that's made of glass, aluminum, or other metal, polyethylene terephthalates, high density polyethylene. Pretty much anything that's commonly used is going to be covered. I wanna note the definition of distributor and manufacturer. These are the persons that will be subject to the that are already subject to the deposit requirement, but will be subject to the producer responsibility organization requirements. So those are important definitions. And then on page three, line 11, you get the actual imposition of the deposit. It is not changing. It stays 5¢ for for most beverage containers. It stays 15¢ for liquor containers greater than 50 milliliters. So that is not changing. You will see on page four well, before we even get to page four, the I think you all know that the sale of liquor in the state is managed by a state agency. That state agency already has effectively a PRO. They run an organization where they go out and they collect the redeemed bottles, whatever bottle, any abandoned liquor deposit that already goes to the state. The Department of Liquor can already retains that.

[Rep. Amy Sheldon, Chair]: You say they already have their own PRO. What does that mean? I mean, you

[Michael O’Grady, Legislative Counsel]: It basically means that they're out there collecting the

[Rep. Amy Sheldon, Chair]: But you take them in with your other returnables.

[Michael O’Grady, Legislative Counsel]: Right. But then they go, and they have to collect them.

[Rep. Amy Sheldon, Chair]: Oh, at each redemption center. But they're not, like, standing up redemption centers.

[Michael O’Grady, Legislative Counsel]: No. They're not. Moving on page four, line 15. The rules authority is being struck here. It's just being moved to section fifteen thirty five, and it's not going to be as specific about what needs to be addressed in the rules. I'll point that out when you get there. On page five, this is the requirements for accepted of acceptance of beverage containers. So a retailer shall not refuse to accept from any person any beverage containers, except there's going to be some exceptions on the next page. And then a manufacturer distributor shall not refuse to pick up from a retailer that sells its product or a person operating a certified redemption center any beverage containers that are labeled and clean that are redeemed by the sensor. But then on page six, you'll see in subsection b that a retailer may refuse to redeem beverage containers if the stewardship plan if there's a stewardship plan that meets the requirements of this bill has been implemented, and the retailer's building is less than 5,000 square feet. Mister Burns referenced this earlier that basically small retailers will be exempted from redeeming if there is that stewardship plan that has been set up as operating. Similarly, when you looked at this bill last biennium, there was concern by manufacturers and distributors that were selling directly from their facility to customers, and they were looking to not have to redeem. So on page six, line seven through 10, a manufacturer distributor sells directly to a consumer from a retail location may refuse to redeem if the retail location where the manufacturer distributor is less than 5,000 square feet. So they have a small space exception as well. But then any retailer that is not exempt, a person operating a redemption center, or any other point of redemption may only refuse to redeem beverage containers that are not clean. Moving on, there's changes to the how the containers are labeled. Right now, there's a requirement that you have to put the the deposit information on the top of certain containers. That is being eliminated. You can still choose to do that, but the changes will allow the existing requirement for embossing on the container, but also on the label and then also on other approved methods secured to the container. And then you will see that is that the the label needs to show the word Vermont or the letters v t and then one of the following, the refund value of the container, the words refund value of the letters r v. The label shall be on the top, the side, barely visible location, doesn't have to be necessarily on the top anymore. And then each beverage container is gonna need to have a UPC code and a barcode so that there will be the ability to scan and redeem and identify responsible manufacturers or distributors. So each distributor shall provide the UPC and barcode as part of its beverage registration or within sixty days following 03/01/2025. Here's your first date you're gonna have to change, and there are other dates that you will need to change because this was introduced last year. And so there's just the obvious need to change those dates. On page eight, you're striking the penalty for noncompliance, but that's really a fiction because ANR's enforcement authority is consolidated in one chapter in title 10, and they're still able to enforce underneath that authority. Then you get the redemption center certification. Person operating redemption center shall obtain a certification from the secretary. It has to specify the name and location. It has to have additional conditions and requirements that the secretary deems necessary for the redemption center. That's really it. But as mister Burns referenced, the redemption centers are gonna effectively, when you are redeeming going into the future with the PRO, you're effectively gonna be meeting the redemption center requirements. And you will see that beginning on page nine with the manufacturer participation and a producer responsibility organization. No manufacturer distributor may sell or distribute a beverage container in the state without participating in an approved PRO. Then on or before 01/01/2026, again, you probably want to change the date, manufacturers of beverage containers sold or distributed within the state jail part of the Secretary to form a PRO to fulfill the requirements of manufacturers. The Secretary may approve for a period not longer than ten years the PRO, provided that it has the capacity to administer the requirements of the plan. The PRO has no unreasonable barriers to others joining the PRO, and that's a pretty common thing. You don't wanna set up these multiple product responsibility organizations that shut each other out. So if you're gonna have one, then the then these organizations need to allow for others to join it. There needs to be a website. Again, a very common aspect of EPR programs that list who is participating, all of the manufacturers, the name of each of their beverages and brands. If they fail to implement the requirements, the secretary may dissolve the product responsibility organization. And then page 10, line nine through 17, if the manufacturers do not form a product responsibility organization, ANR shall either require the formation of one of them, or it will adopt its own plan that meets the requirements of the subchapter. If the secretary administers the plan, it charges the manufacturer the cost of plan administration and the agency's oversight and a 10% penalty. So that is the persuasion for the product responsibility organizations to run their own program. Maybe they think it will be more cost effective for ANR to do it and then assess them, But you do have a backup plan here. The product responsibility program, page 10, line eighteen and twenty, is also required to reimburse ANR for the cost of overseeing the program regardless of whether or not the PRO has their own plan or the agency is doing their own plan. Normally in an EPR program, the manufacturer is required to submit a defined fee. They give a fee to ANR that pays for the administrative cost of ANR overseeing the program. And sometimes the fee is pretty substantial, dollars 10,000, 15,000 a year. This is to account for you don't really know what the cost of the program is yet. So ANR wants to have the ability to start implementing and overseeing the program, then get their costs back from the manufacturers, from the product responsibility organization. But you build in some surety to the manufacturers about what that fee is and that it can't be overcharged. Page 11, ANR annually provides an estimates of overseeing the cost of the program to the PRO. The PRO shall provide any comments to the Secretary's budget within thirty days. ANR has to respond to those comments. Then reimbursement of A and R costs shall be subject to state budgeting, and the producer responsibility organization shall not be required to reimburse any agency costs until that cost is approved as part of the agency's budget. You, the General Assembly, effectively have to approve the amount that ANR is going to charge the PRO for reimbursement. So there is oversight built into what is going to be subject to reimbursement.

