REPORT TO THE TWENTY-FIFTH LEGISLATURE
STATE OF HAWAII2009

PURSUANT TO SECTIONS 342G-102.5(h), 342G-114.5(b), AND 342G-123,
HAWAII REVISED STATUTES, REQUIRING THE DEPARTMENT OF HEALTH
TO GIVE A REPORT ON THE ACTIVITIES OF THE DEPOSIT BEVERAGECONTAINER PROGRAM

PREPARED BY:
STATE OF HAWAII
DEPARTMENT OF HEALTH
November 2008

EXECUTIVE SUMMARYThe State of Hawaii Deposit Beverage (DBC) Container Program (Program)achieved an annual redemption rate of 72% in fiscal year (FY) 2008 and cleareda previously unattained milestone of 70% in its quest to reach its goal of 80%
redemption. 682 million of 948 million deposit beverage containers (DBC) wererecycled that year.
The growth and expansion of the Program is consistent with an April 2008 survey
showing that the public participation in the Program increased and that the public
has a more positive opinion of redemption centers and the Program in general.
The Program will continue focus on improving redemption center services andincreasing customer convenience.
As of June 30, 2008, the department had certified 106 certified redemption
centers, including 77 permanent and 29 mobile truck sites, an increase of 7 newsites since the start of June 2007. Redemption centers have increased their total
operating hours from 2,967 hours to 3534 hours. The Program continues toreceive additional certified redemption center solid waste permit and certification
applications.
Since the start of the Program in October 2002 to June 30, 2008, the departmentcollected about $203.6 million in container fees and deposits from distributors
and paid out almost $152.7 million to redemption center operators for redeemed
deposits and eligible handling fees. DOH also paid about $4.2 million forcontracted county DBC program activities, about $9 million for Programadministration. Around $19.6 million was encumbered, as of June 30, 2008, forvarious items described later.
As of June 30, 2008, the DBC special fund had slightly more than $22 million
remaining after encumbrances. Reserves are needed to handle redemptions; wecollect 6 cents per container (deposit plus container fee) but pay 7 to 9 cents percontainer (5 redemption plus 2-4 cents handling fee).
The Program handled 80 complaints from in FY 2008, compared to 240 in FY
2007. We attribute the decline to increased consumer knowledge, including
knowing that redemption centers must inspect all container loads, reject ineligible
containers, and verify customer claims on the number of containers, etc.
The most prevalent complaints include the inaccuracy of the weight rates andpoor customer service. Weight rate complaints dropped 87% from 155 in FY
2007 to 21 in FY 2008. The program did increase the rates in favor of thecustomer in May 1, 2007. "Customer service" complaints also declined. The
department generally seeks voluntary service improvements, and companies
have been generally cooperative.

2

In FY08, the program issued three formal enforcement notices and orders,(Notices of Findings and Orders), bringing the total to 14 since the Program’s
start.
A continuing challenge is ensuring the accuracy of claims by redemption centers
for refund value and handling fees. The department is working on a proposal on
payment procedure (see Section VII - Challenges and Program Changes, infra),and plans to use professional auditing services to examine regulated companies.
Further, the Program needs to periodically update the DBC weight rate(containers per pound by material) due to changes in beverage sales, and to deal
with island-wide curbside recycling by the City and County of Honolulu.
Act 285, 2007, made several administrative changes to the Program that havebeen successfully implemented. 68 fluid ounce/2 liter containers have been
assimilated into the Program without obstacles. With the Legislative Auditor’s
review, the Director suspended the automatic increase to the DBC container fee(currently still 1-cent per container) despite the redemption rate exceeding 70%,
given expenditure rates and the size of the DBC special fund. Distributors arereporting and paying on the number of deposit beverages " sold in the State."
Additionally, certified redemption centers know they can refuse to pay refunds on
previously processed and baled containers.
The data presented and utilized in this report reflects that data collected as ofJune 30, 2008.
The program website, www.hi5deposit.com, is continually updated to reflectprogram changes and general information.
To find prior legislative reports please visit the Department of Health’s website at:
http://hawaii.gov/health/about/pr/publication.html.

3

I. DEPOSIT PROGRAM MEASURE OF EFFECTIVENESS
The department has selected as its measure of effectiveness the deposit
beverage container redemption rate. It reflects the efficacy of the program toaccomplish its mission to: (1) collect and redeem eligible deposit beveragecontainers and (2) recycle deposit beverage container materials.
Deposit Beverage Container Redemption Rate
The redemption rate increased to 72% in fiscal year 2008 from 68% in fiscal year
2007. The information below shows the actual numbers of containers sold andcontainers redeemed.
The redemption rate is calculated by dividing the number of deposit beveragecontainers (DBC) redeemed by the number of DBC sold.
Redemption Rate

= # DBC redeemed# DBC soldRedemption Rate

= 681,706,599 redeemed
947,692,357 soldRedemption Rate

= 72%

CHART 1: Number of DBC Redeemed FY 2006 - 2008, by Material Type
Deposit Beverage Container Program
FY06-08 Redemption Comparison By Material Type350,000,000
300,000,000
250,000,000
FY06
200,000,000
150,000,000

