Vermont Legislature SmartTranscripts:

[Chair Amy Sheldon]: Steve Collier is unable to make it. Right?

[Unknown committee member (possibly Vice Chair Larry Labor)]: Okay.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: And we're live.

[Chair Amy Sheldon]: And we are live with Laura

[Rep. Larry Satcowitz (Ranking Member)]: Hello. Good Good

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: I'm morning. Laura DiPietro. I work at the agency of agriculture. I am the director of water quality, and I have been there for twenty one years now managing this. So June.

[Chair Amy Sheldon]: '32.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: June. Well, there's not much I mean, this is obviously A and R's house keeping calls. And so there's not much that the agency of ag has as input on this. I think my understanding, there's really only two things. And I believe ANR has already requested a retraction of one of them. I just don't know all my page numbers.

[Chair Amy Sheldon]: One one eighteen, hopefully.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Which one do I know? I don't have the same page. Page 20. Page 18. Sorry, I thought you said Yep. Yep. So that one, I understand ANR has asked to have removed, which that works. And then the other one is the cow calf, which is relatively minor. But it's just the way it was originally is the way the federal law is. So it makes sense to keep it with the federal law, essentially, the original, not the edit. And I believe ANR is my understanding is ANR is supportive of that as well because it aligns, again, with the federal. So those are the only two comments that we would have, but I'm happy to answer questions.

[Chair Amy Sheldon]: Jason?

[Rep. Larry Satcowitz (Ranking Member)]: On the cow calf piece, what we were told by ledge I was told by ledge counsel is that our rules no longer allow the slash.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: For cool or whatever. Right

[Rep. Larry Satcowitz (Ranking Member)]: now, I think the plan is for it to be switched from an or to an and.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Yeah. So what it is meant to be is that, just conceptually so everyone understands it, is that a baby is with its mother and counted as one until it is no longer dependent on its mother, and then they are two, if that makes sense. So however you edit it, just make sure it covers that because that's how the federal covers it is that a cow calf is a pair, meaning they are one until they are independent of each other.

[Rep. Larry Satcowitz (Ranking Member)]: So I think we're gonna use the and. And to me, that makes sense. And, like, when I explained that, Yeah. Council agrees that it should be an and if we can't use the

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: But, again and, you know, obviously, you all can follow Ledge Council. But verbatim, it's the same as the federal the way that it originally was, which is what ANR has to follow, which is the federal. So

[Chair Amy Sheldon]: Other questions. Representative Pritchard.

[Rep. Christopher "Chris" Pritchard]: So I was just curious as how the stakeholder meetings were going. It's my understanding that they would like those to continue.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Yeah. So I'm a member of the stakeholder process. And immediately somehow, you know, the way the process is structured, I'm not involved in every conversation because sometimes the farmers might talk independently with the facilitator or talk with the environmental advocates or whoever. We all get kind of shifted into different conversations, which is appropriate because sometimes it makes sense to have people be able to feel that they can share more. So I can't say for sure everything, but what I can tell you is I'm seeing an incredibly educated group come together about this topic, which for someone who's done this for twenty one years, very much welcome having the stakeholders be as engaged as they are at this point because I think it's a very important conversation. I do think that, you know, at least my experience at the agency of agriculture for the years that I've worked there, in my opinion, if you're going to make a regulation and if people understand it and were part of the process of building it, they will embody it and implement it much better than if you just tell them to do x, y, or z. And then they tell you later, well, you can't actually do x, y, and z. That's great. You made that from your chair in Montpelier, but that doesn't work. And so I've always had, at least in my tenure, lots and lots of meetings and lots of engagement with the farm community. When we revised the required ag practices in 2016, I had over 90 public meetings and went to different farmers. Took me a year and a half to communicate and get to a role that I thought made a lot of sense.

[Chair Amy Sheldon]: And that includes, you know, meeting

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: with advocates, meeting with the everyone. But so I think it's really important, and I'm glad to see that the farms want that and want that space to be able to have that because they are not you know, you hear all the stories of history. Right? This house used to be filled with lots of farmers, and it's very different today in terms of their voice and their opinion. And so this is one space that they can have that because in the end, it doesn't affect them more than anybody else, and it needs to make sense that they can do it or else no one's gonna be successful.

[Chair Amy Sheldon]: Thank you.

[Michael O’Grady, Legislative Counsel]: Any other questions? Representative North?

[Rep. Rob North]: Yes. Thank you. Alright. Thanks for coming in. Specifically on the removal of item four on page twenty eighteen, which says the Secretary determines in the Secretary's discretion that a CAFO permit is required. That obviously is one of the an addition under the category where a large CAFO shall not be required to have CAFO permit unless one of the following conditions are met. So that's the fourth condition being added in the bill. Is is is that a condition that is consistent with the EPA current EPA law? The one that's being added there, is that consistent with current EPA law, or does it go beyond it? Or what's the situation?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: I will answer my understanding of the federal regulations. In federal CAFO, you have to have a discharge to be required to get a permit. You can always ask for one, right, and get one voluntarily. But for the state to tell you you have to have a permit, you have to have a discharge. So and and the iterations of how CAPO went along to take you on a history tour is that, you know, EPA originally, moons ago, tried to say, like, if you are large, you are a CAPO, and therefore, you need a permit. And then, you know, they had tried to apply that to medium farms. And so but mediums, they said, but you actually have have a discharge. So they started with large just by default, are in medium, you have to have a discharge. And there's been court cases that have said, no, everybody has to have a discharge to be required to get permit. And so that ability on line 18 to say that it doesn't have to relate to a discharge is not the federal requirement. So that would be exceeding the federal requirement.

[Rep. Rob North]: Really exceeds.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: In my understanding.

[Rep. Rob North]: Might continue. Did that get added?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Do not know.

[Rep. Rob North]: Was it a request from the agency?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: At of agriculture?

[Rep. Rob North]: Yeah. What's the request from the agency? You

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: would have to ask them.

[Rep. Rob North]: You would have to ask them. I'm tempted to ask you what what your what your opinion is on why that might have gotten out, but maybe that I shouldn't ask me, so that's probably not

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: I I have no knowledge. All I can tell you is that, yeah, the way I read it, it it the way it currently writes is that all large firms could potentially be told to get permits regardless of a discharge, which is not what the federal standard is. The federal standard is you have to have a discharge to have a permit required.

[Rep. Christopher "Chris" Pritchard]: Representative Pritchard. But I think in in one during committee, we were told that that came from the EPA. So that's really not the case. It it it didn't come from the EPA. It's not a federal requirement.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: I I EPA communicates with the ANR on what they need, and so you'd have to ask ANR.

[Rep. Christopher "Chris" Pritchard]: Okay. But ANR, you said ANR is okay with not having this?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: My understanding is that they've sent an email to a committee last week to remove it. Yeah.

[Michael O’Grady, Legislative Counsel]: Any other questions?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: And just if I could, just real high level, just share with you. Because working I've worked in Vermont for many years, I've worked across with other states in the country. And I just want to make sure that you see what you have in Vermont as a regulatory structure for agriculture. Because a lot of other states don't have any other rules except the federal rule. And the federal rule is very, very narrow. And in Vermont, this body created and the agencies have implemented a very broad, very overarching regulatory structure all the way down to the smallest farms. And so while you have to have a discharge to get a CAFO permit, the risk of a discharge or the potential for a discharge is all still regulated in the work that you've done with the medium and the large farm regulations, which is operated by the Agency of Agriculture. And so you have all these safety nets. And then you also have the required ag practices underneath that. And so you have CAFO, medium and large firm, and RAPs. And so you have three layers of regulatory oversight on your farms in Vermont, which is not what it is in other states. So I just want you to hopefully appreciate the ability to make sure that water quality issues are addressed.

