Hawaii 2022 Regular Session

Hawaii Senate Bill SB2211 Compare Versions

Only one version of the bill is available at this time.
OldNewDifferences
11 THE SENATE S.B. NO. 2211 THIRTY-FIRST LEGISLATURE, 2022 STATE OF HAWAII A BILL FOR AN ACT Relating to the SUGAR-SWEETENED BEVERAGE FEE PROGRAM. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
22
33 THE SENATE S.B. NO. 2211
44 THIRTY-FIRST LEGISLATURE, 2022
55 STATE OF HAWAII
66
77 THE SENATE
88
99 S.B. NO.
1010
1111 2211
1212
1313 THIRTY-FIRST LEGISLATURE, 2022
1414
1515
1616
1717 STATE OF HAWAII
1818
1919
2020
2121
2222
2323
2424
2525
2626
2727
2828
2929
3030
3131 A BILL FOR AN ACT
3232
3333
3434
3535
3636
3737 Relating to the SUGAR-SWEETENED BEVERAGE FEE PROGRAM.
3838
3939
4040
4141
4242
4343 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
4444
4545
4646
4747 SECTION 1. The legislature finds that there is a need to continue to invest in the health of Hawaii's keiki and ohana. In Hawaii, one out of four middle and high school youth and more than half of adults are overweight or obese. Sixty-one per cent of Hawaii adults are living with at least one chronic disease such as diabetes, heart disease, or cancer. A 2016 report found that seventy-one per cent of third graders in Hawaii were affected by tooth decay, making Hawaii the state with the highest prevalence of tooth decay among third graders in the nation. The State also received a failing grade in a series of oral health report cards released by the Pew Center on the States. The legislature also finds that these negative health outcomes have not had an equal impact across racial and ethnic groups. Lower income populations and people of color have higher rates of chronic disease due to social determinants of health, including food and housing insecurity, access to health care issues, and lack of spaces for safe physical activity. The coronavirus disease 2019 (COVID-19) pandemic has drawn attention to and exacerbated these health and social inequities in Hawaii. COVID-19 has most severely impacted Pacific Islander, Filipino, and Native Hawaiian communities, who have the highest rates of chronic disease. Additionally, regulations to mitigate viral spread have created disparate economic hardships for these same communities in Hawaii. The legislature finds that many programs have been implemented and many more proposed to address health inequities within Hawaii's most vulnerable communities. These include the Double up Food Bucks program, which allows families who participate in the Supplemental Nutrition Assistance Program to "double" their dollars when purchasing fresh locally-grown produce and healthy proteins. The legislature also finds that one of the most common barriers to enacting or sustaining community-driven health initiatives is a lack of funding. The legislature further finds that sugar-sweetened beverages are the largest source of excess sugar in the American diet, contributing excess calories with little to no nutritional value. Sugary drink consumption is associated with negative health effects, including obesity, diabetes, and cardiovascular disease. The legislature finds that, in an effort to improve health and invest in health initiatives benefitting communities most directly impacted by the negative health effects linked to sugary drink consumption, at least nine jurisdictions in the U.S. and more than fifty jurisdictions across the globe have enacted a tax or fee on sugary drinks. The legislature further finds that a fee on sugar-sweetened beverages is a viable model to reduce consumption and generate revenue for the State to support health, prevent chronic disease, and address root causes of disparities in Hawaii. A 2017 study conducted by the Harvard T.H. Chan School of Public Health and the department of health found that a sugary drink fee has major cost-savings. Passage of a two-cent per ounce sugar-sweetened beverage fee is projected to result in lower levels of sugar-sweetened beverage consumption, fewer cases of obesity, fewer deaths, and health care savings greater than fifty-nine million dollars over a ten year period. A two-cent per ounce fee is also projected to raise as much as $59,320,000 in 2022 according to the Rudd Center Revenue Calculator for Sugary Drink Taxes. Accordingly, the purpose of this Act is to enact a fee on sugar-sweetened beverages in Hawaii to improve health and build resiliency through investment in Hawaii's public health infrastructure. SECTION 2. This Act shall be known and cited as the Healthy Ohana Act of 2022. SECTION 3. Chapter 321, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows: "PART . SUGAR-SWEETENED BEVERAGE FEE PROGRAM §321-A Definitions. As used in this part, unless the context otherwise requires: "Auditor" means the office of the auditor. "Bottle" means any closed or sealed container regardless of size or shape, including but not limited to those made of glass, metal, paper, plastic, or any other material or combination of materials. "Bottled sugar-sweetened beverage" means any sugar-sweetened beverage contained in a bottle that is ready for consumption without further processing, such as dilution or carbonation. "Caloric sweetener" means any substance containing calories suitable for human consumption, that humans perceive as sweet, and includes without limitation sucrose, fructose, glucose, other sugars, or fruit juice concentrates. "Caloric sweetener" excludes non-caloric sweeteners. "Consumer" means a person who purchases a sugar-sweetened beverage for direct consumption. "Department" means the department of health. "Dietary aids" means liquid products manufactured for use as an oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from food or beverages; a source of necessary nutrition used due to a medical condition; or an oral electrolyte solution for infants and children formulated to prevent dehydration due to illness. "Director" means the director of health. "Distributor" means any person, including a manufacturer or a wholesale dealer, who receives, stores, manufactures, bottles, or distributes bottled sugar-sweetened beverages, syrup, or powder for sale to a retailer doing business in the State whether or not that person is also a retailer. "Infant formula" means a food which purports to be or is represented for special dietary use solely as a food for infants by reason of its simulation of human milk or its suitability as a complete or partial substitute for human milk. "Milk without added caloric sweetener" means any beverage whose principal ingredient by weight is natural liquid milk, which is secreted by an animal and consumed by humans, including natural liquid milk regardless of animal source or butterfat content, or natural milk concentrate and dehydrated natural milk, whether or not reconstituted. "Milk substitute without added caloric sweetener" means a plant-based beverage in which the principal ingredients by weight are water and grains, nuts, legumes, or seeds. Milk substitute includes but is not limited to soy milk, almond milk, rice milk, coconut milk, oat milk, hazelnut milk, and flax milk. "Non-alcoholic beverage" means any beverage that contains less than one-half of one per cent alcohol per volume. "Non-caloric