    [Senate Hearing 107-1006]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 107-1006

        RECYCLING: FEDERAL PROCUREMENT AND BEVERAGE CONTAINER RECYCLING
                                    PROGRAMS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                   __________

                                 JULY 11, 2002

                                   __________

      Printed for the use of the Committee on Environment and Public Works

                                     ______

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                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                          one hundred seventh congress
                                 second session
                      JAMES M. JEFFORDS, Vermont, Chairman
    MAX BAUCUS, Montana                  BOB SMITH, New Hampshire
    HARRY REID, Nevada                   JOHN W. WARNER, Virginia
    BOB GRAHAM, Florida                  JAMES M. INHOFE, Oklahoma
    JOSEPH I. LIEBERMAN, Connecticut     CHRISTOPHER S. BOND, Missouri
    BARBARA BOXER, California            GEORGE V. VOINOVICH, Ohio
    RON WYDEN, Oregon                    MICHAEL D. CRAPO, Idaho
    THOMAS R. CARPER, Delaware           LINCOLN CHAFEE, Rhode Island
    HILLARY RODHAM CLINTON, New York     ARLEN SPECTER, Pennsylvania
    JON S. CORZINE, New Jersey           PETE V. DOMENICI, New Mexico

                     Ken Connolly, Majority Staff Director
                     Dave Conover, Minority Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

                                 JULY 11, 2002
                               OPENING STATEMENTS

    Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..    17
    Jeffords, Hon. James M., U.S. Senator from the State of Vermont..     1

                                   WITNESSES

    Boisson, Edward, Boisson and Associates..........................    22
        Prepared statement...........................................    79
    Callahan, Dobbins, chair, Buy Recycled Business Alliance and
      general manager for government markets, Collins and Aikman
      Floorcoverings.................................................     7
        Prepared statement...........................................    52
        Responses to additional questions from Senator Jeffords......    54
    Case, Clifford P., III, partner, Carter, Ledyard and Millburn....     9
        Prepared statement...........................................    56
    Dietly, Kevin S., Northbridge Environmental Management
      Consultants....................................................    25
        Prepared statement...........................................    86
        Responses to additional questions from Senator Jeffords......    94
    Von Zuben, Fred, president and chief executive officer, the
      Newark Group...................................................    11
        Charts, Recycling statistics.................................    62
        Prepared statement...........................................    58
        Statement, American Forest and Paper Association.............    60
    Yap, Debra, Director, Environmental Strategy and Safety Division,
      Office of Business and Operations, Public Building Service,
      General Services Administration................................     2
        Prepared statement...........................................    37
        Responses to additional questions from Senator Jeffords......    40
    Young, Darryl, Director, California Department of Conservation...    19
        Prepared statement...........................................    74

                              ADDITIONAL MATERIAL

    Letters:
        Karigan-Winter, Larry and Marty..............................   117
        Leuty, Steve, Kalamazoo, MI..................................   117
        Turner, Wayne, Greensboro, NC................................    96
    Report, Federal Procurement: Government Agencies' Purchases of
      Recycled-Content Products, David G. Wood, Director, Natural
      Resource and Environmental Issues, General Accounting Office...   100
    Statements:
        American Forest and Paper Association........................    60
        Beer Institute...............................................   129
        Bonior, Hon. David, former U.S. Representative from the State
          of Michigan................................................    95
        Container Recycling Institute................................   121
        Daniel, Julie, general manager, BRING Recycling..............   118
        Ibsen, Thomas, St. Paul, MN..................................   117
        MacCormac, Deborah, Florida Department of Environmental
          Protection.................................................   116
        McPoland, Fran, Chair, White House Task Force on Recycling...    97
        Product Stewardship Institute................................   128
        Pulley, Brenda, Alcan Aluminum Corp..........................   119
        Williams, C..................................................   118

        RECYCLING: FEDERAL PROCUREMENT AND BEVERAGE CONTAINER RECYCLING
                                    PROGRAMS

                                  ----------

                            THURSDAY, JULY 11, 2002

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 9:36 a.m. in room
    406, Senate Dirksen Building, Hon. James M. Jeffords [chairman
    of the committee] presiding.
        Present: Senators Jeffords and Carper.

    OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM
                          THE STATE OF VERMONT

        Senator Jeffords. The hearing will come to order.
        Good morning. I'd like to thank our witnesses for being
    here today. We have a lot to discuss, and I am eager to hear
    your comments. I'm excited about today's hearing.
        The issue of recycling could not be more timely. In the
    last year, our security and resource concerns have been
    highlighted more than ever, lest we not forget that President
    Roosevelt's recycling campaign helped dramatically in World War
    II. Today the war is very different. The energy consequences
    are even more dramatic and important for us to consider.
        I was alarmed by several statistics in the Container
    Recycling Institution's new study on aluminum. Let me share one
    of them with you. In 2001, 100 billion aluminum cans were sold,
    100 billion aluminum cans were sold. More than half, over 50
    billion, were wasted, which means landfills, they were littered
    or incinerated. If these 50 billion cans had been recycled,
    they would have saved the energy equivalent of 16 million
    barrels of crude oil. That's enough energy to generate
    electricity for almost 3 million U.S. homes for a year.
        And the trend is worsening. The 2001 aluminum recycling
    rate was the lowest in 15 years. These statistics are
    astounding. The waste is disturbing. Our disposal practices
    have got to change.
        The Federal Government must become a better role model, or
    industry must begin taking steps voluntarily, or Congress must
    pass recycling legislation, or all the above. In our search for
    the right answer, our balance of right answers, we will focus
    on two areas of recycling today. First, we will look at whether
    the Federal Government, which spent more than $230 billion in
    2001 on goods and product, is maximizing its purchases of
    recycled content products.
        In June of 2001, the General Accounting Office released a
    study that concerned me. One of their conclusions was that the
    many procuring officials and other Federal purchasers either do
    not know about or choose not to implement the requirements for
    establishing recycled content procurement programs. If the
    Federal Government is not recycling, how can we expect the rest
    of the country to do so? If the Federal Government is not
    creating market demand, how can we expect our businesses to
    continue their innovation?
        The second issue I would like to talk about today is the
    beverage container recycling. For the last several Congresses,
    I have introduced a national bottle deposit bill. Vermont has
    been a leader in the area of beverage container recycling. The
    first bottle bill was passed in Vermont in 1953, and now 11
    States have bottle bill laws. Just to put a little family
    history in, my father was on the supreme court in Vermont in
    1953. He wrote the opinion saying, yes, the Government had the
    right to do that. So this is why I get so fired up over these
    things.
        It has been over two decades since the Senate has evaluated
    the merits of deposit legislation to encourage greater beverage
    container recycling. I hope that today's hearing galvanizes the
    beverage industry to work cooperatively with other stakeholders
    to accept deposit systems or develop other solutions to the
    beverage container waste problem.
        Every Congress, we hold hearings on the flow of trash
    through our States. It is a difficult issue that elicits strong
    reaction. One of the best ways to temper these fights is to
    ensure that there is less trash on the road in the first place.
    It is time that we all work together to restore the public's
    faith and therefore enthusiasm in recycling.
        I look forward to working with all of you, and again, we
    thank the witnesses for being here today. We shall proceed.

