Connecticut Seal

General Assembly

File No. 417

    January Session, 2017

Substitute Senate Bill No. 996

Senate, April 4, 2017

The Committee on Environment reported through SEN. KENNEDY of the 12th Dist. and SEN. MINER of the 30th Dist., Chairpersons of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT ESTABLISHING A BOTTLE RECYCLING FEE IN LIEU OF A REFUNDABLE DEPOSIT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective October 1, 2017) (a) For purposes of this section:

(1) "Early recycling fee beverage" means any beverage that is a juice, tea, sports drink, spirit or alcohol;

(2) "Beverage container" means the individual, separate, sealed glass, metal or plastic bottle, can, jar or carton containing an early recycling fee beverage, but does not include a bottle, can, jar or carton of more than fifty milliliters in size if containing a spirit or alcohol;

(3) "Consumer" means every person who purchases a beverage in a beverage container for use or consumption;

(4) "Dealer" means every person who engages in the sale of early recycling fee beverages in beverage containers to a consumer;

(5) "Distributor" means every person who engages in the sale of early recycling fee beverages in beverage containers to a dealer in this state including any manufacturer who engages in such sale and includes a dealer who engages in the sale of early recycling fee beverages in beverage containers on which no recycling fee has been collected prior to retail sale;

(6) "Manufacturer" means every person bottling, canning or otherwise filling beverage containers for sale to distributors or dealers or, in the case of private label brands, the owner of the private label trademark;

(7) "Place of business of a dealer" means the fixed location at which a dealer sells or offers for sale early recycling fee beverages in beverage containers to consumers;

(8) "Use or consumption" includes the exercise of any right or power over an early recycling fee beverage incident to the ownership thereof, other than the sale or the keeping or retention of an early recycling fee beverage for the purposes of sale; and

(9) "Recycling fee initiator" means the first dealer to collect the recycling fee on a beverage container sold to any person within this state.

(b) Every beverage container containing an early recycling fee beverage sold or offered for sale in this state by a dealer to a consumer, except for any such beverage containers sold or offered for sale for consumption on an interstate passenger carrier, shall have a recycling fee. Such recycling fee shall not be less than four cents.

(c) Each recycling fee initiator shall open a special interest-bearing account at a Connecticut branch of a financial institution, as defined in section 45a-557a of the general statutes, to the credit of the recycling fee initiator. Each recycling fee initiator shall deposit in such account an amount equal to the recycling fee established pursuant to subsection (b) of this section for each beverage container sold by such recycling fee initiator. Such deposit shall be made not more than one month after the date such beverage container is sold. All interest, dividends and returns earned on the special account shall be paid directly into such account. Such moneys shall be kept separate and apart from all other moneys in the possession of the recycling fee initiator. The amount required to be deposited pursuant to this section, when deposited, shall be held to be a special fund in trust for the state.

(d) Each recycling fee initiator shall submit a quarterly report for the immediately preceding calendar quarter, on or before the last day of the month next succeeding the close of such quarter. Each such report shall be submitted to the Commissioner of Revenue Services, on a form prescribed by the Commissioner of Revenue Services, and with such information as the Commissioner of Revenue Services deems necessary, including, but not limited to, the following information: (1) The balance in the special account at the beginning of the quarter for which the report is prepared, (2) all recycling fees credited to such account during such quarter, including all recycling fees paid to the deposit initiator and all interest, dividends or returns received on such account, (3) all withdrawals from such account during such quarter, including all service charges and overdraft charges on such account and all payments made pursuant to subsection (c) of this section, and (4) the balance in such account at the close of the quarter for which the report is prepared. Such quarterly report shall be filed electronically with the Commissioner of Revenue Services, in the manner provided by chapter 228g of the general statutes.

(e) On or before January 31, 2018, each recycling fee initiator shall pay the balance outstanding in the special account that is attributable to the period from October 1, 2017, to January 30, 2018, inclusive, to the Commissioner of Revenue Services for deposit in the General Fund. Subsequently, the balance outstanding in the special account that is attributable to the immediately preceding calendar quarter shall be paid by the recycling fee initiator on or before the last day of the month next succeeding the close of such quarter to the Commissioner of Revenue Services for deposit in the General Fund. If the amount of the required payment pursuant to this subdivision is not paid on or before the due date, a penalty of ten per cent of the amount due and unpaid, or fifty dollars, whichever is greater, shall be imposed. The amount due and unpaid shall bear interest at the rate of one per cent per month or fraction thereof, from the due date. Any such penalty or interest shall not be paid from funds maintained in such special account. Such required payment shall be made by electronic funds transfer to the Commissioner of Revenue Services, in the manner provided by chapter 228g of the general statutes.

(f) The Commissioner of Revenue Services may examine the accounts and records of any recycling fee initiator maintained under this section and any related accounts and records, including receipts, disbursements and such other items as the Commissioner of Revenue Services deems appropriate.

(g) The Attorney General may, independently or upon complaint of the Commissioner of Energy and Environmental Protection or the Commissioner of Revenue Services, institute any appropriate action or proceeding to enforce any provision of this section.

(h) The provisions of sections 12-548, 12-550 to 12-554, inclusive, and 12-555a of the general statutes shall be deemed to apply to the provisions of this section, except any provision of sections 12-548, 12-550 to 12-554, inclusive, and 12-555a of the general statutes that is inconsistent with the provision in this section.

(i) Any payment required pursuant to this section shall be treated as a tax for purposes of sections 12-30b, 12-33a, 12-35a, 12-39g and 12-39h of the general statutes.