sweetener" means any substance that contains fewer than five calories per serving, suitable for human consumption, that humans perceive as sweet, and includes without limitation aspartame, saccharin, stevia, and sucralose. "Person" means any natural person, partnership, cooperative association, limited liability company, corporation, personal representative, receiver, trustee, assignee, or any other legal entity. "Powder" means any solid mixture of ingredients that contains caloric sweetener, which is intended to be used in making, mixing, or compounding a sugar-sweetened beverage by combining the powder with one or more other ingredients. "Retailer" means any person who sells or otherwise dispenses in the State a sugar-sweetened beverage to a consumer whether or not that person is also a distributor. "Sale" or "sell" means the transfer of title or possession for valuable consideration regardless of the manner the transfer is completed. "Syrup" means a liquid mixture of ingredients that contains caloric sweetener, which is intended to be used in making, mixing, or compounding a sugar-sweetened beverage by combining the syrup with any one or more other ingredients. "Sugar-sweetened beverage" means any non-alcoholic beverage, carbonated or noncarbonated, that is intended for human consumption and contains any added caloric sweetener. Sugar-sweetened beverages does not include: (1) Beverages consisting of one hundred per cent fruit juice or vegetable juice with no added caloric sweetener; (2) Milk without added caloric sweetener; (3) Milk substitute without added caloric sweetener; (4) Dietary aids; or (5) Infant formula. §321-B Registration required. (a) Every distributor shall register with the department on forms to be prescribed, prepared, and furnished by the department. (b) No retailer shall sell at retail, or hold out or display for sale at retail, any sugar-sweetened beverage acquired by the retailer on or after June 30, 2023, unless the sugar-sweetened beverage was acquired by the retailer from a registered distributor in the State. §321-C Sugar-sweetened beverage fee; payment; exemptions. (a) Every distributor selling sugar-sweetened beverages in the State shall pay the department a sugar-sweetened beverage fee that is imposed at the following rates: (1) Two cents per fluid ounce of bottled sugar-sweetened beverages sold or offered for sale to a retailer for sale in the State to a consumer; and (2) Two cents per fluid ounce of sugar-sweetened beverage that can be produced from syrup or powder, calculated according to the manufacturer's specifications for the use of the syrup or powder sold to a retailer for sale in the State to a consumer. (b) A distributor shall add the amount of the fee imposed by this section to the price of sugar-sweetened beverages, syrups, and powders sold to a retailer, and the retailer shall pass the amount of the fee through to a consumer as a component of the final retail purchase price. The amount of the fee shall be stated separately on all invoices, signs, sales or delivery slips, bills, and statements that advertise or indicate the price of such beverages, syrups, and powders. (c) Every distributor or retailer liable for the fee imposed by this chapter shall file a form identifying all sales of sugar-sweetened beverages made during a period of time specified by the department and shall submit payment of the fee to the department. The form shall be prescribed by the department and the form shall contain any information that the department deems necessary for the proper administration of the sugar-sweetened beverage fee program. (d) The fee shall be deposited into the healthy ohana special fund administered by the department. (e) The following shall be exempt from the fee imposed by this section: (1) Bottled sugar-sweetened beverages, syrups, and powder sold by a distributor or retailer expressly for resale or consumption outside the State; and (2) Bottled sugar-sweetened beverages, syrups, and powder sold by a distributor to another distributor who is registered pursuant to section 321-B, if the sales invoice clearly indicates that the sale is exempt. If the sale is to a person who is both a distributor and a retailer, the sale shall also be exempt from the fee and the fee shall be paid when the purchasing distributor who is also a retailer resells the product to a retailer or a consumer. This exemption shall not apply to any other sale to a retailer. §321-D Healthy ohana special fund; established. (a) There is established in the state treasury the healthy ohana special fund, into which shall be deposited: (1) All revenues generated from sugar-sweetened beverage fees as described under section 321-C; (2) All revenues collected from penalties pursuant to section 321‑K; (3) All interest and earnings accruing from the investment of moneys in the fund; and (4) Appropriations by the legislature to the special fund. (b) The healthy ohana special fund shall be administered by the department. The moneys in the healthy ohana special fund shall be distributed and used as follows: (1) per cent shall be used by the department for implementation and evaluation of the sugar-sweetened beverage fee program; (2) per cent shall be used by the department for the purposes of supporting primary prevention and chronic disease prevention programs and supports, including state obesity prevention and oral health promotion services for Hawaii's ohana; and (3) per cent shall be deposited into the healthy ohana trust fund under section 321-E to be administered by the department. §321-E Healthy ohana trust fund; established. (a) There is established the healthy ohana trust fund as a separate fund of a nonprofit entity having a board of directors and qualifying under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, into which shall be deposited moneys received as provided under section 321-D(b)(3). The director, with the concurrence of the governor, shall select, in accordance with chapter 103D, the entity based upon the proven record of accomplishment of the entity in administering a similar trust fund. (b) Notwithstanding that the healthy ohana trust fund is established within a private entity, the department of budget and finance shall have oversight authority over the fund and may make periodic financial audits of the fund; provided that the director of finance may contract with a certified public accountancy firm for this purpose. The director, with the concurrence of the governor, in the director's sole discretion may rescind the selection of the entity. If the selection of the entity is rescinded, moneys in the healthy ohana trust fund shall revert back to the State and shall be deemed to be trust moneys. (c) The entity selected under subsection (a), for each fiscal year, may expend up to ten per cent of the total market value of the healthy ohana trust fund on the preceding June 30, for the prevention and control of obesity and chronic disease on behalf of families in Hawaii. These activities may include but are not limited to comprehensive programs and methods to support access to healthy food, active living and healthy eating, school and work based health, nutrition and physical education, oral