March/April 1991
If certain national and international proposals are implemented, the answer to that question could be yes.
By Andrew McElwaine
Andrew McElwaine is director of congressional affairs for the Institute of Scrap Recycling Industries (Washington , D.C.).
Throughout the history of the scrap recycling industry, two fundamentals have guided scrap markets: supply and demand. Today, however, a third vital element must be added to the equation: government intervention in the form of new laws and regulations.
One of the most troubling forms of government intervention on the scrap industry has been legislation that, because it deems scrap a "discarded material " or "waste," restricts the trade of recyclables between jurisdictions.
While such controls would be unthinkable if imposed upon virgin materials, it's possible that they could become the norm for scrap in the coming years.
Basel's Restrictions
On the international front, the Basel Convention on the Control of Transboundary Movements of Hazardous and Other Wastes threatens the continued trade of scrap between countries. This international accord, which was motivated by concern about unsafe disposal of hazardous wastes in developing nations that accept such materials in exchange for needed hard currency, calls for "hazardous wastes and other wastes ..., as far as is compatible with environmentally sound and efficient management, [to] be disposed of in the state where they were generated.”
The definition of "other wastes" and "disposal" is left to each nation to determine for itself. As a result, there is no explicit exemption for recycling in the document, and therein lies the threat to scrap. Every nation that signs the Basel Convention is barred from exporting or importing hazardous or other "wastes" to or from nations that have not signed the accord.
In addition, the convention explicitly calls for a limit on the export and import of “wastes,” with any of the following constituents: copper compounds, zinc compounds, lead, metal carbonyls, beryllium, hexavalent chromium, arsenic, selenium, cadmium, antimony, tellurium, mercury, thallium, asbestos, halogenated organic solvents, and other organic and inorganic wastes, provided they are found to be toxic, reactive, corrosive, or ignitable. Under the convention, export and import of these substances could only take place if there was an agreement between the importer and the exporter to accept shipment of such materials and prior notice of the shipment was provided to the exporting nation and importing nation and both approved of each individual shipment.
The convention will take effect 90 days after 20 nations have ratified it. At the beginning of this year, 55 nations had signed the Basel Convention, and 5 of those had ratified it. The United States, Canada, and the 12-member European Community may ratify the convention in 1991.
Japan, Korea, and most of the Pacific Rim nations, however, have failed to sign the convention. Thus, because any materials covered by Basel cannot be exported from signatory nations to nonsignatory nations, U.S. scrap recyclers could be cut off from Asian and other markets. In addition, U.S. scrap market access to Canada and countries inEurope would be limited by the convention if those nations define any scrap materials as hazardous under their domestic laws.
Legislation: Help or Hindrance?
To implement the convention in the United States, Congress must adopt legislation that could have even more serious implications on scrap imports and exports than the Basel Convention. At least one major environmental group, Greenpeace, has testified before Congress, urging a total ban on international trade in "wastes." The organization's proposal would ban the export or import of all secondary materials--paper, glass, metals, textiles, plastics, and so forth--for any purpose whatsoever. Other measures introduced in Congress would ban U.S. exports of "wastes" to nations that do not have environmental laws as stringent" as the United States .
Efforts to protect international markets for recycling are under way. Last year, Sen. Max Baucus (D-Mont.) and former Rep. Thomas A. Luken (D-Ohio) introduced bills that would have excluded nonhazardous paper, plastics, glass, and metals from any export restraints. Similar proposals could come up this session.
Other protection could come from the Organization for Economic Cooperation and Development (OECD). The group, which encompasses the industrialized nations of the world, has proposed a work group to standardize definitions of waste and recycling for those nations in order to ease Basel Convention compliance. The work plan has not been formally adopted by the OECD, however, and likely will take at least until 1992 to complete.
Nevertheless, some industries see an advantage in the possibility of export bans and will work to get them implemented. Some manufacturers are visiting Capitol Hill, urging that various scrap items be banned from export markets for environmental reasons, thereby giving domestic manufacturers control of the market.
Controls at Home
Public concern about safe waste disposal and lack of distinction between scrap and waste also threaten to disrupt domestic scrap markets. As landfills approach capacity and disposal costs rise, some states and municipalities have been hauling solid waste to states and municipalities with more plentiful, cheaper disposal capacity. Following years of outrage from local communities, representatives of the receiving states and municipalities are moving to give those states and municipalities more control over imports of solid waste. In a landmark case known as City of Philadelphia vs. New Jersey, however, the U.S. Supreme Court ruled that solid waste is a commodity in commerce and only the federal government can regulate its movement in interstate commerce.