(j) For the period commencing October 1, 2017, and ending July 1, 2018, the Commissioner of Revenue Services shall make any recycling fees collected pursuant to this section available for payment to the redemption centers established pursuant to section 22a-245 of the general statutes, as amended by this act, in a manner that enables any dealer or operator of such redemption center to realize a handling fee of two and one-half cents for each container of beer or other malt beverage and three cents for each container of mineral waters, soda water, and similar carbonated soft drink or noncarbonated beverage returned for redemption, in accordance with the provisions of sections 22a-243 to 22a-246, inclusive, of the general statutes, as amended by this act.

(k) Any person who violates any provision of this section shall be fined by the Commissioner of Revenue Services or the Commissioner of Energy and Environmental Protection, as applicable, not less than fifty dollars nor more than one hundred dollars, and for a second offense shall be fined not less than one hundred dollars nor more than two hundred dollars and for a third or subsequent offense shall be fined not less than two hundred fifty dollars or more than five hundred dollars.

Sec. 2. (NEW) (Effective October 1, 2017) Notwithstanding the provisions of section 22a-245a of the general statutes, as amended by this act, any balance in a special interest-bearing account established pursuant to section 22a-245a of the general statutes, as amended by this act, as of March 31, 2018, and as of June 30, 2018, shall be held in trust for the state by the deposit initiator and shall be used to refund deposits to dealers until August 31, 2018. Any remaining balance in any such account as of September 1, 2018, shall be paid to the Commissioner of Revenue Services for deposit in the General Fund.

Sec. 3. Section 22a-243 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

For purposes of sections 22a-243 to 22a-245c, inclusive, as amended by this act:

(1) "Carbonated beverage" means beer or other malt beverages, and mineral waters, soda water and similar carbonated soft drinks in liquid form and intended for human consumption;

(2) "Noncarbonated beverage" means, juice, tea, sports drink, spirit or liquor and water, including flavored water, nutritionally enhanced water and any beverage that is identified through the use of letters, words or symbols on such beverage's product label as a type of water, but excluding [juice and] mineral water;

(3) "Beverage container" means the individual, separate, sealed glass, metal or plastic bottle, can, jar or carton containing a carbonated or noncarbonated beverage, but does not include a bottle, can, jar or carton (A) three liters or more in size if containing a noncarbonated beverage, [or] (B) made of high-density polyethylene, or (C) more than fifty milliliters in size if containing a spirit or liquor;

(4) "Consumer" means every person who purchases a beverage in a beverage container for use or consumption;

(5) "Dealer" means every person who engages in the sale of beverages in beverage containers to a consumer;

(6) "Distributor" means every person who engages in the sale of beverages in beverage containers to a dealer in this state including any manufacturer who engages in such sale and includes a dealer who engages in the sale of beverages in beverage containers on which no [deposit] recycling fee has been collected prior to retail sale;

(7) "Manufacturer" means every person bottling, canning or otherwise filling beverage containers for sale to distributors or dealers or, in the case of private label brands, the owner of the private label trademark;

[(8) "Place of business of a dealer" means the fixed location at which a dealer sells or offers for sale beverages in beverage containers to consumers;

(9) "Redemption center" means any facility established to redeem empty beverage containers from consumers or to collect and sort empty beverage containers from dealers and to prepare such containers for redemption by the appropriate distributors;]

[(10)] (8) "Use or consumption" includes the exercise of any right or power over a beverage incident to the ownership thereof, other than the sale or the keeping or retention of a beverage for the purposes of sale; and

[(11) "Nonrefillable beverage container" means a beverage container which is not designed to be refilled and reused in its original shape; and]

[(12) "Deposit initiator"] (9) "Recycling fee initiator" means the [first distributor to collect the deposit] dealer who collects the recycling fee on a beverage container sold to any person within this state.

Sec. 4. Section 22a-244 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

(a) (1) [Every] For the period beginning July 1, 2018, and ending July 1, 2025, every beverage container containing a carbonated beverage sold or offered for sale to a consumer by a dealer in this state, except for any such beverage containers sold or offered for sale for consumption on an interstate passenger carrier, shall have a [refund value] recycling fee. Such [refund value] recycling fee shall not be less than [five] four cents and shall be a uniform amount throughout the distribution process in this state. (2) [Every] For the period beginning July 1, 2018, and ending July 1, 2025, every beverage container containing a noncarbonated beverage sold or offered for sale in this state shall have a [refund value] recycling fee, except for beverage containers containing a noncarbonated beverage that are [(A)] sold or offered for sale for consumption on an interstate passenger carrier. [, or (B) that comprise any dealer's existing inventory as of March 31, 2009. Such refund value] Such recycling fee shall not be less than [five] four cents. [and shall be a uniform amount throughout the distribution process in this state.]

[(b) Every beverage container sold or offered for sale in this state, that has a refund value pursuant to subsection (a) of this section, shall clearly indicate by embossing or by a stamp or by a label or other method securely affixed to the beverage container (1) either the refund value of the container or the words "return for deposit" or "return for refund" or other words as approved by the Department of Energy and Environmental Protection, and (2) either the word "Connecticut" or the abbreviation "Ct.", provided this subdivision shall not apply to glass beverage containers permanently marked or embossed with a brand name.]

[(c)] (b) No person shall sell or offer for sale in this state any metal beverage container (1) a part of which is designed to be detached in order to open such container, or (2) that is connected to another beverage container by a device constructed of a material which does not decompose by photodegradation, chemical degradation or biodegradation within a reasonable time after exposure to the elements.

Sec. 5. Section 22a-245a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

(a) Each [deposit] recycling fee initiator shall open a special interest-bearing account at a Connecticut branch of a financial institution, as defined in section 45a-557a, to the credit of the [deposit] recycling fee initiator. Each [deposit] recycling fee initiator shall deposit in such account an amount equal to the [refund value] recycling fee established pursuant to subsection (a) of section 22a-244, as amended by this act, for each beverage container sold by such [deposit] recycling fee initiator. Such [deposit] recycling fee shall be made not more than one month after the date such beverage container is sold. [, provided for any beverage container sold during the period from December 1, 2008, to December 31, 2008, inclusive, such deposit shall be made not later than January 5, 2009.] All interest, dividends and returns earned on the special account shall be paid directly into such account. Such moneys shall be kept separate and apart from all other moneys in the possession of the [deposit] recycling fee initiator. The amount required to be deposited pursuant to this section, when deposited, shall be held to be a special fund in trust for the state.