     STATEMENT OF DEBRA YAP, DIRECTOR, ENVIRONMENTAL STRATEGY AND
      SAFETY DIVISION, OFFICE OF BUSINESS AND OPERATIONS, PUBLIC
    BUILDING SERVICE, GENERAL SERVICES ADMINISTRATION; ACCOMPANIED
           BY MATTHEW URNEZIS, DIRECTOR, PROCUREMENT DIVISION

        Ms. Yap. Thank you, Mr. Chairman, and members of the
    committee. I am Debra Yap, Director of the Environmental
    Strategy and Safety Division in the General Services
    Administration's Public Buildings Service.
        I appreciate the opportunity to discuss what we are doing
    to ensure the Federal procurement of recycled content products
    and what can be done to improve these efforts. Section 6002 of
    the Research Conservation and Recovery Act established the
    Federal buy-recycled program. Executive Order 13101, ``Greening
    The Government through Waste Prevention, Recycling and Federal
    Acquisition'' strengthens the Federal Government's commitment
    to the acquisition of recycled content products.
        The Environmental Protection Agency designates products
    with recycled content for Federal agency affirmative purchase.
    EPA identifies the products in comprehensive procurement
    guidelines, CPG, and provides recommendations for purchasing
    the products in the Recovered Materials Advisory Notice, or
    RMAN. Hereon, I will refer to products that meet the RMAN
    recommendations as CPG compliant.
        Each year, the top six agencies in terms of Federal
    procurement expenditures are required to report on their CPG
    purchases to the Office of the Federal Environmental Executive
    and the Office of Federal Procurement Policy. The Department of
    Defense, Department of Energy, National Aeronautics and Space
    Administration, Department of Veterans Affairs, Department of
    Transportation, and the General Services Administration account
    for more than 85 percent of total Federal expenditures. March
    2002 report on implementation in fiscal year 1998 through 1999
    indicates that of the $774 million spent on EPA-designated
    products, $492 million, or 64 percent, was spent on CPG
    compliant products.
        Environmental stewardship is a responsibility of each
    Federal agency. The General Services Administration takes this
    role seriously. I would like to tell you how GSA is leveraging
    our unique mission to promote the Federal procurement of
    recycled content products. While I will discuss the efforts of
    GSA's Public Building Service, Federal Supply Service, and the
    Office of Governmentwide Policy separately, our efforts are a
    coordinated response to promote Federal procurement of recycled
    content products.
        In the Public Building Service, PBS delivers superior
    workplaces to the Federal worker and at the same time, superior
    value to the American taxpayer. As the largest commercial style
    real estate organization in the Nation, PBS provides work space
    for a million Federal employees nationwide in more than 100
    Federal organizations. We control approximately 40 percent of
    the Federal Government's office space. Leveraging our role as
    the Federal Government's landlord, PBS integrated a provision
    into its leasing agreements, property management contracts, PBS
    design standards and design selection criteria for CPG
    compliant products.
        The Federal Supply Service (FSS) leverages the purchasing
    power of the Federal Government to provide Federal agencies
    with best value in commercial products and services. Through
    the supply system, FSS provides customers with access to more
    than 4 million professional services and commercial products.
    The business of FSS is entirely dependent on customer revenues.
    Because its services are non-mandatory, FSS must strive to
    maintain customer loyalty.
        To assist customer agencies in their efforts to purchase
    recycled content products, FSS has developed a number of useful
    tools. The Environmental Products and Services Guide, which is
    also available on line, identifies CPG compliant products using
    a CPG icon. GSA developed this icon to make it easier, faster
    and less costly for customers agencies to identify CPG
    compliant products. This guide also indicates the percentage of
    recycled content in the product.
        GSA's customer supply catalog identifies attributes which
    also includes the specific percentage of recycled content. The
    FSS web site also contains a wealth of environmental
    information, including laws, regulations, executive orders and
    links to other agency sites. A user using the site can view
    items, click on specific items, including CPG compliant items,
    and get connected to GSA Advantage, the online ordering system,
    or the Schedules E-Library. Using GSA Advantage, the user can
    specifically search for CPG compliant products by looking for
    the CPG icon.
        Working together, FSS, the GSA Environmental Executive and
    the Office of Acquisition in GSA's Office of Governmentwide
    Policy, developed a clause change that require new and renewing
    schedule holders to identify CPG compliant products at proposal
    submission. This rulemaking is nearly final publication in the
    Federal Register at this time. Once implemented, this will
    greatly facilitate a search for CPG compliant products.
        Finally, FSS has been instrumental in the yearly report to
    OFEE and OFPP by reporting expenditures for other agencies that
    order certain products through FSS, most notably, CPG compliant
    copier paper.
        In GSA's Office of Governmentwide Policy, they are
    responsible for carrying out the policy and regulatory
    functions assigned to GSA by Congress and exercises GSA's
    authority as one of the central management agencies of the
    Federal Government. Together with NASA, DOD, and the Civilian
    Agency Acquisition Council (CAAC), the Office of Acquisition
    Policy has developed regulatory guidance in the FAR that
    specifically addresses requirements for and purchasing of
    recycled content products from the earliest stages of
    requirements analysis, market research, acquisition planning,
    through source selection and contract administration.
        This Office also plays another important role in promoting
    Federal procurement of recycled content products. GSA, under
    OFPP direction, manages the Federal Procurement Data System
    (FPDS). FPDS captures contract award information for the entire
    Federal Government. In October 2001, a committee chaired by GSA
    developed an OFPP approved new data element capturing
    information on CPG compliant contracts. A reporting subgroup of
    the White House Task Force on Waste Prevention and Recycling
    has been working to refine the new data element with the
    purpose of easing Resource Conservation and Recovery Act
    reporting by agencies and to provide a basis for measuring CPG
    compliant purchasing.
        Opportunities for improvement. Reporting and measuring
    continue to challenge this program governmentwide. While we
    applaud the efforts to refine the FPDS data element, dollar or
    volume amounts of individual CPG items within an individual
    contract cannot be captured. Also, it is important to
    understand that purchases under $25,000 are not required to be
    reported under FPDS. The reporting subgroup of the White Task
    Force on Recycling and Waste Prevention continues to address
    these challenges and make recommendations for improvement. The
    Task Force and GSA will continue to work with agencies to
    stress the importance of the agencies' commitment to
    environmental stewardship through acquisition planning,
    contract development and aggressive, affirmative procurement
    programs.
        While research is being conducted to track credit card
    purchases, we do not currently have the ability to do so.
    Presenting a further challenge is the difficulty for card
    holders to identify CPG compliant products at retail
    establishments. We also believe that a periodic review of the
    EPA list of CPG items would help to ensure that suppliers of
    such products are available and responsive and that new
    entrants into the market are included on supplier lists.
        We do understand that EPA is reviewing their supplier list
    and we recommend that this be done periodically.
        In closing the GSA Environmental Executive continues to
    work closely with the Federal Environmental Executive, John
