Hawaii Passes Container Deposit Legislation What's Next?
- Published: June 01, 2002, By Sheila A. Millar, Attorney-at-Law, Keller & Heckman, Washington, DC
Of interest to converters, Hawaii has become the first US state since 1982 to pass container deposit legislation.
The bill, which will take effect in 2005, applies to rigid containers used for liquids. It involves a 5-cent/container redeemable deposit paid by the consumer to the producer/distributor of the product, and an advance disposal fee paid to the state by the producer/distributor of the product.
Whether this reflects a resurgence in deposit laws and a renewal of interest in recycling is not yet clear.
Specifically, starting Jan. 1, 2005, a refundable 5-cent deposit will be added to the purchase price of all beer, wine coolers, tea, coffee, soft drinks, noncarbonated water, and all nonalcoholic drinks (liquid form) sold in glass, metal, PET, and HDPE containers with a volume of 64 fluid oz or less.
This fee will be paid by the consumer at the time of purchase. Producers and distributors of the products in turn will pay the 5-cent deposit fee directly to the state. Exempted from the law are liquids such as syrups, concentrates, flavorings, drugs, infant formula, and products frozen at the time of sale to the consumer.
Consumers will redeem the deposits primarily at the point of retail via in-store redemption, on-site redemption operated by a third party, or reverse vending machine, unless the retailer is located within two miles of an independent, state-certified redemption center in highly populated areas, or if the retailer is located in a rural area.
The state will pay all redemption centers the 5-cent deposit, which in turn will pay the consumers for any beverage containers they return for redemption. Anyone can open a redemption center, as long as it is certified by the state.
In addition to the refundable deposit, producers and distributors of the products listed above also will begin paying an Advance Disposal Fee (ADF) on Oct. 1, 2002. The initial rate of the ADF will be at the rate of 0.5 cent/container; this will increase to 1 cent/container by Oct. 1, 2004. The ADF will be paid directly to the state and is to be used as a handling fee for businesses that redeem containers.
It is estimated the ADF will generate funds in the neighborhood of $12 million/yr, the costs of which will be passed along (most likely) to consumers; total cost of this new law is estimated to be $20 million/yr.
The use of taxes and fees to promote certain types of “environmental” behavior is not new. Environmental taxes and fees have been favored by environmental activists over the years, on the theory that market-shaping mechanisms such as container deposit laws, taxes on chemicals such as chlorofluorocarbons (CFCs), and similar initiatives will shape consumption in a “socially responsible” way.
And like all tax measures, the Hawaii deposit law, as with previous deposit laws, creates questions about the impact on total revenues.
One potential impact of such laws is the extent to which they ultimately force further taxes — higher fees, or an expansion to new product categories — if revenue projections do not meet expectations. Time will tell if this opens the door to more legislation.
Sheila A. Millar, a partner with Keller and Heckman LLP, counsels both corporate and association clients. Contact her at 202/434-4143; This email address is being protected from spambots. You need JavaScript enabled to view it.; PackagingLaw.com