FY07

100,000,000
FY08

50,000,000
0Aluminum

Glass
Material Type

4

Plastic

CHART 2: Comparison of Redeemed & Unredeemed
Deposit Beverage Container Program
FY06-08 Redemption Comparison

100%
32%

32%

28%

Unredeemed

18%

19%

22%

Plastic

17%

16%

15%

33%

33%

34%

80%
60%
40%
20%

Glass

Aluminum

0%
FY06

FY07

FY08

CHART 3: DBC Redeemed In FY 08, by Material Type
Deposit Beverage Container Program
Redemption Rate Comparison by Material Type FY08

500,000,000
400,000,000

Unredeemed

300,000,000
200,000,000

75%
71%

100,000,000

69%

Aluminum

Glass

Plastic

5

RedeemedII. PROGRAM PERFORMANCE INDICATORS
Payments to Certified Redemption Centers
All Certified Redemption Center (CRC) sites continue to submit deposit andhandling fee request forms. The department is able to process the majority of
CRC claims for payments within 2 weeks. From January 2005 through June 30,
2008, the department paid out almost $152.7 million to redemption center
operators for redeemed deposits and eligible handling fees. Incomplete and noncompliant forms or questions related to verification documentation that are
submitted to the department may delay payment.
Charities and Fundraising
Schools and non-profits continue to use the program for fundraising opportunities
through donation programs. Fundraising efforts complement the program andcontribute to the overall number of containers recycled by encouraging people,
who are not motivated, to recycle for a 5¢ deposit. In general, these people
recycle only to help their favorite organizations raise funds. Schools andchurches run collection drives and partner with recyclers to receive deposits. The
National Kidney Foundation of Hawaii expanded their pick-up service for donatedhousehold goods to include deposit containers.
Certified Redemption Centers
As of June 30, 2008, there were106 certified redemption centers (CRCs),
including 77 permanent sites and 29 mobile truck sites. The number of CRCs
increased slightly from the previous year, i.e., as of June 30, 2007, there were 99
CRCs. The number and distribution of CRCs statewide are constantly changing
as new redemption centers are opened and existing ones are closed. However,
the overall leveling off of the number of CRCs can be an indication that thecoverage statewide is maturing, although the Program continues to receive solid
waste permit and certification application from new applicants. There was anincrease in total hours of operation for statewide redemption centers from 2,967
to 3534. A significant part of the increase in operating hours is attributed to thechange in statute (Act 285, Session Laws 2007) requiring CRCs on Oahu tooperate for 30-hour minimum per week, and to the implementation of
infrastructure improvements resulting from the grants administered by the Officeof Solid Waste Management. See Table 1 for breakdown of hours by island.

6

TABLE 1: CRC Numbers & Hours of Operation by Island
No. of Certified Redemption Centers
IslandWeekly Hoursof Operation(June 2007)

Weekly Hoursof Operation(June 2008)

397.5

556

Hawaii

Jan
2005
5

Dec
2005
11

June
2006
12

June
2007
15

June
2008
16

Maui

9

9

12

14

15

538.5

677

Molokai

1

1

1

3

3

49.5

49.5

Lanai

1

1

1

1

1

15.0

15

Oahu

23

49

52

60*

63

1824.0

2031

Kauai

5

6

6

6

7

143.0

185.5

Total:

44

77

84

99

105

2967.53534

The number of mobile redemption centers still includes seventeen (17) sites
operated by one company on Oahu that are operating less than 30 hours per
week. Most of these sites are in areas outside of the Honolulu urban core suchas the military bases, Salt Lake, and Ewa Beach, and “gap” areas such as the
University of Hawaii Manoa and McCully and Makiki supermarket parking lots.
These mobile sites operate only one or two days per week and are being
operated primarily as a service to the community. Terminating these mobile sites
has been delayed due to a lack of suitable alternatives with respect to serving
these relatively remote areas. The company has contacted businesses,
including supermarkets and shopping centers, in these areas and has been
unable to find property owners willing to allow the use of parking lot space on
their property for permanent redemption centers. To arbitrarily terminate thesemobile redemption sites and deprive these customers of the convenience they
have become accustomed to without a satisfactory alternative was, at this time,
not acceptable to the Program. See a list of mobile redemption sites in Table 2.

7

TABLE 2: Mobile Redemption Sites
Supermarket Locations 2005

Days per week

Hours per week

Times McCully

2

12Times Beretania

16Times Kahala

2

12Kalani High School

1

6

Foodland Beretania

1

6

Univ of Hawaii, Law Library parking lot

1

6

Foodland Aina Haina½ (1 day every other week)6

Foodland Kaneohe

16

Waipahu Town Center2

12Foodland Ewa Beach

1

6

Stadium Sack & Save

1

6

Stadium Mall, Ice Palace

1

6

Aliamanu Coast Guard housing

1

2

Fort Shafter

1

3

KMCB Hawaii – Base Exchange

17

Schofield Barracks Commissary

1

4

Tamura’s Market (Wahiawa)2

12

On a more global scale, retailers and shopping centers in general are still
unwilling to allow the use of parking lot space for redemption centers, but some
progress is being made. One new redemption center has started at an Aiea
service station that includes a convenience store, and is open 10 hours a day,seven days a week. Goodwill Industries of Hawaii has added redemption centers
to four of its donation stores, for a total of six stores, five on Oahu and one on the
Big Island. New permanent redemption centers have been allowed at the
Windward Mall (Kaneohe) and Waikele (Waipahu) shopping centers.