    Howard, and the White House Task Force on Waste Prevention and
    Recycling, to ensure we are maximizing our opportunities to
    promote the use of recycled content products.
        Mr. Chairman and members of the committee, thank you again
    for this opportunity to testify. I am happy to answer any
    questions that you may have.
        Senator Jeffords. Thank you very much for a very fine
    statement.
        Procurement officials play an important role in ensuring
    that their agencies purchase recycled content product. Yet many
    of these officials seem unaware of this requirement.
        What do you do to ensure that GSA, a key procurement agency
    for the Government, purchases recycled content products as
    often as possible?
        Ms. Yap. Thank you for that question.
        As part of GSA's Affirmative Procurement Program, we have
    embarked on a training program for our procurement officials
    and credit card holders. We have trained over 1,000 people so
    far, informing them of the requirements to purchase recycled
    content products, and leading them to suppliers of the CPG
    complaint products.
        Senator Jeffords. GSA currently captures the data on
    purchases from its supply centers. What about capturing data on
    recycled content purchases from your supply catalogs?
        Ms. Yap. GSA currently reports on all stock purchases of
    CPG compliant products, not only for GSA, but for the entire
    Federal community. This data is reported to OFEE and OFPP in
    our annual report.
        With regard to further options for tracking data
    collection, with your permission, I would like to answer this
    for the record.
        Senator Jeffords. You may do that, and I appreciate that
    offer.
        Can you estimate what percentage of total recycled content
    purchases for Federal agencies that this data represents?
        Ms. Yap. Again, with your permission, I would like to
    answer that question for the record.
        Senator Jeffords. You may do so. Thank you.
        In 1991, the Senate Governmental Affairs Committee held a
    hearing on Federal procurement. GSA was asked whether schedules
    could reference other schedules that had green products. The
    answer given back was yes. I understand that this has not been
    done. Why not?
        Ms. Yap. At this time, the supply catalog does identify
    products with environmental attributes. It identifies the
    recycled content of the products. We also have an environmental
    products catalog, products and services catalog.
        Senator Jeffords. I have heard the suggestion that GSA add
    a pop-up banner at the beginning of the schedule to remind the
    purchaser to buy green and inform them that this particular
    schedule includes EPA designated products. Why can't GSA do
    this to provide information to the customers?
        Ms. Yap. I represent the Public Building Service. I don't
    have the technical expertise to answer that question. With your
    permission, I would like to answer that for the record.
        Senator Jeffords. What is GSA doing to actively seek
    vendors of green products?
        Ms. Yap. In our solicitations, our commodity centers are
    seeking vendors who have products with environmental
    attributes.
        Senator Jeffords. How are they doing that, is the question?
    If there's someone there that knows this answer, they can
    testify at this time, rather than having to--just identify
    yourself, pull up a chair, be comfortable.
        Mr. Urnezis. Thank you. My name is Matthew Urnezis. I work
    with Debra.
        When we take a look at procurements that are for materials
    that FSS buys, we do a solicitation. And the solicitation asks
    for environmental products. We do market research. We go out
    and find what marketplace materials are there, so that we can
    take and buy those items. That's part of the FAR requirement,
    that we do the market research. Part of the FAR clauses then
    have the contractor identify those products.
        Senator Jeffords. How successful is that, in your judgment?
    Is it working?
        Mr. Urnezis. On the paper commodities, I think we're doing
    a very wonderful job. That's very clear, and it's easy for us
    to track. Some of the other ones that have just been added that
    are new, it's taking a little while for the industry to come up
    with products.
        We're also, Debra had mentioned, doing rulemaking, the
    rulemaking is going through that's requiring vendors to
    identify products also. So it's two approaches. One is looking
    at market research, the other is saying, OK, vendors, when you
    have a product, you have to identify it, you have to show us
    that it's there, so that we can go forward with the Federal
    customers so they know.
        Senator Jeffords. How far along are you in this process?
        Mr. Urnezis. The rulemaking is taking place right now. It's
    near final publication.
        Senator Jeffords. What is the status of requiring vendors
    to indicate which of their products should be identified with a
    CPG icon? I understand that a year ago, GSA was going to
    require vendors to identify CPG products. I understand the
    policy was never issued.
        Mr. Urnezis. The program is in place where a vendor can
    currently identify their CPG compliant product on a schedule.
    The rulemaking will then make that a mandatory requirement. But
    they currently have that capability right now.
        Senator Jeffords. When will the rulemaking be finalized?
        Mr. Urnezis. It's been out for public comment, waiting for
    OGC approval.
        Senator Jeffords. GSA has a critical role to play in
    educating purchasers. The Federal Acquisition Institute is
    supposed to develop green purchasing training for the
    acquisition community. I understand the Institute began to
    develop an online training course, but it was never completed.
    Is that correct, and if so, why not?
        Ms. Yap. With your permission, we would like to answer this
    question for the record.
        Senator Jeffords. All right.
        For each CPG product that GSA has in the stock program, why
    can't GSA stock only recycled content products?
        Mr. Urnezis. GSA does offer non-compliant products. These
    include products made with virgin materials. But also, others
    that have some environmental attributes, such as recycled
    content. But not a percent sufficient to meet EPA's
    recommendations under the CPG program.
        There are exceptions allowed for not purchasing CPG-
    compliant products: when the compliant product does not meet
    the appropriate performance standard, is not available
    competitively in a reasonable timeframe, or is only available
    at an unreasonable price. Therefore, FSS carries alternatives
    for its customers. Our agency's affirmative procurement program
    instructs everyone who is using an exception to a purchased
    product with the highest environmental attributes practical,
    has to note that and has to put that as part of their
    justification.
        We will work with the Federal Environmental Executive and
    EPA if we see a pattern developing of specific products to
    eliminate the cause for these exceptions, either price,
    availability or timeliness. And in some cases, it may just an
    internal issue requiring education. In other cases, outreach to
    the contractor community will be required. But we haven't seen
    any pattern of that yet.
        Senator Jeffords. Is GSA willing to promote reduced
    packaging and packaging that contains recycled materials?
        Mr. Urnezis. I have no information that we haven't been
    willing to do that.
        Senator Jeffords. All right, well, I appreciate your
    testimony. I will be back with you when I get your response in
    writing to those questions that you asked to have time to do
    so. As you may understand, I feel very strongly about this
    issue. It is my intention to continue to work with you and work
    together to make sure that we do the best job we can to
    maximize utilization of our goals here. So thank you.
        Our second panel, the first witness Mr. Dobbins Callahan,
    who is the General Manager of the Government Markets for
    Collins and Aikman floorcoverings, located in Dalton, Georgia.
    He is testifying on behalf of the Buy Recycled Business
    Alliance. Mr. Callahan, pleasure to have you here and please
    proceed.

