S681 1R

An Act concerning the end-of-life management of electronic cigarettes and supplementing Title 13 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the "Electronic Cigarette Extended Producer Responsibility Act."

2. a. The Legislature finds and declares that:

(1) In the past decade, consumption and sales of electronic cigarettes, or e-cigarettes, have risen dramatically worldwide;

(2) Approximately 60 million e-cigarettes and refills are sold annually, and one-third of these are designed for single-use, according to a 2019 study in the Journal of Environmental Management;

(3) E-cigarettes are a growing waste management concern because, despite their small size, they are consumed and discarded much more quickly than typical electronics ¹, they contribute to litter, and they are a source of fires in waste and recycling trucks, transfer stations, and sorting and processing facilities¹ ;

(4) The disposal of e-cigarette waste products into the environment is problematic due to the presence of oxidants, reactive oxygen species, nanoparticles, metals, and toxic compounds including nicotine, carbonyls, and volatile organic compounds (VOCs) such as benzene and toluene;

(5) Local governments, businesses, and residents of the State do not have ready access to an efficient, environmentally sound, and cost-effective disposal method for e-cigarettes;

(6) The producers of e-cigarettes are best able to assume responsibility for the development and implementation of a cost-effective e-cigarette stewardship program that will promote the refurbishment, reuse, and recycling of e-cigarettes, including vaporizers and batteries, and will provide for the collection, transportation, and processing of discarded e-cigarettes.

b. The Legislature therefore determines that it is in the best interests of the State for the producers of e-cigarettes to form a producer responsibility organization and to develop and implement a program to collect, reuse, recycle, transport, and soundly dispose of discarded e-cigarettes.

3. As used in this act:

¹"Consumer" means an individual, corporation, organization, school, or other legal entity who possesses a post-consumer e-cigarette.¹

"Department" means the Department of Environmental Protection.

"Distributor" means a person who has a contractual relationship with one or more producers to market and sell e-cigarettes to retailers.

"E-cigarette stewardship plan" or "stewardship plan" means the plan developed pursuant to section 5 of this act, and which provides for the environmentally sound life-cycle management, by participating producers, of e-cigarettes that are sold or offered for sale in New Jersey.

"Electronic cigarette" or "e-cigarette" means: (1) any device that employs a battery or other mechanism to heat a solution or substance to produce a vapor or aerosol intended for inhalation, including an electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, or vape pen; (2) any cartridge ¹, pod,¹ or ¹other¹ container of a solution or substance intended to be used with or in the device or to refill the device; or (3) any solution or substance, whether or not it contains nicotine, intended for use in the device. "Electronic cigarette" does not include: cigarettes, as defined in section 102 of the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-2), any product approved by the United States Food and Drug Administration for sale as a tobacco cessation product, a tobacco dependence product, or for other medical purposes, and which is marketed and sold solely for that approved purpose, or any asthma inhaler prescribed by a physician for that condition that is marketed and sold solely for that approved purpose.

"Environmentally sound management practices" means policies or procedures for the collection, storage, transportation, reuse, recycling, and disposal of e-cigarettes, which ensure compliance with all applicable federal, State, and local laws, rules, regulations, and ordinances, and the protection of human health and the environment, and which address matters such as adequate recordkeeping, accurate tracking and documentation of the use, reuse, recycling, or disposal of post-consumer e-cigarettes within and outside of the State, and adequate provision of environmental liability coverage for professional services and for the operations of contractors working on behalf of a producer or representative organization.

"Federal waste management hierarchy" means the four-tiered hierarchy, established by the United States Environmental Protection Agency, that guides waste management determinations through the promotion of source reduction, recycling, energy recovery, and waste treatment and disposal, in that order, to the extent feasible.

"Post-consumer e-cigarette" means an e-cigarette that is ¹[not used and]¹ no longer wanted by a consumer.

"Producer" means a ¹[manufacturer of an e-cigarette that is sold, offered for sale, or distributed in the State, either under the producer's own name or under any other brand name] person that is responsible for an e-cigarette that is sold or offered for sale in or into the State, whether the sale occurs through a physical location, a remote transaction, or another commercial distribution method, as determined in the following order of priority: (1) the first priority is the brand owner, which is a person that has legal ownership of the brand under which the e-cigarette is sold, or that manufactures the e-cigarette under a brand that the person owns or is licensed to use; (2) the second priority is the United States importer, which is a person that imports the e-cigarette into the United States for sale or distribution in or into the State, but only if no person described in paragraph (1) can be identified or is subject to the jurisdiction of the State; (3) the third priority is the distributor, which is a distributor that sells, supplies, or arranges for the sale of the e-cigarette in or into the State, but only if no person described in paragraph (1) or (2) can be identified or is subject to the jurisdiction of the State; and (4) the fourth priority is the first seller into the State, which is the person that first sells or offers the e-cigarette for sale in or into the State, but only if no person described in paragraphs (1) through (3) can be identified or is subject to the jurisdiction of the State¹ .