[Rep. Sarah "Sarita" Austin (Clerk)]: Was gonna ask, I'm assuming when you look at the stats on water quality, the biggest contributor to phosphorus is agriculture. And I'm assuming maybe some other farms in the rest of the country, they don't discharge into water. So I just wonder, living on Mallins Bay and just living South Of St. Albans Bay, the amount of destruction to the water in those days due to agriculture discharges know, it's very concerning. I think it's improving. Mhmm. You know? But it is I think it is due to, like you said, the water quality.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Yeah. I mean, there's states with real challenges. There's no question. Because everybody generally has some water. There are certainly some places in this country where water is much more limited. But it usually rains in most places where you're going to have livestock. And so there are real challenges. Because, for example, some other states really struggle with groundwater and not having the protections of that because the federal doesn't do anything with groundwater. The agency of agriculture has authority over groundwater, and it's something we monitor in the state. Every time we do an inspection on a farm, we are taking samples to to check on that stuff. And so and we do have some areas where our soils are are just right that, you know, nitrogen can go down into the soil. And then we work with the farms to change practices and to make sure that everything is tight so that nothing leaks out. So those are some of the protections that are in addition. But the one thing to keep in mind, and and I would agree, I mean, we have lots of data. We have a full dashboard that I've shared with you in the past to show you what farms have been doing. There's been a lot of progress. Mhmm. If there's any sector out there that is just knocking this out of the park, it is agriculture. And again, I go back to like your question with the stakeholder. I truly believe it's because they were educated, they were engaged, they were brought along the way, and they knew that they needed to make this. Because when we changed all that, we made a stakeholder process that lasted about a year and said, look, we wanna change this. How can we change this? And and, you know, so we went through that process. But one of the biggest challenges is legacy stuff. Right? We had all of these practices in terms of or policies is a better phrase and not practices for many, many years on agriculture. Especially like St. Albans Bay is a great example. Some of the backwater areas, there's

[Rep. Larry Satcowitz (Ranking Member)]: a lot

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: of phosphorus in the bottom of that area that is in the water in the sediments. And so we know the cycles of lakes, that they will release that stuff. And so even if you shut off the valve on the land, you're still going to see algae blooms. And so it's an interesting challenge. The farms can do what they can do, but it may not always look how you would expect it in terms of the rate of progress.

[Rep. Rob North]: Just if you could repeat for us what the three layers of oversight that the farms in Vermont have that is different from what other states experience reduced by 90%?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: So across the board, all states have to have CAFO, which either it's operated by EPA or it's operated by a state. And so Vermont has had that for many years. And then below that, we have what we call nonpoint source rules. So, again, these are in this state administered by the agency of agriculture. That's common in other states. But our rules are called medium and large farm rules. So they're non discharge permits. So we provide permits to farms to make sure that they're implementing all these practices. We, you know, like for instance, every single year, we go to a large farm and and do a full inspection of the facility and all the fields, medium farms every three years. And so those medium and large farm regulations are in place, which a lot of other states don't have that. So either they're covered under CAFO or they're not. And then below that, we also have the required ag practices, which applies to every single farm, including those medium and large farms. But it could even be somebody down the road with some horses. It's everything that's in that. And so many states don't have that level of protection. And that's where a lot of the groundwater stuff is in there. And so having performance standards, like they have erosion standards. They can only apply manure so close to the streams or ditches and must have vegetation in between those areas between the streams and the ditches. Like, as an example, CAFO, you can plow right up to the water. Right? Which we you know, when I first started the shop, that's what was happening in some places. And it's not good. You have erosion into the water directly. And so there's a lot of practices that have been placed. There's years and years of regulation that have been overlaid where, you know, especially some of our farms, some operate in New Hampshire. There are no nonpoint source rules in New Hampshire. Some operate in New York. There are nondischarge permits like our medium and large farm permits in New York, but they only apply to 300 or more cows to where we apply it at 200 or more cows. So every state is so fascinating. It's they're all a little bit different, but they all generally try to do similar things. But having that nonpoint source net is not always consistent across states.

[Rep. Rob North]: I can just continue. So of those three layers, within the the top one being CAFO, my understanding is we do not have any CAFO permanent requirements involved. Right. Yeah. A and

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: R has not issued any permits

[Rep. Rob North]: to CAFO. Hasn't nor has EPA. Right? Yep. So we don't, in practice, don't have anything going on at that top layer.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: But you do have I mean, in my role that I've been in, EPA has come up here and inspected farms ever since I've worked here. And so often, they'll come up and they'll do somewhere between five to 12 farms and do those visits. And then A and R has especially, I think it was 2008, there was a de delegation petition. And A and R at that time didn't have anyone in a position dedicated to CAFO. They did have three staff that we worked with that were in wastewater. And they would do inspections with us regularly or do them on their own. And then in 2008, after the first de delegation, they got some positions dedicated to it. So they've had people on farms doing work to oversee that program for decades at this point. So even though there's not a permit, it doesn't mean there isn't activity.

[Rep. Rob North]: Activity occurs as a result of EPA's ultimate oversight, maybe doing auditing or whatever you might want to call it, check on their delegation to the states to make sure we're doing so.

[Rep. Larry Satcowitz (Ranking Member)]: Absolutely, that's what they've done. Okay, thank you for this question.

[Rep. Sarah "Sarita" Austin (Clerk)]: Awesome. Like men from makeup,

[Rep. Larry Satcowitz (Ranking Member)]: and I asked about that.

[Rep. Rob North]: Can

[Rep. Sarah "Sarita" Austin (Clerk)]: you explain why, I know they're asking for recognition as a lake in need. Can you help me understand what is not occurring to protect that lake?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: I would definitely ask DC, like lakes and ponds type people. And Neil Cayman can certainly answer it. But, you know, our our role is more typically if that does occur, what is the role that we need to play? But we do track information on Lake Memphremagog, and we do have separate stats on that on how we're doing in terms of progress on the TMDL. It has the same challenges that the whole state has in that space. And so we do the regulations on the farms. We do the inspect you know, we do all the work the same in that area. I think the question is is is if they get that designation, will there be additional layers that need to be added? Just from experience, you know, with late Carmine crisis, when that occurred.

[Rep. Larry Satcowitz (Ranking Member)]: It

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: really stimulated a lot of public input and education and conversation, which I think was incredibly helpful because sometimes you get to where people get in loggerheads and they don't want to talk to each other, and it did force the conversation. I can't say that any practices change, right? Because they were all being implemented, but it was just that education about what is occurring and that confidence, right? Like that's the biggest thing that's hard. We can all listen to everybody have rhetoric, but we don't all always look at the data every day to see, like, what's happening. And so when you get those people in, they get that chance to finally see, oh, I didn't know you were doing that. And so that's really what I think it opened up, which was very, very useful in that space. So but, again, you know, when you look at the regulatory structure that is in place, it's pretty robust. You can always make more, but it is stronger than many, if not most states. And and so it just needs to be implemented as as you know, and we are implementing it. It's not to say that we're not, but it gives that spotlight to make sure that people see that it's being implemented. Thank you.

[Unknown committee member (possibly Vice Chair Larry Labor)]: Thank

[Rep. Rob North]: you. A little confusion, and I'm assuming it's on my part.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Nope, don't. Please don't, this is a very confusing space.

[Rep. Rob North]: Yeah, You must have a discharge to acquire a cable. Aren't there firms in the state that has discharges? So they if they have a discharge, don't they have a permit?

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Yeah. Well, so my experience in working with other states is, yes, you have to have a discharge if you have a permit or be told you have to get a permit. Ironically, you can't have that discharge most likely under that permit. Right? It would not be allowed.