8

Environmental Indicators
A total of 44,000 tons of deposit beverage containers were recycled in FY2008.
See Table 3 for total tons recycled by material type and by fiscal year since FY
2006.
TABLE 3: Total Tons Recycled by Material Type & Fiscal Year
Material TypeTons Recycled FY 06

Tons Recycled FY 07

Tons Recycled FY 08

Aluminum

5,092

4,999

5,318

Bi-metal

42

54

77

Glass

32,06033,43133,070

Plastic

5,083

5,136

6,016

42,277

43,62044,481

Total

There appears to be a downward trend in the volume of beverage container litterat beaches. To determine the program’s impact on litter, the department used
the Ocean Conservancy’s International Coastal Cleanup data report as anindicator. Every September volunteers help clean up coastal areas and record
the types and number of debris they find. Data is compiled into reports andreleased the following year in spring. See Tables 4 and 5 below to compare datafrom 2003 through 2007.
TABLE 4: Number of Debris Found During Cleanup
BeverageContainer Type
Glass Bottles
Plastic Bottles
Metal Cans
Total

2003

2004

2005

2006

2007

7,687
5,246
4,946
17,87911,362
5,215
6,894
23,471

7,194
3,824
3,518
14,430

5,759
4,799
3,959
14,517

5,008
2,965
2,932
10,905

Note: The number of volunteers and targeted cleanup areas vary from year to year.

TABLE 5: Percentage of Total Debris Collected During Cleanup
Beverage
Bottles & Cans
Glass, Metal, & Plastic

2003

2004

2005

2006

2007

15.9%

14.5%

12.3%

8.7%

6.7%

While there appears to be a downward trend in the number of bottles and cansfound at beaches, beverage containers, along with associated caps and lids,
continue to be a large portion of beach litter. This is why it is important tocontinue to place a deposit on beverage containers to decrease the temptation to9

litter and increase the incentive to recycle. See Table 6 for top five debris items
collected at the 2007 beach cleanup.
TABLE 6: Top 5 Debris Items Collected During The 2007 Cleanup
Number of
Debris Items
72,053
21,21016,554
10,505
7,331
Number of
Debris Items
1081
393
248
55
39

Land Cleanups Only
1. Cigarettes & Filters
2. Caps & Lids
3. Food Wrappers and Containers
4. Beverage Containers (glass, metal, plastic)
5. Cups, Plates, and Utensils
Underwater Cleanups Only
1. Fishing Line
2. Beverage Containers (glass, metal)
3. Cigarettes, Filters, & Cigar Tips
4. Food Wrappers and Containers
5. Caps & Lids

Percent of
Total Collected
44.7%
13.1%
10.3%
6.5%
4.5%
Percent of
Total Collected
54%
19.6%
12.3%
2.7%
1.9%

III. DEPOSIT BEVERAGE CONTAINER SPECIAL FUND
Revenue and Expenditures
From October 2002 to June 30, 2008 the department has collected around$203.6 million in container fees and deposits from distributors, and received $3.9
million in interest payment. In October 2002, the law first required thedepartment to collect a $0.005 (one-half cent) container fee. Subsequently,
starting in October 2004, the law required the department to collect a 1¢
container fee and a 5¢ deposit on all eligible deposit beverages manufactured,
sold and imported in the State. From January 2005 through June 30, 2008, thedepartment paid out almost $152.7 million to redemption center operators forredeemed deposits and eligible handling fees. Around $19.6 million was
encumbered as of June 30, 2008, including $1.18 million for 2 counties (Hawaii &Kauai) for redemption operational support, $675,951 for program administration,$14.6 million for redemption center operators for redeemed deposits and eligible
handling fees, and $3.2 million for redemption center and recycling infrastructure
improvement grants, required under Act 228, Session Laws of Hawaii 2005. Act
231, the reverse vending machine (RVM) rebate program, required the Program
to provide monies for a rebate of 50% of the actual cost of each RVM, including
shipping and general excise tax, purchased by a person or contracted recycler.
By June 30, 2008, $619,199 was paid to recyclers for the RVM rebate program,$2.7 million was paid out for infrastructure improvement grants, andapproximately $4.2 million was provided to all 3 counties for redemption
operation support. Additionally, $5.6 million was expended for program10administrative costs. See Tables 7 and 8 for DBC special fund revenues andexpenditures from October 2002 through June 30, 2008.
TABLE 7: DBC Revenues & Expenditures October 2002 - June 30, 2008
Revenue
Distributor Payments
Deposits (5¢/container)$ 161,822,937

