SB1261 99TH GENERAL ASSEMBLY

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99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1261

Introduced 2/17/2015, by Sen. Linda Holmes

SYNOPSIS AS INTRODUCED:

New Act

Creates the Paint Stewardship Act. Requires each producer to join the representative organization. Requires the representative organization to submit a plan to the Director of the Environmental Protection Agency for the establishment of a paint stewardship program. Sets forth requirements for the program. Requires the representative organization, in conjunction with an independent auditor, to propose, and the Agency to approve, a fee that will be added to the cost of all architectural paint sold to retailers and distributors in this State. Creates a state-action antitrust exemption for actions taken under the Act. Prohibits, after the implementation of the paint stewardship program, a producer, distributor, or retailer from selling or offering for sale architectural paint to any person in the State if the producer is not a member of the representative organization. Authorizes the imposition of civil penalties for violations of the Act. Sets forth fees for the program. Provides that no person shall incinerate architectural paint or industrial maintenance coatings in this State after July 1, 2017. Effective on January 1, 2016.

A BILL FOR

AN ACT concerning safety.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

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

Section 2. Findings. The General Assembly finds that:

(a) Leftover architectural paints are a waste management issue and present environmental, health, and safety risks, especially to workers in the solid waste industry. During waste collection and processing, wet paint can create spills and splashes and oil paint and aerosol containers may rupture, releasing fumes hazardous to workers, and the remaining liquids contribute to leachate problems in landfills. Some local governments provide collection sites or events for latex paint in order to provide their residents with some disposal options and to keep latex paint out of the solid waste stream. However, residents and small businesses need more convenient options for disposal of architectural paint. Drying latex for disposal is difficult for many residents and this process wastes latex paint that could otherwise be reused or recycled. Local government special and moderate-risk waste collection programs are heavily impacted by the cost of managing unwanted architectural paints and these costs decrease the available funds to address other hazardous and hard to handle materials.

(b) An estimated average of 10% of architectural paint purchased becomes leftover paint nationally. Current programs only collect a fraction of the potential leftover paint for proper reuse, recycling, or disposal. There is not a comprehensive Statewide end-of-life management plan for architectural paint which results in significant missed opportunities to reduce, reuse, and recycle paint.

(c) 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: develop and implement strategies to reduce the generation of leftover paint; promote the reuse of leftover paint; and collect, transport, and process leftover paint for end-of-life management, including reuse, recycling, energy recovery, and disposal. A paint stewardship program will follow the paint waste management hierarchy for managing and reducing leftover paint in the order as follows: reduce consumer generation of leftover paint; reuse; recycle; and provide for 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.

(d) 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 of 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.

(e) 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.

(f) 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 producers on each container of paint sold in this State. That assessment will be sufficient to recover, but not exceed, the costs of the program and will be determined by the Illinois Environmental Protection Agency. Funds collected through the assessment will be submitted and used by the representative organization and will not be remitted to producers or retailers.

Section 5. Definitions.

"Agency" means the Illinois Environmental Protection Agency.

"Architectural paint" means interior and exterior architectural coatings sold in containers of 5 gallons or less. "Architectural paint" does not include adhesives and coatings recommended by the manufacturer or importer solely for shop applications or solely for application to non-stationary objects, such as airplanes, ships, boats, automobiles, railcars, equipment, and machinery. "Architectural paint" does not include any coating not considered an architectural paint under the USEPA's Architectural and Industrial Maintenance Coatings Rule.

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

"Distributor" means a company that has a contractual relationship with one or more producers to market and sell architectural paint to retailers in this State.

"Environmentally sound management practices" means procedures for the collection, storage, transportation, reuse, recycling, and disposal of architectural paint, to be implemented by the representative organization or that organization's contracted partners to ensure (i) compliance with all applicable federal, State, and local laws, regulations, and ordinances and (ii) the protection of human health and the environment. Environmentally sound management practices include, but are not limited to, record-keeping, the tracking and documenting of the fate of post-consumer paint inside and outside of this State, and environmental liability coverage for professional services and the operations of the contractors working on behalf of the representative organization.