[Rep. Rob North]: Right.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: But the concept of of a CAFO permit and what it allows you because it's called a discharge permit, is when Noah's Ark comes

[Michael O’Grady, Legislative Counsel]: You're given permission.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Then you're given permission. Right? But underneath that, you cannot have a discharge. So the kinds of discharges that occur are not kinds that would be allowed, typically, when we talk about, like ANR and ag, you know, we have a relationship where we send referrals and we've sent, you know, well over 200 referrals to ANR for things that might be a discharge. And so their role is to look at that and say, did waste go into water? Is there a discharge? Right? And, again, my experience with other states is and, you know, mister Brady could talk more about it, but there is also legal cases that have said, basically and EPA has memos that have said, if you fix it and you can show that you fixed it, then you no longer have discharge, then you no longer need permit. And, you know, admittedly, it often takes a little bit of time to put a permit together. Right? There's there's a lot of public notice process. The farmer has to put all the details together so that they can present all that for public notice. So it's not unrealistic to think it could take six months to issue a permit. And in that six months, that farmer can easily fix that in many instances, especially if it was an overtopping manure pit. Because they didn't manage it, it didn't mean they didn't have the infrastructure. They just didn't manage it. They just have to draw it down. The problem is solved. And so then to suggest that someone is required to get a permit, I think legally they can say, I'm not required to get a permit. And so that's the challenge, is most states have looked at it and said, it's just easier to fix it. Because that's the goal. The goal is water quality, not necessarily always paperwork. And so the experience is that most states land in that space where they have permits. They have fewer farms in them because they get farms to get it fixed. So so for Vermont to have these, you know, these situations, these situations are all under enforcement. And we can look back at the cases, but they should be resolved. So that's the process. And you can look online. ANR has all of their enforcement actions online. So you can see where they've taken action and how they've managed that To say, the latest one that came out was, you need to do this by this date, or else you need to get a cake permit.

[Rep. Rob North]: I suspected the confusion was one.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: I don't think so, Kristi. It's very, very, very challenging.

[Rep. Rob North]: Thank you.

[Rep. Larry Satcowitz (Ranking Member)]: Yeah.

[Chair Amy Sheldon]: Any other questions? Seeing none, thank you very much for your testimony. No, appreciate

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: thank as well. Always here, happy to answer any questions you fall. And certainly, I hope you bring the farmers in to the stakeholder if they have stuff that they want to talk about after it's done. I think that would be really helpful for you all. It's not common. The farmers get to come to this committee. Know the other ones.

[Michael O’Grady, Legislative Counsel]: Thank you. Thank you.

[Chair Amy Sheldon]: Hey, members. We're gonna swing a little early into the next testimony. Michael,

[Rep. Christopher "Chris" Pritchard]: for you.

[Chair Amy Sheldon]: Hi, Michael. Good morning.

[Michael O’Grady, Legislative Counsel]: So this is Michael Gray with Ledge Council. I'm here today to talk to you about a redraft of the bottle bill. There was a request for ANR to go through the draft bill from last year and make recommended changes to the effectively setting up the producer responsibility organization. And this does that. It's strap 2.1 with the February 5 date, and then 10:37AM time does that. It also clarifies how the redemption system works for liquor. That was kind of embedded in the chapter previously and not as transparent as it could have been, and A and R has proposed language that would make it more transparent. Maybe the biggest part of this draft is that it would allow for, I would say, diversion of some of the abandoned beverage container deposit funds from the Clean Water Fund to, the solid waste management account and the waste management assistance fund in order to provide grants to manufacturers and distributors who are effectively the product stewardship organization that is running the extended producer responsibility program. ANR has other language that would then change that diversion further, but that's not in this draft. So with that said, I'll just start stepping through and I'll focus mainly on the changes that ANR is proposing. The bill amends the chapter in title 10 related to the beverage container redemption system. The scope of the program is not changing. Unlike previous versions or attempts to amend the Vital Bill, it remains beverage, beer, or other mild beverage mineral waters, mixed wine drinks, soda water, and carbonated soft drinks in liquid form. It does not include iced tea. It does not include hard cider. It does not include wine, etcetera. That includes juice. The definition of container on page two is pretty much anything that contains a liquid that's a beverage subject to the chapter in any type of material. There is a size limit proposal, page two, line seven and eight. Carbonated beverage containers with a volume greater than three liters will not be part of the program. Moving on to page three, line 11, you're in the section related to the beverage container deposit. No changes here initially. The most containers are gonna have a 5¢ deposit. Liquor containers will have a 15¢ deposit. The previous version of the bill had a requirement that Department of Liquor and Lottery report on the tonnage collected and their redemption rate for liquor bottles. That's being moved to section fifteen twenty seven. It's not going away entirely, but it is being removed from this section. That's why on page three, line 20, you'll see some yellow highlighted. On page four, there's clarification. Well, there's two changes here, lines five and then line six through eight. First, the handling fee for those containers that are not part of a co mingling program will increase from $04 $05 Otherwise, the handling fee is going to remain $03 and a half cents for containers in a co mingling program. However, the handling fee, page four, line six through eight, will not apply to beverages that are covered by a stewardship plan approved by the Secretary. That does not mean the redemption centers and the retailers that are doing redemption are not going to get paid for their work. They're just gonna have to negotiate that up with the product stewardship organization as part of the plan. So there's no default handling fee handling fee or basically reimbursement for the cost or expenses that a redemption center incurs will be part of that plan. Moving down on page four, line 12, the current rules section is being struck. Rules is just moving to fifteen thirty five and will be much less detailed. There will be a a broader grant of rulemaking authority in '14 in 1535. Then you get to acceptance of containers, page five, line 12. Manufacturedistributor shall not refuse to pick up from a retailer that sells its product or a person operating a redemption center any empty beverage containers sold of the brand or type or kind sold by the manufacturer distributor or refuse to pay the retailer the refund value of a beverage container. The retailer may refuse to redeem beverage containers if stewardship plan is has been adopted and the retailer has a building that is less than 5,000 square feet. And then on page six, lines three through six, the manufacturer distributor that is engaged in direct sales will not have the requirement to redeem if their site is less than 5,000 square feet. That can move you to page six, line eleven, fifteen twenty four, and the labeling requirements. So the label has to show the letters Vermont or VT, and it has to show the refund value. In the previous draft, there was three additional alternatives. Instead of just saying the refund value, it could say RV or refund value or some other label designation. That is being removed. It's now just gonna say what the refund value of the container is is, which typically will be 5¢. And then, the label,

[Chair Amy Sheldon]: we're

[Michael O’Grady, Legislative Counsel]: and for certain containers right now, the label has to be on the top of the container, but it can be difficult to put that label on the top of the container. So if you've seen, like, the the little bottle caps on the on some of the aluminum beer containers. It's it's kinda hard to get it on there at at the one eighth inch type size. So this language from page six going on to page seven will allow the manufacturer distributor to put it on another place on the bottle where it's clearly visible as approved by the secretary.

[Rep. Sarah "Sarita" Austin (Clerk)]: Yeah. You know the cost to mandate those for making that change? Like, every time you make a change, do you know what it costs?

[Michael O’Grady, Legislative Counsel]: No. I I don't. But the they'll be able to basically pass through their existing stock and Okay. Then redo their label and or their embossment.

[Chair Amy Sheldon]: Okay.

[Michael O’Grady, Legislative Counsel]: So it's it's not as if their stock in Vermont is going to get warehoused and never be sold. And they have discretion to allow even beyond effective dates to allow the sale. Was it a can of water a couple of years ago? And they manufacture, like, 10 thousands of them, and it they had just a little bit of carbonation in them. And they didn't label it, and they let

[Chair Amy Sheldon]: them sell it.

[Rep. Larry Satcowitz (Ranking Member)]: Okay.

[Chair Amy Sheldon]: So

[Rep. Larry Satcowitz (Ranking Member)]: Great. Thank you.

