2006-01-AU Audit of the County of Hawai‘i's Recycling and Diversion Grants Program

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Chapter 3 IIIS - BEVERAGE CONTAINER DEPOSIT PROGRAM HI5 - BEVERAGE CONTAINER DEPOSIT PROGRAM Statutory Authori The State Legislature passed Act 176 in 2002 and Act 241 in 2004, codified as Hawaii Revised Statutes (HRS) Chapter 342G, Part VIII, providing for a "Beverage Container Deposit Program" to be administered by the Department of Health (DOH), Solid and Hazardous Waste Branch. HRS Chapter 342G, Part VIII, requires that all Hawaii deposit beverage distributors register with DOH, maintain records on the manufacture, import and export of deposit beverage containers, and pay both a per container fee and deposit. It establishes a "Deposit Beverage Container Deposit Special Fund" and requires that all program revenues be deposited into said special fund. Monies in the special fund are to be used to reimburse refund values and pay handling fees to redemption centers, fund administrative costs, public education, and recycling market promotion, and subsidize handling and transport of containers to end markets as well as oversight personnel costs. Specifically, distributors are required to report the number of deposit beverage containers, by container size and type, manufactured in, exported from and imported into the State. A container fee is to be assessed for each deposit beverage container imported into and manufactured in the State (less exports). Pursuant to HRS §342G -110, the Beverage Container Deposit Program was implemented on January 1, 2005, requiring that every deposit beverage container sold in the State have a refund value of five cents, with the refund value clearly indicated on each container. Distributors who manufacture or import deposit beverage containers must pay the five cent per container deposit into the special fund, and can recoup the deposit by charging the dealer, who in turn charges the consumer, who in turn may redeem each clean, empty container for a full five cent refund. Redemption centers must be certified by DOH prior to operation. Once certified, a redemption center must verify and accept all valid "Hawai`i Beverage Deposit Containers ", pay the redeemer the full refund value, ensure that each container collected is recycled, and forward the necessary documentation to DOH to support claims for payment. Documentation must include number or weight of containers of each material type accepted and amount of refunds paid, and number or weight of containers of each material type recycled and out -of -state transport and weight or acceptance receipts from permitted recycling facilities. HRS §342G -113 requires that dealers (retailers of deposit beverage containers) operate redemption centers by July 1, 2005, unless exempted from requirement under HRS §342G- 113(b). HRS §342G- 113(d) provides: "If there is no redemption center within the two -mile radius of a dealer due to the criteria described in subsection (b), then the respective county and the State shall determine the need for a redemption center in that area. If a redemption center is deemed necessary, then the State, with assistance from the county, shall establish the redemption center with funding from the deposit beverage container deposit special fund." Hawaii Administrative Rules (HAR) Title 11, Chapter 282 sets forth rules and requirements for State and county governments, distributors, dealers, redemption centers, and recycling facilities relating to the Deposit Beverage Container Program. HAR §11- 282 -62(a) also provides: "If there is no redemption center within two miles of a dealer due to the criteria described in section 11- 282 -31, then 40