      STATEMENT OF DOBBINS CALLAHAN, CHAIR, BUY RECYCLED BUSINESS
    ALLIANCE, AND GENERAL MANAGER, GOVERNMENT MARKETS, COLLINS AND
                         AIKMAN FLOORCOVERINGS

        Mr. Callahan. Thank you, Senator Jeffords and Senator
    Smith, and to the rest of the committee for allowing me to be
    here today.
        I do serve as chair of the Buy Recycled Business Alliance,
    we call it BRBA, an organization within the National Recycling
    Coalition that is dedicated to bringing purchasers and vendors
    of recycled products together to advance the purchase of these
    recycled products. My company, C&A floorcoverings, has been
    involved with BRBA for several years. We manufacture high
    performance carpets with very significant recycled content.
    These products are also 100 percent recyclable.
        I would like to commend the work of the ad hoc coalition,
    the National Recycling Coalition, the Steel Recycling
    Institute, the American Plastics Council, the Recycled Paper
    Board Alliance, the American Zinc Association, and the
    Consumer's Choice Council, for working together to focus
    attention to this very important issue.
        One of the two aspects of Federal purchasing of recycled
    content products with which I am most familiar is EPA's
    ``designation'' of recycled content products through the CPGs,
    the Comprehensive Procurement Guidelines, as prescribed, of
    course, by RCRA 6002 and Executive Order 13101. Implementation
    of these guidelines does fall under the Office of the Federal
    Environmental Executive. Designation, as we know, means that
    EPA has studied the product category and found suitable
    products within that particular category to be available with
    meaningful recycled content. Once products have been designated
    by EPA, the purchase of those products with recycled content is
    essentially mandated for Federal purchasers.
        As good and as committed as EPA people are, and they are
    good people and they are committed to what they're doing, there
    are two obstacles intrinsic to the designation process. One,
    before designation can occur, there must be competitive
    products available. EPA will not designate a product unless
    there are other manufacturers manufacturing similar products
    with similar recycled content. This means that the most
    innovative products can't be designated until another product
    comes along to compete. I suggest a category short of
    designation, recognizing a new product that meets the goals,
    but which has no competition yet. This recognition would allow
    Federal agencies to use procurement of these products to meet
    their recycled content purchasing goals, but would not be
    mandated. And I do understand that this would have to go
    through the rulemaking process.
        Another obstacle to taking these products to the
    marketplace through the CPGs is the sheer amount of time that
    it takes to go through the designation process. It literally
    can take years. EPA simply doesn't have the resources available
    to accomplish this task in a timely fashion. Unfortunately,
    this situation is exacerbated by industry. EPA invites industry
    to participate in the designation process. Unfortunately, the
    process can be slowed by less than complete information or
    worse, by misleading information. EPA simply doesn't have the
    resources to sort through the barrage of information that it
    receives when it opens itself up to industry.
        Next, I would like to speak about the General Services
    Administration and my experiences through BRBA and through my
    company with them, and particularly, GSA's National Furniture
    Center, just across the river in Arlington as an example of how
    to effectively facilitate the purchase of recycled content
    products. GSA, through its innovative Multiple Award Schedules,
    can and does offer a wide variety of products to the Federal
    marketplace, including recycled content products, even when
    there are no competitive products available. And through the
    pricing mechanism that GSA uses, there is the assurance that
    prices offered to the Federal Government are the lowest prices
    that the best customer could enjoy.
        If the barrier of not recognizing products which have no
    competition can be overcome, GSA does offer a vehicle to get
    these products to the Federal marketplace with full assurance
    that pricing is at best value levels. Other examples of what
    GSA is doing is Planet GSA trade shows to bring Federal
    agencies into contact with those companies that are providing
    products meeting Federal agencies' needs for environmentally
    preferable products, and through the Furniture Center, the
    Evergreen award recognizes and gives credibility to vendors
    providing the best environmental programs for Federal
    customers.
        Finally, the Furniture Center's Quality Partnership brings
    vendors and Federal purchasers together to develop more
    effective and more efficient means of procuring products, again
    including recycled content products. I attend the QPC meetings
    and know them to be an effective mechanism to make Federal
    purchasing, including purchasing of recycled content product
    materials, to be constantly improving. Another suggestion I
    would have is that the QPC model be expedited through other
    procurement centers throughout the country.
        The theme that I've tried to develop is that most of the
    mechanisms are in place for more effective purchasing of
    recycled content products by Federal purchasers. With adequate
    resources, a resolution of the competitive requirement and a
    means to hold industry more accountable through the CPG
    designation process, EPA can be effective in designating more
    products more quickly. GSA, through its Multiple Awards
    Schedule, has a vehicle to take these products to the Federal
    marketplace and innovative programs like Planet GSA, the
    Evergreen award, and the Furniture Center's Quality Partnership
    Council can reinforce the good work currently being done by the
    Office of the Federal Environmental Executive.
        Thank you, sir.
        Senator Jeffords. Thank you.
        The next witness is Clifford Case, who is a partner with
    Carter, Ledyard and Millburn, located in New York. Mr. Case is
    testifying on behalf of the National Recycling Coalition, an
    organization he co-founded in 1978. Thank you for being here
    this morning, and please proceed.

    STATEMENT OF CLIFFORD P. CASE III, PARTNER, CARTER, LEDYARD AND
                                MILLBURN

        Mr. Case. Thank you, Senator.
        An important reason for the formation of the National
    Recycling Coalition, as you noted, in 1978, was in fact to work
    for the implementation of Section 6002, which had been passed,
    of course, 2 years earlier, as a part of the Resource
    Conservation and Recovery Act. We wanted to work to see that
    Section 6002 was enforced, along with other later initiatives
    to try to increase Federal Government purchasing of recycled
    products.
        So as an organization we have some history here, and I
    personally do. Have we done enough in the past quarter century?
    It's a little shocking to think it is a quarter century, but it
    is, to comply with Section 6002, and the executive orders that
    have been issued? I'm afraid the answer has to be no. Things
    started out on the wrong foot when the EPA failed to issue any
    guidelines for recycled products, forcing the National
    Recycling Coalition and Environmental Defense to sue EPA to get
    a court order requiring that the guideline process be
    commenced.
        In general, Federal agency procurement does not take
    advantage of the broad range of high quality recycled products
    that are available in the marketplace today. The GAO report
    that you referenced, Senator, documents that most agencies do
    not know what recycled products are available or how to get
    them. Purchasing data is fragmentary. Many agencies report
    little or no information, and important components of many
    agencies provide little or no information.
        I was struck by the note in the GAO report that within the
    Department of Defense, no information was provided by the Armed
    Services, the Army, Navy and Air Force, major, major components
    of the total picture. Moreover, and this is very important, the
    programs that do exist cover direct agency purchases only. I
    know of no instance in which agencies make any effort
    whatsoever to assure compliance with Section 6002's affirmative
    purchasing requirements by their contractors and grantees. This
    is obviously of vital importance, because purchases by
    contractors and grantees using Federal funds often are much
    more significant than the purchases by the agencies directly.
        GAO notes that in fiscal year 1999, 85 percent of the total
    outlays of the Department of Housing and Urban development were
    for grants to States and local governments, 69 percent of the
    total outlays of the Department of Transportation were for such
    grants. It is safe, I think, to say that none of those grantees
    knew that by law, they were required to give a preference in
    purchasing to recycled products. This, I'm afraid, can only be
    characterized as bureaucratic foot dragging, which has lasted
    for more than two decades and it is very frustrating to those
    of us who have been advocates for more recycling over the
    years. Every time a Federal agency fails to buy a product made
    from recovered paper, plastic or metal, it condemns that
    material to a landfill instead of to a new constructive and
    productive rebirth as a recycled product. Every time a Federal
    agency fails to require its contractors to use recycled
    building products, the materials that could be used in those
    products, again, are going to be thrown away.
        This isn't an academic issue. I'm sure you're aware of news
    stories about a variety of reusable programs, including those
    in my home city of New York, which are being threatened by the
    lack of markets for recovered materials. Just as of July 1, I'm
    going to have to throw out my glass bottles and my plastic
    containers in New York, because they're not going to be
    collected by the city. I have some problem with the rationale
    that the City's department of sanitation has presented for that
    change. Nevertheless, it's a real problem that faces many
    municipalities.
        What can we do? I think there are a lot of things that we
    can do. I've cited several in my testimony. For example,
    codification of existing executive orders on procurement, to
    give statutory sanction to principles such as design for
    recyclability, life cycle costing and reliance on
    environmentally preferable products, requiring major
    improvements in the woefully inadequate information collection
    system that we have now for purchasing recycled products, so
    that progress or the lack of progress can be noted, providing
    mandatary training programs for Government buyers, and I would
    advocate a congressional award program to recognize those
    public servants who, despite all the obstacles, still manage to
    buy recycled successfully.
        One other idea that I want to mention is, let's make clear
    that the citizen suit provisions of the Resource Conservation
    and Recovery Act apply to procurement agencies, so that if they
    don't buy recycled products in conformity with law, they too
    can be sued, just as EPA was sued by the National Recycling
    Coalition, for failure to comply. And let's shift the burden to
    the procuring agencies, once a product has been designated by
    EPA as available in recycled form, let's shift the burden to
    procurement agencies to defend what they have done. And
    naturally, of course, provide for recovery of attorney fees by
    successful plaintiffs.
        That's one way I think we can do a lot more to encourage
    compliance with this important Federal program. Thank you.
        Senator Jeffords. Thank you for very helpful testimony.
        Our next witness is Fred von Zuben, President and CEO of
    the Newark Group, which is a 100 percent recycled paper board
    manufacturing company headquartered in Cranford, New Jersey.
    Mr. von Zuben is testifying today on behalf of the American
    Forest and Paper Association. Welcome, and we look forward to
    your testimony.