[Michael O’Grady, Legislative Counsel]: Page seven, line three, there used to be a requirement in this section about the container having a UPC code and a barcode. That's being moved to the stewardship plan. It's not going away. It's just going to be requirement of the stewardship plan. So page seven, line 13, This is where you get that transparency about the redemption of liquor bottles. This is replacing what would have been a a repeal of, an antiquated penalty section, and it is now going to be about redemption of liquor bottles. So notwithstanding any other provision of the chapter to the contrary, so if there's anything in this section that conflicts with other provisions in the chapter, this section will control redemption of the beverage containers of volume greater than 50 milliliters that contain liquor shall be subject to the following. There will be that deposit. You already saw the 15¢ deposit on each container sold at retailer and returned to the consumer. On page eight, you'll see the handling fee. They will pay a handling fee of 3 and a half cents just like the the containers in a in a commingled system. Page eight, line four, the retail redemption. Retailer shall not refuse to accept or refuse to pay the refund value unless the container is not they can refuse if it's not clean, broken, or has an exemption. And then liquor and lottery shall not refuse to pick up empty beverage containers subject to the section, pay the refund, or pay the handling fee. Page eight, line 11 through 17, they are directed Liquor and Lottery to coordinate or allow to coordinate with and compensate the PRO to collect beverages subject to the section at points of redemption. So if liquor and lottery doesn't wanna be the one going out collecting, going out to, you know, Far South Bennington or or Far Northeast Callis or Canaan, they can negotiate with the PRO to for the PRO to collect the liquor bottles at certain locations or potentially statewide if it's more cost effective. But those containers will be subject to the handling fee. So liquor doesn't get exempted from the handling fee. So remember, if you're a regular container and you're part of the PRO, no handling fee, but the stewardship organization negotiates the cost, the payment to the redemption center.

[Laura DiPietro, Director of Water Quality, Vermont Agency of Agriculture]: Last question.

[Chair Amy Sheldon]: Like, representative.

[Unknown committee member]: Michael, earlier on on on page four when you were talking about the handling fee for the for the for the PRO, and you you talked about the PRO, but you also talked about the commingling agreement. And I'm wondering what the relationship is between those two things are gonna be if if this were to go into effect. So my impression, which I'm thinking maybe is wrong, is that if if we have a PRO, then we wouldn't have a we wouldn't need a commingling agreement because the PRO would be taking on that responsibility.

[Michael O’Grady, Legislative Counsel]: That's exactly correct. I think the entity that runs the commingling program right now will probably be the contractor to run the the stewardship, the PRO. And, I mean, probably, who knows? But I think they'll be. So most of those containers, everything that's in the commingling is likely gonna go into the PRO.

[Unknown committee member]: So we but we keep the language of the 3 and a half cents for commingling in the bill in case things don't quite work out that way.

[Michael O’Grady, Legislative Counsel]: Oh, and and you have the there's debt dates built into the PRO. You're gonna there's a couple years before things are gonna be fully implemented. And when it's fully implemented, you can come back and look if you need that language anymore or not. But it's a good point. Was like, it's you're kind of in a transition, and you have to do both until it's fully tran transition.

[Unknown committee member]: Thank you for that explanation.

[Chair Amy Sheldon]: K. Representing Ricky.

[Rep. Christopher "Chris" Pritchard]: Michael, who who has ultimate you mentioned that the if the liquor lottery doesn't wanna deal with the containers, they reach out to PO to have an agreement. Who ultimately is responsible for taking, seeing that they remove those from the redemption center? Is it liquor and lottery? I mean, are the PROs gonna be required to, you know, if if liquor and lottery says, hey. Wouldn't we don't wanna deal with this, so you're gonna deal with this. You you said negotiation or

[Michael O’Grady, Legislative Counsel]: Right. It'll be an agreement. It'll be a contract. They they will, and if the PRO doesn't wanna do it, they won't do it. And the responsibility ultimately is with liquor and lottery. Okay. It's just how the manufacturers are now contracting with the contractor to run the commingling program. You know, the manufacturer still has the ultimate responsibility of complying with the the bottle bill in Vermont, But for collection, redemption, etcetera, disposition, they've contracted with somebody to do that. And so the the Department of Liquor and Lottery could do that just like they were a manufacture they effectively are a distributor. Right? They they are every bottle of liquor goes through DLL. And so they could contract with the PRO to do to complete their requirements for for redemption of

[Unknown committee member (possibly Vice Chair Larry Labor)]: K. Thank you.

[Chair Amy Sheldon]: Thank you, mister chair. Michael, on 09:11, Department of Liquor and Lottery may coordinate with the compensator, PRO, to collect beverage subject to the section of points of redemption. They can't refuse. They must they can't refuse. They must pay the refund value and pay the handling fee. Do they pay a handling fee now? Because this is New England. Right?

[Michael O’Grady, Legislative Counsel]: This this is part of the transparency. Right? This is they do pay a handling fee now. Okay. But it's you don't see that in the existing law, but this is to provide the transparency about how Okay. Liquor redemption

[Chair Amy Sheldon]: works. I thought they did, but I I just no. I'm thinking ahead. This is looks like new language, and that that's you've explained it. So thank you.

[Michael O’Grady, Legislative Counsel]: So should I move on? Yes. Page eight, line 18. One of the things that the current lottery will do just as the PRO, they will have performance goals and reporting. They shall be subject to the redemption rate goals established in section fifteen thirty four. Those are those dates, like 75% redemption by 2028, etcetera, and we'll review them in a minute. Then beginning on 01/15/2027 annually thereafter, this is where that report that had previously been in that section about the deposit. This is where it's being moved, and they will report the amount and tonnage of liquor bottles that the department collects in the previous calendar year and the redemption rate for liquor bottles in the previous calendar year. So then you move into the redemption center certification. There's a change here on page nine, line 13 through 15. If the if the certified redemption center redeems more than 20 250,000 containers per year, They are a requirement that they they participate in an approved Come England program. That is being that's being struck. It's not really enforced anyway. And then on page 10, you get to the PRO and and how this is going to work. And it's it's pretty similar to most of the extended producer responsibility programs you have seen so far in the state. So first, there's a sale ban. No manufacturer, distributor may sell or distribute a beverage container in the state without participating in an ANR approved producer responsibility organization. On or before 01/01/2026, and so this 2026 date was changed since last year. Manufacturers or beverage containers manufacturers of beverage containers sold or distributed in the state apply to the Secretary to form a PRO. They have to. And then the Secretary may approve for a period not longer than ten years at PRO if it has the capacity to administer the requirements of the stewardship plan. There's no unreasonable barriers to other producers, manufacturers joining. And then you go on on page 10, line 19, going on to page 11. After approval, the PRO has to maintain that website with the name and business address of each manufacturer participating, the name of each beverage and container covered under the plan, and for each beverage container, the UPC code and the barcode. So remember, that was in the draft last year, but it's just being moved here underneath the plan. If the producer fails to implement the requirements of the chapter appropriately, ANR may dissolve the producer responsibility organization. And if there's no producer responsibility organization formed at all, ANR can form their own plan, charge the manufacturers and distributors for the cost of that plan, plus page 11, line seventeen, ten percent additional. So this is the hook. If the PRO, if this the manufacturers distributors don't wanna do this themselves, They're going to get charged for the actual

[Chair Amy Sheldon]: cost plus plus the penalty. And

[Michael O’Grady, Legislative Counsel]: then moving on to page 12. The PRO shall reimburse the Secretary for the cost of overseeing the administration of the program. Now, in an EPR program, there's just a fee that the producer responsibility organization pays to ANR for ANR's cost of administering the program. Well, this program's a little bit different. They're going to pay ANR's actual cost through the budgeting process. So you'll see page 12, line four through six, ANR annually provides an estimate of the cost of overseeing the program to the PRO. The PRO shall provide any comments to the Secretary's budget within thirty days following receipt of that estimate, and ANR shall respond. And then page 12, line 13, the reimbursement of ANR's costs shall be subject to the state budgeting process, and a PRO shall not be required to reimburse reimburse any agency costs until the cost is approved as part of the agency's budget. Then we're gonna stop there. Any questions on that? So there's no fee that the PRO pays. What the PRO pays is a reimbursement of cost after that's been vetted by you in the budgeting Okay. Page 12, line 17. Manufacturers and distributors of liquor are exempt from the requirements of the plan of the PRO, but they can negotiate with the PRO to fulfill both liquor and lotteries requirements. On page 13, Stewardship plan. These are the minimum requirements. First thing I want to know is there's probably a need for a date change. So it says page 13, line two, on or before 10/01/2026. I don't think they're going to get a plan to you by that date. So that needs to change. And then at a minimum, the plan shall meet all of the following. It has to have convenience of collection. Not every HPR program has a convenience requirement. And it has to ensure that consumers have convenient opportunities to redeem. And there has to be reasonable efforts to cite points of redemption equitably regions of the state. You don't just have them in Chittenden County or in Addison County. They're all across the state. And the plan has to document where they will be available and at least three points of redemption per care. And a change here, it says at least one of which provides an immediate return of a deposit. In the previous draft, all three had to provide an immediate return on the deposit. It's not that all three couldn't, but they're only required to have one underneath this proposed language. We also have to at least one point of redemption per municipality with a population of 7,000 or more persons. Immediate return. And they also have to address how sites of redemption will be cited in high population density or located in centers designated on 24 USA chapter 76 a. That's like downtowns, villages, growth centers, etcetera. Representative.