health, programs supporting farm-to-school, locally grown, and sustainable agriculture practices, school gardens, and obesity and chronic disease prevention. (d) The healthy ohana trust fund may receive appropriations, contributions, grants, endowments, or gifts in cash or otherwise from any source, including the State, corporations or other businesses, foundations, government, individuals, and other interested parties; provided that any appropriations made by the State to the healthy ohana trust fund shall not supplant or diminish the funding of existing chronic disease prevention programs or any health related programs funded in whole or in part by the State. (e) The assets of the healthy ohana trust fund shall consist of: (1) Moneys deposited pursuant to section 321-E(b)(3); (2) Moneys appropriated to the healthy ohana trust fund by the state, county, or federal government; (3) Private contributions of cash or property; and (4) Income and capital gains earned by the healthy ohana trust fund. (f) The aggregate principal sum deposited in the healthy ohana trust fund shall be invested by the entity selected under subsection (a) in a manner intended to maximize the rate of return on investment of the healthy ohana trust fund consistent with the objective of preserving the healthy ohana trust fund's principal. (g) If the entity selected under subsection (a) is dissolved, the director, with the concurrence of the governor, shall select a successor entity. If the healthy ohana trust fund is terminated, the moneys remaining in the healthy ohana trust fund shall revert back to the State and shall be deemed to be trust moneys. (h) The administration of the healthy ohana trust fund shall be advised by the healthy ohana advisory committee created under section 321-Q. §321-F Records to be kept. Every distributor and retailer, in addition to any requirements under chapter 321-G, shall prepare or maintain documents involving sugar-sweetened beverages, syrups, and powders, as required by the department. §321-G Audit authority. The records of the distributor and retailer shall be made available, upon request, for inspection by the department, a duly authorized agent of the department, or the auditor. Any proprietary information obtained by them shall be kept confidential and shall not be disclosed to any other person, except: (1) As may be reasonably required in an administrative or judicial proceeding to enforce any provision of this chapter or any rule adopted pursuant to this chapter; or (2) Under an order issued by a court or administrative agency hearings officer. §321-H Contract for administrative services. The department may contract the services of a third party to administer the sugar-sweetened beverage fee program under this part. §321-I Management and financial audit. The auditor shall conduct a management and financial audit of the sugar-sweetened beverage fee program for fiscal year 2023 to 2024 and fiscal year 2024 to 2025, and for each fiscal year thereafter ending in an odd-numbered year. The auditor shall submit the audit report to the legislature and the department no later than twenty days prior to the convening of the next regular session. The auditor may contract the audit services of a third party to conduct the audit. §321-J Administration by director; rules. (a) The department shall adopt rules pursuant to chapter 91 to effectuate the purposes of this part. (b) No later than June 30, 2023, the department shall adopt interim rules, which shall be exempt from chapters 91 and 201M, to effectuate the purposes of this part; provided that the interim rules shall remain in effect until, January 1, 2025, or until rules are adopted pursuant to subsection (a), whichever occurs sooner. §321-K Civil penalties. (a) Any person subject to this part who: (1) Fails to pay the entire fee imposed by this part by the date that payment is due; (2) Fails to register as a distributor as required by section 321-B; (3) Fails to file a form that identifies all sales of sugar-sweetened beverages during the time specified by the department as required by section 321-C; (4) Fails to make payment to the department at the time specified by the department as required by section 321-C; (5) Fails to prepare or maintain records required by this part; or (6) Violates any other provision of this part, shall be liable for the amount of the fee that is due, a penalty equal to fifty percent of the fee due, and additional administrative fees and costs incurred by the department. (b) The director, or the director's duly authorized representative, may determine the amount of the fee and the penalty due under subsection (a) in the event of any nonpayment or underpayment and demand payment of all sugar-sweetened beverage fees and penalties. Interest shall accrue on nonpayment or underpayment of the fee at a rate of eight per cent per year from the date the fee was due, until paid. The director shall have the authority to revoke the distributor registration as a penalty under subsection (a). (c) Any criminal penalties for any violation of this part shall not be deemed to preclude the State from recovering additional civil penalties. §321-L Enforcement. (a) If the director determines that the sugar-sweetened beverage fee, penalties, or interest are due, the director shall notify the person of the amount by certified mail. (b) Any notice issued under subsection (a) shall become final, unless no later than thirty days after the notice is mailed, the person named therein requests in writing a hearing before the director. Whenever a hearing is requested, the amount owed shall become payable only upon completion of all review proceedings and the issuance of a final order confirming the fee, interest, and penalty in whole or in part. Upon request for a hearing, the director shall require the requestor to appear before the director for a hearing at the time and place specified in a notice. (c) Any hearing conducted under this section shall be conducted as a contested case under chapter 91. If, after a hearing held pursuant to this section, the director finds that all or a portion of the fee, interest, or penalty is due, the director shall take action to collect the amount due as provided by subsection (d). (d) If the amount of any fee, interest, or penalty is not paid to the department within thirty days after it becomes due and payable, the director may institute a civil action in the name of the State to collect the fee, interest, and penalty. In any proceeding to collect the fee, interest, or penalty imposed, the director need only show that: (1) Notice was given; (2) A hearing was held, or the time granted for requesting a hearing expired without a request for a hearing; (3) The fee, interest, or penalty was imposed; and (4) The fee, interest, or penalty remains unpaid. (e) In connection with any hearing held pursuant to this section, the director shall have the power to subpoena the attendance of witnesses and the production of evidence on behalf of all parties. §321-M Distribution of revenues. One hundred per cent of revenues collected from the sugar-sweetened beverage fee, interest payments, and penalty payments imposed pursuant to this part shall