November/December 1996
The scrap recycling industry didn’t win all of its legislative and regulatory battles this year, though it did make significant progress on many of them. Here’s a summary of the year’s big issues and how they ended up.
By Rebecca Porter
How did the scrap recycling industry fare in the legislative and regulatory arenas in 1996?
To paraphrase Charles Dickens, it was the best of times, it was the worst of times. There was good news, but also bad news. There was progress here, but setbacks there.
In addition to revisiting Superfund reauthorization yet again and maintaining vigilance regarding flow control measures, the industry also took on the Jones Act, as well as regulatory issues ranging from RCRA definitions and industrial classification codes to the toxic release inventory.
While many of these issues remained unresolved when Congress adjourned in the fall, the industry made important progress on virtually all of them and positioned itself for perhaps greater success next year.
The Superfund Saga Continues
As in the past few years, Superfund was the most visible and most critical issue on the scrap industry’s 1996 legislative agenda. And, as in the past, recyclers continued to strive to secure more equitable treatment under the law’s liability provisions.
Currently, Superfund cleanup costs can be incurred under “retroactive liability,” which requires parties to pay for pollution that occurred prior to the passage of the law in December 1980; “joint and several liability,” which requires all responsible parties to share cleanup costs, regardless of the size of their contribution to a contaminated site; and “successor liability,” which requires the purchaser of a site to assume cleanup liabilities associated with the site.
The scrap industry has argued that Superfund liability was never intended to apply to those who process and ship recyclables. In particular, the industry wants a distinction to be made between scrap and waste to make clear that when they ship scrap recyclables to consumers, they are not “arranging for the treatment or disposal” of those materials.
In the past couple of years, actions in this arena have hinted at big changes. A 1994 decision by the U.S. Supreme Court in Landgraf v. USI Film Products held that, in the absence of a clear statement by Congress specifically outlining that a law is intended to be retroactive, the court must presume the law is to be applied to future actions only.
In another encouraging case decided this past May, a federal judge in the Southern District of Alabama ruled in U.S. v. Olin that parties cannot be held liable for Superfund cleanup costs if the actions on which their liability is based took place before the law was enacted. Though this decision is designed to be reviewed by the 11th Circuit Court of Appeals, it gives recyclers another favorable precedent if they end up in court on Superfund issues.
In this year’s 104th Congress, the Superfund Recycling Equity Act of 1995, or HR 820, was introduced in the House by Rep. Blanche Lambert Lincoln (D-Ark.) and was designed to relieve scrap recyclers of Superfund liability both retroactively and prospectively under specific conditions.
To gain broad congressional support for the act, ReMA created a grass roots implementation team—dubbed GRIT—to mobilize members to lobby their representatives and senators (for more on this program, see “True GRIT” on page 62). ISRI’s goal was to persuade a majority in both houses—218 in the House and 51 in the Senate—to co-sponsor HR 820. While gaining a majority of co-sponsors does not guarantee that a bill will go to the floor for a vote, it ensures that the measure receives careful review.
The GRIT effort succeeded in securing 237 co-sponsors in the House and 43 in the Senate, an impressive feat considering that most bills rarely have more than 10 co-sponsors. Of particular note, ReMA members in five states—Arkansas, Mississippi, North Carolina, South Carolina, and Tennessee—enlisted co-sponsorship support from all of the congressional representatives from their states.
As the legislation progressed, an omnibus Superfund reauthorization bill—HR 2500—that incorporated the recycling provisions of HR 820 gained approval by the House Subcommittee on Transportation and Hazardous Materials, and a Senate counterpart to HR 820—S 607—was also introduced.
Ultimately, however, neither the House nor the Senate versions of the Superfund Recycling Equity Act made it to the floor either as part of a larger Superfund bill or as freestanding bills.
In the end, only one group—lending institutions—received any Superfund relief. In short, these institutions pooled their resources to create a Savings Association Insurance Fund to assist lenders facing Superfund liability. In exchange, they received some lender liability relief, though the relief is limited to Superfund liability for institutions that held liens or foreclosed on contaminated property but did not participate in the management of the facility.
For every other industry, the potential for Superfund relief this year ended when Congress adjourned.
Though this outcome was disappointing for recyclers, Superfund reauthorization is almost certain to be considered next year in the 105th Congress, and the scrap industry will once again rely on its GRIT efforts to enlist support for its recycling provisions. One challenge is that Rep. Lincoln Lambert—one of the industry’s champions in Congress—has retired, so the industry must now find another House member to introduce the Superfund recycling amendment when Congress reconvenes.
States Make Superfund Moves. As recyclers labored to secure Superfund liability relief on the federal level, several states were taking progressive steps of their own on similar state issues.