"Producer responsibility organization" or "PRO" means an organization that is exempt from taxation under Section 501(c)(3) of the federal Internal Revenue Code of 1986 and is formed for the purpose of implementing a producer responsibility plan to meet the requirements of this act.

"Recycling" means any process by which materials or products that would otherwise become solid waste are collected, separated, or processed and returned to the economic mainstream in the form of raw materials or products. "Recycling" shall not include energy recovery or energy generation resulting from combustion or incineration processes.

¹"Retailer" means a person that offers e-cigarettes for sale through sales outlets, via the internet, mail order, or other means whether or not the seller has a physical presence in the State.¹

"Reuse" means the return of a product into the economic stream for use in the same kind of application originally intended for the product, without a change in the product's original composition or identity.

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

4. a. No later than two years after the effective date of this act, each producer of e-cigarettes shall join a producer responsibility organization. Upon the formation of the producer responsibility organization, the members shall elect a governing body, and the governing body shall submit an application to the department demonstrating that the producer responsibility organization meets the requirements for approval pursuant to this act.

b. The department shall approve, for the purposes of this act, the formation of at most one producer responsibility organization.

c. The producer responsibility organization shall:

(1) comply with the requirements of this act and the rules and regulations adopted pursuant thereto;

(2) have a governing board that consists of producers representing the e-cigarettes placed in the market in New Jersey, and, if deemed by the producers to be warranted, include nonvoting members who represent material trade associations and companies; and

(3) demonstrate, to the department's satisfaction, that it has adequate financial responsibility and financial controls in place, including fraud prevention measures and an auditing schedule, to ensure the proper management of the producer responsibility organization's funds.

d. If the department determines that the producer responsibility organization approved pursuant to this section no longer meets the requirements of this act or has failed to implement and administer an approved e-cigarette stewardship plan in a manner that effectuates the purposes of this act, the department shall revoke the producer responsibility organization's approval.

e. Commencing two years after the effective date of this act, any entity that becomes a producer of e-cigarettes shall, within six months of qualifying as a producer, join the approved producer responsibility organization.

f. Each producer shall file its primary business address with the department, and notify the department of any change in their business address within 30 days after the change. A producer responsibility organization may satisfy the requirements of this subsection, on behalf of a producer, by including the producer's primary business address in an e-cigarette stewardship plan, update, or annual report submitted to the department, or by otherwise notifying the department of the producer's address.

g. A producer responsibility organization approved pursuant to this section shall notify the department, within 30 days, of any the following:

(1) the end of any three-month period in which the producer responsibility organization unsuccessfully attempted to obtain a fee, records, or information from a producer, or received incomplete or incorrect records or information from a producer;

(2) the date on which a producer no longer participates in the producer responsibility organization's approved e-cigarette stewardship plan; and

(3) any other instance of noncompliance by a producer.

5. a. No later than ¹[five years after the effective date of] one year after the department adopts rules and regulations pursuant to section 10 of¹ this act, the producer responsibility organization approved pursuant to section 4 of this act shall prepare and submit to the department, for the department's approval, an e-cigarette stewardship plan. The plan shall minimize the involvement of, and eliminate costs to, the public sector in association with the collection, transportation, and processing of post-consumer e-cigarettes by reducing the amount of waste associated with their consumption, promoting their reuse and recycling, and negotiating and executing agreements for their collection, transportation, reuse, recycling, burning for energy recovery, incineration, and disposal, using environmentally sound management practices and consistent with the federal waste management hierarchy.

b. The plan submitted pursuant to this section shall:

(1) provide for convenient and available Statewide collection of post-consumer e-cigarettes from urban, suburban, and rural areas of the State;

(2) provide collection site locations Statewide that will accept post-consumer e-cigarettes such that ¹there is at least one collection site in each county, that¹ at least 90 percent of State residents have a permanent collection site within 15 miles of their residence, that permanent collection sites be established for every 30,000 residents of a population center, and that collection sites be distributed to provide convenient and equitable access for residents within each population center, unless otherwise authorized by the department. For those persons who do not have a permanent collection site within 15 miles of their residence, the plan shall provide for annual collection events, unless more frequent collection events are deemed to be necessary, and are required, in writing, by the department;