be paid to the healthy ohana special fund, established in section 321-D. §321-N Evaluation. The department shall develop criteria and components for an independent evaluation to assess the impact of the fee imposed by this part on consumption of products subject to the fee established by this part. The evaluation shall seek to determine the impact of the fee on sugar-sweetened beverage prices, consumer purchasing behavior, and health outcomes. The reasonable costs of evaluation shall be paid from the healthy ohana special fund and be considered an implementation cost of this part. §321-O Costs. The costs to implement this part may include: (1) Administrative, contractual, audit, independent evaluation, and compliance activities associated with collection and payment of the sugar-sweetened beverage fee program; (2) Personnel to implement the sugar-sweetened beverage fee program; (3) Communication and education activities to inform the public and distributors about the sugar-sweetened beverage fee; and (4) Associated office expenses. §321-P Annual reports. The department shall provide annual reports on the sugar-sweetened beverage fee program to the legislature and the governor no later than twenty days prior to the convening of each regular session for the period beginning when the program is in effect following the adoption of rules pursuant to section 321-J. The reports shall contain: (1) Measures of effectiveness; (2) Amounts of revenues collected in the prior fiscal year; (3) Distributions and expenditures from the healthy ohana special fund in the prior fiscal year; and (4) Description of program activities. If administration of the program is contracted to a third party pursuant to section 321-H, a copy of the contract shall be appended to the next applicable report, and the contractor shall abide by these reporting requirements as well. §321-Q Healthy ohana advisory committee. (a) There is established a healthy ohana trust fund advisory committee under the department for administrative purposes. (b) Members of the committee shall: (1) Be appointed by the director, and shall serve at the director's pleasure; and (2) Have background and expertise in chronic disease prevention. (c) The healthy ohana advisory committee shall advise the department on the administration of the healthy ohana trust fund. (d) The healthy ohana advisory committee, in collaboration with the department, shall develop a strategic plan for chronic disease prevention, including: (1) Developing and implementing effective and cost efficient policies and programs, including health promotion and disease prevention with an emphasis to improve health equity and to reach remote, vulnerable, and underserved populations; (2) Developing adequate standards and benchmarks by which measures of chronic disease prevention policies and programs may be appropriately evaluated; and (3) Assessing the effectiveness of policies and programs engaged in chronic disease prevention. (d) A simple majority of the committee members shall constitute quorum." SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $250,000 or so much thereof necessary for fiscal year 2022-2023, to be deposited into the healthy ohana special fund established pursuant to section 321-D, Hawaii Revised Statutes. SECTION 5. There is appropriated out of the healthy ohana special fund the sum of $250,000 or so much thereof as may be necessary for fiscal year 2022-2023 to carry out the purposes of this Act, including the establishment, hiring, and filling of positions and contractors. The sum appropriated shall be expended by the department of health for the purposes of this Act. SECTION 6. No later than July 1, 2024, the department of health shall establish a repayment plan and schedule to repay to the general fund, the sum deposited into the healthy ohana special fund established pursuant to section 321-D, Hawaii Revised Statutes, established by this Act. The department of health shall only use moneys from the healthy ohana special fund to repay the general fund. SECTION 7. No later than March 15, 2023, the director of health, or the director's designee, shall submit a report and provide an informational briefing to the legislature concerning the progress of implementing this Act, including the status of rulemaking by the department of health pertaining to the sugar-sweetened beverage fee program. SECTION 8. For the purposes of effectuating this Act, the personnel hired and the contracts entered into by the department of health, pursuant to this Act, shall be exempt from chapter 76, Hawaii Revised Statutes, for a period beginning on July 1, 2022, and ending on June 30, 2024; provided that: (1) All personnel actions taken pursuant to this Act by the department of health after June 30, 2024, shall be subject to chapter 76, Hawaii Revised Statutes, as appropriate; and (2) Any employee hired by the department of health to effectuate this Act, who occupies a position exempt from civil service on July 1, 2024, shall: (A) Be appointed to a civil service position; and (B) Not suffer any loss of prior service credit, vacation or sick leave credits previously earned or other employee benefits or privileges; provided that the employee possesses the minimum qualifications and public employment requirements for the class or position to which appointed; provided further that subsequent changes in status shall be made pursuant to applicable civil service and compensation laws. SECTION 9. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable. SECTION 10. In codifying the new sections added by section 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act. SECTION 11. This Act shall take effect on July 1, 2022. INTRODUCED BY: _____________________________
4848
4949 SECTION 1. The legislature finds that there is a need to continue to invest in the health of Hawaii's keiki and ohana.
5050
5151 In Hawaii, one out of four middle and high school youth and more than half of adults are overweight or obese. Sixty-one per cent of Hawaii adults are living with at least one chronic disease such as diabetes, heart disease, or cancer. A 2016 report found that seventy-one per cent of third graders in Hawaii were affected by tooth decay, making Hawaii the state with the highest prevalence of tooth decay among third graders in the nation. The State also received a failing grade in a series of oral health report cards released by the Pew Center on the States.
5252
5353 The legislature also finds that these negative health outcomes have not had an equal impact across racial and ethnic groups. Lower income populations and people of color have higher rates of chronic disease due to social determinants of health, including food and housing insecurity, access to health care issues, and lack of spaces for safe physical activity. The coronavirus disease 2019 (COVID-19) pandemic has drawn attention to and exacerbated these health and social inequities in Hawaii. COVID-19 has most severely impacted Pacific Islander, Filipino, and Native Hawaiian communities, who have the highest rates of chronic disease. Additionally, regulations to mitigate viral spread have created disparate economic hardships for these same communities in Hawaii.