Container Fees (1¢/container)$ 41,752,414

Interest (from Bank)$ 3,976,150
Total Revenue$ 207,551,501

Expenditures
Payments to Redemption Centers
Deposits (5¢/container)$ 107,930,290

Handling Fees (2¢ or 3¢/contr)$ 44,777,500

Subtotal$ 152,707,790

County Support
County of Hawaii$ 2,122,737

County of Maui

$ 1,580,697

County of Kauai$ 502,092

Subtotal$ 4,205,526

Infrastructure Improvement Grant(Act 228, 2005)$ 2,655,130

Reverse Vending Machine Rebate(Act 231, HRS-342G-102.5)$ 619,199

Administrative Expenses
DOH Payroll$ 1,618,937

DOH supplies, phone, misc.

$ 644,747

Advertising/Outreach$ 1,992,749

Payment to General Fund for
Admin Expenses for FY05, FY06

$ 1,282,061

Audit Fee for FY05

$ 92,480

Others - Travel$ 41,411

Subtotal$ 8,946,714
Total Expenditures$ 165,860,030

Unspent before encumbrances$ 41,691,471

Encumbrances
For redemption center payments(from July 2007 to June 2008)$ 14,580,119

For County Support$ 1,186,357

For marketing, admin, misc.

$ 675,951

For contracts (Act 228, 2005) FY06
FY08

$ 336,466$ 2,825,815

For RVM (reversed vending machine) Rebate
HRS 342G-102.5$0Total Encumbrances$ 19,604,708

Unspent after encumbrances$ 22,086,763

11

TABLE 8: DBC Revenues & Expenditures FY 2008 (July 1 - June 30, 2008)
Revenue
Distributor Payments
Deposits (5¢/container)$ 48,299,001

Container Fees (1¢/container)$ 9,665,298

Interest (from Bank)$ 1,696,246
Total Revenue$ 59,660,545

Expenditures
Payments to Redemption Centers
Deposits (5¢/container)$ 31,933,484

Handling Fees (2 or 3¢/contnr.)$ 11,899,344

Subtotal$ 43,832,828

County Support
County of Hawaii$ 423,934

County of Maui

$0

County of Kauai$ 221,298

Subtotal$ 645,232

Administrative Expenses
DOH Payroll$ 560,031

DOH supplies, phone, misc.

$ 248,703

For contracts (Act 228, 2005)$0

Advertising/Outreach$ 648,747

For RVM Rebate(HRS §342G-102.5)$0

Payment to General Fund for
Admin Expenses for FY$0

Audit Fee for FY$0

Others - Travel$ 10,941

Subtotal$ 1,468,422
Total Expenditures$ 45,946,482
MEMO ONLY

Expenditures paid in FY08 for FY07
(encumbered in FY07)$ 7,858,504

Expenditures paid in FY08 for FY06
(encumbered in FY06)$ 470,873

12

Infrastructure Improvement Grant Program
The Infrastructure Improvement Grant Program (Act 228, SLH 2005) awarded
nearly $6 million in funds to 15 contractors to improve and expand redemption
center services to the public. Expanded service will improve convenience andhelp to increase recycling rates. The department utilized the Request for
Proposals (RFP) process to award the contracts in 2006 and 2008. See Tables 9
and 10 below for details.
TABLE 9: Contracts Awarded in 2008
CompanyAward

Activity

1. Kona Investment Partners, LLC$ 1,317,000

Will open 7 new redemption centers: 6 on
Oahu and 1 on Maui.

2. JKL Enterprises$ 311,000

Will open 1 new redemption center on Maui.

3. Island Container Redemption, LLC$ 280,000

Will open 1 new redemption center on Oahu.

4. Kauai Community Recycling Services$ 352,000

Will open 1 new center and expand services
at an existing center on Kauai.

5. Atlas Recycling Centers, LLC$ 163,000

Will open 1 new redemption center on the Big
Island.

6. Kadota Liquor and K's Drive-In$ 255,000

Will open 1 new redemption center on the Big
Island.

7. Tri-Isle RC&D

$ 75,000

Will assist the redemption center on Lanai tocontinue to operate.

8. NKH Construction, Inc$72,000

Will open a center in Hana, Maui.

TABLE 10: Contracts Awarded in 2006
Company

1. Reynolds Recycling
2. Goodwill
3. Maui Disposal
4. Garden Isle Disposal
5. Honolulu Recovery Systems
6. Aloha Glass Recycling
7. RRR Recycling Services

Award

Activity

Improved customer care and obtained equipment to$ 1,139,000 increase capacity to move and process material toprevent shut downs in service.
$ 939,000

Opened 6 new redemption centers: 5 on Oahu and 1
on Big Island.

$ 430,000

Obtained equipment to increase capacity to accept
material and maximize processing efficiency.

$ 120,000

Obtained equipment to increase capacity to accept
material and maximize processing efficiency.