[Rep. Sarah "Sarita" Austin (Clerk)]: Yeah. So we've seen a technology where people could bring bottles in a bag and then have money deposited into their checking account?

[Chair Amy Sheldon]: Yes.

[Rep. Sarah "Sarita" Austin (Clerk)]: Is that would that meet the requirements of the immediate return of the deposit?

[Michael O’Grady, Legislative Counsel]: I I don't believe technically it does. The immediate return is like that machine. Remember, I watched the YouTube videos of how these things work. It's it spits out an invoice, and you take it and you take it to someone that that's at the retailer redemption center, and they pay you. Okay. That would be immediate return. Moving on, page 13, line twenty and twenty one, there has to be fair operation and compensation to redemption centers. But remember, they're not gonna pay the handling fee. They're gonna need to compensate them. And they shall describe how all the locations that redeem beverage containers are fairly compensated. There shall be no barriers to participation in the collection program for a redemption center, except for restrictions that the secretary might apply, like you have to be environmentally managing according to environmentally sound standards. You can't throw containers that are not part of the program into the trash or into the water, etcetera. So there there will be some some restrictions on a redemption center entering. The plan shall describe how management and sorting of containers is minimized, and it'll document how brand sorting will be eliminated at points of redemption. Remember, sorting is one of the high labor costs that the redemption centers have to to handle. And so one of the parts of this program is to eliminate that. And shall describe how materials will be picked up from redemption centers on a timely basis and how they will maximize the use of existing infrastructure. That's one of the kind of key components of EPR programs. If we already have collection infrastructure, why not don't duplicate it, don't replicate it, don't so if you they can use the existing infrastructure like a municipal transfer station, use that if they can. So there's also requirements for education to consumers. They also have to consult with all of the stakeholders in developing land, including, you'll see on page 14, line twenty and twenty one, redemption centers, municipal and private recycling organizations, and other stakeholders. They have to report at least annually. They have to give you the name and business hours of each redemption center, the amount of container material type that they redeemed, the location and amount of container material that was recycled, and what it was recycled into, carbon impacts, costs associated with administration of the plan, description of any improvements made in the reporting year, efforts taken by or on behalf of the manufacturerdistributor to reduce environmental impacts. And then, Page 16, efforts taken by or on behalf of the PRO to improve environmental outcomes and improve efficiency. And then a description and copies of the educational materials that they are using. On page 16, line 10, ANR approves the plan and and will approve it if it meets the criteria for the plan, including convenience. And this is, generally for a five year period. If the PRO fails to meet the redemption rate in 1534, which we'll get to in a minute, the Secretary may require the PRO to implement activities to enhance that rate of redemption, including education and outreach, additional redemption sites, or additional redemption opportunities. There are two audits. One, page 17, one's a program audit, looking at how the program works, if it's effective, if it's efficient. That's done by an independent third party. That's done every five years. You'll see that requirement, page 17, lines two through six. There's also a fiscal yard audit that's done every year and begins 03/01/2028, conducted again by an independent third party, provides transparent fiscal analysis of the PRO, its expenditures, its cost, and its redemption rate. And all of those audit results, the five year audit and the annual audit, is submitted to the Secretary for purposes of reviewing performance of the PRO. And then you get to the redemption rate goals, page 18, line one. So it is goal, not a mandate. The goal that the following minimum beverage container rate shall be satisfied. 2028, 75%. 2,032, 80%. 2,037, 85%. 2,042, 90%. There is no automatic escalator on the deposit if the goals are not met. That has been in previous drafts. It is not in this draft. So if they fail to meet 75% in 2028, it does not increase the deposit on any container. Page 18, line nine, beginning 07/01/2027, annually thereafter, the secretary submits to you a written report containing the current beverage container redemption rate for both liquor and all other beverage containers, that report will include a recommendation of whether the container deposit should be increased. But you would have to legislate that if you were going to increase that. Page 19, line one through three, this is the rulemaking authority. It's a general rulemaking authority. It doesn't have all that detail that the existing rulemaking authority has and that nobody does. And then page 19, line four, this is antitrust section. Remember when you have a bunch of manufacturers, distributors working together, that can look like illegal collusion. So you are allowing them under state law to collude for purposes of the product stewardship organization. But on page 19, lines 14 through 18, they can't collude in order to affect the price of the beverage containers or restrict the geographic area in which the customers to where the beverage container will be sold.

[Unknown committee member (possibly Vice Chair Larry Labor)]: We'll go back to page 18, these redemption rates. If I remember correctly, the main purpose of the bottle bill was well, one of the purposes was to take these sheets and put them into the clean water fund. You rob them from the clean water fund, and what do we do? We get so efficient, our clean water fund goes broke.

[Michael O’Grady, Legislative Counsel]: Well, can I talk about that in a minute?

[Chair Amy Sheldon]: Sure.

[Michael O’Grady, Legislative Counsel]: Because it might happen sooner than you think. Okay. One last thing on the antitrust language. It doesn't apply to federal antitrust. We haven't had any concerns or actions where the federal government has brought antitrust against manufacturers, distributors. And you can't immunize people from federal law. So I just wanna note that They ask for it, but you can't give it. Page 19, line 19, section two, you're moving out of the PRO, out of the whole chapter on beverage container redemption, you're moving into ANR's default notice and comment requirements and the plan for noticing the plan for the PRO on page 21. Line five is being added to the the default notice and comment requirements for general permits. And then it's kind of like what this kind of plans are generally kind of like a general permit. So there has to be notice to the public. If anyone asks, there has to be a public meeting about the plan. And then it's part of the ANR environmental bulletin. Now we're can talk about the clean water fund. So you will see going on page 21 to page 22, line eight through nine, that currently the unclaimed beverage container deposits remitted to the state are deposited into the clean water fund. And there there's, varying estimates about what that is, but I would say 2.5 to $3,500,000 annually. What the PRO, the manufacturers and distributors, have asked for is that for a certain time that part of that money, part of those sheets, abandoned deposits, is deposited into the solid waste management assistance account for grants to them to help them stand up the stewardship plan of producer responsibility organization. So you will see page 22 going on to page 23. In fiscal year twenty twenty nine, the first 1,500,000.0 of the sheet is transferred to the solid waste management assistance account. 2030, it's 500,000. 2031, it's 500,000. In 2032, it's 500,000. So total of 3,000,000 over four years goes to the PRO to help them stand up plan. So that will be a reduction in the clean water fund. And so there will be a need to adjust the clean water fund budget. They've got an extra, I don't know, $27,000,000 from state revenue plus federal revenue. They're around 45 to 50,000,000 a year. But they'll take a hit over those four year. And then you see page 23, line 12, section four. This is the Waste Management Assistance account. The Waste Management Assistance account has three accounts. Waste Management Assistance Fund has three accounts in it They aren't actually accounts, but getting a little too technical. But page 24, line six six through seven, you'll see that it will now also include transfers from the Clean Water Fund. And you will then see on page 25 what the that money in the solid waste management assistance account can be used for. And it will be used for the secretary entering grants with the PRO. The grant shall be for four years and reimburse the cost of equipment and improvements to infrastructure documented by the PRO. So it's a it's not just anything. They have to show costs. It's a grant to reimburse them for their cost in in setting up the program.

[Chair Amy Sheldon]: Sarita Austin, that's a question.

[Rep. Sarah "Sarita" Austin (Clerk)]: Why the clean what's the rationale for taking it out of the clean water? That that's really concerning to you.