[Rep. Amy Sheldon, Chair]: Michael, that happens every year?

[Michael O’Grady, Legislative Counsel]: We're to do it every year.

[Rep. Amy Sheldon, Chair]: Would come to the legislature every year?

[Michael O’Grady, Legislative Counsel]: As part of their budget.

[Rep. Amy Sheldon, Chair]: And how do our other how does the how do we get compensated for oversight of our other PROs?

[Michael O’Grady, Legislative Counsel]: The PRO, the one or a few pays a fee, an administrative fee to ANR for the cost of oversight.

[Rep. Amy Sheldon, Chair]: You know what that fee is?

[Michael O’Grady, Legislative Counsel]: It depends on the program. I mean, think think about and that makes sense because the number of manufacturers in the lighting program is, like, 30. The number of manufacturers in the household has for those products is probably close to a couple thousand. Yeah. And so the cost to administer that varies.

[Rep. Amy Sheldon, Chair]: Or does it? We'll find out.

[Rep. Sarah “Sarita” Austin, Clerk]: Yeah.

[Rep. Amy Sheldon, Chair]: Thanks.

[Michael O’Grady, Legislative Counsel]: Moving on into the minimum requirements for the plan. So on or before 10/01/2026, again, probably a date that you want to change. The PRO submits a stewardship plan to the secretary. It has to meet all of the minimum requirements. Many of these minimum requirements are the general subjects or common in an EPR plan. First is convenience. You always have a conversation about convenience, about how and when and where. But all plans have to ensure convenience. And the plan shall take reasonable efforts to cite points of redemption equitably across all regions of the state to allow for convenient and reasonable access of all Vermonters to redemption opportunity. Then they have to document that there's at least three points of redemption per county that provide an immediate return of a deposit to a consumer unless a waiver is granted by ANR. They have to have at least one point of redemption per municipality with a population of 7,000 or more that provides an immediate return of deposit, plus ANR waives. It must also have how sites of redemption are or will be cited. This document for their convenience has to have how sites of redemption are or will be cited in areas with high population density or located in centers designated under 24 VSA chapter 76 a. Those are the designated areas. It has to have fair operation and compensation to redemption centers. This is what mister Burns was referring to about the negotiation with the redemption centers on cost. Now I don't think it's really ever gonna drop below what the handling fee is. One of the reasons that redemption centers are going out of business is that they can't necessarily support themselves with just the handling fee. So I think part of what this is is not allowing for it dropping below the it's allowing for the cost to go above the handling fee, especially for some of the larger redemption centers. So they have to describe how all locations that redeem beverage containers are fairly compensated for their participation in the program. There shall not be barriers to participation, and the plan shall describe how management and sorting of containers at redemption centers is minimized. They have to describe how materials will be picked up from redemption centers on a timely basis, and how to maximize the use of the existing infrastructure establishing points of collection. They have to give education to consumers, what education efforts will be undertaken. They have to consult with the stakeholders to basically include a process for regular consultation, and it will include the redemption centers, municipal and private recycling organizations, and other stakeholders. That's really it for the content of the plan. And when you look at other EPR programs, you will see more categories of content that need to be addressed, environmental safety, where you go identifying where you are taking the product that is being recycled, making sure that those entities are licensed and following environmental standards. So there are other things you can add to this plan if you think that they are necessary. But right now, it's just those four basic categories, including what the PRO negotiates with the reduction centers. And moving on from there, there's a reporting requirement at a frequency required by ANR, not less than annually that PRO reports the following to ANR. They report everybody that's a redemption center that's participating in the approved plan and their contact information, the amount and containers and tons and material type of beverage containers redeemed, the redemption rate of beverage containers. So location and amount of beverage container material that was recycled and what products that beverage container material was recycled to, the carbon impacts associated with the plan, the cost associated with administering the plan. And that's the cost of a PRO administering the plan. It's not the cost of ANR overseeing administration of the plan. It has to have a description of any improvements made in reporting year to increase ease of convenience. It has to report efforts taken by or on behalf of manufacturers or distributors to reduce environmental impacts throughout the life cycle of the program. And have to report efforts taken on behalf of the PRO to improve the environmental outcomes of the program, a description and copy of the educational materials, and then any additional information required by AN. The plan submitted to ANR, and ANR has to conclude that all the elements are there, maximize diversion, provides convenience. ANR can approve this for a period not greater than five years. If the PRO fails to meet the beverage container redemption goals, which you'll see in a minute, secretary may require the PRO to implement activities to increase or enhance the rate of redemption. There is a program audit. All of these e