(3) address, to the extent reasonably feasible and mutually agreeable, the coordination of the e-cigarette stewardship program with the existing infrastructure of local governments and the existing electronic waste collection infrastructure in the State, provided that there are no additional costs to the local, county, or State governments for the collection, transportation, or processing of post-consumer e-cigarettes;

(4) describe how the program will follow the federal waste management hierarchy;

(5) describe the educational materials and outreach efforts that will be used to inform consumers about the e-cigarette stewardship program. Educational materials shall include, but need not be limited to, information at the point of purchase identifying the end-of-life management options that are available for post-consumer e-cigarette through the e-cigarette stewardship program ¹, and an Internet website that includes collection locations and a list of compliant producers and brands¹ ;

(6) describe how the stewardship plan will be administered, and identify the staff members who will be responsible for ensuring proper administration of the plan;

(7) include a description of the fee system developed pursuant to subsection d. of this section and the annual fee to be imposed on each producer; ¹[and]¹

(8) include a proposed budget that has been reviewed and certified by an independent financial auditor, and which confirms that the fees charged to producers by the PRO will cover and sustain the costs of the e-cigarette program ¹and the annual fee assessed by the department pursuant to section 9 of this act¹ . The cost of any work performed by an independent financial auditor pursuant to this paragraph shall be funded by the e-cigarette stewardship program. The proposed budget shall also include a description of surplus funds, if any, that are in reserve for future use ¹;

(9) allow for the participation of public and private schools as collection sites, within 90 days of receiving a request from the school to serve as a collection site. A school collection site shall be designed to collect post-consumer e-cigarettes from school faculty and devices confiscated from students;

(10) describe how the producer responsibility organization will provide collection sites with adequate collection receptacles for post-consumer e-cigarettes and staff training necessary to manage the collection site; and

(11) establish performance goals for the stewardship program, including an e-cigarette collection target and recycling rates¹ .

c. The producer responsibility organization shall notify the department, in writing, within 30 days of any of the following changes to a plan approved pursuant to section 6 of this act:

(1) the location or number of collection sites identified in the plan;

(2) the identity of the processors that manage the post-consumer e-cigarettes collected ¹or any changes to the end-of-life processing method¹ ; or

(3) the designated transporters of post-consumer e-cigarettes.

d. The producer responsibility organization shall annually raise sufficient revenue to fully fund all costs identified in its budget. The revenue shall be raised through a system of fees to be imposed on producers that are members of the producer responsibility organization. The fee system shall impose fees on producers in proportion to the amount, by weight or volume, as appropriate, of e-cigarettes sold, offered for sale, imported, or distributed in or into the State by the producer. In addition, the fee system shall impose fees that are proportional to the environmental impact of the e-cigarettes, consistent with the following provisions:

(1) reusable e-cigarettes shall be associated with a lower fee;

(2) e-cigarettes that are composed of recycled content ¹[, are readily recyclable using curbside recycling in New Jersey, or are biodegradable]¹ shall be associated with a lower fee; ¹and¹

(3) the presence of hazardous materials in the e-cigarettes, as identified by the Department of Health or the department, shall be associated with a higher fee ¹[; and

(4) the incorporation of elements, including, but not limited to, inks, labels, and adhesives, that prevent an otherwise recyclable or biodegradable product from being recyclable or biodegradable, as applicable, shall be associated with a higher fee]¹ .

6. a. Not more than ¹[120] 180¹ days after receipt of a completed e-cigarette stewardship plan, submitted pursuant to section 5 of this act, the department shall approve, conditionally approve, or disapprove the plan and provide written notice of the determination to the producer responsibility organization. ¹[If the department does not provide written notice of the determination made pursuant to this section within the timeframe specified by this subsection, the plan shall be deemed to have been approved, and the producer responsibility organization shall proceed to implement the plan as provided by paragraph (1) of subsection c. of this section.]¹ In making a determination pursuant to this section, the department may solicit information from the representatives of recycling facilities and other stakeholders, as the department deems appropriate.

b. A stewardship plan shall not be approved, pursuant to this section, unless the department determines that:

(1) the producer responsibility organization has engaged in satisfactory consultation with stakeholders in the development of the plan;

(2) the plan adequately addresses all of the elements described in subsection b. of section 5 of this act in sufficient detail to demonstrate that the objectives of the plan will be met; and

(3) the plan contains an adequate financing mechanism, developed pursuant to subsection d. of section 5 of this act, and a budget that has been verified by an independent financial auditor.

c. (1) If an e-cigarette stewardship plan is approved pursuant to this section, the producer responsibility organization shall begin implementing the approved plan within ¹[90] 180¹ days after receipt of the department's written notice ¹[or after the expiration of the 120-day period established by subsection a. of this section, as the case may be]¹ , or within another timeframe agreed to by the department.

