SB1164sam001 102ND GENERAL ASSEMBLY

Sen. Linda Holmes

Filed: 4/7/2021

10200SB1164sam001 LRB102 04985 CPF 24558 a

AMENDMENT TO SENATE BILL 1164

AMENDMENT NO. ______. Amend Senate Bill 1164 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Paint Stewardship Act.

Section 5. Findings. The General Assembly finds that:

(1) Leftover architectural paints present significant waste management issues for counties and municipalities. Managing the end-of-life of architectural paint can be costly and present environmental, health, and safety risks if not properly managed.

(2) Nationally, an estimated 10% of architectural paint purchased by consumers is leftover. Current governmental programs collect only a fraction of the potential leftover paint for proper reuse, recycling, or disposal. In northern Illinois, there are only 4 permanent household hazard waste facilities and these facilities do not typically accept latex paint, the most common paint purchased by consumers.

(3) It is in the best interest of this State for paint manufacturers to assume responsibility for development and implementation of a cost-effective paint stewardship program that will: educate consumers on strategies to reduce the generation of leftover paint; provide opportunities to reuse leftover paint; and collect, transport, and process leftover paint for end-of-life management, including reuse, recycling, energy recovery, and disposal. Requiring paint manufacturers to assume responsibility for the collection, recycling, reuse, transportation, and disposal of leftover paint will provide more opportunities for consumers to properly manage their leftover paint, provide fiscal relief for this State and local governments in managing leftover paint, keep paint out of the waste stream, and conserve natural resources.

(4) Similar architectural paint stewardship programs are currently operating in 9 jurisdictions and are successfully diverting a significant portion of the collected paint waste from landfills. These paint stewardship programs are saving counties and municipalities the cost of managing paint waste and have been successful at recycling leftover paint into recycled paint products as well as other products. For instance, in the state of Oregon, 64% of the latex paint collected in the 2019-2020 fiscal year was recycled into paint products; and, in Minnesota, 48% of the latex paint collected during the same time period was reused or recycled into paint products. Given the lack of access to architectural paint collection programs in Illinois, especially for leftover latex architectural paint, and the demonstrated ability of the paint industry to collect and recycle a substantial portion of leftover architectural paint, this legislation is necessary. It will create a statewide program that diverts a significant portion of paint waste from landfills and facilitates recycling of leftover paint into paint and other products.

(5) Establishing a paint stewardship program in Illinois will create jobs as the marketplace adjusts to the needs of a robust program that requires transporters and processors. Certain infrastructure already exists in the State and the program may attract additional resources.

(6) Legislation is needed to establish this program in part because of the risk of antitrust lawsuits. The program involves activities by competitors in the paint industry and may affect the costs or prices of those competitors. As construed by the courts, the antitrust laws impose severe constraints on concerted action by competitors that affect costs or prices. Absent State legislation, participation in this program would entail an unacceptable risk of class action lawsuits. The risk can be mitigated by legislation that would bar application of federal antitrust law under the "state action" doctrine. Under that doctrine, federal antitrust law does not apply to conduct that is (1) undertaken pursuant to a clearly expressed and affirmatively articulated state policy to displace or limit competition, and (2) actively supervised by the State.

(7) To ensure that this defense will be available to protect participants in the program, it is important for State legislation to be specific about the conduct it is authorizing and to express clearly that the State is authorizing that conduct pursuant to a conscious policy decision to limit the unfettered operation of market forces. It is also critical for the legislation to provide for active supervision of the conduct that might otherwise be subject to antitrust attack. In particular, the legislation must provide for active supervision of the decisions concerning the assessments that will fund the program. A clear articulation of the State's purposes and policies and provisions for active State supervision of the program will ensure that industry participation in the program will not trigger litigation.

(8) To ensure that the costs of the program are distributed in an equitable and competitively neutral manner, the program will be funded through an assessment on each container of paint sold in this State. That assessment will be sufficient to recover, but not exceed, the costs of sustaining the program and will be reviewed and approved by the Illinois Environmental Protection Agency. Funds collected through the assessment will be used by the representative organization to operate and sustain the program.

Section 10. Definitions. In this Section:

"Agency" means the Environmental Protection Agency.

"Architectural paint" means interior and exterior architectural coatings sold in containers of 5 gallons or less. "Architectural paint" does not include industrial original equipment or specialty coatings.

"Collection site" means any location or event at which architectural paint is accepted into a postconsumer paint collection program pursuant to a postconsumer paint collection program plan.

"Director" means the director of the Environmental Protection Agency.

"Environmentally sound management practices" means procedures for the collection, storage, transportation, reuse, recycling, and disposal of architectural paint to be implemented by a manufacturer or representative organization or by the manufacturer's or representative organization's contracted partners to comply with all applicable federal, State, and local laws and any rules, regulations, and ordinances for the protection of human health and the environment. These procedures shall address adequate record keeping, tracking and documenting of the final disposition of materials, and appropriate environmental liability coverage for the representative organization.