$ 260,000

Obtained equipment to increase capacity to accept
material and maximize processing efficiency.

$ 99,000

Obtained equipment to increase capacity to accept
material and maximize processing efficiency.

$ 14,000

Obtained equipment to increase capacity to accept
material and maximize processing efficiency.

13

Reverse Vending Machine Rebate
The Reverse Vending Machine (RVM) Rebate program (Act 228, Session Laws
of Hawaii 2005, amended by Act 231, Session Laws of Hawaii 2006, codified at
HRS 342G-102.5) was completed this year.
Under this program, the department provided over $765,000 in rebates to four
companies who took advantage of the offer. Table 11 shows which companies
received rebates, number of machines to receive rebate, and total rebate value.
TABLE 11: RVM Rebates by Company
Company

RVM QTY

Total Rebate

1. Reynolds Recycling

98$

412,476

2. RRR Recycling Services

44$294,112

3. Aloha Shell

6$37,207

4. Zitro Recycling

3$

21,991

151$

765,785

Total

The RVM rebates were offered as incentives to increase the number of machinesavailable to the public for recycling and deposit refunds. The rebate reimbursed
50% of the actual cost of each machine including shipping and General Excise
Tax. The machines had to be in operation at certified redemption centers by
December 31, 2007 in order to qualify for rebate.

IV. INFORMING AND LEARNING FROM BUSINESS AND THE PUBLIC
Program OutreachThe department continued working with Hastings and Pleadwell Communications(H&P) to develop a print and radio media campaign to inform the public that 2liter bottles are redeemable beginning in December. The department also
created recycling bin stickers and publicized their availability to the public. We
received over 200 calls and distributed approximately 7,000 stickers to homes
and businesses, making the campaigns highly successful.
The department also worked with H&P and Ward Research to conduct astatewide survey entitled “Tracking Participation In and Attitudes Toward the HI-5
Deposit Beverage Container Recycling Program”. The survey was conducted in
April 2008 and covered 701 residents, 400 on Oahu and about 100 each on
Maui, the Big Island and Kauai. The survey found that the number of overall

14

people recycling is up from 2006 to 2008. Specifically, the results comparing the2006 to 2008 survey were as follows:
•
•
•
•
•

Recycling activity: up 13 percent to 72 percent.
Number of overall recyclers: up 12 percent to 82 percent.
Number of people who visit redemption centers: up 10 percent to 60
percent —greater than either city recycle bins or nonprofit contributions.
Overall awareness of HI-5: up one percent (91 to 92 percent).
Redemption center satisfaction levels are up specifically in the areas of
the increase in number of centers, increase in the number andconvenience of the hours of redemption center operation, and shorter wait
times. However, satisfaction levels were down regarding the accuracy ofredemptions when weighed; and 66 percent said their particular
redemption center had worsened.

The program web site, www.hi5deposit.com, is continually updated to reflectprogram changes and provide the public with needed program information.
Important contact information is also provided on the web site.
Educational Outreach
In conducting the marketing and outreach, the department identified pre-schooland elementary grade level students as an important market to reach. Thesestudents are very effective in educating and motivating members in their families
to accept new concepts like recycling and to change their solid waste-related
habits. The department plans to reach these students through educationalclassroom activities and plays.
The department issued a request for proposals (RFP) for an interactive muscial
theater performance to teach children about waste minimization and recycling. A
contract was awarded to Kahilu Theatre Foundation to develop the production forPre-6th grade students. In addition, Kokua Hawaii Foundation is funding thedevelopment of an educational guide to complement the performances. The
theater production will travel to schools around the state to excite students about
how to Reduce, Resuse, and Recycle, and teach them ways to apply the 3-R’s intheir households.
Finally, the department sponsored a “HI-5 Recycling” category in the `Olelo
Community Television’s 2008 Youth Xchange video competition for students
grades K-12. Students produced 30-second public service announcements topromote the HI-5 program and recycling in general. Twenty-seven (27) videos
were submitted in this category and the department participated in judging thevideos. The department plans to sponsor the HI-5 Recycling category in 'Olelo's
video competition in 2009.

15

Improving Customer Service At Redemption Centers
A large part of how the public feels about the program will come from theexperience they have at the centers. Redemption center operators are the “face”
of the program. If a customer takes their deposit containers to a redemption
center for refund and feels they were not treated fairly by the operator then theyleave disappointed with the operator and with the program as a whole.
The department conducted several training sessions for redemption center
operators to help encourage them to make changes that will improve customer
service and become “goodwill ambassadors” of the program. The training
program was well received and redemption center operators received tools to
help them provide better customer service.