(2) If an e-cigarette stewardship plan is conditionally approved pursuant to this section, the department's written notice shall specify the conditions that are to be satisfied in order for the plan to be approved pursuant to this act. The producer responsibility organization shall implement the conditionally approved plan, in accordance with the conditions specified in the notice, either within 90 days after receipt of the department's notice or within another timeframe agreed to by the department.

(3) If an e-cigarette stewardship plan is disapproved pursuant to this section, the department's written notice shall be accompanied by a detailed statement describing the reasons for disapproval. Not more than 30 days after receipt of the department's notice and accompanying statement of the reasons for disapproval, the producer responsibility organization shall submit a revised e-cigarette stewardship plan to the department, who shall approve, conditionally approve, or disapprove of the revised plan in accordance with the provisions of subsection a. of this section.

d. Not more than 90 days after approving an e-cigarette stewardship plan pursuant to this section, or any revisions thereto, the department shall post the plan at a publicly accessible location on the department's Internet website.

e. (1) A stewardship plan approved pursuant to this section shall be reviewed and updated by the producer responsibility organization, and reapproved by the department, at least once every five years, in accordance with the procedures specified in this section.

(2) Notwithstanding the provisions of paragraph (1) of this subsection to the contrary, the department may, at any time, review a previously approved e-cigarette stewardship plan to determine whether the plan is being implemented in accordance with this act. If the department, at any time, finds that the approved plan, as implemented, is deficient, the department may order the producer responsibility organization to incorporate modifications to the plan or to the implementation thereof, as may be necessary to ensure that the plan, as implemented, fully complies with the provisions of this act.

¹f. No later than three years after the date on which department first approves an e-cigarette stewardship plan pursuant to this section, each retailer in the State shall participate in the program as a collection site. The producer responsibility organization shall notify the department of any retailer that refuses to participate as a collection site within 90 days of that refusal.¹

7. a. Commencing ¹[six years after the effective date] 180 days after the department first approves an e-cigarette stewardship plan pursuant to section 6¹ of this act, a producer, distributor, or retailer shall not sell e-cigarettes or offer e-cigarettes for sale to any person in the State unless the producer of the e-cigarettes is a member of a producer responsibility organization that is engaged in the implementation of, or has fully implemented, an e-cigarette stewardship plan approved by the department pursuant to section 6 of this act.

b. (1) A producer, distributor, or retailer who violates the provisions of subsection a. of this section shall be subject to: (a) a written warning for a first offense; and (b) a civil penalty of $500 for each subsequent offense. A civil penalty under this subsection shall be collected by the department, a municipality, or an entity certified
pursuant to the "County Environmental Health Act," P.L.1977, c.443 (C.26:3A2-21 et seq.) in a civil action by a summary proceeding under the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). The Superior Court and the municipal court shall have jurisdiction to enforce the provisions of the "Penalty Enforcement Law of 1999" pursuant to this subsection.

(2) The department, a municipality, or an entity certified pursuant to the "County Environmental Health Act," P.L.1977, c.443 (C.26:3A2-21 et seq.) may institute a civil action for injunctive relief to enforce the provisions, or prevent a violation, of this section, and the court may proceed in the action in a summary manner.

c. (1) Whenever the department determines that any producer, distributor, or retailer is in violation of a provision of this act, the department may assess a civil administrative penalty of not more than $10,000 for each violation, and each day of violation shall constitute an additional, separate, and distinct violation. A civil administrative penalty shall not be levied until a violator has been provided with written notice, by certified mail or personal service, of the following:

(a) the statutory or regulatory basis of the violation;

(b) the specific act or omission that constituted the violation;

(d) the right of the violator to contest, through a hearing, any matter contained in the notice; and

(e) the procedures for requesting a hearing on any contested matter.

