AN ACT to reDUCE ROADSIDE AND OTHER LITTERING AND TO ENCOURAGE RECYCLING BY REQUIRING A DEPOSIT ON BEVERAGE CONTAINERS AND REQUIRING REDEMPTION CENTERS TO ACCEPT RETURNED BEVERAGE CONTAINERS AND REFUND THE DEPOSITS.

The General Assembly of North Carolina enacts:

SECTION 1.  Article 9 of Chapter 130A of the General Statutes is amended by adding a new Part to read:

Part 2K. Beverage Container Deposits and Refunds.

§ 130A‑309.245.  Findings; intent.

(a)        The General Assembly finds that:

(1)        Beverage containers constitute a major source of nondegradable litter and solid waste in this State.

(2)        Litter remains a large problem in North Carolina despite other efforts to discourage littering and to establish criminal penalties under G.S. 14‑399 for first‑time and subsequent offenses of littering.

(3)        The collection and disposal of litter imposes a great financial burden on the citizens of North Carolina.

(4)        A more concerted effort to reduce litter is needed in North Carolina.

(5)        Beverage containers should be reused or recycled.

(6)        Other states' experience shows that beverage container deposit legislation is successful in reducing litter and increasing recycling of discarded beverage containers.

(7)        Beverage container deposit legislation is consistent with the State's policy, set forth in G.S. 130A‑309.04, to promote methods of solid waste management that are alternatives to disposal in landfills.

(8)        The program under this Part will contribute significantly to the reduction of the beverage container component of the litter in this State.

(b)        It is the intent of the General Assembly to address the blight that litter imposes on the highways and lands of this State, while creating incentives for manufacturers, distributors, retailers, and consumers of beverages in beverage containers to recycle and reuse beverage containers.

§ 130A‑309.246.  Definitions.

Unless a different meaning is required by the context, the following definitions apply throughout this Part:

(1)        Beverage. – Any ready‑to‑drink liquid intended for human oral consumption. Beverage includes any malt beverage; spirituous liquor; fortified wine; unfortified wine; wine cooler; soda or noncarbonated water; and any nonalcoholic carbonated or noncarbonated drink in liquid form. The term does not include any drug regulated under the federal Food, Drug, and Cosmetic Act (Title 21 U.S.C. § 301 et seq.; 52 Stat. 1040 et seq.), infant formula, meal replacement liquids, or dairy products derived from animal milk.

(2)        Beverage container. – A prepackaged container designed to hold a beverage that is made of any material, including glass, plastic, and metal. Beverage container does not include cartons, pouches, or aseptic packaging such as a drink box.

(3)        Consumer. – An individual who purchases a beverage in a beverage container for his or her use or consumption with no intent to resell the beverage. Consumer includes a lodging, eating, or drinking establishment.

(4)        Contracted agent. – A public or private company or individual who enters into an agreement with a distributor or deposit initiator to pick up empty beverage containers from redemption centers and dealers.

(5)        Curbside recycling program. – A recycling program that meets all of the following criteria:

a.         The program picks up recyclables from individual residences.

b.         The program is operated by, or pursuant to a contract with, a city, county, or other public agency.

c.         The program accepts empty beverage containers from consumers with the intent to recycle them.

(6)        Curbside recycling program entity. – A material recovery facility or any other person or establishment contracted to receive beverage containers collected through a curbside recycling program for the purposes of processing, sorting, or preparation for recycling.

(7)        Dealer. – A person who sells beverages in beverage containers, including beverage containers sold through vending machines, to a consumer at the retail level. Dealer does not include any of the following:

a.         Establishments who sell less than 250,000 beverage containers in a calendar year.

b.         Establishments that provide on‑premises consumption of beverages in beverage containers, such as hotels, restaurants, or bars.

(8)        Deposit initiator. – The first distributor to collect the deposit on beverage containers sold to any person within the State.

(9)        Distributor. – A person who engages in the sale of beverages in beverage containers to a dealer in this State. A manufacturer of beverages who also engages in the sale of beverages is also a distributor.

(10)      Downcycling. – Methods of sorting, processing, and aggregating materials from solid waste that do not preserve the original material quality and, as a result, render the aggregated material no longer usable for manufacturing into the same or a substantially similar product.

(11)      Environmental justice community. – A community determined by the Department to include a concentration of low‑income households, people of color – including indigenous peoples, or households lacking English language proficiency.

(12)      Processing payment. – The amount of money paid by a distributor to a curbside recycling entity as determined by the Department pursuant to G.S. 130A‑309.255.