V. INSPECTIONS & ENFORCEMENT
The program logged and followed up on 80 complaints from July 1, 2007 to June30, 2008. A detailed table on types of complaints is provided in Attachment A.
The number of complaints declined by 69% (80 complaints total) during themonths of July 2007 through June 2008, as compare to the previous year (July
2006 through June 2007), which posted a total of 240 complaints received. The
decline in complaints may likely be attributed to increased consumer knowledgeof the redemption process and acceptance that operators must comply withredemption center certification requirements, e.g., verify customer claims,
thoroughly inspect containers for eligibility, reject ineligible containers, etc. Thisis consistent with the Program's April 2008 consumer survey, which concluded
that, of those surveyed, consumers have a more positive opinion of redemption
centers and the Program overall.
The two most prevalent complaints for the 2007 and 2008 period, were:
1) DBC segregated rate not accurate (21 total); and2) Poor customer service by redemption center staff (12 total).
It is significant that the number of segregated rate complaints has greatly
reduced from FY 2007 to FY 2008. In FY 2007, the Program received 155
segregated rate compared to 21 in FY 2008, which represents about an 87%
reduction. The Program believes that this dramatic reduction in these complaints
is the result of application of the revised and increased (favoring the customer)
segregated weight conversion rates. The Program also opines that because the
DBC segregated weight conversion rates closely, but still approximate the valueof a load of redeemed DBC, there will always be a percentage of consumers thatare not satisfied with the results of redemption by weight, i.e., they do not receive

16

exactly 5-cents per container. Further, Program follow up on segregated rateaccuracy complaints has revealed that customer dissatisfaction with the rates
may be rooted in other concerns at redemption centers, e.g., inaccurate scales
and weighing procedures, discovery and rejection of ineligible containers, buyer
error in reading scales, poor customer service, etc. For a detailed breakdown ontype and frequency of complaints, see Attachment A.
The number of redemption center "customer service" complaints has also
declined. The department generally refers customer service complaints to theprivate, redemption company and requests that the company address and,hopefully, resolve these complaints. The redemption companies have been
generally cooperative and responsive in addressing these types of complaints.

Inspections for Compliance and Complaints
As a way to inform distributors, retailers, and recyclers on the requirements inlaw, the Program Inspectors visit businesses to help with compliance. Further,
inspectors conduct site inspections of regulated businesses on which complaints
have been received. Additionally, inspectors conduct pre-certification inspections
and more comprehensive compliance evaluation inspections (CEIs) of regulated
facilities, including certified redemption centers and deposit beverage container
recycling facilities. Some CEIs are initiated pursuant to facility complaints, which
warrant more intensive investigation. Businesses that are not in compliance withthe law are advised orally during the CEI outbrief, provided copies of inspection
reports (which staff are requested to sign) and, if applicable (especially for repeat
violators), issued warning letters to inform them of corrective actions they need totake to help bring them into compliance.

17

TABLE 12: Total Inspections & Warning Letters in FY2008
MonthCompliance
Inspections

Complaint
Inspections

PreCertification
Inspections

Warning
Letters

Follow Up to
Warning
Letters*

July 2007

12

7

0

5

1

August

19

0

0

6

0

September

24

0

0

2

1

October

20

3

0

1

1

November

1

0

0

3

0

December

8

2

0

4

0

January 2008

16

1

0

4

0

February

16

1

0

20

0

March

7

0

0

1

1

April

8

2

0

13

1

May

14

2

0

4

0

June

8

3

2

6

0

Total

153

21

2

69

5

Note: The number of inspectors decreased following October 2007, which resulted in is areduction in the number of inspections completed each month.
* A follow-up to a warning letter is a step subsequent to the first warning letter during which the
respondent and the department negotiate on a proposed corrective action and/or payment plan.

Enforcement
In FY 2008, the majority of warning letters were issued to deposit beverage
distributors for delinquent distributor reports and payments.
The program issued three (3) enforcement notices and orders, in the form ofofficial Notices of Findings and Orders (NFVOs). One order was issued to adeposit beverage (DB) distributor, Evies Natural Foods, Inc (Evies). Evies hascomplied with the program’s enforcement order by submitting the required
delinquent distributor reports and payments.
An enforcement action was also issued to Mehana Brewing Company (thecompany's second NFVO) for DBC distributor violations of DB distributor
requirements, i.e., delinquent distributor reports and payments. Mehana Brewing
Company has complied with the program’s order by paying the entire penalty
amount, including all delinquent distributor payments.
Additionally, an enforcement notice and order was issued against a certified
redemption/recycling facility, Rolloffs Hawaii Inc., for violations of DBC rules andcertification requirements. Rolloffs Hawaii Inc. has contested the complaint, has

18requested a hearing with the department, but is currently negotiating with thedepartment on a possible settlement agreement.
In FY 2007, DOH filed a Notice of Finding of Violation/Complaint and Order(NFVO) against Reynolds Recycling, Inc. (Reynolds) for violations of the DBC
certified redemption center laws. DOH assessed a total penalty of $42,279.00
against Reynolds. In 2008, DOH signed a formal settlement agreement with
Reynolds and agreed to a penalty amount of $20,039.00. In addition to the cash
settlement, Reynolds agreed to complete three Supplemental Environmental
Projects (SEPS), which included a Redemption Center Employee Customer
Service Training Video, conducting of a Mystery Recycler Program, andimplementation of an Abandoned Cart Removal Program. Based on the
Settlement Agreement, Reynolds will be credited for a total of $22,400 for the
successful completion of the previously listed SEPS.