[Michael O’Grady, Legislative Counsel]: Well, it's interesting because there's always been an argument that the sheets shouldn't go into the clean water fund, that they should go into the solid waste management fund because this is about managing and collecting and preventing litter and and managing waste. There's always been that argument. You made the policy decision, the legislature, how many years ago now, five about, to put that money in the clean water fund. But it's your discretion. It's you can you can it's a revenue source. You can direct how it's used however you would like. And remember, that's what the clean water fund is. It doesn't automatically go out like other funds do. Like, you put money into to the transportation fund. Some of those programs, it automatically goes out as soon as the money goes into that program. No. This has to come back to you. The Clean Water Board has to recommend to you how that money is gonna be spent, and it goes through the budgeting process. So every year, the Clean Water Fund basically could be could be redirected. Generally, it's not, but this is saying for the purposes of setting up this program, they get $3,000,000. Now the agency I told you earlier that the agency has some alternative language that's not in the bill. This is where that alternative language would be. And I'll let Matt tell you what that is. There is, a report well, it's really more of a reporting requirement. Manufacturers and distributors that are subject to the to the bottle bill, They report the recycling information to the secretary in the same way that recycling materials are reported to the secretary under the solid waste management chapter. And then the information shall include the amount of containers and tons of material, the location and amount of beverage container material, what they were recycled into. That's already kind of part of the plan. This is to get anybody, that's somehow not reporting as part of the plan. You might not even need this section anymore. And then the effective dates, well, the first effective date needs to change. It has to be 2026 at least. And the first thing that's being effective is 1531 D three. That's the UPC. That right now is 03/01/2027. You we might wanna look at that because remember, it's got moved into the plan and embedded in the plan. And so you wanna true up that UPC requirement with the plan requirement. And then under 10 VSA fifteen thirty one, the prohibition on the sale, unless you have a PRO, that takes effect on 03/01/2027. No change in the deposit. Handling fees only changing for non commingled and only for the duration where there is no PRO. Liquor and lotteries requirements are set out in a more transparent way. Still 15¢ still requirement for them to collect all the redeemed containers. They can contract with the PRO to do collection for them. Money from the Clean Water Fund would be directed to the Waste Management Assistance Fund for for grants from the solid waste management account to reimburse the manufacturers and distributors for their costs and setting up the PRO. And that that's that's it. No automatic escalator. Just a recommendation on what should be done in order to increase redemption rates if you are not meeting them. Thank you very much. Representative North.

[Chair Amy Sheldon]: Thank you, Chair. Thank you, Michael, for coming and sharing this with us. Some question around the redemption and redemption rates. So what's the how is redemption rate calculated? Is that specified?

[Michael O’Grady, Legislative Counsel]: Sure. It's gonna be based on their sales numbers versus what is collected. And so Is

[Chair Amy Sheldon]: that specified? So that's the I

[Unknown committee member]: to engineer. It's not

[Michael O’Grady, Legislative Counsel]: Did we not define it in this?

[Chair Amy Sheldon]: So I've seen redemption rates calculated lots of different ways.

[Michael O’Grady, Legislative Counsel]: Yeah. But specify. Mean, generally, that's how it is.

[Chair Amy Sheldon]: Makes sense to me. I don't know Right. If that we should have it here. We can take that. Yeah. Yeah. Then the redemption rates from 75, 80%, 85, etcetera, Those are listed as goals. Usually, goals are not.

[Michael O’Grady, Legislative Counsel]: That's correct. And and really, there there is these aren't mandatory either. If but if

[Chair Amy Sheldon]: not meeting them, people are gonna start getting penalized. That makes it sound bad.

[Michael O’Grady, Legislative Counsel]: Well, if they're not meeting them, there's two things that could happen. A and R could recommend to you to change the deposit or make any other changes to the plan, or ANR says to the PRO, you need to do different things. You need to increase your education, increase your redemption centers. There's there's no other penalty.

[Chair Amy Sheldon]: You're you're using the word need. That you would need to. Need sounds like.

[Michael O’Grady, Legislative Counsel]: It is. It would be required. I mean, it's discretion for you to increase the the requirement on the PRO. So that would be a requirement, including potentially the deposit amount. And ANR already has, as part of their oversight of the plan, the ability to say, you are not meeting the redemption goals, you are required to do additional activities to increase your redemption rate.

[Chair Amy Sheldon]: What's most important, at least in our discussions, my understanding of what's most important relative to redemption rates is the overall redemption rate, in other words, not just through the redemption process but through the recycling and recapture through the murph, making sure that all of the material was captured but not going into a landfill or primarily not going into a landfill. This seems to be these redemption rates, talking about calculating it based on just what's redeemed, seem to kind of address only a part of the problem and not really calculate the overall effect of all of the processes that are involved and that requires this portion of all of those processes to escalate.

[Unknown committee member (possibly Vice Chair Larry Labor)]: And I don't have to come up.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: Am I I mean I

[Michael O’Grady, Legislative Counsel]: mean, no. I I I think that's a very relevant policy point. And it was part of the reason why three years ago, the General Assembly enacted that legislation that would have brought pretty much every beverage, except for certain large sizes, into the program and and expanded it to include everything because then you would have had equity across all containers and materials for the purposes of redemption. That that passed, but but it was vetoed. And I don't think you have I don't think the manufacturers would support a similar program. But they are I can't say that they are all supporting this, but there is signs that some of them will support this. Will there be some will there be potentially lack of equity? I I can't say. But there's also the the the one of the detractors of the bill three years ago were were the solid waste and the municipalities that were working with solid waste haulers to build the MRFs because they were concerned they were gonna lose inputs, especially from the expanded scope that they had estimated as part of their fiscal analysis of going forward with a bond and going forward building the MRF. You don't you don't have that criticism here. These are still the containers that are part of the redemption system. Small enough fraction. Correct.

[Chair Amy Sheldon]: Okay.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: Good morning. For the record, Matt Chapin. I'm the director of the Waste Management Provincial Division in DEC. You should see on the website an alternate SEC three. So section three is the the Clean Water Fund the the interrelationship between the Clean Water Fund and the Solid Waste Management Assistance Fund for purposes of of building out the capital infrastructure and equipment needs for this transition. And the agency's proposal is slightly different really in two ways. One is it increases the total amount from 3,000,000 to 3,500,000.0. So it's 1,000,000 for the first two years, 750,000 for the following two years. And rather than having that money automatically transferred from the clean water fund, it's going to basically be paid. The the grants would be paid out of the solid waste management assistance fund. At the end of a fiscal year, based on the amount actually spent, the secretary would be a have the authority to transfer up to that amount from the clean water from to the side. So, again, I think it actually, in some respects, cabins what's happening even more to what is actually being spent and what's actually taking that place. It's increasing the dollar amount a little bit based on frankly conversations that have taken place between some of the manufacturer distributors in the agency and then from a mechanism standpoint makes it more reimbursable as opposed to a direct transfer. So those are the two changes that the agency is proposing and think that it's important to include that sort of approach in the ultimate bill the committee considers. And I'm happy to answer any questions that anyone has, both on what Mike walked through and also that particular substitution.

[Unknown committee member]: Representative Sifuentes. Thank you for this testimony. You're welcome. I'd love to have a better feeling for where these numbers are coming from. They're very round numbers. It seems like there's a lot of over time, we've had some testimony around this, I think, but I have not gotten a clear picture of what anticipated costs might be even very roughly and how these numbers fit into that picture. So I'm happy to

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: have some conversations about being able to present some information to you. I have received an estimate that estimates and again, I think all of this is an estimate at this point, right? That the equipment needs for build out of sort of mechanical infrastructure we need for this transition are somewhere between 3,200,000.0 to $4,000,000 So basically the $3,500,000 total that we're putting out there is in the mid range of what the estimate of equipment needs are. There's a little bit of analysis that has gone into that, but I'll be honest. I mean, I think if you ask sort of the people who are looking at the system, they will tell you that we need to get further along in the planning process to refine those numbers. I think the 3.2 to 3.9 is consistent, generally speaking, with some of the work that we did in the context of the economic analysis that we provided earlier in the session to the committee, and it's also consistent with some of the estimates that we're seeing from the distributor manufacturers.