In June, for instance, Georgia Gov. Zell Miller signed legislation—HB 1227—protecting scrap recyclers from third-party, downstream liability, making Georgia the third state—after Pennsylvania and Michigan—to rule that arranging for the recycling of “recovered materials” consisting of scrap metals, paper, glass, plastics, textiles, and batteries is not the same as arranging for the treatment or disposal of waste. This law stipulates that scrap recyclers cannot be held liable for cleaning up sites contaminated by an owner or operator that must be remediated under state law. This protection, however, does not apply to cleanups mandated under the federal Superfund law, nor does it exempt recyclers from cleanups at their own facilities.
Also, in Florida, the legislature adjourned before acting on an amendment clarifying that arranging for recycling is not arranging for the treatment or disposal of waste. Rather than wait for next year’s legislative session, however, ReMA and the Florida Recyclers Association are working with the Florida Department of Environmental Protection—which supports the measure—in an effort to prompt the department to issue an administrative policy on the matter that would take effect more quickly.
Flow Control Returns Again
Flow control was a key blip yet again on the scrap industry’s legislative radar. Currently, recyclables not voluntarily relinquished by their owner, as well as wastes and residues generated by the scrap recycling process, are exempt from flow control authority, thanks to the May 1994 U.S. Supreme Court decision in C&A Carbone Inc. v. Town of Clarkstown, N.Y. This case established that flow control violates the commerce clause of the U.S. Constitution.
Though this decision was a significant blow against flow control, the issue has far from died since then. In 1994, for instance, a bill combining flow control authority and interstate waste transport issues passed in the House but died in the Senate due to contention over the interstate portion. In 1995, a comprehensive flow control/interstate waste bill, S 534, passed the Senate in May but was never taken up in the House.
And in January of this year, the House defeated a freestanding flow control bill (H Res 349) that would have granted state and local governments limited flow control authority to direct municipal solid waste—but not recyclables or recycling residues and wastes—to designated facilities. This bill was defeated because of opposition to specific legislative language and fears by some representatives that they would not get to vote on an interstate waste bill if flow control legislation moved on its own.
Despite this setback, flow control resurfaced in August when more than 130 members of the House sent a letter asking House leadership for joint legislation covering both limited flow control authority over municipal solid waste and limits on transport of interstate municipal solid waste. This effort, however, achieved no response.
In the Senate, Sen. Dan Coats (R-Ind.), an advocate of interstate waste restrictions, attached an amendment to an energy and water appropriations bill identical to S 534, the interstate waste/flow control bill that passed the Senate in 1995. But Coats’ provision was dropped during a House-Senate conference on the appropriations bill.
The interstate waste issue and, hence, the closely allied flow control issue will most likely make another appearance in the 105th Congress. If so, one important focus next year will be for states that import or export solid waste to reach a middle ground, for as long as they continue to disagree, flow control authority is unlikely to be granted.
Keeping Up With the Jones Act
Though not as high-profile as Superfund and flow control, the Jones Act also demanded attention from the scrap industry this year.
Passed in 1929, the Jones Act requires that all waterborne trade between U.S. ports be carried in U.S.-flagged, -built, -owned, and -manned vessels. In the past several years, however, the act has come under fire, being called outdated and burdensome to trade by many factions.
Within the scrap recycling industry, producers of ferrous scrap have long sought cheaper transportation from the East and West coasts to potential consumers in the middle of the country. Since no competitive U.S.-flagged carrier now exists to serve the need, the only option is relaxation of the Jones Act, which would allow entry of foreign vessels to perform this task. On the other hand, scrap processors currently selling to midwestern and southern markets would see new competition from the coasts if this occurred.
This year, Sens. Jesse Helms (R-N.C.) and Charles Grassley (R-Iowa) introduced a bill—S 1813—that would reform the act to relax or repeal some of those requirements, particularly allowing non-U.S. flag carriers to transport certain materials from one U.S. port to another. The bill, however, never moved from introduction in the Senate to committee. Furthermore, there was no comparable House bill, although an informational hearing was held on revising the act.
Regulatory Round-Robin
Aside from the year’s legislative highlights, the scrap industry has also faced a full plate of regulatory issues in 1996, some of which offered good news for scrap recyclers.
A Scrap Metal Exclusion. One such issue was the EPA’s proposed exclusion of processed scrap metal from its definition of solid waste, an exclusion that would exempt such material from regulation under RCRA. The agency made this decision after concluding that processed scrap metal is “sufficiently commodity-like” and is, therefore, not part of the waste disposal problem.