5454
5555 The legislature finds that many programs have been implemented and many more proposed to address health inequities within Hawaii's most vulnerable communities. These include the Double up Food Bucks program, which allows families who participate in the Supplemental Nutrition Assistance Program to "double" their dollars when purchasing fresh locally-grown produce and healthy proteins. The legislature also finds that one of the most common barriers to enacting or sustaining community-driven health initiatives is a lack of funding.
5656
5757 The legislature further finds that sugar-sweetened beverages are the largest source of excess sugar in the American diet, contributing excess calories with little to no nutritional value. Sugary drink consumption is associated with negative health effects, including obesity, diabetes, and cardiovascular disease.
5858
5959 The legislature finds that, in an effort to improve health and invest in health initiatives benefitting communities most directly impacted by the negative health effects linked to sugary drink consumption, at least nine jurisdictions in the U.S. and more than fifty jurisdictions across the globe have enacted a tax or fee on sugary drinks. The legislature further finds that a fee on sugar-sweetened beverages is a viable model to reduce consumption and generate revenue for the State to support health, prevent chronic disease, and address root causes of disparities in Hawaii. A 2017 study conducted by the Harvard T.H. Chan School of Public Health and the department of health found that a sugary drink fee has major cost-savings. Passage of a two-cent per ounce sugar-sweetened beverage fee is projected to result in lower levels of sugar-sweetened beverage consumption, fewer cases of obesity, fewer deaths, and health care savings greater than fifty-nine million dollars over a ten year period. A two-cent per ounce fee is also projected to raise as much as $59,320,000 in 2022 according to the Rudd Center Revenue Calculator for Sugary Drink Taxes.
6060
6161 Accordingly, the purpose of this Act is to enact a fee on sugar-sweetened beverages in Hawaii to improve health and build resiliency through investment in Hawaii's public health infrastructure.
6262
6363 SECTION 2. This Act shall be known and cited as the Healthy Ohana Act of 2022.
6464
6565 SECTION 3. Chapter 321, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:
6666
6767 "PART . SUGAR-SWEETENED BEVERAGE FEE PROGRAM
6868
6969 §321-A Definitions. As used in this part, unless the context otherwise requires:
7070
7171 "Auditor" means the office of the auditor.
7272
7373 "Bottle" means any closed or sealed container regardless of size or shape, including but not limited to those made of glass, metal, paper, plastic, or any other material or combination of materials.
7474
7575 "Bottled sugar-sweetened beverage" means any sugar-sweetened beverage contained in a bottle that is ready for consumption without further processing, such as dilution or carbonation.
7676
7777 "Caloric sweetener" means any substance containing calories suitable for human consumption, that humans perceive as sweet, and includes without limitation sucrose, fructose, glucose, other sugars, or fruit juice concentrates. "Caloric sweetener" excludes non-caloric sweeteners.
7878
7979 "Consumer" means a person who purchases a sugar-sweetened beverage for direct consumption.
8080
8181 "Department" means the department of health.
8282
8383 "Dietary aids" means liquid products manufactured for use as an oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from food or beverages; a source of necessary nutrition used due to a medical condition; or an oral electrolyte solution for infants and children formulated to prevent dehydration due to illness.
8484
8585 "Director" means the director of health.
8686
8787 "Distributor" means any person, including a manufacturer or a wholesale dealer, who receives, stores, manufactures, bottles, or distributes bottled sugar-sweetened beverages, syrup, or powder for sale to a retailer doing business in the State whether or not that person is also a retailer.
8888
8989 "Infant formula" means a food which purports to be or is represented for special dietary use solely as a food for infants by reason of its simulation of human milk or its suitability as a complete or partial substitute for human milk.
9090
9191 "Milk without added caloric sweetener" means any beverage whose principal ingredient by weight is natural liquid milk, which is secreted by an animal and consumed by humans, including natural liquid milk regardless of animal source or butterfat content, or natural milk concentrate and dehydrated natural milk, whether or not reconstituted.
9292
9393 "Milk substitute without added caloric sweetener" means a plant-based beverage in which the principal ingredients by weight are water and grains, nuts, legumes, or seeds. Milk substitute includes but is not limited to soy milk, almond milk, rice milk, coconut milk, oat milk, hazelnut milk, and flax milk.
9494
9595 "Non-alcoholic beverage" means any beverage that contains less than one-half of one per cent alcohol per volume.
9696
9797 "Non-caloric sweetener" means any substance that contains fewer than five calories per serving, suitable for human consumption, that humans perceive as sweet, and includes without limitation aspartame, saccharin, stevia, and sucralose.
9898
9999 "Person" means any natural person, partnership, cooperative association, limited liability company, corporation, personal representative, receiver, trustee, assignee, or any other legal entity.
100100
101101 "Powder" means any solid mixture of ingredients that contains caloric sweetener, which is intended to be used in making, mixing, or compounding a sugar-sweetened beverage by combining the powder with one or more other ingredients.
102102
103103 "Retailer" means any person who sells or otherwise dispenses in the State a sugar-sweetened beverage to a consumer whether or not that person is also a distributor.
104104
105105 "Sale" or "sell" means the transfer of title or possession for valuable consideration regardless of the manner the transfer is completed.
106106
107107 "Syrup" means a liquid mixture of ingredients that contains caloric sweetener, which is intended to be used in making, mixing, or compounding a sugar-sweetened beverage by combining the syrup with any one or more other ingredients.
108108
109109 "Sugar-sweetened beverage" means any non-alcoholic beverage, carbonated or noncarbonated, that is intended for human consumption and contains any added caloric sweetener. Sugar-sweetened beverages does not include:
110110
111111 (1) Beverages consisting of one hundred per cent fruit juice or vegetable juice with no added caloric sweetener;
112112
113113 (2) Milk without added caloric sweetener;
114114
115115 (3) Milk substitute without added caloric sweetener;
116116
117117 (4) Dietary aids; or
118118
119119 (5) Infant formula.
