Vermont Legislature SmartTranscripts:

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

[Rep. Amy Sheldon (Chair)]: right. Welcome back to the House Environment Committee. We're meeting our meeting and shifting topics to the redemption PRO committee bill and welcoming Michael Noel from Tom Ra. Welcome back.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: Thanks. Good to see you, Chair Sheldon. Hey, members of the committee. Well, thanks for the opportunity to testify and to comment on the bill. I'm commenting on the version that I saw yesterday afternoon. I think it was three point one. I'm not sure if there's a new version by now. So for those, if we haven't met, I'm Mike Dwell. I'm a public affairs director at TOMRA. And just so you know, our role in the system, TOMRA provides a range of technology and services for Vermont's deposit return system or bottle bill as it's known. We also operate in all major deposit return systems around the world, Europe, Australia, even Asia, including all 10 US states with such a program. In Vermont, we provide reverse vending technology to stores and redemption centers, both the single feed machines you might see at a retailer and bulk feed machines where you can empty an entire bag in at once and get paid back immediately. You can find those in Morrisville. Really, we recently brought clink into the Tomer family this year. They provide a popular bag drop redemption service where a consumer can drop off an entire bag and get paid back through their mobile device or contribute to charity their deposit money. We provide container deposit pickup services on behalf of all beverage distributors in Vermont and handle them at our recycling processing facility in Essex. We also provide clearing house services to help distributors, redemption centers, and retailers to simplify and streamline the exchange of deposit refunds and handling fees. So kind of like the bank for the deposit system, if you will. So on today's bill, in general, we don't really have a strong position on the bill one way or another. However, we do have a number of programmatic recommendations to make sure what we think is the intent with some of the language to make sure it does work in practice, we don't have hiccups or rough implementation. And then tomorrow I'll share more specific language recommendations, but this is just a first pass. So the first has to do with what we would call universal redemption. This is the idea that any return location, be it a store or a redemption center, needs to take back any deposit container regardless of whether they sold it or not. And so this is proposing the bill, but it needs a few other components to make it work in practice. First, I would take a look at the retailer refusal language, because that still refers to retailers only taking back containers of the kind size and brand they sold. And language from Maine's law would need to be added to ensure that distributors cannot refuse to pay refunds or handling fees. If a container has been processed through an RBM or a backdrop service. This is a loophole in the current law today. And it's the reason why you don't see more redemption technology at say a transfer station or more redemption centers.

[Rep. Amy Sheldon (Chair)]: Wait, you flesh that out again for me. That seems like I want to catch the nuance.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: So when the laws, the deposit laws were first passed, they just said that a distributor needs to pick up and pay refund values and handling fees for containers of the same kind, size and brand that they sold. So typically if you're manually sorting them into a box, it's pretty easy for the distributor or their pickup agent to show up and say, this is a Budweiser can we sell that that material type that size will give you a handling fee and a refund for that. When reverse vending machines and even bag drop came into the program, they provide an automated commingling service, they verify the barcode of every container, then they compact it more so more like flattening to be honest. And some distributors have argued, hey, that's been compacted, I can't see the brand, I can't see the barcode even on this product after your machine compacted it, I'm not going to pay this redemption center or retailer, a refund value or handling fee, and I'm not going to pick it up. And so that really was that?

[Rep. Amy Sheldon (Chair)]: Oh, I just said, yeah, oh, sorry, go ahead.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: Exactly. So that's like, and so then that inhibits the scale of technology inhibits redemption centers and retailers to reduce the cost of their programs. And if there's this vision that this retailer or this redemption, well, really, it's more so relevant for a retailer will take back any any brand, maybe the retailer might choose to, but then that distributor who does not sell to that retailer says I have no business relationship with this location, I'm not going to pay, I'm not going to give you a deposit refund or handling fee. So that's, you know, it's called out in Maine's law, it's not allowed to have that loophole. And so you know, if Vermont wants to make it easy for people to get their money back at any return location, then that kind of thing would need to be added.

[Rep. Amy Sheldon (Chair)]: Question, Representative, sacred has a question.

[Rep. Larry Satcowitz (Ranking Member)]: Yeah, do you do you have any sense of whether that's a current issue right now in Vermont? I

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: can get back to you. But in general, yes. Like, this is one of the reasons why we would have gone to a transfer station in the past.