(13)      Producer responsibility organization. – A nonprofit organization organized under section 501(c) or section 501(d) of the Internal Revenue Code (26 U.S.C. § 501(c), § 501(d)) and created by a group of distributors to fulfill their obligations under this Part.

(14)      Recyclable. – With respect to beverage containers, a type of beverage container that can be technically recycled in current United States market conditions without the consumer needing to remove an attached component of the beverage container, such as a shrink sleeve, label, or filter.

(15)      Recycle, recycling, or recycled. – The series of activities by which a covered product is collected, sorted, processed, and converted into a raw material with minimal loss in material quality for use in the production of a new product, including a new version of the covered product. These terms do not include any of the following:

a.         Downcycling.

b.         The use of materials as fuel, a fuel substitute, or for energy production.

c.         The use of materials for repurposing into infrastructure or construction, including, but not limited to, pavement for streets, sidewalks, or roads, building materials, or other infrastructure products, as the Department may specify by rule.

d.         The disposal of materials within a solid waste disposal facility or the use of materials for alternative daily cover for a solid waste disposal facility.

e.         The processing of materials through advanced recycling, chemical recycling, combustion, gasification, incineration, pyrolysis, solvolysis, thermal desorption, waste‑to‑energy, waste‑to‑fuel, or any other chemical or molecular conversion process.

(16)      Recycling rate. – With respect to a category of beverage container, the percentage of that category of beverage container that is recycled.

(17)      Redeemer. – Any person other than a dealer who demands the refund value provided for herein in exchange for an empty beverage container.

(18)      Redemption center. – An operation certified by the Department that engages in any of the following activities:

a.         Accepts empty beverage containers from consumers of beverages and pays, or provides the refund value, for empty beverage containers.

b.         Collects and sorts empty beverage containers from dealers.

(19)      Redemption location. – A place, mobile unit, reverse vending machine, or other device where a certified redemption center accepts one or more types of empty beverage containers from consumers and pays, or provides the refund value, for one or more types of empty beverage containers.

(20)      Retailer. – A person who sells or offers for sale in this State to consumers a beverage in a beverage container, including an operator of a vending machine containing a beverage in a beverage container.

(21)      Reusable. – With respect to beverage containers, means that the container is capable of being refilled a number of times that the Department shall establish by rule under current market conditions in the United States.

(22)      Reverse vending machine. – An automated device that can accurately recognize the universal product code on containers to determine if the container is redeemable and accumulates information regarding containers redeemed, including the number of such containers redeemed, thereby enabling the device to accept containers from redeemers, issue a receipt for their refund value, transmit data for reconciliation, sort, and compact the container to cancel it.

(23)      Single‑use beverage container. – A beverage container that is not designed or placed in commerce to be reusable.

(24)      Supermarket. – A full‑line, self‑service retail store with gross annual sales of two million dollars ($2,000,000) or more that sells dry goods, canned goods, nonfood items, and perishable items.

(25)      Universal product code (UPC). – A standard for encoding a set of lines and spaces that can be scanned and interpreted into numbers to identify a product. Universal product code includes any industry accepted barcode used for product identification purposes in a manner similar to a UPC, such as a European Article Number.

(26)      Use or consumption. – The exercise of any right or power over a beverage incident to the ownership thereof, other than the sale, storage, or retention for the purposes of sale of a beverage.

§ 130A‑309.247.  Department to administer program; adoption of rules.

(a)        The Department shall administer this Part.

(b)        The Department and the Commission for Health Services may adopt any rules necessary or useful to implement this Part, and the Department may adopt any rules necessary or useful to carry out any of its duties imposed under this Part. The Department shall determine, by rule, all of the following:

(1)        The method for calculating the redemption rate and recycling rate for beverage containers.

(2)        The method for calculating the amount of reusable beverage containers sold or refilled.

(3)        The process for information collection necessary to ensure distributor and dealer compliance with the requirements of this Part.

(4)        The method for determining compliance with the performance standards set forth in G.S. 130A‑309.256.

(5)        The designation of environmental justice communities in this State.

(6)        The number of cycles for a beverage container to qualify as reusable.

(7)        The process for determining the handling fee payable to dealers and redemption centers under G.S. 130A‑309.254 and the applicable processing payment under G.S. 130A‑309.255.

(8)        The process for licensing of redemption centers.

(9)        The process for soliciting, reviewing, and awarding grants from the Unredeemed Beverage Container Deposits Account established in G.S. 130A‑309.257(c).

§ 130A‑309.248.  Deposit and refund value; requirements concerning beverage containers.