120120
121121 §321-B Registration required. (a) Every distributor shall register with the department on forms to be prescribed, prepared, and furnished by the department.
122122
123123 (b) No retailer shall sell at retail, or hold out or display for sale at retail, any sugar-sweetened beverage acquired by the retailer on or after June 30, 2023, unless the sugar-sweetened beverage was acquired by the retailer from a registered distributor in the State.
124124
125125 §321-C Sugar-sweetened beverage fee; payment; exemptions. (a) Every distributor selling sugar-sweetened beverages in the State shall pay the department a sugar-sweetened beverage fee that is imposed at the following rates:
126126
127127 (1) Two cents per fluid ounce of bottled sugar-sweetened beverages sold or offered for sale to a retailer for sale in the State to a consumer; and
128128
129129 (2) Two cents per fluid ounce of sugar-sweetened beverage that can be produced from syrup or powder, calculated according to the manufacturer's specifications for the use of the syrup or powder sold to a retailer for sale in the State to a consumer.
130130
131131 (b) A distributor shall add the amount of the fee imposed by this section to the price of sugar-sweetened beverages, syrups, and powders sold to a retailer, and the retailer shall pass the amount of the fee through to a consumer as a component of the final retail purchase price. The amount of the fee shall be stated separately on all invoices, signs, sales or delivery slips, bills, and statements that advertise or indicate the price of such beverages, syrups, and powders.
132132
133133 (c) Every distributor or retailer liable for the fee imposed by this chapter shall file a form identifying all sales of sugar-sweetened beverages made during a period of time specified by the department and shall submit payment of the fee to the department. The form shall be prescribed by the department and the form shall contain any information that the department deems necessary for the proper administration of the sugar-sweetened beverage fee program.
134134
135135 (d) The fee shall be deposited into the healthy ohana special fund administered by the department.
136136
137137 (e) The following shall be exempt from the fee imposed by this section:
138138
139139 (1) Bottled sugar-sweetened beverages, syrups, and powder sold by a distributor or retailer expressly for resale or consumption outside the State; and
140140
141141 (2) Bottled sugar-sweetened beverages, syrups, and powder sold by a distributor to another distributor who is registered pursuant to section 321-B, if the sales invoice clearly indicates that the sale is exempt. If the sale is to a person who is both a distributor and a retailer, the sale shall also be exempt from the fee and the fee shall be paid when the purchasing distributor who is also a retailer resells the product to a retailer or a consumer. This exemption shall not apply to any other sale to a retailer.
142142
143143 §321-D Healthy ohana special fund; established. (a) There is established in the state treasury the healthy ohana special fund, into which shall be deposited:
144144
145145 (1) All revenues generated from sugar-sweetened beverage fees as described under section 321-C;
146146
147147 (2) All revenues collected from penalties pursuant to section 321‑K;
148148
149149 (3) All interest and earnings accruing from the investment of moneys in the fund; and
150150
151151 (4) Appropriations by the legislature to the special fund.
152152
153153 (b) The healthy ohana special fund shall be administered by the department. The moneys in the healthy ohana special fund shall be distributed and used as follows:
154154
155155 (1) per cent shall be used by the department for implementation and evaluation of the sugar-sweetened beverage fee program;
156156
157157 (2) per cent shall be used by the department for the purposes of supporting primary prevention and chronic disease prevention programs and supports, including state obesity prevention and oral health promotion services for Hawaii's ohana; and
158158
159159 (3) per cent shall be deposited into the healthy ohana trust fund under section 321-E to be administered by the department.
160160
161161 §321-E Healthy ohana trust fund; established. (a) There is established the healthy ohana trust fund as a separate fund of a nonprofit entity having a board of directors and qualifying under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, into which shall be deposited moneys received as provided under section 321-D(b)(3). The director, with the concurrence of the governor, shall select, in accordance with chapter 103D, the entity based upon the proven record of accomplishment of the entity in administering a similar trust fund.
162162
163163 (b) Notwithstanding that the healthy ohana trust fund is established within a private entity, the department of budget and finance shall have oversight authority over the fund and may make periodic financial audits of the fund; provided that the director of finance may contract with a certified public accountancy firm for this purpose. The director, with the concurrence of the governor, in the director's sole discretion may rescind the selection of the entity. If the selection of the entity is rescinded, moneys in the healthy ohana trust fund shall revert back to the State and shall be deemed to be trust moneys.
164164
165165 (c) The entity selected under subsection (a), for each fiscal year, may expend up to ten per cent of the total market value of the healthy ohana trust fund on the preceding June 30, for the prevention and control of obesity and chronic disease on behalf of families in Hawaii. These activities may include but are not limited to comprehensive programs and methods to support access to healthy food, active living and healthy eating, school and work based health, nutrition and physical education, oral health, programs supporting farm-to-school, locally grown, and sustainable agriculture practices, school gardens, and obesity and chronic disease prevention.
166166
167167 (d) The healthy ohana trust fund may receive appropriations, contributions, grants, endowments, or gifts in cash or otherwise from any source, including the State, corporations or other businesses, foundations, government, individuals, and other interested parties; provided that any appropriations made by the State to the healthy ohana trust fund shall not supplant or diminish the funding of existing chronic disease prevention programs or any health related programs funded in whole or in part by the State.
168168
169169 (e) The assets of the healthy ohana trust fund shall consist of:
170170
171171 (1) Moneys deposited pursuant to section 321-E(b)(3);
172172
173173 (2) Moneys appropriated to the healthy ohana trust fund by the state, county, or federal government;
174174
175175 (3) Private contributions of cash or property; and
176176
177177 (4) Income and capital gains earned by the healthy ohana trust fund.