[(b) (1) Any reimbursement of the refund value for a redeemed beverage container shall be paid from the deposit initiator's special account, with such payment to be computed, subject to the provisions of subdivision (2) of this subsection, under the cash receipts and disbursements method of accounting, as described in Section 446(c)(1) of the Internal Revenue Code of 1986, or any subsequent corresponding Internal Revenue Code of the United States, as amended from time to time.

(2) A deposit initiator may petition the Commissioner of Revenue Services for an alternate method of accounting by filing with such deposit initiator's return a statement of objections and other proposed alternate method of accounting, as such deposit initiator believes proper and equitable under the circumstances, that is accompanied by supporting details and proof. The Commissioner of Revenue Services shall promptly notify such deposit initiator whether the proposed alternate method is accepted as reasonable and equitable and, if so accepted, shall adjust such deposit initiator's return and payment of reimbursement accordingly.]

[(c)] (b) (1) [Each deposit initiator shall submit a report on March 15, 2009, for the period from December 1, 2008, to February 28, 2009, inclusive.] Each [deposit] recycling fee initiator shall submit a report on [July 31, 2009] October 31, 2018, for the period from [March 1, 2009, to June 30, 2009] July 1, 2018, to September 30, 2018, inclusive, and thereafter shall submit a quarterly report for the immediately preceding calendar quarter one month after the close of such quarter. Each such report shall be submitted to the Commissioner of Energy and Environmental Protection, on a form prescribed by the commissioner and with such information as the commissioner deems necessary, including, but not limited to: (A) The balance in the special account at the beginning of the quarter for which the report is prepared; (B) a list of all [deposits] recycling fees credited to such account during such quarter, including all [refund values] recycling fees paid to the [deposit] recycling fee initiator and all interest, dividends or returns received on the account; (C) a list of all withdrawals from such account during such quarter, all service charges and overdraft charges on the account and all payments made pursuant to subsection [(d)] (c) of this section; and (D) the balance in the account at the close of the quarter for which the report is prepared.

(2) Each [deposit] recycling fee initiator shall submit a report on October 31, [2010] 2018, for the calendar quarter beginning July 1, [2010] 2018. Subsequently, each [deposit] recycling fee initiator shall submit a quarterly report for the immediately preceding calendar quarter, on or before the last day of the month next succeeding the close of such quarter. Each such report shall be submitted to the Commissioner of Revenue Services, on a form prescribed by the Commissioner of Revenue Services, and with such information as the Commissioner of Revenue Services deems necessary, including, but not limited to, the following information: (A) The balance in the special account at the beginning of the quarter for which the report is prepared, (B) all [deposits] recycling fees credited to such account during such quarter, including all [refund values] recycling fees paid to the [deposit] recycling fee initiator and all interest, dividends or returns received on such account, (C) all withdrawals from such account during such quarter, including all service charges and overdraft charges on such account and all payments made pursuant to subsection [(d)] (c) of this section, and (D) the balance in such account at the close of the quarter for which the report is prepared. Such quarterly report shall be filed electronically with the Commissioner of Revenue Services, in the manner provided by chapter 228g.

[(d) (1) On or before April 30, 2009, each deposit initiator shall pay the balance outstanding in the special account that is attributable to the period from December 1, 2008, to March 31, 2009, inclusive, to the Commissioner of Energy and Environmental Protection for deposit in the General Fund. Thereafter, the balance outstanding in the special account that is attributable to the immediately preceding calendar quarter shall be paid by the deposit initiator one month after the close of such quarter to the Commissioner of Energy and Environmental Protection for deposit in the General Fund. If the amount of the required payment pursuant to this subdivision is not paid by the date seven days after the due date, a penalty of ten per cent of the amount due shall be added to the amount due. The amount due shall bear interest at the rate of one and one-half per cent per month or fraction thereof, from the due date. Any such penalty or interest shall not be paid from funds maintained in the special account.]

[(2)] (c) On or before October 31, [2010] 2018, each [deposit] recycling fee initiator shall pay the balance outstanding in the special account that is attributable to the period from July 1, [2010] 2018, to September 30, [2010] 2018, inclusive, to the Commissioner of Revenue Services for deposit in the General Fund. Subsequently, the balance outstanding in the special account that is attributable to the immediately preceding calendar quarter shall be paid by the [deposit] recycling fee initiator on or before the last day of the month next succeeding the close of such quarter to the Commissioner of Revenue Services for deposit in the General Fund. The recycling fee initiator shall deduct from each quarterly payment due to the commissioner an amount equal to the recycling fees charged to dealers that are determined to be permanently uncollectable during the preceding calendar quarter. If the amount of the required payment pursuant to this subdivision is not paid on or before the due date, a penalty of ten per cent of the amount due and unpaid, or fifty dollars, whichever is greater, shall be imposed. The amount due and unpaid shall bear interest at the rate of one per cent per month or fraction thereof, from the due date. Any such penalty or interest shall not be paid from funds maintained in such special account. Such required payment shall be made by electronic funds transfer to the Commissioner of Revenue Services, in the manner provided by chapter 228g.

[(e) If moneys deposited in the special account are insufficient to pay for withdrawals authorized pursuant to subsection (b) of this section, the amount of such deficiency shall be subtracted from the next succeeding payment or payments due pursuant to subsection (d) of this section until the amount of the deficiency has been subtracted in full.]

