The Proposed Tennessee Deposit Legislation

NOTE: The bill's sponsors do not intend to bring the bill to a vote in 2018. TennCan advocates will use this time to acquaint lawmakers with the benefits of the bill and motivate citizens, especially nonprofit organizations, to help make sure it passes in 2019. Please go to our Get Involved page to join that effort!

TITLE

"The Tennessee Deposit Beverage Container and Community Recycling Act" 
 

CHIEF SPONSORS (2018)

In the Senate
Prime sponsor Sen. Frank Niceley (R-Strawberry Plains)

In the House
Prime sponsor Rep. Bo Mitchell (D-Nashville)
 

TO READ THE UNOFFICIAL DRAFT

NOTE: The attached PDF is a working draft of the bill that will be introduced in 2019. It will almost certainly be tweaked between now and then.

 

A quick tour of the bill

•    The deposit for all covered beverages is 5 cents and is fully refundable. 

•    The deposit applies to most beverages in sealed containers, including soft drinks, beer/malt beverages, plain and flavored water, energy drinks, sports drinks, iced teas, iced coffees and juices.

•    The deposit applies to containers made of glass, plastic, aluminum, steel and any other metal, regardless of size. 

•    Stores have nothing to do with the empty containers. Unlike in some deposit programs, stores in Tennessee are not responsible for accepting, redeeming, sorting, storing, selling or otherwise dealing with empty containers (unless they wish to open their own redemption centers). Instead, consumers in Tennessee will get back their nickels at any of hundreds of independent, certified "redemption centers" across the state, many of which will be located adjacent to stores. At most redemption centers, workers at the redemption centers will calculate the number of containers by hand-count or by weight; sort them by material and (if appropriate) by color; compact them (f authorized); and put them aside for purchase and transport by a participating scrap processor. (Many redemption centers will be certified as scrap processors as well.)

•    Bottlers have nothing to do with the empty containers. Unlike in some deposit programs, beverage distributors in Tennessee have no role whatever in accepting, handling, transporting, processing, marketing, reporting or otherwise dealing with the empty containers. This is done instead by processors (scrap dealers, material recovery facilities and the like) who have been certified by the program to participate in it. Processors receive an "administrative allowance" of 1/10 cent per container, paid out of the program fund, to cover bookkeeping costs. But their real benefit is access to high volumes of clean, properly sorted scrap material that commands the highest prices from end-users.

•    Redemption centers may be owned by any entity meeting certification requirements, including individuals, businesses, nonprofit groups, scrap yards, processors, manufacturers, MRFs, curbside recyclers and local governments, including the county convenience centers where many Tennesseans already take their household recyclables.

•    Every redemption center must either be a nonprofit entity, or it must have a "beneficial relationship" with one. "Beneficial relationship" will be defined during rulemaking, but it can range from sponsoring a donation bin for the local library, to hosting bottle drives for the Little League, to offering supervised work opportunities to individuals with special needs. 

•    The program will give particular assistance to nonprofit groups wishing to open their own redemption centers.

•    Third-party contractors are possible. The legislation provides that the commissioner of the Department of Environment and Conservation has overall authority for the program, the Division of Solid Waste Management oversees operations, and the Department of Revenue acts as the program accountant and administers the program fund. (The program fund is the "bank" into which all program monies are deposited and out of which all program payments are made). However, the bill also provides that either department may contract with an independent third-party agent to carry out its designated functions, with expenses paid out of the program fund.

•    The program is self-supporting. Redemption centers are independent businesses, compensated by the revenues from scrap sales and an "overhead allowance" equal to 1 cent per container (max) paid out of the program fund.

•    Redemption centers may be super-centers known as depots.  Redemption center "depots" help increase recycling access in Tennessee by accepting and selling nondeposit glass containers (at a minimum) and other recyclables such as milk jugs, newspaper and cardboard.

•    No tax increase on beverage distributors. Beverage distributors pay no new taxes under this bill. Instead, they simply continue paying a small fee to support county litter crews and litter education through the "county litter grants" program—something they've been doing since 1981. At present, they are paying two separate taxes, based on volume of beer sales and gross receipts of soft drink sales, that together equal about 1/8 cent per container. Under the new legislation, these existing taxes will be revoked. In their place, distributors will pay a flat "litter-grants fee" of 1/8 cent ($0.00125) on every container. The money collected will be disbursed to the counties and to Keep Tennessee Beautiful by the same agency (the Tennessee Department of Transportation); payments to individual counties will be calculated using the same apportionment formula used now.

•    No interruption in Tennessee's existing litter program. As noted above, the bill uses the 1/8-cent "litter-grants fee" to ensure uninterrupted, undiminished funding of the "county litter grants" program, which funds litter crews from the county jails as well as litter education by the counties and Keep Tennessee Beautiful. In order to make payment during the interim year of the start-up period, as well as to cover the program's other start-up costs, the legislation requires distributors to pay an advance on the container-recovery fee. The advance is 1/4 cent ($0.025) for the first nine months, after which it drops to 1/10 cent ($0.001) for the next three years, until the advance has been fully recouped by the distributors, at which point it goes to the full $0.00125.

•    Allows the program fund to accept outside grants and donations. The bill allows the fund to accept donations from public and private sources--for instance, a manufacturing trade group or the EPA. This provides a way for recycling advocates and beneficiaries of the program to support its operations and keep fund levels healthy without mandating special fees or reducing payments to redemption centers and processors.

•    Varied redemption options. In addition to storefront redemption centers, the bill authorizes "reverse vending machines," mobile redemption services, "drop-and-go" satellite kiosks (which funnel empties to a centralized automated processing site) and "microsites" (attended rolloff trailers typically located outside grocery stores or other retailers). Every redemption center must meet various criteria for things like location, hygiene, hours of operation, etc., in order to become and remain certified by the program.

•    Penalties for cheating and rewards for being honest. Fraud has never been a major problem with bottle bills, typically accounting for only 1 to 2 percent of the roughly 45 billion containers redeemed across this country each year. Nonetheless, the Tennessee bill takes some innovative steps to minimize fraud. For instance, the fine for knowingly trying to redeem more than 24 non-deposit containers (e.g., containers purchased in another state) is a whopping $25,000 or $100 per container (whichever is greater). And if a redemption center or processor detects the fraud, and the case is successfully prosecuted, the vigilant party is "rewarded" with half of any fines collected, less court costs.

•    Assured coverage. In the unlikely event of an "underserved" area (as defined during the rule-making process), the bill stipulates that the program is responsible for seeing that one or more redemption centers is established in the area. Microsites--attended redemption trailers that fit into a single parking space, typically outside a host grocery store--are a good option in such situations.

•    Extra money for recycling and litter control. The bill stipulates that any monies in the program fund that are not required to fund the program may be used to provide grants to local governments for solid waste management, recycling, litter control and related activities. At no point may they revert to the state's treasure (general fund).