The exemption defines processed scrap metal as material that has been “processed by scrap metal recyclers to be traded on recycling markets for further reprocessing into metal end products.” The definition excludes any “components separated from unprocessed or partially processed scrap metal that would not otherwise meet the current definition of scrap metal”—such as batteries, capacitors, or other liquid-bearing metal articles, fluff or other nonmetal residues, liquid metals and metal-bearing liquids, and process secondary materials including slags, drosses, ashes, and sludges. Any of those materials still fall under RCRA jurisdiction.
Though encouraging, the proposal is being reviewed pending approval as a final rule. In addition, since this proposal was introduced, ReMA has taken the issue a step further, submitting extensive comments requesting that the exemption cover unprocessed scrap metal such as home and prompt material as well.
If approved, this exemption would reportedly be a major step forward for the scrap industry in distinguishing it from the waste disposal industry. This distinction might even give scrap recyclers and brokers a stronger defense if named as potentially responsible parties in court cases involving Superfund.
A New Code. The scrap industry also saw changes in the Standard Industrial Classification (SIC) System this year, as the Office of Management and Budget made revisions in the entire system to make it consistent with international classification systems. As part of this effort, the office proposed a revision to the existing SIC Code for scrap recyclers. Now generally classified as wholesalers under SIC Code 5093—the “scrap and waste materials” classification—scrap recyclers would become wholesalers of “recyclable materials,” denoted by new SIC Code 43193.
There are several advantages to distinguishing recycling from the waste industry and wholesalers from manufacturers. Many environmental regulations, for instance, impose more stringent requirements on manufacturers. To wit: Industrial firms in the manufacturing sector have to file detailed right-to-know reports on the volumes of “toxic chemicals”—a category that covers copper, nickel, and other metals—that are handled at their facilities. Wholesalers, on the other hand, need not file such reports.
This classification change could put recyclers in an interesting situation, however. Since manufacturers in most states are exempt from sales taxes on the purchase of equipment used in the manufacturing process, the proposed changes may mean scrap recyclers have to prove they are wholesalers by SIC designations, but manufacturers for tax purposes.
A TRI Release. Another regulatory victory of sorts for the scrap industry this year has been the EPA’s exclusion of scrap recyclers from its expanded list of industries that must file reports under its toxic release inventory (TRI). This inventory is part of the Emergency Planning and Community Right-to-Know Act (EPCRA) of 1993 that gives communities information about releases of toxic chemicals from industrial plants.
Because filing TRI forms is costly and time-consuming, and because some regulatory agencies may piggyback other requirements and fees onto companies with TRI reporting status, this exclusion could offer significant relief for scrap recyclers.
Manufacturers with SIC Codes 20-39 traditionally have had to report under EPCRA, but most scrap recyclers operating under SIC Code 5093 (and the probable new 43193 code), as wholesalers, are not included. Processors who deal with chemicals listed as “hazardous” under EPCRA sections 311 and 312 must still file TRI reports.
Although the exclusion is scheduled to take effect Jan. 1, 1997, the EPA will continue to monitor programs and may revisit industries not included on the filing list. In addition, the agency plans to expand the TRI program in the future to include information on chemical use—including types and quantity used—at certain facilities.
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As the results of the above issues show, the scrap recycling industry did not win all of its legislative and regulatory battles this year, but it certainly made significant gains in a few and has tried to position itself to emerge victorious on the others next year.
As this year winds down, the industry can examine its progress and map out its strategy for next year. And when January rolls around, the 105th Congress will convene, and the game will begin again.
True GRIT
Under today’s changing lobbying rules, constituent lobbying is the name of the game, as constituents—not hired-gun lobbyists—are the ones who can get quality time with congressional representatives and portray the scrap industry’s issues as constituent problems rather than special-interest problems.
Recognizing this, ReMA launched its grass roots implementation team—or GRIT—program in 1995. Through GRIT, members learn the techniques of grass roots lobbying so they can act as emissaries for the industry, effectively communicating its legislative and regulatory issues to their elected officials on the local, state, and federal levels.
The GRIT program was largely responsible for the industry’s success in prompting more than half the House and almost half the Senate to co-sponsor the Superfund Recycling Equity Act of 1995. “Never before have so many members of Congress heard so much about what it is that scrap recyclers do—and about a significant, unintended consequence of federal law that has created an impediment to increased recycling,” says Mark Reiter, ISRI’s manager of legislative and international affairs.
As ReMA looks toward 1997, it will likely rely heavily once again on the GRIT program to provide the lobbying edge on the industry’s most crucial legislative and regulatory challenges. “Expanding GRIT will, more and more, likely be the foundation on which all ReMA legislative efforts are built,” says Reiter. “This will be the case for Superfund and federal legislative battles to come, as much as it will be the case for state and local legislative battles.” —R.P.•
The scrap recycling industry didn’t win all of its legislative and regulatory battles this year, though it did make significant progress on many of them. Here’s a summary of the year’s big issues and how they ended up.