The federal government has taken steps in that direction. Legislation introduced in the last Congress--which was passed by the Senate but did not receive full congressional approval--would have granted each state the opportunity to close its borders to out-of-state waste under certain broad circumstances. On the House side, legislation introduced by Luken last year would have given states the authority to close their borders to out-of-state waste once they had implemented a 20-year plan for the management and recycling of discarded material within their borders.
Because there is no distinction in federal law between a recycling activity and a disposal activity, these measures pose significant risks to recycling markets. For example, there is the danger that aluminum clips moving from a processor in one state to a smelter in another might be stopped at the border and sent back. Pieces of legislation introduced to date have had very limited recycling exemptions, but because there is no definition of recycling in federal statutes, each state could decide for itself which recycling activities to accept in its borders and which to exclude.
The interstate waste shipment controversy will have to be dealt with in the reauthorization of the Resource Conservation and Recovery Act (RCRA), which promises to be a major environmental item on the current congressional agenda. Considered one of the most controversial aspects of RCRA, the waste movement issue likely will be fought out at length.
Legislating Trades
The greening of the marketplace is evident in other U.S. legislation as well. For example, under the Clean Air Act as reauthorized by Congress in 1990, utilities must reduce their emissions of sulfur dioxide to 1.2 pounds per hour. Those that reduce their emissions beyond the level required by law are credited an "allowance" for that excess reduction, which can be sold to utilities that fail to meet the target. The idea, sponsored by the Environmental Defense Fund and a team of policy analysts led by Sens. John Heinz (R-Pa.) and Timothy E. Wirth (D-Colo.), was to allocate the costs of acid rain control in the most efficient manner. Some utilities could afford excess reductions at low cost, while for others any reduction was highly problematic. The new Clean Air Act allows development of a marketplace for acid rain control.
The concept has been applied to recycling. Legislation by Heinz and Wirth would require the Environmental Protection Agency (EPA) to determine the present recycling rate for used oil, tires, batteries, and newsprint, and require manufacturers to increase their use of these materials by a set amount per year. Consumers of these items that used more than the EPA-set amount of recycled content would receive allowances for the overage. Those that faded to use that amount would have to purchase allowances from those who used more. "By making producers responsible for recycling a portion of the materials they generate, prices of these materials will more accurately reflect society's cost of managing the resulting wastes," said Heinz and Rep. Esteban E. Torres (D-Calif.) in a statement.
Not all sides support this effort to force manufacturers to use recyclables. The Bush administration, in congressional testimony last August, criticized the measures as requiring too much recordkeeping and being too burdensome to work properly. The American Newspaper Publishers Association called "legislation that attempts to manipulate the newsprint market ... unnecessary and unwise."
Within Congress itself, however, there are members actively reviewing the option. Luken, the former chairman of the Hazardous Materials and Transportation Subcommittee, included the Heinz-Wirth used-oil recycling provisions in his proposal to reauthorize RCRA. And in a recent speech to the Paper Stock Institute, a chapter of the Institute ofScrap Recycling Industries, Luken indicated that the Heinz-Wirth newsprint recycling effort may make it through Congress this year.
Such proposals to force consumption differ from past congressional recycling efforts, which have mandated landfill diversion regardless of ultimate consumption. For example, Luken's bill to reauthorize RCRA required that all states achieve a 25-percent recycling rate, but initially defined recycling as collection or processing, without attention to ultimate consumption. Similar problems were evident in other measures. For example, the EPA proposed a municipal incinerator rule last year that required incinerators to source separate 25 percent of their intake for recycling, but did not require that any of this material actually be reused. Although the proposal was scotched, the EPA has been considering a similar separation requirement for landfills.
The federal government is making itself a major player in recycling markets. In addition to those proposals outlined, Congress will consider such plans as mandatory takeback of lead-acid batteries, making battery retailers, wholesalers, and manufacturers entirely responsible for battery recovery and making it illegal to take one anywhere else. Also possible are additional recordkeeping and storage requirements for recycling that could dramatically change the way scrap commodities are bought and sold. Furthermore, during 1991 or 1992, Congress likely will reauthorize RCRA for the first time in more than six years. The measure will determine the extent of federal intervention in recycling and has the potential to change the way the marketplace now works.•
If certain national and international proposals are implemented, the answer to that question could be yes.