VI. CHALLENGES AND PROGRAM CHANGES
Update on 2007 Segregated Materials Rates
The revision to the rates paid for separated materials in 2007 resulted in a
dramatic decrease in complaints on the rates from FY 2007 to FY 2008, i.e., 155
vs. 21 complaints, respectively; a reduction of 87%. The decrease is evident in
the total reduction of complaints described in section V and Attachment B. The
department adopted “segregated rates” (weighing rates for converting weights tocounts for separated types of containers) to help process containers faster and to
give the public options on how to redeem containers to recover their deposits.
The Department conducts a statewide segregated rate study to determine theaverage number of beverage containers per pound. The segregated rate, or
container weight conversion, is an average because beverage containers comein a wide variety of sizes and weights. The Program's last segregated rate study
resulted in generally, increased, revised rates, which included a separate
segregated rate for smaller plastic containers, i.e., 17 fluid ounces or less, which
was determined to be 22.7 containers per pound (the mixed plastic container
segregated rate also increased from 16.6 to 17.5 containers per pound). The
Program determined and implemented this additional segregated rate category in
response to consumers who believed that they were not receiving an accurate
redemption for their smaller, plastic water bottles. The segregated rates are
displayed in Table 13.

19

TABLE 13: Segregated Rates
Material Type# Containers per Pound

Aluminum

31.6

Bi-metal

8.0

Glass

2.3

Plastic (small size: 17 fluid oz. or less)

22.7

Plastic (mixed sizes)

17.5

Consumers continue to have a choice to request redemption by weight or bycount. The Program pursued the amendment of its Administrative Rules toprovide an increased required CRC hand-count for consumer DBC loads, from50 to 200 or less containers. Consumers now may request a hand count, andcertified redemption centers must provide a hand count of loads of 200 or lesscontainers if requested. Some redemption centers have reported to thedepartment that they are hand counting larger loads. If people believe that theweight rate may result in an undercount, as may happen if many small plastic
containers are involved, they can segregate the containers by size and seek ahand count. People who bring in large loads of deposit containers may choose
to have their loads weighed to avoid waiting while each container is counted.

New Segregated Rate Study for Curbside Recycling
The department will need to conduct specialized segregated rate studies fordeposit containers collected through the City’s curbside recycling program. Thisis because bottles and cans collected through a single stream curbside system
are not rejected for contamination and may contain liquid or foreign material.
When weighed, these beverage containers will weigh more and result in an
inaccurate refund calculation. This contrasts with the bottles and cans turned in
to redemption centers by consumers, which are source separated by type andvery clean. The beverage containers do not contain contamination or foreignmaterial and redemption centers are required to reject containers that are not
empty. A segregated rate designed specifically for curbside will allow the City toaccurately claim deposit refunds on material it collects for recycling.
In addition, the curbside collection system may capture a wider, or different,
universe of bottles and cans than what comes into redemption centers.
Demographics, including consumer habits and choice of recycling system, allinfluence what is captured by any given recycling system. A segregated rate
study specific to curbside will accurately determine the average weight of bottles
and cans collected through that particular system.

20

Certified Redemption Center Claims Procedure Proposed Changes
The program continues to plan a major change to its current redemption andrecycling company claims procedures. The proposal is to pay the combined
DBC refund value and handling fee claims only on the quantity of DBC material
that is actually shipped to and received by the materials end use recycler/reprocessor. At present, the Program pays deposit refunds upon receiving claims,
half the handling fee when DBC are shipped, and the other half of the handlingfee when the re-processor receives the DBC. DOH has in some cases foundsignificant differences between the number of containers claimed for deposit
refunds and the number of containers reportedly shipped later. The DBC
quantity claimed by redemption centers is sometimes not a reliable indicator of
the actual quantity of DBC material collected, which has been found to beaffected/reduced by such factors as material shrinkage, theft, contamination, etc.
The proposed change will base all payments on the number or quantity ofcontainers shipped to and received by the materials end use recycler/reprocessor.
The proposed procedure will also establish a single combined deposit andhandling fee form. This form will be a combination of the program’s currently
used DR-1 and HR-1 forms. This modification will better ensure that refund
payment requests made by redemption centers for DBC material
redeemed/collected cover the same quantity of DBC material shipped to an enduser recycler and provide a simple administrative process.
The Program is assessing the negative impacts from this planned change in cash
flow, which could include closing of certified redemption facilities and possible
reduction of deposit beverage container redemption. Based on an informal
survey, initially certified redemption companies vehemently opposed this
proposed change. During recent discussions, certain certified redemption
companies were more willing to discuss the proposed claims procedure changes.
At the start of the program our primary concern was encouraging private entities
to provide DBC recycling. The program is maturing and weighing other values
more highly now.
Contract for Regulated-Company Audits
Closely associated with the DBC claims and accounting procedure challenge
described above, the Program continues its efforts to improve accountability, in
general, amongst regulated entities, i.e., certified redemption centers andregistered DB distributors and dealers. To this end, the Program plans tocontract for professional auditing and accounting services to conduct in-depth
auditing of regulated companies. Although, the Program conducts regular andon-the-spot general audits and records review of regulated facilities, the Program
expects that the in-depth audit and accounting investigations will provide moredetailed insight into the regulated companies and recommend policy and21

procedural changes, which will significantly improve accountability of thecompanies audited and for the Program as a whole.