(a)        Every consumer who purchases a beverage in a beverage container shall pay a deposit equal to the refund value under subsection (b) of this section.

(b)        Subject to the adjustment set forth in subsection (d) of this section, every beverage container sold or offered for sale to a consumer in this State that has a volume which is not less than 50 milliliters nor greater than 3 liters of a beverage shall have a refund value of ten cents (10¢).

(c)        Every beverage container that contains a beverage that is sold or offered for sale in this State shall (i) clearly indicate by embossing or imprinting on the normal product label, or in the case of metal beverage containers, on the top of the container the words North Carolina or the initials N.C. and the refund value of the container in not less than 1/4 inch type size and (ii) include a UPC barcode to identify and validate participation in the refund program as set forth in this section.

(d)       Every five years, beginning July 1, 2028, the Department shall do all of the following:

(1)        Determine the percentages of each category of beverage containers, based on the composition of the container: aluminum, nonaluminum metal, glass, plastic, or other materials or combination of materials, that are being returned. If the Department finds that the return rate for any category is less than seventy‑five percent (75%), the Department may increase the deposit value for that category of beverage containers by five cents (5¢).

(2)        Update the deposit value to reflect changes in the Consumer Price Index computed by the United States Bureau of Labor Statistics over the previous five years.

§ 130A‑309.249.  Duties of retailers.

(a)        Every retailer shall pay to the distributor deposits equal to the value of the refunds under G.S. 130A‑309.248 when the retailer purchases beverages from a distributor and shall receive deposits from consumers at the time of sale.

(b)        Every retailer shall identify, by a clear and conspicuous sign at the retailer's place of business, the address of at least the redemption center or redemption location nearest to the retailer that redeems all types of empty beverage containers at one location during at least 30 hours per week with a minimum of five hours of operation occurring during periods other than from Monday to Friday, from 9:00 A.M. to 5:00 P.M.

§ 130A‑309.250.  Regulation and reporting requirements for distributors of beverage containers.

(a)        No distributor shall sell a beverage container in the State without the distributor registering the beverage container with the Department prior to the sale. This registration shall take place on a form provided by the Department and include all of the following:

(1)        The name and principal business address of the distributor.

(2)        The name of the beverage and the container size.

(3)        The material type of the beverage container.

(4)        Documentation of the presence and type of UPC on the beverage container.

(5)        Methods the distributor intends to use to prevent the fraudulent sale and redemption of beverage containers not sold within the State.

(6)        The name of the person picking up the empty beverage containers from dealers, redemption centers, and curbside recycling entities, if that person is different from the distributor.

(7)        Any other information required by the Department to enforce the provisions of this Part.

(b)        The Department may request that a distributor provide a copy of the container label, or a picture of any beverage container sold or offered for sale in the State on which it initiates a deposit.

(c)        A distributor shall place a deposit as determined by G.S. 130A‑309.248 on all beverage containers sold, offered for sale, or distributed into the sale.

§ 130A‑309.251.  Establishment of redemption centers.

(a)        The Department shall allow for the establishment, operation, and licensure of redemption centers. Redemption centers shall accept all types of beverage containers.

(b)        These redemption centers shall supplement, but not supplant, the return of beverage containers to dealers as required by G.S. 130A‑309.252.

§ 130A‑309.252.  Acceptance of beverage containers by dealers.

(a)        A dealer shall accept at their place of business from a redeemer any empty beverage container during any period that the dealer is open for business, regardless of whether the specific beverage container was sold by the dealer, as long as the beverage container is made of the same type of material as the beverage containers sold by the dealer. The dealer shall pay to the redeemer the deposit value for each beverage container redeemed.

(b)        A dealer or redemption center may refuse to accept from a redeemer any empty beverage container that is not clean, is broken, or contains foreign material or other contaminants.

(c)        Redemptions of the deposit value must be in legal tender, or a script or receipt from a reverse vending machine, providing that the script or receipt can be exchanged for legal tender for a period of not less than 60 days without requiring the purchase of other goods. The use or presence of a reverse vending machine shall not relieve a dealer of any obligation imposed pursuant to this Part. If a dealer utilizes a reverse vending machine to redeem containers, the dealer shall provide for redemption of beverage containers when the reverse vending machine is full, broken, under repair, or does not accept a type of beverage container material sold or offered for sale by such dealer.

(d)       Each dealer shall establish and maintain a dedicated area within their place of business to accept beverage containers for redemption.

§ 130A‑309.253.  Acceptance of beverage containers by distributors.