[Rep. Amy Sheldon, Chair]: I'll take a pause and see if folks have any questions on that report program. Yeah.

[Rep. Rob North]: There are, what, a dozen or so, a few more than that, states in The United States that have PROs set up for packaging. How does this list of requirements for setting up PROs relate to, say, Minnesota, I think, is considered one of the best at this point?

[Michael O’Grady, Legislative Counsel]: It's fairly similar. The Minnesota plan has more incorporated into the plan, whereas here, the reporting that has a lot of what are your environmental outcomes. They generally hit the same subject matter. They do it in a little bit different way. I mean, all EPR programs kind of follow the model is, like, 65% the same for every for every EPR program. It's like getting into the details for the individual unique products in each plan.

[Rep. Rob North]: So I just know that some are more heavy handed than some in Canada where I think more heavy handed in kind of detail or I did micromanaging, and then some were a little too hands off and it didn't go, so the Minnesota one was kind of

[Michael O’Grady, Legislative Counsel]: Yeah. I mean, you you can get really detailed if you want to.

[Rep. Rob North]: No. No. I don't want to. I wanna make sure it was more on the the hands off side. I think this might maybe work.

[Michael O’Grady, Legislative Counsel]: I I think this it's it's it's giving flexibility to the PRO to figure out how to do it and then to report on how they've been doing it and what the outcomes are. As I said, generally, done other EPR programs, you've been much more specific about what the plan has to include. There is a required audit. There's one that's every five years to look at by an independent auditor, look at the operation of the plan to make recommendations on improvement. There's also a fiscal audit every year to look at the cost of this program and to provide a transparent fiscal analysis of the PRO, its expenditures, the number of containers collected, and the amount of unfamed deposits. So you're gonna be getting from an independent third party information on how the fiscal program is working every year. The results of each of those audits is submitted to the Secretary. There isn't a specific requirement about making them available to you or to the public, but they would be public records. They might have some confidential business information in them, but ANR knows how to deal with that, to redaction or otherwise.

[Rep. Amy Sheldon, Chair]: Or the other reports do we get a battery one sent to us directly?

[Michael O’Grady, Legislative Counsel]: They're they're publicly available. I don't think they're submitted to you every year. Should I move on?

[Rep. Amy Sheldon, Chair]: Representative Austin?

[Rep. Sarah “Sarita” Austin, Clerk]: Just on page 20, line three.

[Rep. Kristi Morris]: Page 20?

[Rep. Sarah “Sarita” Austin, Clerk]: Oh, I'm sorry.

[Rep. Ela Chapin]: Yeah. Page 20.

[Paul Burns, Executive Director, VPIRG]: We're not on page

[Rep. Amy Sheldon, Chair]: 20 now.

[Rep. Sarah “Sarita” Austin, Clerk]: Oh, we're not there yet. Okay.

[Rep. Amy Sheldon, Chair]: Sorry. He didn't even know. Showing off.

[Michael O’Grady, Legislative Counsel]: On page 16, line 15, this is where you get the redemption rate goals for program. And it provides that by 07/01/2028, it's gonna be a 75% redemption rate. July 3280. July 3785. And then July 4290.

[Rep. Amy Sheldon, Chair]: It's been a Chapin.