[(f)] (d) The Commissioner of Revenue Services may examine the accounts and records of any [deposit] recycling fee initiator maintained under this section or [sections] section 22a-243 [to 22a-245, inclusive,] or 22a-244, as amended by this act, and any related accounts and records, including receipts, disbursements and such other items as the Commissioner of Revenue Services deems appropriate.

[(g)] (e) The Attorney General may, independently or upon complaint of the Commissioner of Energy and Environmental Protection or the Commissioner of Revenue Services, institute any appropriate action or proceeding to enforce any provision of this section. [or any regulation adopted pursuant to section 22a-245 to implement the provisions of this section.]

[(h)] (f) The provisions of sections 12-548, 12-550 to 12-554, inclusive, and 12-555a shall be deemed to apply to the provisions of this section, except any provision of sections 12-548, 12-550 to 12-554, inclusive, and 12-555a that is inconsistent with the provision in this section.

[(i)] (g) Any payment required pursuant to this section shall be treated as a tax for purposes of sections 12-30b, 12-33a, 12-35a, 12-39g and 12-39h.

[(j) Not later than July 1, 2010, the Department of Energy and Environmental Protection or successor agency shall establish a procedure that allows each such deposit initiator to take a credit against any payment made pursuant to subsection (d) of this section in the amount of the deposits refunded on beverage containers which such deposit initiator donated for any charitable purpose.]

Sec. 6. Section 22a-245b of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

Any manufacturer who bottles and sells two hundred fifty thousand or fewer beverage containers containing a noncarbonated beverage that are twenty ounces or less in size each calendar year may apply to the Commissioner of Energy and Environmental Protection for an exemption from the requirements of sections 22a-244 [to] and 22a-245a, [inclusive] as amended by this act, with regard to such beverage containers containing noncarbonated beverages. Such application shall be accompanied by a sworn affidavit signed by such manufacturer or such manufacturer's authorized agent certifying such manufacturer bottles and sells two hundred fifty thousand or fewer of such beverage containers per calendar year. [Any such application filed on or before April 1, 2009, shall be deemed automatically approved and such exemption shall remain valid until December 31, 2009.] Not later than [November 1, 2009] October 31, 2018, and each year thereafter, each such manufacturer or such manufacturer's authorized agent may apply to the commissioner for an exemption in accordance with this section on a form prescribed by the commissioner. The commissioner shall approve each such application not later than thirty days after the receipt of the application by the commissioner, provided the applicant satisfies the requirements of this section.

Sec. 7. Section 22a-245c of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

Any manufacturer, dealer or distributor of beverage containers containing noncarbonated beverages may apply to the Governor or the Secretary of the Office of Policy and Management for a delay in the implementation of the requirements imposed by the provisions of sections 22a-244 [to] and 22a-245a, [inclusive] as amended by this act, with regard to such beverage containers containing noncarbonated beverages. Such application may be on a form prescribed by the Governor or the secretary. The Governor or the secretary may delay the implementation of such requirements upon the showing of undue hardship to the industries affected by such requirements, but in no case shall such requirements be implemented later than October 1, [2009] 2019.

Sec. 8. Section 22a-246 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

Any person who violates any provision of section 22a-244 [, 22a-245] or 22a-245a, as amended by this act, shall be fined not less than fifty dollars nor more than one hundred dollars, and for a second offense shall be fined not less than one hundred dollars nor more than two hundred dollars and for a third or subsequent offense shall be fined not less than two hundred fifty dollars or more than five hundred dollars.

Sec. 9. Subsection (b) of section 22a-251 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

(b) The provisions of sections 22a-247 to 22a-249, inclusive, and 22a-250 shall be in addition to and shall not supersede any provision of [sections] section 22a-243 [to 22a-245, inclusive] or 22a-244, as amended by this act.

Sec. 10. Subdivision (8) of section 12-407 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

(8) (A) "Sales price" means the total amount for which tangible personal property is sold by a retailer, the total amount of rent for which occupancy of a room is transferred by an operator, the total amount for which any service described in subdivision (2) of this subsection is rendered by a retailer or the total amount of payment or periodic payments for which tangible personal property is leased by a retailer, valued in money, whether paid in money or otherwise, which amount is due and owing to the retailer or operator and, subject to the provisions of subdivision (1) of section 12-408, whether or not actually received by the retailer or operator, without any deduction on account of any of the following: (i) The cost of the property sold; (ii) the cost of materials used, labor or service cost, interest charged, losses or any other expenses; (iii) for any sale occurring on or after July 1, 1993, any charges by the retailer to the purchaser for shipping or delivery, notwithstanding whether such charges are separately stated in a written contract, or on a bill or invoice rendered to such purchaser or whether such shipping or delivery is provided by the retailer or a third party. The provisions of subparagraph (A) (iii) of this subdivision shall not apply to any item exempt from taxation pursuant to section 12-412. Such total amount includes any services that are a part of the sale; except as otherwise provided in subparagraph (B)(v) or (B)(vi) of this subdivision, any amount for which credit is given to the purchaser by the retailer, and all compensation and all employment-related expenses, whether or not separately stated, paid to or on behalf of employees of a retailer of any service described in subdivision (2) of this subsection.