"Household waste" has the same meaning as defined in 40 CFR 261.4(b)(1).

"Postconsumer paint" means architectural paint not used and no longer wanted by a purchaser.

"Manufacturer" means a manufacturer of architectural paint who sells, offers for sale, or distributes the architectural paint in the State under the manufacturer's own name or brand.

"Program" means the postconsumer paint stewardship program established pursuant to Section 15.

"Recycling" means a method, technique, or process designed to remove any contaminant from waste so as to render the waste reusable, or any process by which materials that would otherwise be disposed of or discarded are collected, separated, or processed and returned to the economic mainstream in the form of raw materials or products.

"Representative organization" means a nonprofit organization established by a manufacturer to implement the postconsumer paint stewardship program.

"Retailer" means a company that offers architectural paint or other allied products for retail sale in the State.

"Very small quantity generator" has the same meaning as defined in 40 CFR 260.10.

Section 15. Paint stewardship program plan.

(a) A manufacturer of architectural paint sold at retail in the State or a representative organization shall submit to the Director a plan for the establishment of a postconsumer paint stewardship program. The program shall seek to reduce the generation of postconsumer paint, promote its reuse and recycling, and manage the waste stream using environmentally sound management practices.

(b) The plan submitted by the manufacturer or representative organization to the Agency under this Section shall:

(1) Provide a list of participating manufacturers and brands covered by the program.

(2) Provide information on the architectural paint products covered under the program, such as interior or exterior water-based and oil-based coatings, primers, sealers, or wood coatings.

(3) Describe how it will provide for convenient and cost-effective statewide collection of postconsumer architectural paint in the State. The manufacturer or representative organization may coordinate the program with existing household hazardous waste collection infrastructure as is mutually agreeable. A paint retailer may be authorized by the manufacturer or representative organization as a paint collection site if the paint retailer volunteers to act as such, complies with all applicable laws, rules, and regulations, and the retail location is consistent with the maintenance of a cost-effective network of paint collection locations.

(4) Establish a goal for the number and geographic distribution of collection sites for postconsumer architectural paint using geographic modeling and the following criteria:

(A) at least 90% of State residents shall have a collection site within a 15-mile radius; and

(B) one site shall be available for every 50,000 residents of an Urbanized Area, as defined by the U.S. Census Bureau, unless otherwise approved by the Director.

(5) Describe how postconsumer paint will be managed in an environmentally and economically sound manner using the following strategies and in the following order: reuse, recycling, energy recovery, and disposal. Incineration within the State shall not be utilized.

(6) Describe education and outreach efforts to inform consumers about the program. These materials should include:

(A) information about collection opportunities for postconsumer paint;

(B) information about the fee for the operation of the program that shall be included in the purchase price of all architectural paint sold in the State; and

(C) efforts to promote the source reduction, reuse, and recycling of architectural paint.

(7) Be reviewed by an independent auditor to assure that any added fee to paint sold in the State as a result of the postconsumer paint stewardship program does not exceed the costs to operate and sustain the program in accordance with sound management practices. The independent auditor shall verify that the amount added to each unit of paint will cover the costs and sustain the postconsumer paint stewardship program.

(c) A manufacturer or representative organization shall select the independent auditor under paragraph (7) of subsection (b) in consultation with the Agency. The Agency shall review the work product of the independent auditor. The cost of any work performed by the independent auditor shall be funded by the program.

(d) Not later than 60 days after submission of the plan under this Section, the Director shall make a determination in writing whether to approve the plan as submitted or disapprove the plan.

(e) The Agency shall enforce the plan and may, by rule or regulation, establish enforcement procedures. If circumstances require an adjustment of the paint stewardship fee, the manufacturer or representative organization shall request the adjustment by submitting to the Agency a justification for the adjustment as well as financial reports to support the request, including a 5-year projection of the financial status of the organization. The Agency shall review the request to determine if the proposed fee adjustment will generate revenues sufficient to pay the program expenses, including any accumulated debt, and develop a reasonable reserve level sufficient to sustain the program. If a decrease in the paint fee is requested, the Agency shall review the request to determine if the proposed fee adjustment and the resulting decreased revenue is sufficient to pay program expenses and maintain a reasonable reserve level sufficient to sustain the program.

(f) No later than the implementation date of the program, information regarding the approved plan, the names of participating manufacturers, and the brands of architectural paint covered by the program shall be posted on the Agency's website and on the website of the manufacturer or representative organization.

(g) Upon implementation of the program, each manufacturer shall include in the price of any architectural paint sold to retailers and distributors in the State the per container amount in the approved program plan. Manufacturers are responsible for filing, reporting, and remitting the paint stewardship assessment for each container of architectural paint to the representative organization. A retailer or distributor shall not deduct this amount from the purchase price.