[Rep. Ela Chapin]: I just wanna make sure those align with the audit years. These are every are every these are my

[Michael O’Grady, Legislative Counsel]: There's two audits. One every five years for the entire program. It's called the operational audit. And then there's a fiscal audit every year just on how expensive it is to run the program, the cost of the plan, etcetera.

[Rep. Ela Chapin]: I guess my question really is, do these dates and goals align with the time when data is getting collected for something like an audit?

[Michael O’Grady, Legislative Counsel]: That's a great question. I think all of these dates need to be adjusted by a year, at least. The five year plan it's really how the program's working. And I think over five years, you're gonna give them time to stand up the program, start to run it, identify weaknesses, cure the weaknesses. I think even five years is probably suitable for that. The fiscal one, that was incorporated because of the concern about the cost of this program and not knowing exactly what it would cost and whether or not you and the agency want to have more close oversight of that and to have a third party doing it so that it's transparent and reliable. And so I do think there may not be enough or a lot of information in the first year for the fiscal audit. And you can adjust that by when that fiscal audit starts. You know? Maybe give them two or three years before they start reporting annually with their fiscal information.

[Rep. Amy Sheldon, Chair]: Right. Is it really an annual audit, or is it the annual report?

[Michael O’Grady, Legislative Counsel]: It's an audit. It's a fiscal audit. And that's on page 16, beginning 03/01/2028, and annually thereafter, the PRO conducts an independent third party fiscal audit of the program.

[Rep. Amy Sheldon, Chair]: It comes after this. I figured if it was annual, it would come before then. Okay. President Morris. Thank you, Madam Chair.

[Rep. Kristi Morris]: Michael, these goal percentages I've had the honor of presenting this bill on the floor a couple of times, it seemed and to me these might be holdovers from when we were looking at expanding bottle or when we were going to advance it from 5¢ to 10¢.

[Michael O’Grady, Legislative Counsel]: Those are two very good points. The the numbers in here are the same as what they were in the last biennium. Whether or not they need to be adjusted, I think, is the conversation with ANR and the other advocates. I think

[Rep. Amy Sheldon, Chair]: it was linked to an increase to 10¢. And is that still in here?

[Michael O’Grady, Legislative Counsel]: Have Oh, there is no increase of the deposit. It means $05 The only thing that's increasing is the hammock fee for those manufacturers that are not part of a.

[Rep. Amy Sheldon, Chair]: But what happens if they don't

[Rep. Rob North]: meet the goal, I guess, is

[Rep. Amy Sheldon, Chair]: what I'm saying? We had linked it if you don't make the goal to then an automatic increase to $0.10 Right.

[Michael O’Grady, Legislative Counsel]: And earlier on, it's had said the PRO is not meeting the goal that ANR can impose additional requirements for the PRO, including education and outreach. Let me find that. So on page 15, line 12, if the PRO fails to meet the beverage container redemption rate in 1534, which is what we were just looking at, the secretary may require the PRO to implement activities to enhance the rate of redemption, including additional public outreach, additional redemption sites, or additional redemption opportunities.

[Rep. Michael “Mike” Tagliavia]: Representative Tagliavia? So do I understand these percentages to be if we don't meet these percentages or if the ROs don't meet these percentages, we're gonna assume that because they weren't returned, that they went into a landfill instead of being recycled by a private corporation, and we're still meeting our goals of environmental protection. But since the PRO is competing with other corporations and they're losing, that the people who are buying these beverages need to be penalized? If they don't mean their returns, then there's an automatic increase in the deposit.

[Rep. Rob North]: So

[Rep. Michael “Mike” Tagliavia]: that's what I thought I just heard.

[Rep. Amy Sheldon, Chair]: I just asked. That was in here. It's not.

[Rep. Rob North]: It's not. That that was previous. That's where the specific has came from.

[Rep. Amy Sheldon, Chair]: That

[Michael O’Grady, Legislative Counsel]: that that is how it it worked in the last biennium. That's you the PRO wasn't meeting goals than there was at one time an an automatic it was called the escalator clause.

[Rep. Michael “Mike” Tagliavia]: So if those goals are met here, then what?

[Michael O’Grady, Legislative Counsel]: Then that's the language on page 15, line 12 through 17. And it's discretionary authority of ANR where they may require the PRO to implement activities to enhance rate of redemption, education outreach, redemption sites, redemption opportunities. There's no automatic escalator in this version of the bill.

[Rep. Kristi Morris]: So what you're

[Michael O’Grady, Legislative Counsel]: doing instead you're not you're not putting a new imposition on the consumer. You would be putting a new require new requirements on the producer responsibility organization to enhance their efforts.

[Rep. Amy Sheldon, Chair]: Which they were already making anyway. Representative North.