(B) "Sales price" does not include any of the following: (i) Cash discounts allowed and taken on sales; (ii) any portion of the amount charged for property returned by purchasers, which upon rescission of the contract of sale is refunded either in cash or credit, provided the property is returned within ninety days from the date of purchase; (iii) the amount of any tax, not including any manufacturers' or importers' excise tax, imposed by the United States upon or with respect to retail sales whether imposed upon the retailer or the purchaser; (iv) the amount charged for labor rendered in installing or applying the property sold, provided such charge is separately stated and exclusive of such charge for any service rendered within the purview of subparagraph (I) of subdivision (37) of this subsection; (v) unless the provisions of subdivision (4) of section 12-430 or of section 12-430a are applicable, any amount for which credit is given to the purchaser by the retailer, provided such credit is given solely for property of the same kind accepted in part payment by the retailer and intended by the retailer to be resold; (vi) the full face value of any coupon used by a purchaser to reduce the price paid to a retailer for an item of tangible personal property, whether or not the retailer will be reimbursed for such coupon, in whole or in part, by the manufacturer of the item of tangible personal property or by a third party; (vii) the amount charged for separately stated compensation, fringe benefits, workers' compensation and payroll taxes or assessments paid to or on behalf of employees of a retailer who has contracted to manage a service recipient's property or business premises and renders management services described in subparagraph (I) or (J) of subdivision (37) of this subsection, provided, the employees perform such services solely for the service recipient at its property or business premises and "sales price" shall include the separately stated compensation, fringe benefits, workers' compensation and payroll taxes or assessments paid to or on behalf of any employee of the retailer who is an officer, director or owner of more than five per cent of the outstanding capital stock of the retailer. Determination whether an employee performs services solely for a service recipient at its property or business premises for purposes of this subdivision shall be made by reference to such employee's activities during the time period beginning on the later of the commencement of the management contract, the date of the employee's first employment by the retailer or the date which is six months immediately preceding the date of such determination; (viii) the amount charged for separately stated compensation, fringe benefits, workers' compensation and payroll taxes or assessments paid to or on behalf of (I) a leased employee, or (II) a worksite employee by a professional employer organization pursuant to a professional employer agreement. For purposes of this subparagraph, an employee shall be treated as a leased employee if the employee is provided to the client at the commencement of an agreement with an employee leasing organization under which at least seventy-five per cent of the employees provided to the client at the commencement of such initial agreement qualify as leased employees pursuant to Section 414(n) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or the employee is added to the client's workforce by the employee leasing organization subsequent to the commencement of such initial agreement and qualifies as a leased employee pursuant to Section 414(n) of said Internal Revenue Code of 1986 without regard to subparagraph (B) of paragraph (2) thereof. A leased employee, or a worksite employee subject to a professional employer agreement, shall not include any employee who is hired by a temporary help service and assigned to support or supplement the workforce of a temporary help service's client; (ix) any amount received by a retailer from a purchaser as the battery deposit that is required to be paid under subsection (a) of section 22a-245h; the [refund value] recycling fee of a beverage container that is required to be paid under subsection (a) of section 22a-244, as amended by this act; or a deposit that is required by law to be paid by the purchaser to the retailer and that is required by law to be refunded to the purchaser by the retailer when the same or similar tangible personal property is delivered as required by law to the retailer by the purchaser, if such amount is separately stated on the bill or invoice rendered by the retailer to the purchaser; and (x) the amount charged for separately stated compensation, fringe benefits, workers' compensation and payroll taxes or assessments paid to a media payroll services company, as defined in this subsection.

Sec. 11. (NEW) (Effective July 1, 2018) (a) There is established a separate, nonlapsing account within the General Fund, known as the "recycling fee account". The Commissioner of Revenue Services shall credit two cents of every recycling fee received by the commissioner in accordance with the provisions of sections 22a-244 and 22a-245a of the general statutes, as amended by this act, to the recycling fee account. Said account may also receive funds from private or public sources, including the federal government or a municipal government.

(b) Within the recycling fee account, there shall be the following subaccounts, the: (1) Collectors' subaccount, (2) tipping fee subaccount, and (3) beverage container reuse subaccount. The commissioner shall credit the recycling fees received in the recycling fee account, pursuant to subsection (a) of this section, equally among each of the three subaccounts established pursuant to this subsection.

(c) Any funds credited to the collectors' subaccount in accordance with the provisions of subsection (b) of this section shall be utilized to make payments to collectors registered to haul solid waste pursuant to section 22a-220a of the general statutes. Such payments shall be made in a manner that reflects any verifiable increased volume in the number of beverage containers, as defined in section 22a-243 of the general statutes, as amended by this act, that a collector hauls as a result of the provisions of section 12 of this act. The Commissioners of Revenue Services and Energy and Environmental Protection shall determine the terms and amount of any such payment, including, but not limited to, the frequency of any such payments. The Commissioner of Energy and Environmental Protection, in consultation with the Commissioner of Revenue Services, may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this subsection.

(d) Any funds credited to the tipping fee subaccount in accordance with the provisions of subsection (b) of this section shall be utilized to make payments to municipalities that realize an increase in tipping fees paid by such municipalities that are verifiably attributable to the provisions of section 12 of this act. The Commissioners of Revenue Services and Energy and Environmental Protection shall determine the terms and amount of any such payment, including, but not limited to, the frequency of any such payments. The Commissioner of Energy and Environmental Protection, in consultation with the Commissioner of Revenue Services, may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this subsection. Nothing in this subsection shall be deemed to affect the payment of any grant to a municipality pursuant to section 22a-219b or 22a-219c of the general statutes.

(e) Any funds credited to the beverage container reuse subaccount in accordance with the provisions of subsection (b) of this section shall be utilized by the Commissioner of Energy and Environmental Protection and the Recycle CT Foundation, Inc. to fund the development of reuses for beverage containers, as defined in section 22a-243 of the general statutes, as amended by this act, that are recycled in accordance with the provisions of section 22a-241b of the general statutes. Such funds shall be expended to fund research, projects, purposes, including but not limited to, industry and businesses, and other efforts that result in the reuse of such beverage containers in this state. The Commissioner of Energy and Environmental Protection, in consultation with the Recycle CT Foundation Council, shall determine the requirements and terms for any funds awarded to any person pursuant to the provisions of this subsection, including, but not limited to, the amount of any funds awarded pursuant to this subsection. In developing such requirements, the commissioner may consult with Connecticut Innovations, Incorporated. Such quasi-public agency shall provide the commissioner with any information that the commissioner determines is necessary for the performance of the commissioner's responsibilities pursuant to this subsection. The Commissioner of Energy and Environmental Protection may adopt regulations in accordance with the provisions of chapter 54 of the general statutes to implement the provisions of this subsection.