      STATEMENT OF FRED VON ZUBEN, PRESIDENT AND CHIEF EXECUTIVE
                       OFFICER, THE NEWARK GROUP

        Mr. von Zuben. Gentlemen, members of the committee, thank
    you for holding this hearing.
        As you said, my name is Fred von Zuben. I'm here on behalf
    of the American Forest and Paper Association. My presentation
    is a summary of written testimony, which I ask be included in
    the record.
        Senator Jeffords. It will be.
        Mr. von Zuben. I am President and CEO of the Newark Group,
    a 100 percent recycled paper board manufacturing company
    headquartered in Cranford, New Jersey. My company has been in
    the recycling business for over 100 years. When it comes to
    recycling, I believe that paper products have received more
    attention than any other product. The last time our industry
    was here to talk about recycling, you wanted us to do more. I
    am happy to report that we have met and surpassed all
    expectations. We are still picking up Mr. Case's paper in New
    York, by the way.
        [Laughter.]
        Mr. von Zuben. The American Forest and Paper Association,
    AF&PA, represents over 240 members of the pulp, paper,
    paperboard and wood products industry. We have large
    international companies with paper mills employing thousands of
    workers, small family owned paper and sawmills and everything
    in between.
        Recycling and recovered fiber in our business is an
    integral part of our whole setup. In the 1980's, the public and
    the Congress demanded higher recycling levels. In response,
    AF&PA members, our company included, pledged to recover 40
    percent of all paper consumed in the U.S. for recycling. This
    was unprecedented. Many, including some in our own industry,
    were skeptical. Billions of dollars went into new mills and
    facility upgrades. We virtually institutionalized the market
    for clean, sorted papers from residential and commercial users
    across the U.S. We reached the 40 percent goal and raised it to
    50 percent, which we expect to meet within the next few years.
        Let's look at a few facts. According to EPA, more paper is
    diverted or recovered from municipal solid waste than all other
    materials combined. Paper recovery increased 97 percent since
    1987 when the recovery rate was 28.8 percent. Recovered fiber
    now accounts for almost 38 percent of the industry's raw
    material supply. The bottom line is, we have done well, but a
    serious crisis is looming.
        The demand for recovered fiber is growing even more rapidly
    than the supply. Domestic paper mills will be squeezed in
    coming years by an anticipated 50 percent surge in U.S. exports
    of recovered paper. The two largest recovered paper grades,
    news and old corrugated, are expected to be in particular tight
    supply in the coming years. We anticipate using even more mixed
    papers from homes and offices to fill the anticipated gap. If
    we don't turn the situation around, companies like mine run the
    real risk of shutting down our paper mills.
        Misguided waste and procurement policies will make the
    problem worse, conceivably, not better. Policy makers and
    regulators look at a pile of paper and see waste or garbage,
    something that needs to be disposed of, incinerated, landfilled
    or recycled. I look at that same pile and I see a valuable raw
    material. I see something I can use to make a new product. Yet
    we continually fight against programs that give financial
    incentives to those who would use recyclable paper as a fuel,
    or municipal waste managers who would deny us access to
    recovered paper in their communities.
        On the procurement side, politically attractive but
    simplistic ideas like raising the content requirement for copy
    paper from 30 to 40 percent may actually hurt more than they
    help. They simply move the limited supply of quality recovered
    fiber from one product, like tissue or paper board, into
    another product. They don't necessarily lead to more recycling.
        In like manner, the Federal Government may need to rethink
    its preference for post-consumer paper. Let me assure you that
    today, paper diverted or recovered from the waste stream will
    be recycled or reused. Pre-consumer or post-consumer, we will
    use it. Artificial distinctions are economically damaging and
    ironically, create more paperwork.
        Mr. Chairman and members of the committee, there are many
    reasons for the Government to take the lead in promoting
    recycling. Leadership, however, means taking a leadership role
    on both sides of the equation, supply and demand. Without a
    doubt, purchasing managers need to be more cognizant of what
    they buy. At the same time, building managers need to be more
    cognizant of what they throw out and what they recycle.
        Given the unprecedented use of recycled fiber throughout
    industry, we offer the following recommendation. Have the
    Office of the Federal Environmental Executive, OFEE, give
    greater emphasis to recovery of used paper within the
    Government. Currently, many Federal facilities do not offer
    collection programs or fail to encourage participation in those
    programs which exist. Rather than continue its do as I say and
    not as I do posture, it is time for the Federal Government to
    lead by example.
        Mr. Chairman, there are additional ideas put forth in the
    written testimony. The paper industry is proud of its recovery
    and recycling record. This is not the periphery of our
    industry, but a vital component of our economic health and
    well-being. We look forward to working with you and members of
    the committee as we evaluate Federal policies to encourage
    ever-increasing paper recovery in the U.S., and an opportunity
    to engineer the most efficient use of this fiber.
        Thank you very much, Mr. Chairman.
        Senator Jeffords. Thank you very sincerely for an excellent
    testimony.
        Now let me go to questions. First, Mr. Callahan, I
    appreciated your pointing out the responsibility that industry
    has in the Federal procurement process. On a scale of one to
    ten, how well is GSA doing at creating the demand necessary for
    businesses like your own to succeed?
        Mr. Callahan. I'm not great at categorization that way, but
    I would say GSA is doing a very good job, maybe an eight, maybe
    a nine, but a very good job of creating the demand. But I would
    say that I don't view the primary responsibility personally for
    creating the demand to be GSA's responsibility. The demand, in
    my opinion, is created by 13101 and the CPGs through the OFEE.
    And then I see GSA as more being a facilitator to help
    companies that manufacture recycled content products take those
    products to the Federal marketplace by establishing programs
    that make Federal customers aware of those products.
        Programs like the ``Planet GSA'' programs, like ``GSA
    Advantage,''which does have a green flag for those products
    that are recycled. GSA is currently working through the Quality
    Partnership Council that I mentioned, on a better mechanism of
    allowing vendors to know which products have been designated
    through CPG. From a perspective of allowing vendors to bring
    their products through GSA to the Federal marketplace with the
    imprimatur of the CPG, I think GSA is doing an excellent job,
    in the nine and a half, ten range, perhaps.
        Senator Jeffords. You are obviously a good actor. How often
    do you see bad actors succeed in the Federal procurement
    process?
        Mr. Callahan. Thank you for that. We try. And
    unfortunately, if you were to ask me what the single greatest
    impediment to the procurement of environmentally preferable
    products, recycled products or products that have other
    environmentally preferable characteristics, whether it be to
    Federal agencies or otherwise within the country, I think the
    single largest obstacle is the, I'll use the term ``ambiguity''
    in marketing claims that are made by people who are trying to
    promote green products.
        We have seen examples over and over again, both within
    Federal agencies and outside of Federal agencies, where
    customers will say, either all of you are doing the same thing,
    so it doesn't matter, or no one is doing anything, so it
    doesn't matter, or I give up on trying to sort all this out, so
    it doesn't matter. So I would not feel comfortable
    characterizing that there are bad actors necessarily within not
    just my industry, within industry. But there certainly is a
    significant degree of ambiguity in the way environmental
    marketing claims are positioned so that it creates a huge
    burden to purchasers to try to sort through the information.
        Senator Jeffords. Mr. Case, in your testimony, you
    mentioned the need for mandatory training for procurement
    officials. Can you elaborate on what you envision this training
    program would look like?
        Mr. Case. Well, I think the best thing would be if the
    range of officials who are responsible for purchasing were
    first notified clearly of what their obligations were, and then
    taken step by step through the process of identifying recycled
    products, finding out their characteristics, finding out where
    they can be used and where if at all they cannot be used, and
    then coupling that with better information about the range of
    products that are available. Following up that with courses to
    identify problems, so that we're not just dealing with a one
    time training program, but a continuing effort to both feed
    back with problems that have been identified and resolving
    those problems.
        The National Recycling Coalition has for many years had Buy
    Recycled programs, such as Dobbins Callahan has mentioned.
    We've also done training for procurement people. We can provide
    you specifics for programs that work.
        Senator Jeffords. Mr. von Zuben, growing numbers of
    environmental groups are promoting the purchase of paper that
    is considered to be more environmentally preferable, paper