[Rep. Rob North]: Yeah. So I guess that conversation just leads me to wonder why are we increasing those percentages? Heard from the previous testifier that things are going quite well, when I assumed from that, and maybe I should have asked Paul previously, that anything above the 72%, that the other remaining 28% are being

[Rep. Michael “Mike” Tagliavia]: pleasantly

[Rep. Rob North]: recycled by going through the blue green process, or at least a large fraction of it. It doesn't seem, but in other words, I asked what's the big problem we're trying to solve, the problem was not that a whole bunch of stuff is ending up in a landfill or littering the sides of the roads. Why do we feel it's necessary? I don't

[Rep. Kristi Morris]: know if this question is for you, Michael,

[Rep. Rob North]: or us as a group. Why do we feel it's necessary to be increasing these percentages? At some point, during this increase in percentages of things going through the redemption, the solid waste management folks are going to basically go out of business because we're we're taking their revenue stream away as these

[Michael O’Grady, Legislative Counsel]: Well, in the prior biennium, when you expanded the scope of the program and you you started taking more containers, that's when the solid waste management districts testified that you were taking away a significant source of the product that they sell when they can sell it.

[Rep. Rob North]: Right. So if we're worried about the little redemption centers going out of business now and that's why we need to do something, well, if we do this, we're gonna be pushing other very big successful businesses out of business here at Vermont. Right.

[Michael O’Grady, Legislative Counsel]: But also, they might be the people running the redemption centers. Remember, they're supposed to rely on the existing collection infrastructure, which is solid waste districts and the people that contract for the management of them, like the Murphs. And so they might actually become the people that are running this.

[Rep. Kristi Morris]: Mike? Mike? Yeah.

[Rep. Amy Sheldon, Chair]: It could. It could become the representative Chapin.

[Rep. Ela Chapin]: Yeah, I mean, I'm just observing what I think we're looking at some foldable language from a different time, different iteration of a bill that has some potential value to it. But I guess what I've been hearing from folks over the last couple of weeks is that modernizing the system is really meant, without the expansion elements, we're modernizing the system, really just to retain it, because we're worried, we've lost a lot of redemption centers, we're worried we're going to continue to build this redemption capacity. And I do think, I believe, and I've heard a little bit of testimony, but we don't have data that shows that redemption rates are likely to go up with a more modern system without any expansion. How much? Nobody's saying a ton. It'll really sort of depend on how convenient it is and other factors. But I heard once we modernize the system, then we're in a better position to consider expansion. And so I just wonder if maybe we want to move in a direction where instead of these increasing redemption rate goals, after five years, look at what did we get out of modernization? Where are we at now? What would it take to increase redemption rates? And then we talk about expansion. So I guess I just wonder if we could build something in here, a report back on that sort of, okay, now are we ready for that next step to actually reach significant increases in redemption rates? Just a thought that maybe this got left in here, and what could we do to try and get at redemption rate increases down the road? Might require more thinking about that expansion piece.

[Rep. Amy Sheldon, Chair]: Representative?

[Rep. Kristi Morris]: Sure. We have two systems in Vermont, so called blue bin and redemption. In this bill, the materials really

[Rep. Rob North]: are separate.

[Rep. Kristi Morris]: When you talk about the blue vents, you're talking about the glass, your wine bottles, which are not in here. You're talking about your glass jars that you have for consumer products that are not in here. There are some crossovers, like aluminum cans could be redemption or they could not be deposit containers. But is it safe that there's these two these two programs are dealing with separate materials under this bill?

[Michael O’Grady, Legislative Counsel]: Well well, not necessarily because it's up to the consumer as to how they're gonna manage the the used product. Representative Austin says she puts hers in the blue bin because she's comfortable with supporting the Clean Water Fund to where the unclean the sheets go. So that could be any type of product. It could be something so that or not. So it's it's It's not entirely accurate to say that they deal with different materials. There are some materials. Newspaper, cardboard, etc. Those are clearly blue binned, always happen, not part, no inter, no overlap with this program at all. But for beverage containers, they're they're they they can be managed through either system.

[Rep. Kristi Morris]: And there is a certain faction. You you put your deposit containers

[Rep. Rob North]: in

[Rep. Kristi Morris]: the blue. Thanks. That's what you'd like to do. There are a significant number of people that still throw it in the rubbish, and it goes right

[Rep. Amy Sheldon, Chair]: That's actually interesting.

[Rep. Kristi Morris]: They don't do either.

[Michael O’Grady, Legislative Counsel]: I I don't doubt that.

[Rep. Kristi Morris]: I I am personally aware of several.

[Rep. Amy Sheldon, Chair]: How big is your sample size?

[Rep. Kristi Morris]: I don't wanna name names.

[Rep. Amy Sheldon, Chair]: Representative Sarita

[Rep. Larry Satcowitz, Ranking Member]: Yeah. I just my recollection from when we took up the expanded bottle bill last biennium

[Michael O’Grady, Legislative Counsel]: Sorry.

[Rep. Rob North]: I apologize.