Sec. 12. Section 22a-245 of the general statutes is repealed. (Effective July 1, 2018)

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2017

New section

Sec. 2

October 1, 2017

New section

Sec. 3

July 1, 2018

22a-243

Sec. 4

July 1, 2018

22a-244

Sec. 5

July 1, 2018

22a-245a

Sec. 6

July 1, 2018

22a-245b

Sec. 7

July 1, 2018

22a-245c

Sec. 8

July 1, 2018

22a-246

Sec. 9

July 1, 2018

22a-251(b)

Sec. 10

July 1, 2018

12-407(8)

Sec. 11

July 1, 2018

New section

Sec. 12

July 1, 2018

Repealer section

Statement of Legislative Commissioners:

In Subdivision (2) of Section 4, "For the period beginning July 1, 2018, and ending October 1, 2025, every" was added for consistency. In Section 11, references to "Section 10" were changed to "Section 12", for accuracy.

ENV

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Revenue Serv., Dept.

GF - Cost

522,034

489,378

State Comptroller - Fringe Benefits1

GF - Cost

111,206

148,275

Department of Revenue Services

GF - Revenue Gain

Potential

None

Department of Revenue Services

GF - Revenue Loss

None

1.1 million

Department of Revenue Services

GF- Recycling Fee Account - Revenue Gain

None

32.4 million

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 18 $

FY 19 $

Various Municipalities

STATE MANDATE - Cost

None

Potential

Various Municipalities

Revenue Gain

None

Potential

Explanation

The bill replaces the current bottle redemption system with an expanded recycling program that levies a non-refundable minimum four-cent fee on an expanded range of containers beginning in FY 18 and ending in FY 25.2

Elimination of Bottle Redemption System

The bill eliminates the existing bottle redemption system beginning on July 1, 2018. This results in a General Fund revenue loss of approximately $33.5 million annually from bottle escheats beginning in FY 19.

Section 2 of the bill specifies any balance in bottle redemption accounts as of March 31, 2018 and June 30, 2018 be used to refund deposits to dealers until August 31, 2018 with any balance remaining on September 1, 2018 to be deposited in the General Fund. To the extent this results in a one-time increase in escheat revenue to the General Fund, the revenue loss could be less than $33.5 million in FY 19.

Early Recycling Fee

Effective October 1, 2017 the bill establishes a minimum four-cent “early recycling fee” on juice, tea, sports drinks, and spirits or alcohol in containers of up to 50 milliliters (“nips”). This is estimated to generate approximately $11 million in FY 18.3

The bill specifies that this revenue be deposited in the General Fund and be made available to redemption centers in a manner that enables them to realize handling fees at higher rates than under current law. It is assumed that any revenue remaining after payments to redemption centers would remain in the General Fund; thus, this results in a potential one-time revenue gain to the General Fund in FY 18.

The bill establishes fines for violation of the early recycling fee provisions. To the extent any such violations occur, this results in a potential minimal revenue gain in FY 18.

Recycling Fee

Beginning July 1, 2018 and continuing until July 1, 2025 the bill establishes a minimum four-cent recycling fee on beverage containers subject to the current bottle redemption law and juice, tea, sports drinks, and nips. This is estimated to generate approximately $64.9 million annually.

The bill specifies that half the revenue be deposited in the General Fund and half the revenue be deposited in a new Recycling Fee Account within the General Fund. This results in a General Fund revenue gain of approximately $32.4 million annually from FY 19 through FY 25, and a Recycling Fee Account revenue gain of approximately $32.4 million annually from FY 19 through FY 25.

The bill further specifies that revenue deposited in the Recycling Fee Account be split evenly between the collector's subaccount, tipping fee subaccount, and beverage container use subaccount for various enumerated uses.

Administrative Costs

To administer the newly established fee, the Department of Revenue Services (DRS) would require two Revenue Examiners ($66,213 for salary and $25,214 for fringe costs each), two Tax Corrections Examiners ($58,640 for salary and $22,330 for fringe costs each), and two Revenue Agents ($69,836 for salary and $26,594 for fringe costs each), as well as approximately $100,000 in annual overtime and temporary employee costs. This estimate is based on the administrative requirements of other state trust taxes.

The DRS would also incur a one-time cost of approximately $155,000 in FY 18 for form development and printing, changes to the online Taxpayer Service Center (TSC) associated with electronic filing, programming changes to the agency's Integrated Tax Administration System (ITAS), and mailing expenses.

Municipal Impact

There is a cost to municipalities that experience increased tipping fees as a result of the expanded recycling program under the bill's provisions. The cost will vary based on the volume of new items municipalities must recycle. It is anticipated that the cost to municipalities will be at least partially offset by revenue deposited into the newly established tipping fee subaccount and used to reimburse municipalities for these costs.

The Out Years

The annualized ongoing fiscal impact identified above associated with the recycling fee would continue through FY 25, at which point the recycling fee terminates. The annualized ongoing revenue loss from the elimination of the bottle redemption system would continue into the future.

Sources:

Container Recycling Institute

 

Department of Revenue Services Bottle Escheat Data

 

Maine Bureau of Alcoholic Beverages and Lottery Operations Sales Figures

OLR Bill Analysis

sSB 996

AN ACT ESTABLISHING A BOTTLE RECYCLING FEE IN LIEU OF A REFUNDABLE DEPOSIT.

SUMMARY

This bill replaces the existing bottle redemption system with a two-phase beverage container recycling system covering an expanded range of containers. Under the new system retail customers pay a minimum four-cent, nonrefundable recycling fee instead of a redeemable nickel deposit on covered beverage containers, as the current system requires. The bill terminates the new recycling program on July 1, 2025.