[Unknown committee member]: So that seems to imply that this is an amount which would cover the industry's intended to cover the industry's costs for the transition? No. This this is really it's a a portion. Right?

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: It's intended to cover the capital costs. So like the investments in new technology and other sort of transitional equipment, that is what this is intended to do. Putting in reverse vending machines, putting in bag drops, putting in, making frankly upgrades to facilities so that they're ADA compliant. That would be something that this money would be eligible for. So, I mean, existing, we have a set of infrastructure. There has not, and I don't want to be, there are some redemption centers that have done a lot to make investments and then there are others that happen. And I think there's an acknowledgement by the, that if we're going to make this transition, we're going to need to bring up some of the ones that have not made those investments so that it meets what I think the sort of diversity of options that the public is likely to want in an effective bottle. If I didn't

[Rep. Larry Satcowitz (Ranking Member)]: Respect, I'm not sure

[Unknown committee member]: you answered my question.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: Well, I think there are gonna be a lot of operational costs, a lot of other costs that are not gonna be subject to the reimbursement under this section. This is intended for capital and equipment needs, not for planning needs, operational needs and other costs that the distributors and beverage manufacturers are going to incur in this transition? Do

[Unknown committee member]: you have any sense of what those costs might be? I

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: don't. I don't think that there's a clear appreciation, at least from my perspective, of what it's going to cost to stand up a PRO and implement a system like this. And again, I think going going sort of back to the overall scheme, part of this is intended to the way the system manages the bottle bill system as a whole, it's also intended to give that manager some flexibility in how the system works. I mean, I think if you talk to and really at some point, the distributors should probably sit in the chair and have a conversation about this, right, is that in between the handling fee and some of the other operational issues in the bottle bill, there are lot of sort of fixed costs that are very challenging. This would give them more flexibility to meet broader performance mechanisms, use negotiation and contracting to make sure that costs are reasonable and people are being fairly compensated and having the state oversee the totality of the process to make the system globally more efficient and hopefully more accessible to Vermont's public.

[Unknown committee member]: Yeah. I'm I'm I'm just I would love to have a more complete picture of what the cost of the transition are just because I know when we've stood up other, you know, PROs that we we normally expect the PROs to down cost of of in their program. Here, we're giving pretty substantial amount of money to do so, which maybe is what it needs to be, but to to to me, maybe that needs to happen in some regard. But I but before we commit to a certain amount of money and we commit to it being distributed in a certain way, I think it would be important to know a more complete picture of how the money would be spent and what those other costs would be in terms of what how much the PRO would be taking on themselves.

[Chair Amy Sheldon]: I mean, again, I think

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: that part of the reason that the agency feels pretty strongly about this being a grant program is because it gives you that level of oversight. We're not giving the PRO $3,500,000. We're allowing them to come to the agency and request reimbursement of certain eligible costs that are going to get defined in a grant agreement. So again, I don't want anyone here to think that we're just writing a blank check to the distributors for them to take some walking around money to stand up this system. I understand. But wanted I to be clear because I think that's important from our standpoint too. This is not intended to just sort of be a blank check or giving money back. It's intended to basically be for a purpose that I think the agency from the agency's perspective, we know that this system needs this investment and it's a fairly significant investment And we want to see in order for it to work effectively these types of transitions as far as technology and equipment taking place. And I'll tell you, without having the investment, you may just be left with something that looks a lot like the current system without some of these improvements or investments that I think we hope end up coming. Well, that will come out if we pay for

[Unknown committee member]: My concern is not so much about whether the investment needs to take place or not, as much as how much of it gets shouldered by the industry and how much the state ends up covering. Sure.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: I I I will go back and double check. I think a lot of those costs are sort of outlined in the the analysis that we were provided earlier on in this session. But, you know, again, I think there's always going to be more refinement around some of this. I mean, is a a fairly large, fairly complicated system that's not really a system. I think that's part of the challenge from me not giving you as direct an answer as I would like to be able to give you is because I don't really have eyes into the system as far as like, what does it cost and how do some of these transitions take place? So it's hard for me to sort of give you like this. The benefit of this type of a transfer is it actually gives the state and the legislators a lot more data to understand what's going on and what the costs of the system are. Representative.

[Rep. Larry Satcowitz (Ranking Member)]: To further this conversation in a in but in a slightly different direction, I guess, I'm so what I'm what I'm hearing is that this is sort of an unusual way to fund the start of a slightly different PRO, that we wanna make sure the investment is there, but how much does the legislature get involved versus the state agency determining what is the right level of investment. So I guess I would just, I'm curious if there's maybe something else to build in here that's a step in the process once we have a better idea about investments. There's also a couple, two pieces that I specifically wanted to ask you guys about in the bill that sort of relate to this, like what level of investment. So on page 14, line eight and nine, it says it eliminates brand sorting at redemption centers, but I'm envisioning a redemption center that also might have a sorting facility in the back. And so I guess I'm just concerned that we have a vision that redemption centers will always be separate from the facilities. Guess I'm just curious if we have any places that do both, that maybe we want to preserve that opportunity. That language seems really restrictive to me as opposed to like, I understand eliminating it from the redemption retail space, but I guess what if somebody has a facility? We heard about it. Well, we heard about a sorting facility that somebody's made investments in. I And guess I'm not sure if they maybe they don't do any retail drop off redemption at that site, but I I can envision future facilities. So I guess I just feel like, do we wanna be that prescriptive? Maybe we wanna explain that we wanna eliminate it from the redemption space, but not into potential building.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: Sort of and again, this is maybe not a defined term, but it's a term of art used within the context of bottle bill. When we're talking about brand sorting, we're talking about the person that you see basically having a different bag for Budweiser versus Miller versus Coke. And that they're doing that brand sorting sort of at the point it's not. And frankly, I think that what we've seen is someplace that has, I'm just gonna say Morrisville beverage, where they have a larger sort of system there that would do the sorts. To some degree, again, when I come in as a consumer, I either have a bag or something else that gets dumped into that machine, and that machine counts the number of cans and then gives back an amount of money to me. There's no brand sorting taking place at that point.

[Rep. Larry Satcowitz (Ranking Member)]: Yeah. I'm not confused about what Okay.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: I was just maybe I was confused about your question.

[Rep. Larry Satcowitz (Ranking Member)]: Is I'm just wondering if that language is a little narrow and doesn't allow for some large facility that somebody might have that both is working under the PRO to do the ultimate sorting because they end up making investment in the right equipment, and they also accept redemption at that same building, does this eliminate that possibility for someone? I don't think so. Okay. And then more to the point of this conversation that I was trying to carry on, there's a piece in here about there is a new edit in the bill that instead of, I think it was three per county, and that must have the I'm curious about the immediate return of payment. And I think we heard some testimony early on this year about there are some people who collect returns and really rely on that cash back. They might not have a bank account. And we also know that that same population, folks in that situation might also not have great access to transportation. So I'm a little concerned about this particular edit being only one per county. It doesn't say co located in the largest community. There's no connection to downtown. So I guess I just wanted to flag that. I'm just a little nervous about that.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: Just things working together, right? While there's only three per county, one of which is direct return, but there has to be one in every municipality greater than 7,000 people that is direct return. So again,

[Rep. Larry Satcowitz (Ranking Member)]: That's it direct return? Yep. Oh, I'm sorry. Okay. That

[Unknown committee member]: addresses that. Because I would have the I would

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: have the same concern. Right? I mean I

[Rep. Larry Satcowitz (Ranking Member)]: just missed that. And that's that next bullet. So I guess just back to this other piece, and I know we have, like, two minutes. I'm just wondering if there's something we could do to address this issue that we're learning about.

[Michael O’Grady, Legislative Counsel]: Remember, everything in the PRO is gonna have a UPC barcode on it. I don't know if there's gonna be much need for sorting anymore. The sort is going to be electronic. And so I don't know if there will be a need for a larger facility for sorting.