[Rep. Larry Satcowitz, Ranking Member]: It's that while the while the recyclers were very concerned about plastics in particular and some aluminum being diverted from their programs, that it would cost them some revenue. They also gave us some estimates of what those costs would be, and they didn't actually talk about not being able to run those programs, but they would have slightly higher costs. But those costs would be passed on to the consumer probably in the form of tipping fees that were a little higher. I don't remember the numbers, but they characterized those costs as really being very minimal. Didn't cause them to not strenuously object to them. But my recollection is that those increased fees that they would have to recover were really very small compared to the fees that they were anticipating having to charge anemia.

[Rep. Amy Sheldon, Chair]: Representative Tagliavia.

[Rep. Michael “Mike” Tagliavia]: Mister senator, she's coming. I I have two questions. Number one is or maybe it's just a an observation first. No matter how much we try to change human behavior, we're only going to change so much of it. That's one of the reasons why we have criminal law. The other thing, to Representative Austin's point about dropping her plastic and glass recyclable or deposit bottles in the blue bins is to support clean water. Who has looked at how has it been looked at to completely bag PRO and all the other stuff, the bottle bill, and just get rid of all that bureaucracy and all of the FTEs and just put a line item in the clean water fund and let the other stuff be handled by the private contractors because they're becoming better and better and better at it and not have so much bureaucracy.

[Michael O’Grady, Legislative Counsel]: So there would be no mandate to recycle?

[Rep. Michael “Mike” Tagliavia]: No, not to the Obviously, we'd want to recycle, and I think this in the state, because of education and outreach, that wouldn't go away. Just allow it to go through the blue bins into the MRF and be recycled that way. All the waste districts have gotten pretty darn good at getting better every day at sorting it, and the purity levels are pretty high.

[Michael O’Grady, Legislative Counsel]: That's an option, but that's what you just hired that consultant to look at. Right? And they came back and said, I don't want to characterize it.

[Rep. Amy Sheldon, Chair]: Yeah. And actually, we're kind of doing a walkthrough right now. We're not in a debate. Questions are about what is the bill addressing.

[Michael O’Grady, Legislative Counsel]: So you're on page 17, line two, beginning 07/01/2027, and annually thereafter, ANR reports to you regarding the container redemption rate for liquor bottles and all other beverage containers. And each report includes a recommendation on whether the beverage container deposit should be increased to improve redemption in either category. Then you get the rulemaking authority. Remember, I referenced that it was earlier in existing law, and you're moving it here, and you're making it less specific. It's a pretty broad rulemaking authority for them to implement rules necessary for administration of the chapter. Then on page 17, line 17, whenever you create one of these EPR programs, you're basically telling manufacturers and those that work with manufacturers to get together and decide on how they're going to run a program, which is kind of the definition of collusion, which is generally prohibited under antitrust law. So this is some surety to those manufacturers that they can basically individually or jointly immune from liability for conduct under state laws relating to antitrust restraint and trade, unfair practices, and other regulation to the extent that conduct is reasonably necessary to implement the requirements of the program. However, on page 18, lines six through 10, that limitation does not apply to agreement among the producers, manufacturers, etcetera, regarding the price of beverage containers or any agreement restricting the geographic area in which customers to whom beverage containers shall be sold. Every one of your EPR programs has language like this. The attorney general's office approved this general language about ten years ago, and so this is what we use for the antitrust language. Manufacturers will try to get something broader. Manufacturers will try to say, Hey, you need to immunize us from federal antitrust law as well. We say, We can't do that. We're not federal prosecutors. We're not a federal legislator. We can't provide that immunity. You can always work with your state laws. Section two is a public notice requirement for the stewardship plan on page 19. Mr. Burns referenced it should be available for the public for comment. It will be required to go out for notice and comment, page 19, line 16. And then on page 20, the secretary has to hold a public meeting whenever any person files a written request for a meeting. If anyone wants to to have a meeting to review the plan, they only need to request that meeting be held and AR needs to hold it.

[Rep. Amy Sheldon, Chair]: Questions? Representative Austin?

[Rep. Sarah “Sarita” Austin, Clerk]: So that doesn't make any sense to me. I mean, that the secretary has to hold a public meeting when anybody wants a public meeting. I mean, can't we limit the number of public meetings?

[Michael O’Grady, Legislative Counsel]: You can do that if you wanted to. You can so this section is part of the larger chapter on ANR public notice and comment, and there are different versions of public notice and comment that may be required depending on the type of activity that's subject to review. You you can look at those different options and see if there's a better option. Some of them don't require a public meeting. Some of them give the secretary the authority to decide to hold a public meeting, and some of them have this mandatory public meeting when requested. And you can change the number of persons that ask or if required to ask. You can do that if you would like.