178178
179179 (f) The aggregate principal sum deposited in the healthy ohana trust fund shall be invested by the entity selected under subsection (a) in a manner intended to maximize the rate of return on investment of the healthy ohana trust fund consistent with the objective of preserving the healthy ohana trust fund's principal.
180180
181181 (g) If the entity selected under subsection (a) is dissolved, the director, with the concurrence of the governor, shall select a successor entity. If the healthy ohana trust fund is terminated, the moneys remaining in the healthy ohana trust fund shall revert back to the State and shall be deemed to be trust moneys.
182182
183183 (h) The administration of the healthy ohana trust fund shall be advised by the healthy ohana advisory committee created under section 321-Q.
184184
185185 §321-F Records to be kept. Every distributor and retailer, in addition to any requirements under chapter 321-G, shall prepare or maintain documents involving sugar-sweetened beverages, syrups, and powders, as required by the department.
186186
187187 §321-G Audit authority. The records of the distributor and retailer shall be made available, upon request, for inspection by the department, a duly authorized agent of the department, or the auditor. Any proprietary information obtained by them shall be kept confidential and shall not be disclosed to any other person, except:
188188
189189 (1) As may be reasonably required in an administrative or judicial proceeding to enforce any provision of this chapter or any rule adopted pursuant to this chapter; or
190190
191191 (2) Under an order issued by a court or administrative agency hearings officer.
192192
193193 §321-H Contract for administrative services. The department may contract the services of a third party to administer the sugar-sweetened beverage fee program under this part.
194194
195195 §321-I Management and financial audit. The auditor shall conduct a management and financial audit of the sugar-sweetened beverage fee program for fiscal year 2023 to 2024 and fiscal year 2024 to 2025, and for each fiscal year thereafter ending in an odd-numbered year. The auditor shall submit the audit report to the legislature and the department no later than twenty days prior to the convening of the next regular session. The auditor may contract the audit services of a third party to conduct the audit.
196196
197197 §321-J Administration by director; rules. (a) The department shall adopt rules pursuant to chapter 91 to effectuate the purposes of this part.
198198
199199 (b) No later than June 30, 2023, the department shall adopt interim rules, which shall be exempt from chapters 91 and 201M, to effectuate the purposes of this part; provided that the interim rules shall remain in effect until, January 1, 2025, or until rules are adopted pursuant to subsection (a), whichever occurs sooner.
200200
201201 §321-K Civil penalties. (a) Any person subject to this part who:
202202
203203 (1) Fails to pay the entire fee imposed by this part by the date that payment is due;
204204
205205 (2) Fails to register as a distributor as required by section 321-B;
206206
207207 (3) Fails to file a form that identifies all sales of sugar-sweetened beverages during the time specified by the department as required by section 321-C;
208208
209209 (4) Fails to make payment to the department at the time specified by the department as required by section 321-C;
210210
211211 (5) Fails to prepare or maintain records required by this part; or
212212
213213 (6) Violates any other provision of this part,
214214
215215 shall be liable for the amount of the fee that is due, a penalty equal to fifty percent of the fee due, and additional administrative fees and costs incurred by the department.
216216
217217 (b) The director, or the director's duly authorized representative, may determine the amount of the fee and the penalty due under subsection (a) in the event of any nonpayment or underpayment and demand payment of all sugar-sweetened beverage fees and penalties. Interest shall accrue on nonpayment or underpayment of the fee at a rate of eight per cent per year from the date the fee was due, until paid. The director shall have the authority to revoke the distributor registration as a penalty under subsection (a).
218218
219219 (c) Any criminal penalties for any violation of this part shall not be deemed to preclude the State from recovering additional civil penalties.
220220
221221 §321-L Enforcement. (a) If the director determines that the sugar-sweetened beverage fee, penalties, or interest are due, the director shall notify the person of the amount by certified mail.
222222
223223 (b) Any notice issued under subsection (a) shall become final, unless no later than thirty days after the notice is mailed, the person named therein requests in writing a hearing before the director. Whenever a hearing is requested, the amount owed shall become payable only upon completion of all review proceedings and the issuance of a final order confirming the fee, interest, and penalty in whole or in part. Upon request for a hearing, the director shall require the requestor to appear before the director for a hearing at the time and place specified in a notice.
224224
225225 (c) Any hearing conducted under this section shall be conducted as a contested case under chapter 91. If, after a hearing held pursuant to this section, the director finds that all or a portion of the fee, interest, or penalty is due, the director shall take action to collect the amount due as provided by subsection (d).
226226
227227 (d) If the amount of any fee, interest, or penalty is not paid to the department within thirty days after it becomes due and payable, the director may institute a civil action in the name of the State to collect the fee, interest, and penalty. In any proceeding to collect the fee, interest, or penalty imposed, the director need only show that:
228228
229229 (1) Notice was given;
230230
231231 (2) A hearing was held, or the time granted for requesting a hearing expired without a request for a hearing;
232232
233233 (3) The fee, interest, or penalty was imposed; and
234234
235235 (4) The fee, interest, or penalty remains unpaid.
236236
237237 (e) In connection with any hearing held pursuant to this section, the director shall have the power to subpoena the attendance of witnesses and the production of evidence on behalf of all parties.
238238
239239 §321-M Distribution of revenues. One hundred per cent of revenues collected from the sugar-sweetened beverage fee, interest payments, and penalty payments imposed pursuant to this part shall be paid to the healthy ohana special fund, established in section 321-D.
240240
241241 §321-N Evaluation. The department shall develop criteria and components for an independent evaluation to assess the impact of the fee imposed by this part on consumption of products subject to the fee established by this part. The evaluation shall seek to determine the impact of the fee on sugar-sweetened beverage prices, consumer purchasing behavior, and health outcomes. The reasonable costs of evaluation shall be paid from the healthy ohana special fund and be considered an implementation cost of this part.