(2) A producer, distributer, or retailer who receives a notice pursuant to this subsection may, within 20 calendar days following receipt of the notice of violation, request a hearing on any matter contained in the notice. Any person requesting a hearing shall comply with all requisite procedures therefor, as specified in the notice. Failure to submit a timely request or to comply with all requisite procedures shall constitute grounds for denial of a hearing request. After a hearing and upon a finding that a violation has occurred, the department shall issue a final order assessing the amount of the civil administrative penalty specified in the notice. If a violator does not request a hearing or fails to satisfy the statutory and administrative requirements for requesting a hearing, the notice of assessment of a civil administrative penalty, issued pursuant to paragraph (1) of this subsection, shall become a final order on the 21st calendar day following receipt of the notice by the violator. If the department denies a hearing request made pursuant to this paragraph, the notice of denial shall become a final order upon receipt of the notice by the violator.

(3) A civil administrative penalty may be settled by the department on such terms and conditions as the department may determine.

(4) Payment of a civil administrative penalty shall not be deemed to affect the availability of any other enforcement remedy in connection with the violation for which the penalty was levied.

(5) If a civil administrative penalty imposed pursuant to this section is not paid within 30 days of the date that the penalty is due and owing, and the penalty is not contested by the producer, distributor, or retailer against whom the penalty has been assessed, or if the producer, distributor, or retailer fails to make a payment pursuant to a payment schedule entered into with the department, an interest charge shall accrue on the amount of the penalty from the 30th day that the amount was due and owing. In the case of an appeal of a civil administrative penalty, if the amount of the penalty is upheld, in whole or in part, the rate of interest shall be calculated on that amount as of the 30th day from the date the amount was due and owing under the administrative order. The rate of interest shall be that established by the New Jersey Supreme Court for interest rates on judgments, as set forth in the Rules of Court.

d. The department may post on its Internet website a list of producers, distributors, and retailers that are in violation of this act.

8. a. Except as provided in subsection b. of this section, an action undertaken by a producer or producer responsibility organization that is necessary to develop or implement an approved e-cigarette stewardship plan shall not be deemed to constitute a violation of any State law relating to antitrust, restraint of trade, unfair trade practices, or the regulation of trade or commerce.

b. The provisions of subsection a. of this section shall not apply to:

(1) any agreement establishing or affecting the price of a product; or

(2) any agreement restricting the output or production of a product or the geographic area or customers to which a product will be sold.

9. a. One year after the department provides notification to a producer responsibility organization of its approval of a plan in accordance with section 6 of this act, and annually thereafter, the producer responsibility organization shall submit a report to the department describing its e-cigarette stewardship program. The report shall include, at a minimum:

(1) a description of the methods used to reduce, reuse, collect, transport, recycle, and process post-consumer e-cigarettes under the program;

(2) the estimated quantity of ¹e-cigarettes sold in New Jersey and the estimated quantity of¹ post-consumer e-cigarettes collected under the program during the preceding year;

(3) the volume of post-consumer e-cigarettes processed under the program by method of disposition, including reuse, recycling, energy recovery, incineration, and disposal;

(4) the estimated quantity of post-consumer e-cigarettes collected at each collection site under the program;

(5) a list of all processors of post-consumer e-cigarette from the time of collection to final disposition that are used in the program and the disposition method used by each processor;

(6) a list of all producers participating in the program;

(7) the total cost of implementing the program, which shall include, but need not be limited to, separate figures for the cost of collection, transportation, disposition, communication, and independent financial audit;

(8) an evaluation of the effectiveness of the program and any steps necessary to improve the program;

(9) samples of the educational materials provided to consumers of e-cigarettes, together with an evaluation of the methods used to disseminate those materials and an assessment of the educational and outreach effectiveness of those materials; and

(10) a certification to the validity of the information contained in the report.

b. Within 90 days after receipt of an annual report, the department may meet with interested stakeholders to review the report. If the department chooses to meet with interested stakeholders, the department shall post the minutes of each stakeholder meeting, on its Internet website, within 30 days after the date of the meeting.

c. Each report submitted pursuant to subsection a. of this section shall be posted on the department's Internet website. The department shall not disclose financial, production, or sales data reported by a producer responsibility organization pursuant to this section, except that the department may disclose such data in aggregate or summary format, provided that individual producers, distributors, or retailers and their financial, production, or sales data are not specifically identified, and the summary omits any reference to unique characteristics from which the identities of individual producers, distributors, or retailers might be ascertained.

¹d. Within 90 days of receiving the initial annual report submitted by the producer responsibility organization pursuant to subsection a. of this section, the department shall establish an annual fee to be paid by the producer responsibility organization that is reasonably calculated to cover the actual costs of the department to administer, implement, and enforce the provisions of this act.¹

10. The department shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as are necessary to effectuate the purposes of this act.

11. This act shall take effect immediately.