Section 20. Incineration prohibited. No person may incinerate leftover architectural paint collected pursuant to an approved paint stewardship plan as required by Section 15.

Section 25. Plan submission. The plan required by Section 15 shall be submitted not later than 12 months after the authorization of the program is final. The Agency may grant an extension of time to submit the plan for good cause.

Section 30. Sale of paint.

(a) A manufacturer or retailer shall not sell or offer for sale architectural paint to any person in the State unless the manufacturer of a paint brand or the manufacturer's representative organization is implementing an approved paint stewardship plan as required by Section 15.

(b) A retailer shall be in compliance with this Act if, on the date the architectural paint was offered for sale, the retailer's manufacturer is listed on the Agency's website as implementing or participating in an approved program or if the paint brand is listed on the Agency's website as being included in the program.

(c) A paint collection site authorized under the provisions of this Act shall not charge any additional amount for the disposal of paint when it is offered for disposal.

(d) No retailer is required to participate in a paint stewardship program as a collection site. A retailer may participate as a paint collection site on a voluntary basis.

(e) Nothing in this Act shall require a retailer to track, file, report, submit, or remit a paint stewardship assessment, sales data, or any other information on behalf of a manufacturer, distributor, or representative organization.

Section 35. Liability. A manufacturer or representative organization participating in a postconsumer paint stewardship program shall not be liable for any claim of a violation of antitrust, restraint of trade, unfair trade practice, or other anticompetitive conduct arising from conduct undertaken in accordance with the program.

Section 40. Annual report. Annually, a manufacturer or representative organization shall submit a report to the Agency that details the program. The report shall include:

(1) a description of the methods used to collect and transport postconsumer paint collected in the State;

(2) the volume and type of postconsumer paint collected and a description of the methods used to process the paint, including reuse, recycling, and other methods;

(3) samples of educational materials provided to consumers of architectural paint; and

(4) the total cost of the program and an independent financial audit. An independent financial auditor shall be chosen by the manufacturer or representative organization. The report or information relating to the report shall be posted on the Agency's website and on the website of the manufacturer or representative organization.

Section 45. Annual report submission. A manufacturer or representative organization shall submit the first annual report detailing the postconsumer paint collection program as required by Section 15 to the Director within 14 months following implementation of the program, and annually thereafter. The Agency may extend the time for submission of the annual report for cause shown.

Section 50. Disclosure. Financial, production, or sales data reported to the Agency by a manufacturer, retailer, or representative organization shall not be subject to disclosure, but the Director may release a summary form of the data that does not disclose financial, production, or sales data of the manufacturer, retailer, or representative organization.

Section 55. Program plan submission fee. A manufacturer or representative organization submitting a program plan shall pay an administrative fee to the Agency at the time of submission. The Agency may establish a variable fee based on relevant factors, including, but not limited to, the portion of architectural paint sold in the State by members of the manufacturer or representative organization compared to the total amount of architectural paint sold in the State by all manufacturers or representative organizations that submit a plan.

Section 60. Oversight fee. A manufacturer or representative organization operating a stewardship program shall pay to the Agency the costs it incurs in overseeing the stewardship program. The Agency shall set the fee at an amount that, when paid by every manufacturer or representative organization that submits a plan, is adequate to reimburse the Agency's full costs of administering this Act. The total amount of annual fees collected under this Section must not exceed the amount necessary to reimburse costs incurred by the Agency to administer this Act.

Section 65. Timing of oversight fee. A manufacturer or representative organization subject to Section 60 must pay the Agency's administrative fee annually. Each year after the initial payment, the annual administrative fee may not exceed 5% of the aggregate stewardship fee added to the cost of all architectural paint sold by manufacturers in the State for the preceding calendar year. The Agency may extend the time for payment upon good cause shown.

Section 70. Implementation. A manufacturer or representative organization shall implement the postconsumer paint collection plan within 6 months of the date that the program plan is approved. The Agency may extend the date of implementation for good cause shown.

Section 75. Postconsumer paint from households and small businesses.

(a) Generators of household waste and very small quantity generators are authorized to transport or send their architectural paints to a paint collection site to the extent permitted by a postconsumer paint stewardship program approved by the Director.

(b) Paint collection sites are authorized to collect and temporarily store architectural paints generated by persons specified in subsection (a), in accordance with the requirements of the paint stewardship program, in lieu of any otherwise applicable hazardous waste or solid waste laws, rules, or regulations.

(c) Nothing in this Act shall be construed as restricting the collection of architectural paint by a postconsumer paint stewardship program where the collection is authorized under any otherwise applicable hazardous waste or solid waste laws, rules, or regulations.

(d) Nothing in this Act shall be construed to affect any requirements applicable to facilities that treat, dispose, or recycle architectural paint under any otherwise applicable hazardous waste or solid waste laws, rules, or regulations.".