VII. ADMINISTRATIVE RULES
The department is currently in the process of amending Hawaii Administrative
Rules Chapter 11-282 to outline the details of the field citation procedures, which
will allow for more expedient and effective enforcement.

VIII. STAFFING AND PROGRAM ORGANIZATION
Staffing
The Program has successfully filled its Planner and one (1) Environmental HealthSpecialist (EHS) vacancies. Currently, 2 EHS III and 1 Account Clerk II positions
are vacant. The Program plans to fill the vacant Account Clerk II position in thevery near future. Currently, the Program retains an 89-day temporary hire in thevacant clerk position. Table 14 provides a listing and current status of all
Program staff positions.
TABLE 14: Staff Positions
Position

NumberPosition Filled

SR RatingAccountant
Account Clerk
Temporary Clerk-typist II
Environmental Health Specialist III
Engineer IV
Planner IV
Recycling Coordinator – partial deposit
beverage container (DBC) special funded
Solid Waste Management Coordinator –partially DBC special funded
Total

1
2
1
5
1
1
1

Yes
Yes
Vacant2 vacant
Yes
Yes
Yes

SR-20
SR-8
SR-8
SR-20
SR-24
SR-22
Exempt1

Yes

Exempt12

10

The Program continues to encounter difficulty in hiring EHSs because theProgram must compete will all other DOH environmental health programs forthese positions. Additionally, the Program is disadvantaged because
environmental health specialist applicants opt for higher-level environmental
health specialist IV positions in the department. Currently, the Program has only
environmental health specialist III positions available. The program will continue
its efforts to upgrade these positions to the IV level.

22

The Program has successfully upgraded the Accountant III position to an
Accountant IV. The Program believes that this upgrade was necessary torecognize the quantity and complexity of the work currently required of theProgram Accountant and, hopefully, will be sufficient to retain the incumbent
Accountant IV in this integral Program position.
Program Organizational Charts (unchanged)(See enclosed documents)
IX. LEGISLATIVE AUDITThe program has undergone its second Legislative Audit for FY 2006. At thiswriting, the Program has not received the official results/report from the second
Legislative audit. The Program is scheduled for its third, FY 2008 audit, which
would initiate the statutory requirement for Program audits for fiscal years endingin an even-numbered year.
X. CLOSING REMARKSThe program has experienced significant success in FY 2008 when the DBC
redemption rate increased to 72%.
The Program believes that the marked improvement in the redemption rate is
directly related to increased customer satisfaction with the redemption process
and the overall DBC program. This is shown by the Program's April 2008 opinion
survey, which concluded that the public generally has a more positive opinion ofredemption centers and the Program as a whole. As such, the Program willcontinue to concentrate on improving customer improve customer convenienceand service during the redemption process. The Program will also continue toimprove and increase customer awareness and knowledge of the Program, via
its public education and outreach programs, in order to adequately and timely
notify consumers of available redemption services and any changes in theredemption rules and requirements.
The Program will continue to improve by increasing internal efficiency and DBC
redemption center and distributor accountability, including consistent andadequate verification of claims, and vigorous regulatory enforcement.

23

ATTACHMENT A

Complaints
Certified Redemption Centers (CRC), Stores, & Program

2007
J

A

S

Program: Segregated rates not accurate

5

6

1

CRC: Poor customer service; rude staff

5

CRC: Refuse to count to 200

2

1

CRC: Not open during stated business hours

1

2

CRC: Not accepting all materials (aluminum, glass, plastic)

2

2008

O

N

J

1

2

1

1

2

3
1

1

F

1

CRC: Insufficient cash on hand; inconvenient redemption

1

M

M

J

2

1

3

21

1

2

12

1

1

9
1

3

1
1

1

1
1

5

1

4

1

1

CRC/Program: Rejecting unlabeled DBC containers;
Labeling requirements stated in the law unfair

11

1

1

CRC: Refusing to provide redemption service

A

2

1

Stores: Charging tax on deposit; charging deposit on non-HI5

CRC: Scale weight not visible to customers

D

Total

1

3

1

2

2

2

CRC: Improper weighing procedures; or scale is inaccurate

1

1

2

CRC: Using improper/poor redemption procedures

1

1

CRC: Operations are noisy

1

1

CRC: Refusing more than one transaction per person/per day

1

1

CRC: Calculating refund based on customer reported count

1

1

CRC: Refund value not accurate

1

1

CRC: RVM machine not working

1

1

CRC: Unattended, staff not on site

1

1

CRC: Relocated and now difficult to find

1

1

Total

16

12

24

5

1

6

2

8

2

6

8

5

9

80