[Rep. Larry Satcowitz (Ranking Member)]: Okay. It was fine. I just wanted to raise that because it Right.

[Chair Amy Sheldon]: And I think getting back

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: to representative Satcowitz's question that sort of spurred off of this, I I think the other there's probably a need for some date adjustments in this bill. And if I was just going to talk globally, it probably makes sense to move everything one year back because we were talking excuse me, one year forward in time because we were a year ago talking about this and working through the dates, and I think they all probably would benefit from some more time. Think trying to set up a PRO by July 1 is going to be a pretty big lift for some of these organizations. Having said that, if you look at the grant process and the stand up and capital investments in the system, we're looking at fiscal year, roughly speaking, 2930 when the expenditures are going to be made. Before that, we're going to have a plan. The plan is going to give a lot more definition to what the system looks like. There will be a lot more in the way of actual cost data that comes in. I am not going to object to having a reporting requirement to come in and provide you with an update as to whether those numbers need to get adjusted based on actual data once we have sort of the actual data in the plan.

[Rep. Larry Satcowitz (Ranking Member)]: That'd be a good look. I mean, to me, that would make sure we look at that again and add input and make sure it's not being overbuilt because the PRO is pushing too much investment, that it's not being underbuilt, that we're, like, you know, sort of, again, looking at that with this lens. I don't but, anyway, I I'd be interested in that if it makes sense.

[Chair Amy Sheldon]: Representative Pritchard? Yeah.

[Rep. Christopher "Chris" Pritchard]: Matt, I I was just wondering. I had it written down somewhere, but I can't find it. So I guess I just wanna clarify. What is the current redemption, what, percent now? I thought it was, like, 72%. It it is.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: So so and I think it's important if if we can just sort of divide the redemption rate from what I'm going call the conversion rate. So the redemption rate is when we're talking just about the bottle bill, and we're really focused in on how many bottle bill eligible containers that we're talking about versus the larger efforts that we take on diversion of trying to get those bottles and cans out of the landfill, out of the litter, and into the recycling stream, of which the bottle bill's part, but there's a broader system that's out there. Just to confuse everyone, the diversion rate and the retention rate are about the same. They're about at 72, 73%.

[Rep. Christopher "Chris" Pritchard]: Okay. Has has that been the case for the life of the program?

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: No. We've actually seen over the past several years, I'm gonna call it a modest erosion in redemption rate. We see the redemption rate going down and the amount of his sheets going up, the amount of of redemption going down, which is what we would expect. And, you know, I we don't have any hard data based on what we're looking at, though. It looks like we're seeing an erosion in the number of redemption centers and an inability for people to to go to their local store, their local redemption center, redeem their bottles, as

[Rep. Christopher "Chris" Pritchard]: a result, they're electing not to do it because it's more difficult. So the goal, I guess, of this whole bill is to at least get a base start of increasing this by two or 3%. That'd be fair

[Chair Amy Sheldon]: to It

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: is. Yes. Okay.

[Rep. Christopher "Chris" Pritchard]: So then my question is, you got the 75 to eighty, eighty to 85. What in the bill was the driver of that? I mean, what changes that number every year? Well, so I think it

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: is a performance goal to try to encourage the PRO to ensure that they have a system that's sort of driving towards more and more collection of this universe of bottles and cans. Right?

[Rep. Christopher "Chris" Pritchard]: It sounds like we're making it more efficient. I don't know what's driving that percentage to Sure.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: I think it's both more efficiency, then I think if it gives I would say that it gives the PRO an incentive to ensure that there's adequate collection facilities throughout your communities. So maybe three is not enough. Maybe they need five to seven in Chittenden County or in Rutland County or in Addison County. So they need to increase the amount of convenience so that they can increase the amount of people that are redeeming. So that's all of the sort of things that happen operationally in the plan. And I think it's intended to basically give, to scale up over time. So again, I think that the numbers and the performance goals, I'll just say, I think they're aggressive. I think that what those goals are intended to be is at these annual meetings that are gonna take place with various stakeholders, we review what took place during the last year. And maybe we say, you know what, you were at 74%, not 75%. So you really need to up your education and outreach efforts. So what sort of education campaign are you gonna put in place next year? Okay. Let's see what effect that has and see if that pushes the retention rate up during the next fiscal year. So it's to me, it's sort of adaptive management based on a set of goals that are being established in the law. I think there's room to adjust those goals if the committee wants, but from my perspective, it's also a planning and management tool. Thank

[Unknown committee member (possibly Vice Chair Larry Labor)]: you. You're welcome.

[Chair Amy Sheldon]: Other questions for Matt? I did have a really good discussion with the owner of several of the redemption centers in Vermont. He happens to be a constituent in Vermont. I think just as we've been talking about here, his concern is the same, and that is that we're improving the efficiency of system. Which includes accessibility. So we're slowly over time, just as you said, losing redemption centers, so people have more and more trouble getting stuff into the redemption centers, so you're seeing it at a slow degree in the redemption rates. From his perspective, what's happened is that the 3.5¢ has remained constant for decades. Meanwhile, the hourly rate, the minimum wage has increased from $2 to $14.75 and he's paying $19 an hour. So, he used to be able to have five guys, five people, at his redemption center, and they could sort through the 10,000. It was no big deal. Now he's got one. He can afford to have one. And so, to him, the biggest thing is eliminating sorting. We could because he's got to sort into over 200 bins, each little can. That's their manual job that they're doing right now, entirely manually. He can't afford to invest in a machine to do all that electronically without what he says is about $300,000 worth of investment to invest in a machine that'll do that. At 3 and a half cents, we're still at 3 and a half cents. He only gets a fraction of that because that gets split between him and somebody who oversees him or comes and picks up a can of bottles from him. That's just not enough. So, it seemed to me a possible solution is just providing some more investment money by increasing the 3.5¢ to 4.5¢, and that might solve the whole efficiency problem. Then more redemption centers would crop up, they would start, this actually could be a profitable business. And I go into it and do that. Why wouldn't, why couldn't we? Increase that and then everything else remains the same. We don't even need the PRO, we don't even make all these huge changes.

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: I think, and again, you should probably talk to people who have a better eye into the economics of the system than I do, my understanding is that the efficiency or the viability of the business model that you have is largely dependent upon the input of material you have going through your facility.

[Chair Amy Sheldon]: To some

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: degree. I mean, are some places that just for whatever reason seem to have more throughput than others and that may be because of tourist related activity and other related activity too, but no disagreement. Then I think the question is, know, 4 and a half cents might make sense in Addison County, 2 and a half cents might make sense in Chittenden County, and 6 and a half cents may make sense in Essex or Orleans County, right? And I think that that that's that is at least what I what this proposal tries to address is to be negotiable. Exactly. Exactly. And I I think that the the issue that your your constituent addressed is real. And that this attempts to basically put the responsibility for capital improvements onto the PRO and take it off of the individual redemption centers. They're going to see a labor savings as a result of that, And it also allows conversation to take place around what the appropriate compensation is for their participation in the system. I mean

[Chair Amy Sheldon]: That's why think those words fair compensation, and that that's gonna be determined by the top level as opposed by by a bid from lower level. He's just afraid that as soon as the PRO shows up, he's gonna get pushed right out of business now. But you have to

[Matt Chapman, Director, Waste Management & Prevention Division, VT DEC]: I mean, I am going to assume I I'm going to say I think the PRO is going to need these redemption centers just as much as the redemption centers are going to need the PRO. If they are not gonna be able to meet both their performance obligations and their minimum statutory requirements without ensuring that they have a robust collection network that includes. And the law says you need to take advantage of to the extent you can take advantage of existing infrastructure. So there are some things that are built into this that try to address the very concerns that that, again, I think we were sort of thinking about as this got constructed. We wanna make sure that we aren't disrupting people who are are sort of in the the system today.

[Michael O’Grady, Legislative Counsel]: And, Bruce, we have lost one. We're gonna have to go off time.

[Chair Amy Sheldon]: The