"Fund" means the Solid Waste Management Fund.

"Industrial maintenance coating" means a high performance architectural coating, including primers, sealers, undercoaters, intermediate coats, and topcoats formulated and recommended for application to substrates and labeled under the USEPA's Architectural and Industrial Maintenance Coatings Rule as, "for industrial use only", "for professional use only", "not for residential use", or "not intended for residential use".

"Paint stewardship assessment" means the amount paid to the representative organization by producers of architectural paint sold in this State that is necessary to cover the cost of collecting, transporting, and processing post-consumer paint by the representative organization under the paint stewardship program.

"Post-consumer paint" means architectural paint that is not used by a purchaser of architectural paint.

"Producer" means a manufacturer of architectural paint who sells, offers for sale, distributes, or contracts to distribute architectural paint in this State.

"Recycling, reclamation, or reuse" means a method, technique, or process designed to remove any contaminant from waste 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 the nonprofit organization created by producers to implement the paint stewardship program described in Section 10 of this Act.

"Retailer" means any person who offers architectural paint for sale at retail in this State.

"Sell" or "sale" means any transfer of title for consideration, including, but not limited to, remote sales conducted through sales outlets, catalogues, the Internet, or any other similar electronic means.

"Shop application" means that a coating is applied to a product or a component of a product in a factory, shop, or other structure as part of a manufacturing, production, or repairing process.

Section 10. Paint stewardship program.

(a) On or before March 1, 2017, each producer shall join the representative organization, and the representative organization shall submit a plan for the establishment of the paint stewardship program described in this Section to the Director. The paint stewardship program shall:

(1) minimize public sector involvement in the management of post-consumer paint by: (A) reducing the generation of post-consumer paint, (B) promoting the reuse and recycling of post-consumer paint, and (C) negotiating and executing agreements to collect, transport, reuse, recycle, and dispose of post-consumer paint using environmentally sound management practices;

(2) provide for convenient and available Statewide collection of post-consumer paint that, at a minimum, provides for collection rates and levels of convenience that are equal to, or greater than, those provided by the collection programs available to consumers before the implementation of the paint stewardship program;

(3) propose a paint stewardship assessment;

(4) include a funding mechanism that requires each producer who participates in the representative organization to remit to the representative organization payment of the paint stewardship assessment for each container of architectural paint the producer sells in this State;

(5) describe how the program provides for reasonably convenient and available Statewide collection of leftover paint from covered entities in urban and rural areas of the State, including island communities; and

(6) use geographic information modeling to determine the number and distribution of collection sites for the following criteria: 90% of Illinois residents shall have a permanent collection site within 15 miles by road; and one additional permanent site shall be established for every 30,000 residents of a population center distributed to provide convenient access in high traffic areas.

The representative organization shall maintain a Statewide list of producers and post up to date collection locations on its website.

(b) The plan shall identify each producer participating in the paint stewardship program and the brands of architectural paint sold in this State covered by the program, and it shall address the coordination of the paint stewardship program with existing household hazardous waste collection infrastructure, as much as is reasonably feasible and mutually agreeable.

(c) Not later than 3 months after submission of the plan, the Director shall determine whether the plan satisfies the requirements of this Act.

(d) Not later than 3 months after the date the plan is approved pursuant to subsection (c), the representative organization shall implement the paint stewardship program.

(e) Any retailer may participate, on a voluntary basis and in accordance with any applicable provision of law or regulation, as a paint collection point.

(f) Not later than the implementation date of the paint stewardship program, the Agency shall list the names of participating producers and the brands of architectural paint covered by the paint stewardship program on its website.

(g) Upon submission of the paint stewardship plan required by this Section, each representative organization shall pay to the Agency a fee of $10,000, which the Agency shall deposit into the Solid Waste Management Fund. Upon approval of a paint stewardship program, the representative organization shall also pay to the Agency an annual fee of $20,000, which the Agency shall deposit into the Fund.