    containing high post-consumer recycled content, chlorine free
    processing, zero growth forest content, agricultural residue or
    other alternative fibers. How should purchasers prioritize
    these environmental attributes when making purchasing
    decisions?
        Mr. von Zuben. Well, in my talk today I was really focusing
    on the supply side, Mr. Chairman. But I would say that as an
    industry association, we think our record speaks for itself. We
    have taken a position that the fiber goes to where the market
    directs it, i.e., if it's best for fax-copy paper to go into
    tissue or paperboard, it goes there simply because dollars send
    it there. So in terms of what you buy, I think the marketplace
    is determining, as best we see it, where the recovered fiber
    goes. It goes into the recycled product that gets purchased.
        So we have a little different opinion. In terms of
    specifying, is this environmentally friendly, we need to ask in
    what way is it preferable. Is it just recycled content, or are
    there other issues that we're all working on these days in
    terms of energy, etc. But I would add that the industry is very
    happy to be able to say that we have cleaned off the supply
    train. We are really suffering right now from a lack of fiber.
    So any mandated procurement criteria actually does not help the
    mechanism that we live with every day, which is the free market
    system.
        Senator Jeffords. What is the paper industry doing to help
    purchasers prioritize the attributes?
        Mr. von Zuben. I would have to say that the individual
    members of our organization are out there calling on people at
    all times. I think we operate under the FTC guidelines when
    presenting our products in brochures, or whatever we use to
    market our products. We use truthful statements. We have always
    felt that a level playing field was very, very important. You
    ought to get a pound of credit for a pound of environmental
    goodness, so to speak.
        We've always said we want to present our products in this
    manner, and simply say, if you are going to be buying green,
    then paper is an excellent product in its overall
    characteristics. We have been engineering paper for 100 years
    in hundreds of ways to use recycled fiber where it makes
    economic sense. So it's a little different situation. Recyclng
    is a vital part of our business. Thirty-eight percent of our
    industry's raw material comes from recovered fiber.
        This isn't something we started working on over the last
    couple of years. We've been working on recycled products for
    100 years. Our company, as a matter of fact, received the
    patent, back in 1898, to turn newspaper into paperboard.
    Recycling is something we've been at a long time, and we do our
    engineering and work it through the market system. So in order
    to fully answer your question, we probably need a seminar.
        Senator Jeffords. What can the Government do to promote and
    supply your company needs to meet increased demand?
        Mr. von Zuben. We have two suggestions in our written
    testimony. We want to work with the OFEE on collection from
    Government buildings. We visit here and see that facilities are
    not set up so people cannot easily recycle. People want to
    recycle and we encourage it all the time. Every chance we get
    we thank people immensely for collecting and sorting their
    paper.
        So maybe it's time for the Federal Government to take
    another look at the supply side for paper and help us a little
    bit. Because with the anticipated 50 percent increase in the
    export of recovered paper, we're facing a serious challenge in
    our business. This is a huge amount of paper that's going to be
    exported out of this country. I make 100 percent recycled
    paperboard, so I don't have a choice about my fiber supply. I
    cannot cut a tree down; I'm a friend of the family.
        Senator Jeffords. Mr. Callahan, you mentioned ambiguity in
    the process. What can be done to address this problem?
        Mr. Callahan. Ambiguity in the marketing claims, sir?
        Senator Jeffords. Yes.
        Mr. Callahan. We have studied the Federal Trade Commission
    guides for environmental marketing claims and find that they
    are a model of clarity, easy to understand. If someone reads
    the environmental marketing guides as issued by FTC, you read
    it and say, ``I get it,'' because it's so clear. Several things
    are actually being done. The National Recycling Coalition is
    undergoing an educational program that we will take throughout
    the country to try to help people understand better that there
    are guides that can be used in evaluating marketing claims.
        As I mentioned, the GSA Quality Partnership Council is also
    undertaking a very similar program right now, not from a
    regulatory perspective, because that's not what the partnership
    does, but from an educational perspective, to help vendors
    understand what the right way to phrase marketing claims is,
    and also to have the contracting officers to understand, not
    what 13101 is, because we think that most contracting officers
    now, at least the majority, understand 13101, but to
    understand, if someone comes to them and says, this product has
    recycled content, how to evaluate that claim.
        Just as a quick example, a claim could be made that a
    product is manufactured using 100 percent recycled content, and
    we've seen that claim. A reasonable contracting officer would
    expect that means that the product is made using nothing but
    recycled content. The person making the claim could have meant
    that some of the content of the product was 100 percent
    recycled. So the ambiguity is there. Maybe neither one meant to
    mislead. What GSA and NRC are trying to do is educate people in
    how to look at these claims and how to evaluate what really
    could be behind the claim itself.
        I know that the Federal Trade Commission guides are the law
    of the land. But I think that the FTC also doesn't have a huge
    staff, as you would know. I don't know the legislative process
    well enough to understand how this would work, but if FTC
    guides could be more incorporated into any responses that are
    made to any Federal activity regarding purchasing of
    environmentally preferable products, I think that could be very
    effective. I'm not sure if I'm saying it right, but if there
    was a way to bring the FTC guides more to bear in the Federal
    purchasing process, I think that would help to clear up the
    ambiguity.
        Senator Jeffords. Let me ask all three of you just this
    question. Has any great thought come to mind as you two have
    been talking that you would like to share? I don't want you
    leaving here with something unsaid that you would like to say.
        Mr. von Zuben. I would like to return to the question you
    asked about the help we need. We certainly want to work with
    the committee. The post-consumer, pre-consumer distinction is
    an issue that we've lived with for a long time, and I think
    it's unnecessary. Also, removing recovered material, and
    particularly paper from waste definitions in RCRA would be one
    of the most significant things you could do to help us. We
    constantly are embroiled in solid waste issues when we're
    really in the recovered paper business. And this is a huge
    business. This is not something we do just on the weekends.
        It would be very helpful if we could find some means of
    taking recovered materials out of that RCRA solid waste
    definition. Thank you.
        Senator Jeffords. Mr. Case.
        Mr. Case. Senator, I think one of the very important things
    that this body can do is to keep the heat on. It's been 10
    years, as I think you noted, since the last hearing on
    Government procurement. Ten years in geologic time is a short
    interval, but in real time, in terms of developing industries,
    it's a very long time.
        So I think, just as you mentioned, there are annual
    hearings on interstate transportation of waste, I think there
    should be a similar short timeframe between such attention
    focusing. Because frankly, if somebody is sitting off in an
    agency some place buying things and they don't hear from you
    for 10 years, they don't really have that much incentive, they
    don't have the spotlights, they don't have the attention
    focused on them that they need in order to change. I think that
    would be very positive.
        I mentioned a way to use the sort of private attorney
    general approach to try to encourage greater purchasing. Those
    are the two main suggestions in addition, of course, to the
    education, that I think I'd like to leave with the committee.
        Senator Jeffords. Thank you. Mr. Callahan.
        Senator my perspective, and BRBA's perspective, is that the
    American public wants to do the right thing, whether it's the
    commercial American public or the Federal American public. We
    have found that people really have a heart to buy recycled
    content products, where products are available to them that
    serve their purposes.
        We have found that perhaps the greatest way to encourage
    that is just to continue to bring attention to the good things
    that can be done and to create within the organizations that
    are responsible for that, GSA, EPA and others, the mechanisms
    to facilitate the free flow of information and the free flow of
    products from vendor to the consumer. And quite frankly, I'm
    impressed with all the things that have been done in that area.
        But most importantly I think is to continue to bring public
    light to this very important issue. That in my opinion, sir, is
    exactly what your committee is doing here today, and I would
    just like to thank you and commend you for this work, and just
    encourage you to keep doing what you're doing and looking into
    these matters and trying to make them work better.
        So thank you very much.
        Senator Jeffords. Thank you.
        Senator Carper, if you have anything you would like to ask
    of this panel.