(a)        A distributor shall accept from a dealer or redemption center any empty beverage containers of the design, shape, size, color, composition, and brand sold, distributed, or offered for sale by the distributor in the State and shall pay the dealer or redemption center a handling fee as established by the Department pursuant to G.S. 130A‑309.254 for each such beverage container.

(b)        A distributor shall accept and redeem all such empty beverage containers from a dealer or redemption center.

(c)        A distributor's failure to pick up empty beverage containers, including containers processed in a reverse vending machine, from a redemption center, dealer, or the operator of a reverse vending machine shall be a violation of this Part.

(d)       A group of distributors may elect to create or appoint a producer responsibility organization to fulfill their obligations under this Part. The Department shall not delegate to any producer responsibility organization the authority to oversee, enforce, or manage the requirements of this Part.

§ 130A‑309.254.  Handling fee.

(a)        A dealer or redemption center who redeems beverage containers shall be reimbursed by the distributor of such beverage containers a handling fee set by the Department.

(b)        The Department shall set the handling fee to be paid by distributors to dealers or redemption centers in a manner that covers the costs of collecting, sorting, processing, and transporting empty beverage containers for recycling, reuse, or refilling.

(c)        The Department shall update the handling fee every five years to reflect changes in the Consumer Price Index computed by the United States Bureau of Labor Statistics over the previous five years.

(d)       Beginning three years after the effective date of this act, the Department shall increase the handling fee by one cent (1¢) if there is less than one point of redemption for every 3,000 persons in each county within the State or there is less than one point of redemption for every 3,000 persons in an environmental justice community. For purposes of this subsection, a point of redemption is either a dealer or redemption center redeeming beverage containers.

§ 130A‑309.255.  Curbside collection of beverage containers.

(a)        The Department may approve procedures allowing for curbside recycling entities to be paid a processing payment for beverage containers collected, processed, sorted, and delivered to distributors for recycling, so long as the beverage containers collected are clean, sorted, and baled. The processing payment shall not exceed the value of the handling fee set by the Department pursuant to G.S. 130A‑309.254.

(b)        Beverage containers collected, processed, sorted, and delivered to distributors by entities that collect curbside recycling shall not be included in the calculations of the performance requirements set in G.S. 130A‑309.256.

§ 130A‑309.256.  Performance standards.

(a)        The following performance standards apply with respect to redemption of beverage containers:

(1)        Beginning July 1, 2027, at least eighty percent (80%) of beverage containers sold in the State shall be redeemed.

(2)        Beginning July 1, 2029, at least ninety percent (90%) of beverage containers sold in the State shall be redeemed.

(3)        Beginning July 1, 2031, at least ninety‑five percent (95%) of beverage containers sold in the State shall be redeemed.

(b)        The following performance standards apply with respect to recycling of single‑use containers:

(1)        Beginning July 1, 2027, at least seventy percent (70%) of single‑use beverage containers sold in the State shall be recycled.

(2)        Beginning July 1, 2029, at least eighty percent (80%) of single‑use beverage containers sold in the State shall be recycled.

(3)        Beginning July 1, 2031, at least eighty‑five percent (85%) of single‑use beverage containers sold in the State shall be recycled.

(c)        The Department shall require each distributor, and any producer responsibility organization, to work with dealers within the State to develop a plan that ensures that the distributor and any producer responsibility organization meet the following standards for reuse and refilling:

(1)        Beginning July 1, 2029, at least ten percent (10%) of all beverage containers sold by the distributor or the distributors that are members of the producer responsibility organization are returned and refilled.

(2)        Beginning July 1, 2031, at least twenty percent (20%) of all beverage containers sold by the distributor or the distributors that are members of the producer responsibility organization are returned and refilled.

§ 130A‑309.257.  Management of deposits.

(a)        Each deposit initiator who received deposits under this act shall segregate the deposits in a deposit transaction fund maintained separately from all other revenues. Each deposit initiator shall place in the fund each deposit for all beverage containers the deposit initiator sells.

(b)        The revenue in the deposit transaction fund may only be expended to pay the refund to consumers for the return of an empty beverage container.

(c)        At the end of each month, any amounts that are or should be in the deposit initiator's deposit transaction fund that are in excess of the sum of (i) interest income earned on amounts in the fund during that month and (ii) the total amount of refund values received by the deposit initiator for beverage containers that month and the two preceding months shall be deemed to constitute unredeemed deposits.

(d)       No later than the tenth day of each month, each deposit initiator shall remit to the Department from its deposit transaction fund any deposit amounts deemed to be unredeemed at the close of the preceding month, pursuant to subsection (c) of this section.