[Rep. Sarah “Sarita” Austin, Clerk]: Just seems like a lot of A and R time. Maybe we

[Rep. Amy Sheldon, Chair]: could ask ANR how often that happens before

[Rep. Rob North]: we start

[Rep. Amy Sheldon, Chair]: thinking about CHIP. On

[Michael O’Grady, Legislative Counsel]: page 20, line nine, there's a report from ANR. They submit to you Report on the status of the state's recycling system prior. Now this says expansion. There's no expansion. That should not be in I mean, this was a draft from last year. So you need to get rid of a reference to expansion. And then the report includes a summary of the operation of the plan, identification of the points of redemption, assessment of whether existing points of redemption allow for convenient and reasonable access, assessment of whether the existing points of redemption are suitable for redemption, any recommendations to improve convenience, summary of the infrastructure in the state other than the points of of redemption available for management and processing of beverage containers and assessment of whether additional infrastructure that's needed. Again, this says a reference to expansion, But you still may want to request whether or not more infrastructure is needed. The beverage registration requirement for every beverage, because right now, if you want to sell a beverage subject to the deposit law in the state, you have to register it with ANR. And every redemption center needs a certification by ANR. They are going to be repealed. 03/01/2025 has already passed. But the concept is the PRO takes responsibility for those requirements because in order to participate or in order to sell, you need to be participating in a PRO. And when you're participating in a PRO, you have to list all of your brands and products. So that will be replacing beverage registration. And in order to be part of the PRO's redemption center, you have to be identified in the PRO's plan. So that takes away the need for ANR to certify redemption centers as well. And then there's a report, page 21, section five. They report recycling information. Manufacturers or distributors that are collecting beverage containers shall report recycling information to the secretary in the same manner as recycled materials are reported under 10 VSA chapter one fifty nine. The blue bin, there is recycling rates that's reported to ANR as part of that blue bin program. Manufacturers and distributors are now going to be providing that type of information as part of the PRO. Then you get the effective dates. They all need to change most likely. Some of them are already passed. Some of them you probably wanna consult with ANR about, consult with the manufacturers and distributors. That's the bill.

[Rep. Amy Sheldon, Chair]: Are there questions?

[Rep. Kristi Morris]: Representative Morris? Thank you. Michael, we keep having a conversation, my point earlier about separate opinion, we keep having a conversation about blue bin. I don't use a blue bin pickup system, private system. What is the general use of the Blue Bin system? Is it the trash haulers that come around and they're also obligated now to pick up the recycles? Or are we talking about a bin at a recycling

[Rep. Rob North]: location people don't stop in?

[Michael O’Grady, Legislative Counsel]: So it's both. You have to go back to the universal recycling law in 2015, where the mandates or the prohibitions on disposal of various categories of recyclables were added. And one of those categories is mandated recyclables, which is your traditional when you think of a recyclable, that's what it is. It's aluminum cans, glass bottles, newspaper, etcetera. So that is banned from disposal in a landfill. So therefore, your solid waste management district has to figure out a way it's going to manage those materials. And they can do that either through contracting with solid waste haulers or authorizing solid waste haulers to operate within their district, which is what some of the larger ones do. And then the hauler also has that prohibition. They can't take that material to the landfill, so the hauler needs to figure out what it's going to do with that material. In addition, the solid waste management district, of them have at their transfer stations, their dumps, whatever you call the facility. They have infrastructure for the collection of the mandated recyclables, and they charge. It's what? It's like $2 a bag in in solid waste. I don't know what else where what it is elsewhere. And so, you know, you you can choose how you wanna do it. You If would rather not do a blue bin because you don't think you generate enough or you think the costs are too high by the hauler, you can manage by going to your solid waste management transfer station and and paying that $2 and

[Rep. Kristi Morris]: That's point. There's a cost to the loop in system. If it's a track private trash haul and it comes to a a residence and picks up the trash and it's obligated to pick up the recycles, you're paying for that. So in a in a sense, there's a there's a cost to just that system

[Rep. Rob North]: if we were

[Rep. Kristi Morris]: to not do a redemption. Right.

[Michael O’Grady, Legislative Counsel]: And and the way that that is set up now, if a hauler is offering services for solid waste and for recycling, they have to incorporate the recycling costs into the cost of the general fee. Because when you did the universal recycling law, there was concern that people, if they had the option, wouldn't take the recycle and then would just put their containers in the trash in order to avoid having to manage it and avoid that extra fee. So you basically said that the the cost has to be uniform if you're gonna provide both services.

[Rep. Amy Sheldon, Chair]: Representative Chittenden.

[Rep. Ela Chapin]: Just back to what was more of a statement before from me, but now I'm gonna ask a question about it. So if we're gonna really spend this sort of five year period, if we're envisioning a five year period to really modernize the system, we get some annual information, we'll get a five year look back, and we wanna set our in this though, could we set ourselves up for being ready at that point to really consider expansion and understand the potential effects once it's modernized of the potential to expand the types of containers or utilize a higher deposit and how those types of expansions would impact the system. What would you recommend in the bill in order to be ready to do that?