     OPENING STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR FROM
                         THE STATE OF DELAWARE

        Senator Carper. I sure do. Thank you, Mr. Chairman. I
    dropped in not from an airplane, but from a train.
        I used to be Governor of Delaware, I did it for 8 years.
    And gosh, for probably 38 years, I've been recycling. I drive
    my wife crazy with all that we recycle in our homes, from
    newsprint to white bond paper, all kinds of paper, clothes
    hangers, plastic, we do Styrofoam, you name it, we recycle. We
    try to set a personal example.
        When I was Governor of Delaware, I never was satisfied with
    the job that we did in my State in terms of encouraging
    recycling, although we did, I think, take some modest steps. We
    don't have curbside recycling in many places in Delaware,
    although we're doing it now as a demonstration in a variety of
    places.
        But the issue is one I have a whole lot of interest in, did
    then and do now in my new job. I learned or came to believe
    over time that one of the best things we could do to encourage
    recycling is to provide markets for recycled goods. As you
    know, the volatility of prices for anything from newsprint to
    aluminum to glass and other recyclables is so unpredictable, to
    the extent that I'm convinced that to the extent we could
    provide better support in the marketplace, more demand for
    products with recycled goods, that we could do a whole lot
    better at the other end in terms of encouraging communities and
    citizens to recycle.
        I apologize for missing most of your statements. I'm just
    going to ask each of you to take a minute and tell me what you
    think I need to know from what you said. Just to start with
    you, Mr. Callahan. If you want me to walk out of here taking
    nothing else but one or two thoughts, what would they be?
        Mr. Callahan. The two thoughts, sir, would be that the
    designation process takes too long, no matter how good and
    competent and committed the folks at EPA who are doing it are,
    the designation process takes too long. And products that do
    not have competition cannot be designated. That's part of the
    rules. Therefore, the most innovative products cannot be taken
    to the marketplace through the CPGs, because there is no
    competition. And I suggest that there could be a way to address
    that.
        The second thing I think would be that there are examples
    of Federal agencies who are doing a terrific job of
    facilitating taking recycled content products to the
    marketplace, particularly GSA's National Furniture Center
    across the river here in Arlington. I think the third thing, if
    I may have three, is a way to address ambiguity of marketing
    claims within the environmental community, so that all of us
    are better educated on what we should say about our products,
    so that we phrase the recycled content or the environmental
    preferability of our products in a way that is common, would
    facilitate the purchasers of these products trying to evaluate
    what's being brought to the marketplace.
        Senator Carper. Good. Thank you.
        Mr. Case, a similar question. A couple thoughts, if I
    remember nothing else, take nothing else from this, or maybe we
    take nothing else from this hearing, but several thoughts, what
    would those be?
        Mr. Case. I'll take a couple of points, Senator, if I
    might. One is that make clear the linkage between markets for
    recovered materials, as you indicated, and the strength of the
    process for recovering materials from solid waste. Without a
    market for the end product, there cannot be any viable recovery
    from solid waste. That's why the Federal Government's
    purchasing program is so important.
        Let's have more congressional oversight at more frequent
    intervals, so we get to talk to the people who are actually
    carrying this program out and finding out what problems they
    have. Let's have more education for them so that they can in
    fact, the people whose main job is buying things for the
    Federal Government, let's make sure that they're properly
    trained. Let's make sure also that it is understood that the
    law applies not just to the direct purchase GSA buying copy
    paper, it also applies to the grantees and those who receive
    Federal moneys, people who are building roads, building
    buildings, doing all those very important, supplying
    automobiles, all of those very important things. They are
    obligated to have affirmative purchasing programs as well. And
    let's try to increase enforcement by considering, at least, the
    use of the citizen suit provisions, just as you do in----
        Senator Carper. Citizen what?
        Mr. Case. Citizen suit provisions, which are a part of
    RCRA, the Clean Air Act, Clean Water Act, have private attorney
    generals help. I think we'd be eager to help in that area if we
    had an opportunity.
        And those are the things I'd like to leave you with today,
    Senator.
        Senator Carper. That's great, thank you, sir.
        Mr. von Zuben. Senator, one thing I'd like to leave you
    with is the fact that the American Forest and Paper
    Association, which I'm representing here, came here and talked
    about increasing paper recycling in 1987. We told you we'd
    deliver 40 to 50 percent recovery rates and we've done it.
    That's something I'd like you to understand. In fact, we have
    invested so much money in our businesses--billions of dollars--
    that at this point in time, the paper industry does not have an
    adequate supply of paper to recycle. We literally will see some
    cases where recycling operations will be shut down because the
    supply of recovered fiber is not there.
        I would say the paper industry has a unique problem. We
    have a supply side consideration. Secondarily, being a lifelong
    recycler, getting tied up in RCRA with solid waste issues has
    meant all kinds of problems: flow control and issues that
    nature. It haunts us in every municipality, because this is a
    business that runs city by city, town by town, as you
    described. Really, when we get lumped into solid waste
    problems, we get fighting mad. I'm in New Jersey so I'm
    watching the interstate haulers go by, and I don't want to be
    part of that problem. My business is to take recovered paper
    and make a new product out of it. I'd like you to leave with
    that thought, if you would please.
        Senator Carper. Those are good thoughts, thank you very
    much. Thank you for being here today.
        Senator Jeffords. Thank you very much. We reserve the right
    to funnel some other questions to you. But I wouldn't be too
    worried about it.
        [Laughter.]
        Senator Jeffords. But I deeply appreciate your being here
    today. You've been extremely helpful in better understanding
    what we should be doing and what we can do and what you are
    doing. We appreciate that very much. Thank you.
        We want to welcome our third panel, and last panel. First
    we have with us Darryl Young, who is Director of the California
    Department of Conservation. We have Edward Boisson, who is a
    consultant with considerable expertise in the recycling field.
    And Kevin Dietly is with Northbridge Environmental Management
    Consultants, based in Westford, Massachusetts. Mr. Young,
    please proceed.