(e)        If in any month the authorized payments from the deposit transaction fund by a deposit initiator exceed the funds that are or should be in the deposit transaction fund, the Department shall reimburse the deposit initiator the amount of excess funds remitted to it under this section.

§ 130A‑309.258.  Beverage Container Litter Reduction Account.

(a)        The Beverage Container Litter Reduction Account is created in the Department, to be administered by the Department. The Beverage Container Litter Reduction Account is a nonreverting fund that consists of unredeemed refund values remitted by distributors to the Department under G.S. 130A‑309.257 and credited to the account. Interest earned shall accrue to the account.

(b)        The Beverage Container Litter Reduction Account shall be used to fund the following:

(1)        The costs to the Department for administering this Part.

(2)        A reserve for contingencies in a reasonable and prudent amount determined by the Department, not to exceed one million dollars ($1,000,000).

(c)        The Unredeemed Beverage Container Deposits Account is created in the Department, to be administered by the Department. After all expenditures under subsection (b) of this section have been made, the balance remaining in the Beverage Container Litter Reduction Account shall be credited to the Unredeemed Beverage Container Deposits Account. The Unredeemed Beverage Container Deposits Account may be used by the Department to provide grants for all of the following purposes:

(1)        For urban, rural, and recreational litter abatement and recycling activities.

(2)        For recycling information, education, and promotion.

(3)        For incentive payments to encourage the establishment of redemption centers in environmental justice communities or rural areas.

(4)        For public education programs directed at reducing litter.

§ 130A‑309.259.  Additional penalties.

(a)        A person may be assessed a civil penalty not to exceed one thousand dollars ($1,000) per violation if the person does any of the following:

(1)        Sells or offers for sale beverages in containers not labeled in accordance with G.S. 130A‑309.248 or registered under G.S. 130A‑309.250.

(2)        Makes a report pursuant to G.S. 130A‑309.260 that is false.

(b)        The Department may examine the accounts and records of deposit initiators and may assess a penalty of ten percent (10%) per year, plus interest, for underpayments of the refund value for beverage containers to be credited to the Beverage Container Litter Reduction Account. The Department may also impose a civil penalty of fifteen percent (15%) of the amount due for payments up to a month late and a five percent (5%) additional penalty for each month the payments continue to be unremitted.

§ 130A‑309.260.  Reports.

(a)        Every distributor who sells or offers for sale in this State beverage containers or beverages in beverage containers shall report to the Department no later than April 15, 2026, and quarterly thereafter, the number of beverage containers sold, categorized by material type and size and weight, by whether the container is reusable or single‑use, and by any other manner prescribed by the Department.

(b)        No later than July 1, 2026, and annually thereafter, the Department shall determine and shall include in its report to the Environmental Review Commission all of the following:

(1)        A summary of the information contained in the distributors' reports under subsection (a) of this section.

(2)        The status of beverage container recycling opportunities throughout the State, together with any recommendations on methods to enhance the opportunities for all consumers in every region of the State to return empty beverage containers conveniently, efficiently, and economically.

(3)        An analysis of the total amount of funds used for program administration and for reimbursement payments to redemption centers, nonprofit drop‑off programs, and curbside programs and an analysis of how funds in the Unredeemed Beverage Container Deposits Account are distributed and used under G.S. 130A‑309.258(c).

(4)        The economic impact of this Part on North Carolina retailers, distributors, and manufacturers of beverages and their containers.

(5)        The problems, if any, incurred in the distribution, sale, and return of beverage containers attributed to the enactment of this Part.

(6)        The effectiveness of this Part in reducing the proportion of empty beverage containers in litter found along the State's roads and highways and along its streams and rivers.

(7)        The effectiveness of this Part in increasing recycling or reuse of beverage containers.

(8)        The costs incurred in the administration of this Part.

(9)        Any recommendations or administrative or legislative proposals considered appropriate to improving the effectiveness of this Part in achieving its purposes.

(10)      Any other information the Department determines is pertinent to achieving the purposes of this Part.

(c)        The Department may require any retailer, distributor, or certified redemption center to provide that information concerning its compliance with this Part that will enable the Department to prepare its report under this section.

SECTION 2.  G.S. 130A‑309.247, 130A‑309.248(c), 130A‑309.250(a), and 130A‑309.258(a), as enacted in Section 1 of this act, become effective April 1, 2026. The remainder of this act becomes effective January 1, 2026, and applies to beverage containers sold or offered for sale on or after that date.