242242
243243 §321-O Costs. The costs to implement this part may include:
244244
245245 (1) Administrative, contractual, audit, independent evaluation, and compliance activities associated with collection and payment of the sugar-sweetened beverage fee program;
246246
247247 (2) Personnel to implement the sugar-sweetened beverage fee program;
248248
249249 (3) Communication and education activities to inform the public and distributors about the sugar-sweetened beverage fee; and
250250
251251 (4) Associated office expenses.
252252
253253 §321-P Annual reports. The department shall provide annual reports on the sugar-sweetened beverage fee program to the legislature and the governor no later than twenty days prior to the convening of each regular session for the period beginning when the program is in effect following the adoption of rules pursuant to section 321-J. The reports shall contain:
254254
255255 (1) Measures of effectiveness;
256256
257257 (2) Amounts of revenues collected in the prior fiscal year;
258258
259259 (3) Distributions and expenditures from the healthy ohana special fund in the prior fiscal year; and
260260
261261 (4) Description of program activities.
262262
263263 If administration of the program is contracted to a third party pursuant to section 321-H, a copy of the contract shall be appended to the next applicable report, and the contractor shall abide by these reporting requirements as well.
264264
265265 §321-Q Healthy ohana advisory committee. (a) There is established a healthy ohana trust fund advisory committee under the department for administrative purposes.
266266
267267 (b) Members of the committee shall:
268268
269269 (1) Be appointed by the director, and shall serve at the director's pleasure; and
270270
271271 (2) Have background and expertise in chronic disease prevention.
272272
273273 (c) The healthy ohana advisory committee shall advise the department on the administration of the healthy ohana trust fund.
274274
275275 (d) The healthy ohana advisory committee, in collaboration with the department, shall develop a strategic plan for chronic disease prevention, including:
276276
277277 (1) Developing and implementing effective and cost efficient policies and programs, including health promotion and disease prevention with an emphasis to improve health equity and to reach remote, vulnerable, and underserved populations;
278278
279279 (2) Developing adequate standards and benchmarks by which measures of chronic disease prevention policies and programs may be appropriately evaluated; and
280280
281281 (3) Assessing the effectiveness of policies and programs engaged in chronic disease prevention.
282282
283283 (d) A simple majority of the committee members shall constitute quorum."
284284
285285 SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $250,000 or so much thereof necessary for fiscal year 2022-2023, to be deposited into the healthy ohana special fund established pursuant to section 321-D, Hawaii Revised Statutes.
286286
287287 SECTION 5. There is appropriated out of the healthy ohana special fund the sum of $250,000 or so much thereof as may be necessary for fiscal year 2022-2023 to carry out the purposes of this Act, including the establishment, hiring, and filling of positions and contractors.
288288
289289 The sum appropriated shall be expended by the department of health for the purposes of this Act.
290290
291291 SECTION 6. No later than July 1, 2024, the department of health shall establish a repayment plan and schedule to repay to the general fund, the sum deposited into the healthy ohana special fund established pursuant to section 321-D, Hawaii Revised Statutes, established by this Act. The department of health shall only use moneys from the healthy ohana special fund to repay the general fund.
292292
293293 SECTION 7. No later than March 15, 2023, the director of health, or the director's designee, shall submit a report and provide an informational briefing to the legislature concerning the progress of implementing this Act, including the status of rulemaking by the department of health pertaining to the sugar-sweetened beverage fee program.
294294
295295 SECTION 8. For the purposes of effectuating this Act, the personnel hired and the contracts entered into by the department of health, pursuant to this Act, shall be exempt from chapter 76, Hawaii Revised Statutes, for a period beginning on July 1, 2022, and ending on June 30, 2024; provided that:
296296
297297 (1) All personnel actions taken pursuant to this Act by the department of health after June 30, 2024, shall be subject to chapter 76, Hawaii Revised Statutes, as appropriate; and
298298
299299 (2) Any employee hired by the department of health to effectuate this Act, who occupies a position exempt from civil service on July 1, 2024, shall:
300300
301301 (A) Be appointed to a civil service position; and
302302
303303 (B) Not suffer any loss of prior service credit, vacation or sick leave credits previously earned or other employee benefits or privileges;
304304
305305 provided that the employee possesses the minimum qualifications and public employment requirements for the class or position to which appointed; provided further that subsequent changes in status shall be made pursuant to applicable civil service and compensation laws.
306306
307307 SECTION 9. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
308308
309309 SECTION 10. In codifying the new sections added by section 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
310310
311311 SECTION 11. This Act shall take effect on July 1, 2022.
312312
313313
314314
315315 INTRODUCED BY: _____________________________
316316
317317 INTRODUCED BY:
318318
319319 _____________________________
320320
321321
322322
323323
324324
325325 Report Title: Healthy Ohana; Sugar-Sweetened Beverage Fee Program; Special Fund; Trust Fund; Advisory Committee; Appropriation Description: Imposes a fee for selling sugar-sweetened beverages at the distributor level. Creates a special fund and trust fund into which revenues are deposited, the proceeds of which shall fund programs to prevent obesity and chronic disease for Hawaii's Ohana. Establishes the healthy ohana advisory committee. Makes appropriations. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
326326
327327
328328
329329
330330
331331 Report Title:
332332
333333 Healthy Ohana; Sugar-Sweetened Beverage Fee Program; Special Fund; Trust Fund; Advisory Committee; Appropriation
334334
335335
336336
337337 Description:
338338
339339 Imposes a fee for selling sugar-sweetened beverages at the distributor level. Creates a special fund and trust fund into which revenues are deposited, the proceeds of which shall fund programs to prevent obesity and chronic disease for Hawaii's Ohana. Establishes the healthy ohana advisory committee. Makes appropriations.
340340
341341
342342
343343
344344
345345
346346
347347 The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.