In the first phase of the new recycling system, starting October 1, 2017, the bill imposes a recycling fee on items not redeemable under current law: juice; tea; sports drinks; and spirits or alcohol in containers of up to 50 milliliters (“nips”). The bill refers to these beverages as “early recycling fee beverages.”

The second phase, starting July 1, 2018, expands the recycling program by also imposing the minimum four-cent recycling fee on containers that are now redeemable. These include containers for beer and other malt beverages, mineral water, soda and other carbonated soft drinks, and water. As under current law, containers include bottles, cans, jars, and cartons made of glass, metal, or plastic.

Beginning July 1, 2018, the bill requires that two cents of each four-cent recycling fee be used to (1) develop reuses for the recycled containers and (2) help compensate solid waste haulers and municipalities for increases in the volume of recycled material.

The bill increases, for the nine months between October 1, 2017 and July 1, 2018, the handling fee distributors pay retailers and redemption centers. It increases, from 1.5 cents to 2.5 cents, the handling fee for beer and malt beverages, and, from 2 cents to 3 cents, the handling fee for soda and carbonated drinks, mineral water, and water. It eliminates redemption centers as of July 1, 2018.

The bill generally imposes on the recycling program the same administrative and enforcement requirements that now apply to the bottle redemption program, including specifying that the recycling fee is not part of an item's price for sales tax purposes.

The governor or Office of Policy and Management secretary may delay implementation of provisions of the bill that take effect July 1, 2018 for manufacturers, dealers, or distributors of noncarbonated beverages (water, juice, tea, sports drinks, or nips) if they can show that the recycling fee would create undue hardship for their businesses. But the bill must be implemented no later than October 1, 2019. It is not clear how the bill affects manufacturers and distributors.

The bill also makes conforming changes.

EFFECTIVE DATE: October 1, 2017 for the provisions affecting juice, tea, sports drinks, and certain liquor bottles and July 1, 2018 for the provisions affecting beverages now redeemable.

EARLY RECYCLING FEE (PHASE I)

Fee Amount and Base

Starting October 1, 2017, the bill imposes a recycling fee of at least four cents on containers of juice; tea; sports drinks; and spirits or alcohol in containers of up to 50 milliliters (“nips”). Containers include certain bottles, cans, jars, and cartons made of glass, metal, or plastic. Unlike the current bottle redemption system, the bill does not require that these containers be specially marked or identified. (The bill defines several terms, such as distributor and manufacturer, to which it does not later refer in this section.)

Special Accounts

Under the bill, a recycling fee initiator (hereinafter “initiator”) is the first dealer to collect the recycling fee on an early recycling fee beverage. The bill, similar to the current bottle redemption law, requires initiators to open a special interest-bearing account in a state branch of a financial institution, such as a bank, trust company, or credit union, and deposit into the account an amount equal to the recycling fee for each container they sell. They must make this deposit no later than one month after selling the container. Money in this account must be kept separate from other funds the initiator possesses and held in a special fund in trust for the state. All interest, dividends, and returns earned on the special account must be paid directly into the account.

By January 31, 2018, each initiator must pay the balance outstanding in the special account attributable to the four-month period from October 1, 2017 through January 30, 2018 to the Department of Revenue Services (DRS) commissioner for deposit into the General Fund. Subsequent balances must be paid on a quarterly basis by the initiator by the last day of the month following the quarter (i.e., the balance for the quarter ending March 31 must be paid by April 30). Presumably, the second quarterly payment following the four-month period would include only fees collected in February and March.

An initiator who does not make the required payment on time must pay a penalty of 10% of the amount due, or $50, whichever is greater. The initiator must also pay interest of 1% per month, or portion thereof, on the amount due and unpaid. The initiator must make the payments to DRS electronically. It cannot use any funds in the special account to pay any penalty or interest.

The bill authorizes the DRS commissioner to examine the accounts and records of any initiator, including related receipts, disbursements, and other items the commissioner deems appropriate. The attorney general may take any appropriate action to enforce the bill, acting either independently or on complaints by the commissioners of DRS or the Department of Energy and Environmental Protection (DEEP).

Under the bill, payments made by initiators are considered a tax for purposes of certain DRS administrative procedures, such as limits on interest paid on certain overpayments and liens on personal property. The DRS audit, collection, and other tax administration procedures applicable to the admissions and dues taxes apply to the payments except where inconsistent.

Handling Fee Increases

The bill requires the DRS commissioner, from October 1, 2017 until July 1, 2018, to make recycling fee revenue available for payment to redemption centers to enable them to receive higher handling fees. It increases the handling fee for beer and malt beverages from 1.5 cents to 2.5 cents, and the handling fee for mineral water, soda and carbonated soft drinks, and water from 2 cents to 3 cents. The bill eliminates redemption centers as of July 1, 2018.

Reports to DRS

Each initiator must report to DRS quarterly, by the last day of the month following the quarter. The report must be on a form prescribed by the DRS commissioner, submitted electronically, and provide the information he deems necessary. It must include at least the following information:

Penalties

The DRS or DEEP commissioner, as applicable, must impose fines of between $50 and $100 for a first violation of its provisions on early recycling fee beverages, between $100 and $200 for a second violation, and between $250 and $500 for each subsequent violation. The penalties are similar to those now imposed for violations of the bottle redemption program.

RECYCLING FEE AND BOTTLE REDEMPTION (PHASE II)

Fee Amount and Base

Starting July 1, 2018, the bill eliminates the bottle redemption program and replaces it with a minimum four-cent recycling fee on beverage containers subject to the current bottle redemption law. These include containers for beer and other malt beverages, mineral water, soda and other carbonated soft drinks, and water. It also imposes this recycling fee on the early recycling fee beverages covered under the first phase: juice; tea; sports drinks; and spirits or liquor in containers of up to 50 milliliters (“nips”).