[Rep. Amy Sheldon (Chair)]: So interesting.

[Rep. Larry Satcowitz (Ranking Member)]: So I wonder if that would be a simple way to get us maybe a part of the way towards what we want with this bill.

[Rep. Amy Sheldon (Chair)]: Okay, let's.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: So also tied to that, you know, we're if we're if there's a vision to see more technology, more automation in the system, well, even if there's not just to make sure the current program continues to work. All products need to be registered in the program. I think right now it says all all maybe distributors or manufacturers need to be registered, but we actually need down to the to the barcode level information and which distributor is associated with that. Without that, then the RVM or the backdrop technology which relies on RVMs can't can't give you your money back, we don't know who to bill. So that that product registration language would need to be added. And I'm sure I'm short on time, so I'll just list some of the other topics and if you have questions, feel free to shout.

[Rep. Amy Sheldon (Chair)]: You're only short on time if you are short on time, we have time to hear from you.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: Oh, okay, that's great. Also, I mean, I won't be long, but I'll mention them. So the timing of retailers dropping out of the system and being able to refuse consumers should just be looked at more closely by my admittedly somewhat quick read, it looks like it allows a retailer below 5,000 square feet, who sells their own private label beverage, which is many retailers these days, this would be like their own branded water, for example, I guess in Vermont, branded soda. And if they do so, then they're under the way it's written tier, they can drop refuse people bringing back containers as soon as this bill takes effect. Whereas I think what you mean is they can drop out once the stewardship organization has implemented their their plan, which meets a convenience standard. So I'm assuming that's a typo.

[Rep. Amy Sheldon (Chair)]: Yeah, thank you.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: The labeling section could use some work. So the first is that the label should require a universal product code or barcode to be on every every container. This is this is mentioned in like the pure website section, but it's the right place for it is the labeling section. Again, RBMs and backdrop can't accept containers unless they have a barcode. And also within that labeling section, there's something about the you know, the label needs to include Vermont and the refund value, unless some other like indications are allowed by the Secretary. I think we take I think we take issue with that aspect because I mean, there's there shouldn't be a lot of leg room or wiggle room for a label to include the refund value itself in the state. And that's important for the consumers education, they should know what and what is and what is not eligible, and the refund value for it. So that, know, unless all alternative indications are allowed, that you know, that could, that could allow a distributor to put, know, kind of whatever they want, as long as DEP is okay with it on the label. This is relevant if the state were to ever raise the deposit value, this would have a distributor change their label today. And then if the state were to propose to go to 10¢ later on, or whatever deposit value, the distributor say, hey, I already changed my labels due to what you changed last year, this is going to be more expensive to change it. So this is just a just be clear about it. This way it is in almost all deposit states. You need to state on the label and you need the refund value period. And then there's a liquor redemption section where I mean, least by my read, it looks like it allows DLL to pay retailers a refund value and handling fee, but it makes no mention of redemption centers. And then there's a performance target section, more of like a goal. There's of course, know, when when it comes time for those targets to be met or not met, there'll be a lot of discussion about that. So Vermont should be upfront about what do you mean by redemption rate should be a calculation that's usually set based on like, for example, in Maine, it's, I think it's the number of containers eligible for a deposit that were returned, not including those collected through municipal, you know, collection programs, meaning outside the deposit program. And then I noticed, at least in the recent version, it had solid waste haulers and solid waste entities on the actual management board of the PRO. I mean, unless by solid weight, unless by those terms, they mean Tamara who picks up the programs and processes them for recycling, then those entities, solid waste haulers, solid waste entities are really not involved in the bottle deposit program at all. So it's kind of strange to have them in the actual driver's seat, that that would be probably more appropriate to have them in an advisory board capacity of some kind. But I would, you know, talk to the beverage industry about that, because they're the ones who are, at the end of day, going to be managing and investing in the program. And then last one is the bill. I mean, there's a lot of good criteria in here around what a return location needs to do in order to count towards the convenience standard. But it does also strike the minimum standard for return locations to be open to the public. And so that's a that's somewhat concerning because theoretically, if you could have the PRO open up a return location, open it up for two hours on a Saturday and four hours on a Tuesday and call it a day, we should remember that the without enforcement of those performance targets, then the PRO's incentive is to recycle less containers and not more. It's nothing against individual beverage companies, it's just the incentive structure in the program without those enforcement measures. So there should be some standard set for opening hours of some sort. And we may be happy to provide different examples of that, for example, in Quebec, which went through similar modernization efforts, but something of that sort may not make sense to us. And that's it. Happy to take any questions.