[Michael O’Grady, Legislative Counsel]: Well, there's already a report back that recommends whether or not the deposit for the two main categories, liquor and beverage containers, should be increased in order to to increase redemption. So that's partly already. Whether or not to expand, you've largely removed the concept of expansion from this bill. If you wanna build it back in, I think that's a possibility through a report or or part of the audit. That could that can be done.

[Rep. Ela Chapin]: Just asking for specific information in that sort of five year reporting to give us some information to contemplate that juncture. Representative

[Rep. Amy Sheldon, Chair]: North.

[Rep. Rob North]: Yeah. Thank you, chair. I don't know if you have the answer to this, but how many other states in the Northeast have EPR programs in place? I

[Michael O’Grady, Legislative Counsel]: don't know. Don't know. How many have Bottle Bottle there's there's Maine, Massachusetts, Connecticut.

[Rep. Rob North]: For for bottle bill.

[Michael O’Grady, Legislative Counsel]: So, course, require a PRO. I I don't know off the top of my head.

[Rep. Rob North]: It's just Maine. I'm not sure if any other

[Michael O’Grady, Legislative Counsel]: I don't think Massachusetts has one. I would have to check-in Connecticut.

[Rep. Rob North]: I just wonder what I don't know if you would know or not, but what what would be the implications of Vermont trying to do this also surrounded by states who don't? I mean

[Paul Burns, Executive Director, VPIRG]: Well, remember Would it be a challenge for us?

[Rep. Rob North]: Would it not make a difference? So Well, just one.

[Rep. Amy Sheldon, Chair]: This this suggestion came from the manufacturers. Right? So you assume that they can take it up. Even

[Rep. Rob North]: though we're just 600,000 people surrounded by states of many more. Well, we yeah.

[Rep. Amy Sheldon, Chair]: We currently run our bottle bill, you know, our redemption program.

[Michael O’Grady, Legislative Counsel]: I I

[Rep. Amy Sheldon, Chair]: I think there is a report on the universe of these. We have I think in our we can there's only 12 bottle bill states. There's not that many bottle bill states. And then of those, how many do it with a PRO? Fair questions. Are very few, and the folks who want to use recycled material pursue the material from bottle bill programs to meet their corporate goals on using recycled materials. So super important to remember the fundamentals of why the bottle bill is actually cleaner material that is desired among those who are reusing materials.

[Michael O’Grady, Legislative Counsel]: And I will say whenever you do an EPR program, there's a criticism that it's going to increase the cost to consumers. And I can't say that it's never happened, but there hasn't been a considerable increase in any of the programs. Like, TVs, they said the TVs were gonna go up by, like, a $102,100 dollars. In fact, TV costs have gone down. And and so there's there are definitely cost considerations, but I think sometimes, well, I would just say that I haven't seen them play out much at all. Like, the biggest concern was then the lighting bill, and you've seen lighting costs go down because of LEDs and the programs sent sent them. And so it's it's hard to say how those costs get passed on. I'm sure that they do get passed on. I'm not naive enough to think that the costs are not being passed on. But, you know, the only program where you do have a fee is the paint program. And because they were concerned that they wouldn't be able to turn over their product, there wasn't gonna be a big market for the recycled. There still is a market for it. They do recycle it, but they were concerned that they wouldn't be able to turn over the product like the battery people do or the lighting people do or the e waste.

[Rep. Amy Sheldon, Chair]: Any more questions for legislative council? Not seeing anything. Thank you, Michael. Alright, folks.

[Rep. Sarah “Sarita” Austin, Clerk]: Representative Austin? Have a question for you. If we put testimony on the technology that's coming that we think is a much more efficient, I believe this morning.

[Rep. Amy Sheldon, Chair]: So we took a lot of that testimony last year, and that's where I would say, can you revisit what we've seen already before we ask for folks to come back again?

[Rep. Sarah “Sarita” Austin, Clerk]: Okay.

[Rep. Amy Sheldon, Chair]: That would be really even right now, we're going to have half an hour before anyone needs to be anywhere. I'm going to take advantage of that and look back at testimony we took last year on myself. Then I want folks to say, like, if there's a new topic you need more information on, let me know.

[Rep. Rob North]: Relative to this topic.

[Rep. Amy Sheldon, Chair]: Yeah. Yeah. Relative to this. Alright.

[Michael O’Grady, Legislative Counsel]: Has has ANR testified yet? Because I'm sure Matt's gonna

[Rep. Amy Sheldon, Chair]: We have not in, but I think we'll we'll need to have him back in after your walk through Right. To address some of the more specific issues. But we did

[Michael O’Grady, Legislative Counsel]: I mean, the dates, I'm sure, is something that he's gonna have significant interest in.

[Rep. Amy Sheldon, Chair]: Thank you.