For the purposes of phase two, containers are bottles, cans, jars, or cartons made of glass, metal, or plastic, but not containers containing three or more liters of water or made of high-density polyethylene. Unlike the current redemption system, the bill does not require these containers to be specially marked or identified.

Current law requires the bottle deposit to be a uniform amount throughout the distribution process. The bill maintains this requirement for the recycling fee on carbonated beverages, but not for noncarbonated beverages.

Special Account

Under the bill, a phase two initiator is any dealer that collects the recycling fee. Similar to phase one and the bottle redemption program, the bill requires initiators to open special accounts at a state branch of a financial institution in which to deposit an amount equal to the recycling fee for each beverage container the initiator sells. It requires each initiator to make (presumably, deposit) the “recycling fee” no later than one month after the beverage's sale date.

Its requires each initiator, by October 31, 2018, to pay the balance outstanding in the special account attributable for the period between July 1, 2018 and September 30, 2018 to the DRS commissioner for deposit into the General Fund. As with the payment by early recycling initiators, subsequent payments must be made to the DRS commissioner for deposit in the General Fund for each quarter by the last day of the month following the quarter. The same penalty, record inspection, enforcement, and tax provisions apply to these initiators as to initiators of early recycling fee containers.

Unlike early recycling fee initiators, however, phase two initiators must deduct from each such payment to DRS an amount equal to the recycling fees charged to dealers determined to be permanently uncollectable in the preceding quarter. (It is not clear to what this refers, since the bill does not require dealers to pay the recycling fee).

Reporting Requirements for Initiators of Redeemable Containers

The bill requires these initiators to submit, on October 31, 2018, a report for the period between July 1, 2018 and September 30, 2018 to both the DEEP and DRS commissioners, and to submit this and subsequent quarterly reports in the same manner and containing the same information as the quarterly reports filed by early recycling fee initiators.

Small Manufacturer Exemption

A manufacturer who bottles and sells 250,000 or fewer containers of noncarbonated beverages, including water, juice, tea, sports drinks, and nips, that are 20 ounces or less in size may apply to DEEP to be exempt from the phase two recycling fee requirements. They must apply no later than October 31, 2018, and must reapply each year thereafter to remain exempt. (Under current law, these manufacturers may apply for an exemption from the redemption system.) As under current law, the commissioner must approve such an application no later than 30 days after receiving the application, provided the applicant meets the bill's requirements. It is not clear why manufacturers, who are not affected by the bill, would seek an exemption.

Recycling Fee Account

Starting July 1, 2018, the bill creates a recycling fee account in the General Fund into which DRS must deposit two cents of every recycling fee. The account may also receive funds from private or public sources, including the federal or a municipal government.

It creates three subaccounts within the recycling fee account. These are the (1) collectors' subaccount, (2) tipping fee subaccount, and (3) beverage container use subaccount. The DRS commissioner must distribute money in the recycling fee account equally among these three subaccounts.

Collectors' and Tipping Fee Subaccounts

Money in the collectors' subaccount must be used to pay solid waste haulers to reflect any verifiable increase in the number of beverage containers they haul because of the elimination of the bottle redemption program. Money in the tipping fee subaccount must be paid to municipalities whose tipping fees increase because the bill has created an increase in the amount of recycled items. Such payments do not affect the payment of grants to a municipality for resources recovery facilities.

For both of these subaccounts DEEP and DRS must determine the terms and amount of any payment, including how often payments are made. The DEEP commissioner may adopt regulations to implement these provisions in consultation with DRS.

Beverage Container Reuse Subaccount

DEEP and the Recycle CT Foundation Inc. must use money in this subaccount to develop reuses for recycled beverage containers. They must fund research, projects, and purposes, including industry and businesses and other efforts that result in such reuse. The DEEP commissioner, in consultation with Recycle CT, must determine the requirements and terms of any funds awarded, including the amount of funding. In developing the requirements, the commissioner may consult with Connecticut Innovations, Inc., which must provide him with any information he finds necessary. The commissioner may adopt implementing regulations.

DEPOSIT REFUNDS TO DEALERS BY CERTAIN INITIATORS

Under current law, deposit initiators are the first distributors to collect the deposit on a beverage container sold in Connecticut. The bill requires, regardless of any other law, any balance in a special account as of March 31, 2018 and June 30, 2018 (presumably for each calendar quarter ending on these dates) to be held in trust for the state by the deposit initiator and used to refund deposits to dealers until August 31, 2018. Any balance remaining on September 1, 2018 must be paid to DRS for deposit in the General Fund.

BACKGROUND

Connecticut Bottle Redemption System (“Bottle Bill”)

The state's redemption system generally requires consumers to pay a five-cent deposit on each purchased bottle or can of beer, malt beverages, soda water, carbonated soft drinks, and water. The deposit may be redeemed by returning the beverage container to a retailer or bringing it to a redemption center. Unclaimed deposits are transferred to the state's General Fund (CGS 22a-243 et seq.).

Recycle CT Foundation

This is a state-chartered foundation whose purpose is to coordinate and support research and education to increase the rates of recycling and reuse (CGS 22a-228a).

COMMITTEE ACTION

Environment Committee

Joint Favorable Substitute

Yea

17

Nay

12

(03/22/2017)

TOP

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 38.08% of payroll in FY 18 and FY 19.

2 The bill specifies that the new recycling fees cannot be less than four cents but does not specify a specific or maximum amount. For the purposes of this analysis, it is assumed that all such fees are levied at four cents.

3 The bill does not specify an end date for the “early recycling fee.” However, for the purposes of this analysis, it is assumed that it becomes subsumed in the “recycling fee” established in Section 4 of the bill.