[Rep. Amy Sheldon (Chair)]: Great. Are you it's I think I heard you say you'll send these this specific list tomorrow?

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: Yes.

[Rep. Amy Sheldon (Chair)]: That would be great. And references to the page and line number would be very helpful.

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

[Rep. Amy Sheldon (Chair)]: Yeah. Do folks have questions? Representative Austin.

[Rep. Sarah "Sarita" Austin (Clerk)]: Do you know of states that are using, like, emerging technology? I mean, is there is there emerging technology that we should be aware of that might make it more efficient or manageable?

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: Nothing. That has been proven at scale quite yet. I think everybody is looking into AI because that provides some ways to redeem containers quickly. It does have trade offs with respect to both fraud and the quality of the material you get on the other end. So it's kind of like what is the PRO or the state comfortable with? On the material quality point, you could theoretically run a lot of containers through an AI recognition system. And, but then, if you're not sorting that or have some sort of like cleaning mechanism upfront, then you end up with contamination in the program. So there's there would need to be a solve for that. And then on the fraud front, the reason why, you know, universal product codes and barcodes are the gold standard for deposit return programs is because it really ties it to a specific distributor. All those barcodes are registered in the program. AI at this point doesn't necessarily read the barcode, but it would look for brands and different images. And so it's tying a container to a brand, and then that's a less level of specificity than you get with barcodes. And then of course, need to make sure any AI equipment is actually accurate at reading the brand, although that's that kind of tech is getting better. So that's, that's kind of the state of play. It's like something that's definitely being looked at, but it's not quite here yet at scale.

[Rep. Amy Sheldon (Chair)]: Okay. Are you able to share any knowledge about handling fees and the transition that we would be undergoing if this bill goes into effect? I mean, one of the concerns we've had is we want to support existing redemption centers, but also acknowledge capital investments that will make it more efficient to process containers. Do you have any thoughts on that?

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: To be honest, I want to talk with our head of material recovery to see what his take would be on that because he would have probably has a better handle on the cost per container. It really has a lot to do with the volume that the given return location is doing. Like if you're a small return location, then you really need, you know, each container to be worth more. If you're doing a lot of containers, maybe you don't need it as much. It has all has to do with volume. Vermont's pretty low volume state without water in the program or 10¢. But those are generally generally like the deposit economics. Beyond that, it's more I think it's a it's kind of a redemption center mom and pop issue. You know, I think I would be if I was them, I'd a little bit nervous because I don't I don't necessarily see the guarantee. Oh, sorry, the version yesterday, you know, there was a floor at least for three years. But even then, that might make me nervous if I invested in my, in my business for the better part of the decade or whatever. But from a tech standpoint, I'll get back to you with some more specific thoughts.

[Rep. Amy Sheldon (Chair)]: Yeah, and how other jurisdictions may have transitioned. Yeah, I know you're probably the most familiar with more jurisdictions of anyone we hear from.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: I don't have a great example of a deposit system that has gone from a centralized system to more, sorry, decentralized to centralized. I mean, might be a close example. Their PRO is somewhat similar. However, they did not touch the handling fee, they just kept it. And there was no real discussion about minimum. Well, sorry, the PRO needs to conduct a study, and they'll come back and make a recommendation based on those findings to the legislature. And then it's kind of like up to legislature again. So I guess that's, that's probably the most relevant example. But it's, it's tricky. I mean, there's clearly some opportunities for efficiencies and accountability in the program. But there's, there's, existing businesses, and they've provided a service for years. So yeah, it's not a straightforward solution out there.

[Rep. Amy Sheldon (Chair)]: All right, do members have any more questions, Mike, before we let them go?

[Rep. Larry Satcowitz (Ranking Member)]: Not seeing any. Thank you

[Rep. Amy Sheldon (Chair)]: so much for joining us, we look forward to your written testimony.

[Michael (Mike) Noel, Public Affairs Director, TOMRA]: Absolutely. Thanks for your time. Bye, everybody.

[Rep. Amy Sheldon (Chair)]: Right, members. That was a lot today. So with that, we will adjourn for the afternoon.