RELATING TO THE DEPOSIT BEVERAGE CONTAINER PROGRAM.

SB2105

THE SENATE

S.B. NO.

2105

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the deposit beverage container program
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
�
The
legislature finds that Act 12, Session Laws of Hawaii 2022, codified at section
328G-121.5, Hawaii Revised Statutes, attempted to strengthen accountability for
the deposit beverage container program by requiring the department of health to
develop and implement procedures to verify the accuracy and completeness of
data reported by distributors and redemption centers.
�
The legislature finds, however, that the requirement
under section 328G-121.5(c)(2), Hawaii Revised Statutes, that all deposit
beverage distributors obtain independent audits biennially has caused, and
would have continued to cause, financial hardship on some distributors had the
governor not paused enforcement on September 10, 2025.
�
Many mid-sized distributors have received
preliminary quotes upwards of $25,000 to complete an audit because the auditing
firms found the statutory language vague and the auditing requirement difficult
to execute in a consistent, defensible manner.
�

These unanticipated costs are unreasonable, particularly when applied
uniformly without regard to risk, and will inevitably be transferred to
consumers in the form of higher beverage prices.
�
Distributors and retailers have also noted
that the cost of conducting the required independent audits exceeds the amount
they pay into the deposit beverage container program, resulting in a compliance
mandate that costs more to administer than it generates in program
contributions or accountability benefits.

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The legislature further finds that the
State already has among the highest food costs in the nation due to shipping
expenses, labor costs and shortages, commercial rents, electricity rates, and
other structural cost drivers.
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At the
same time, approximately one in three households in the State struggle to
afford food.
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Therefore, it is imperative
that the State refrain from imposing unnecessary administrative requirements
that increase the cost of food and beverages without delivering a commensurate
public benefit.
�

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The legislature also finds that the
department of health is already given robust enforcement authority under other
provisions of section 342G-121.5, Hawaii Revised Statues, including a
risk-based audit selection process, data analytics, trend analysis, follow-up
audits, and public reporting of violations.
�
These tools directly address compliance
concerns identified by the state auditor that led to the enactment of
Act 12 in 2022, and allow the department to focus oversight where risk is
greatest.
�
The deposit beverage container
deposit special fund already has ample resources to support strong oversight
without shifting large audit costs onto the food supply chain.
�
The state auditor's most recent financial and
program audit reports that the deposit beverage container deposit special fund
had a fund balance of $77,860,170 as of June 30, 2024.
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These funds can support as many risk-based
audits through internal staff or external consultants as the department of health
deems necessary, while avoiding a blanket, high-cost independent audit mandate
that increases consumer prices.
�

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The
legislature additionally finds that no other state imposes a fixed, universal
requirement that every distributor obtain an independent audit on a set
biennial schedule regardless of risk; instead, other states rely on reporting,
compliance oversight, and targeted enforcement mechanisms to maintain program
integrity.

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Accordingly,
the purpose of this Act is to repeal unnecessary and disproportionate
administrative burdens on deposit beverage distributors and redemption centers in
the State, including the universal biennial independent audit requirement, while
preserving the deposit beverage container program's existing risk-based accountability
verification framework.

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SECTION
2
.
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Section 342G-121.5, Hawaii Revised Statutes,
is amended to read as follows:

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"[
[
]�342G-121.5[
]
]
�

Risk-based selection process; audit.
�
(a)
�
The department shall develop a risk-based
process to select[
,
] for periodic audit[
,
] certain deposit
beverage distributor and redemption center reports submitted to the deposit
beverage container program.
�
The
department may hire personnel or external consultants to perform the audits.
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In developing a risk-based process to audit
certain deposit beverage distributor and redemption center reports, the
department shall:

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(1)
�
Consider a variety of risk factors,
including but not limited to the amount of money transacted, prior audit
findings, and frequency of the deposit beverage distributor's or redemption
center's prior audits;

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(2)
�
Require

selected
deposit beverage distributors
and redemption centers
to
send monthly or semi-annual distribution reports and supporting records, such
as schedules of invoices, shipping documents, point‑of‑sale
reports, and other documentation as required by the department, to the deposit
beverage container program; and

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(3)
�
Ensure that the audit process includes
a risk assessment derived from deposit beverage distributor and redemption
center data based on the reports submitted, including but not limited to
carrying out analytics and trend analyses to target certain deposit beverage
distributors and redemption centers having unusual fluctuations.

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(b)
�
The department shall:

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(1)
�
Summarize the results of the deposit
beverage distributor and redemption center audits and assess whether
enforcement actions should be considered to ensure that the amounts that are [
being
]
reported are accurate;

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(2)
�
Consider conducting follow-up audits;
and

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(3)
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Consider publicly announcing
violations.

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[
(c)
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All deposit beverage distributors shall:

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(1)
�
Develop and submit to the deposit
beverage container program for approval an internal control process to ensure
that the monthly or semi-annual distribution report forms contain accurate data
and that adequate records are maintained; and

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(2)
�
Obtain independent audits for years
ending in an odd number.
]"

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SECTION 3.
�

Statutory material to be repealed is bracketed and stricken.
�
New statutory material is underscored.

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SECTION 4.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

DOH; Deposit
Beverage Container Program; Audit; Internal Control Process; Repeal; Distributors;
Redemption Centers

Description:

Repeals provisions
requiring all deposit beverage distributors to send monthly or semi-annual
distribution reports and supporting records to the Department of Health;
develop and submit to the program for approval, an internal control process to
ensure accurate data reporting and adequate record maintenance; and obtain
biennial independent audits.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.