(h) The Agency shall review the paint stewardship program plans it receives for completeness and shall notify the representative organization in writing if a plan is incomplete. Within 30 days after receiving a notification of incompleteness from the Agency, the representative organization shall submit to the Agency a plan that contains all of the required information. A new plan or amendment is required to be submitted to the Department for approval when:

(1) there is a change to the amount of the assessment;

(2) there is an addition to the products covered under the program; or

(3) there is a revision of the product stewardship organization's goals.

Section 15. Paint stewardship assessment.

(a) On or before March 1, 2017, the representative organization shall propose a uniform paint stewardship assessment for all architectural paint sold in this State. An independent auditor shall review the proposed paint stewardship assessment to ensure that it does not exceed the costs of maintaining the paint stewardship program, and the auditor shall recommend an amount for the paint stewardship assessment to the Agency.

(b) On and after the date of implementation of the paint stewardship program, the paint stewardship assessment shall be added to the cost of all architectural paint sold to retailers and distributors in this State by each producer. On and after the implementation date, each retailer or distributor, as applicable, shall add the amount of the paint stewardship assessment to the purchase price of all architectural paint sold in this State.

Section 20. State-action antitrust exemption. Each producer and the representative organization shall be immune from liability for any claim of a violation of antitrust law or unfair trade practice if the conduct is a violation of antitrust law, to the extent the producer or representative organization is exercising authority pursuant to the provisions of this Act.

Section 25. Enforcement.

(a) On and after the implementation date of the paint stewardship program, no producer, distributor, or retailer shall sell or offer for sale architectural paint to any person in this State if the producer of the architectural paint is not a member of the representative organization.

(b) No retailer or distributor shall be found to be in violation of the provisions of subsection (a) if, on the date the architectural paint was ordered from the producer or its agent, the producer or the subject brand of architectural paint was listed on the Agency's website in accordance with the provisions of subsection (f) of Section 10.

(c) The Attorney General or State's Attorney may request, and the Court may impose, after providing notice and opportunity to be heard, a civil penalty in the amount of $500 a day against any person who violates the terms of this Act.

(d) Nothing in this Act prohibits a retailer or distributor from selling their inventory of architectural paint existing on the effective date of this Act.

(e) The penalties provided for in this Section may be recovered in a civil action brought in the name of the people of the State of Illinois by the State's Attorney of the county in which the violation occurred or by the Attorney General. Any funds collected under this Section in an action in which the Attorney General has prevailed shall be deposited in the Environmental Protection Trust Fund, to be used in accordance with the provisions of the Environmental Trust Fund Act.

Section 30. Consumer education. Producers or the representative organization shall provide consumers with educational materials regarding the paint stewardship assessment and paint stewardship program. Those materials shall include, but not be limited to, information regarding available end-of-life management options for architectural paint offered through the paint stewardship program and information that notifies consumers that a charge for the operation of the paint stewardship program is included in the purchase price of all architectural paint sold in this State.

Section 35. Report to the Environmental Protection Agency. On or before October 15, 2017, and annually thereafter, the representative organization shall submit a report to the Director that details the paint stewardship program. The report shall include, but not be limited to: (1) a description of the methods used to collect, transport, and process post-consumer paint in this State; (2) the volume of post-consumer paint collected in this State; (3) the volume and type of post-consumer paint collected in this State by method of disposition, including reuse, recycling, and other methods of processing; (4) the total cost of implementing the program, as determined by an independent financial audit, as performed by the independent auditor; (5) samples of educational materials provided to consumers of architectural paint and an evaluation of the methods used to disseminate those materials; and (6) a list of collection locations. The Agency may post copies of the plan and annual reports on its website.

Section 40. Incineration prohibited. No person shall incinerate architectural paint or industrial maintenance coatings in this State after July 1, 2017.

Section 99. Effective date. This Act takes effect January 1, 2016.