     STATEMENT OF DARRYL YOUNG, DIRECTOR, CALIFORNIA DEPARTMENT OF
                              CONSERVATION

        Mr. Young. Good morning, Mr. Chairman, and members of the
    committee. I'm Darryl Young, Director of the California
    Department of Conservation. Today I'd like to speak to you
    about California's unique experience with beverage container
    recycling and producer responsibility. California's version of
    the bottle bill is a dynamic work in progress where all
    stakeholders have played a role and have an interest in seeing
    our program succeed.
        Our program has adapted to changes in consumer behavior and
    market dynamics. For example, when California's program began
    in 1987, it basically covered soft drinks and beer. But today,
    the market has changed. There are more beverage types and
    consumption has changed as well, particularly non-carbonated
    beverages.
        So in January of 2000, California expanded the program to
    include fruit drinks, soft drinks, such as coffee, things like
    Frappacino, tea, sports drinks and bottled water. This addition
    of some 3.5 billion containers constitutes the single largest
    expansion of a recycling program in the Nation. The result is
    that last year alone, 400 million additional containers were
    recycled and kept out of landfills.
        Another unique feature of our program is the principle of
    California redemption value. It is important to note that the
    California redemption value system, or CRV, begins with
    beverage container distributors paying a redemption payment
    into the recycling fund, which is administered by the State.
    And that's a unique feature. This is based on the number of
    containers that beverage manufacturers sell.
        The central deposit fund is used to pay CRV deposits back
    to recyclers. In other States, deposit funds are handled
    entirely by beverage manufacturers. From a consumer viewpoint,
    the system is much simpler. Consumers pay CRV to the store when
    they purchase a beverage. The CRV is 2.5 cents on containers
    less than 24 ounces, and a nickel on larger containers. When
    redeeming the container at the recycling center, consumers get
    back the CRV deposit and the container's scrap value. And
    that's a notable difference. This is a feature which provides
    an additional financial incentive for people to recycle. Most
    of the supply is to aluminum.
        So how do consumers redeem containers? Where do they redeem
    containers? Unlike most bottle bill States, California does not
    force recycling containers inside supermarkets. This was an
    important requirement sought out by our State's retailers.
    Although recycling centers existed before the program, they
    were not always conveniently located. So the program set up
    areas around supermarkets called convenient zones, that are
    served by a recycling center. Supermarkets typically arrange to
    have a convenient zone recycling center set up in the parking
    lot. This adds a considerable amount of consumer convenience
    and adds additional recycling opportunities for consumers.
        The program also has other unique recycling opportunities.
    Unlike other States, California's program incentivizes the
    creation of other recycling opportunities. If consumers choose
    to use the curbside, the curbside program recoups the CRV. The
    same is true of recycling opportunities at parks, sports
    stadiums, schools and workplaces. The rule is that whoever
    collects the container is entitled to the CRV from the State.
    This helps to offset the cost of individual recycling programs
    and is a unique feature of California's program.
        This process also has unique benefits. The State-run
    deposit fund is efficient and less labor intensive than a
    traditional bottle bill. California's program mixes the
    deposits on all containers. This frees retailers from handling
    the deposits on the containers that they sell. It also allows
    retailers to operate like retailers and doesn't force them into
    the role of a recycler, something that was very important to
    retailers in California. The system also benefits private
    industry recyclers if they don't have to track individual
    manufacturers' containers through the entire recycling system.
        But what happens to the unclaimed deposits, the cans that
    are not recycled, what happens to that CRV? Well, unlike most
    other States where beverage companies keep the unclaimed
    deposits, the cash from the unclaimed deposits in California is
    put to good use to promote recycling, to create recycling
    opportunities and promote recycled content in beverage
    containers. For example, the funds are used to offset unique
    costs to convenient center recyclers in parking lots of
    supermarkets. Additionally, California also offers other
    subsidies and grants to help promote recycling, from local
    curbside programs to local conservation corps, park districts,
    schools and universities, and basically other innovative
    projects that promote recycling opportunities.
        Beyond redemption payments paid by beverage distributors,
    as I mentioned earlier, California's program also has other
    requirements for producer responsibility. Some containers,
    notably glass and plastic bottles, do not have sufficient scrap
    value to cover the recycler's cost to handle them. When this
    occurs, California's program imposes a small processing fee,
    around two-tenths of a cent on each container, and requires
    manufacturers who choose to package their product in this
    material to pay the small amount. In recent years, I must note
    that this fee has been partially subsidized by the California
    Redemption Value Fund.
        Beyond these fees, California's program addresses the
    demand side of recycling, something you mentioned to try and
    establish, by requiring bottle manufacturers to use a 35
    percent recycled glass content and 25 percent for plastic
    bottles in some instances. So what are the challenges? With a
    program as complex and as large as California's, it is a
    dynamic system, not without challenges.
        But one problem we have is the issue of fraud. As the
    program has grown in size and scope, the potential for fraud
    has grown. While mandatory audited reporting of participants in
    California provides for early fraud detection, fraud is still a
    factor, albeit a small portion of the total redemptions in
    California. We are working with Federal, State and local law
    enforcement to vigorously identify and prosecute fraud.
        Another challenge that we have is the decline in recycling
    rates. We believe that there are several factors that we have
    identified and we are trying to address those. We believe those
    factors are things like the sales of new containers have
    outstripped the returns, especially in the area of plastic
    containers. Additionally, away from home consumption, in other
    words, people drinking beverages not at home, has created a
    lack of opportunity for people to recycle. They don't usually
    want to take those things back home, they want to be able to
    recycle some place close.
        And last, as California's deposit is the lowest in the
    Nation, its value as a motivating factor has declined due to
    inflation. Actually, there is one actual bigger factor that we
    are aware of, and that is with the addition of all these new
    beverage containers, the rate has dropped because consumers are
    not aware of the value of these new containers that have been
    added into the system, such as bottled water and iced tea.
        The good news is that the decline in recycling has
    stabilized, and more importantly, we've seen an average overall
    volume to the number of containers recycled in 2000. And we
    would suggest that's a more important measure, how many
    beverage containers are you keeping out of the system before
    and now. Educating consumers to these new containers that are
    now part of the recycling system is an important part of the
    Department's groundbreaking social marketing campaign to change
    consumer behavior and increase awareness.
        In closing, while ours is not a perfect system, it is a
    system where all participants make valuable contributions to
    make the system work. California's deposit program is
    significantly cheaper than traditional deposit systems, because
    the containers are not sorted by hand. California's system
    complements rather than duplicates curbside collection and
    provides flexibility to address different parts of the waste
    stream.
        The fund created by the system is the engine that allows
    for adjustments to the system and changes in market dynamics.
    Our system is complex, but it is cooperation by all
    stakeholders that results in conservation. Thank you for this
    opportunity to speak before you.
        Senator Carper [assuming the chair]. Thank you, Mr. Young.
    Where do you live?
        Mr. Young. I live in Davis, California.
        Senator Carper. Mr. Boisson, do you pronounce your name
    Boisson?
        Mr. Boisson. Boisson is good, yes.
        Senator Carper. You've probably been called a lot of
    things, haven't you?
        [Laughter.]
        Mr. Boisson. That's true. And I'd like to just point out,
    I'm the only one here whose last name means beverage.
        [Laughter.]
        Senator Carper. I hope Mr. Dietly doesn't say Dietly means
    container or something.
        [Laughter.]
        Senator Carper. Thank you. Please go ahead.

          STATEMENT OF EDWARD BOISSON, BOISSON AND ASSOCIATES

        Mr. Boisson. Thank you, Senator Carper, and good morning.
        I'm honored to be here today, and I want to thank Chairman
    Jeffords for calling this important hearing. More than ever,
    such leadership is needed to break the stalemate of the
    beverage container recycling policy that has endured now for
    over 30 years.
        I am Edward Boisson, a consultant with 14 years experience
    evaluating and implementing recycling policies with the
    Government, industrial and non-profit sectors. Last year, on
    behalf of Businesses and Environmentalists Allied for
    Recycling, a project of Global Green USA, I managed the multi-
    stakeholder recovery project, a dialog among representatives of
    the beverage industry, the waste and recycling industries,
    State and local government and environmental organizations.
    Even though they held strongly opposing views, these
    participants were able to jointly release a report documenting
    the costs, benefits and effectiveness of U.S. beverage
    container recycling programs.
        My testimony today is largely based on the project's
    results and I'll refer to it from now by its acronym, MSRP. I
    was asked to provide information on the concept of beverage
    industry producer responsibility, and I have three main points
    I'd like to make. First, there is in fact a serious beverage
    container waste problem, and there are well documented,
    compelling economic and environmental reasons for solving it.
    For example, recycling the 114 billion beverage containers that
    were disposed in 1999, which was our study year, would have
    saved the energy equivalent of 27.4 million barrels of oil, and
    decreased greenhouse gas emissions by 4.8 million metric tons
    of carbon equivalent, all while fueling a plastics recycling
    industry whose growth depends specifically on new sources of
    raw material.
        Unfortunately, recycling rates for all container types are
    heading down, not up. In fact, the aluminum can recycling rate
    has dropped to its lowest level in over 15 years, even though
    aluminum recycling yields the highest energy and greenhouse gas
    benefits than any other component of the waste stream.
        My second point is that most stakeholders are actually able
    to agree on both the causes for why recycling rates are
    declining and what it would take to increase them. MSRP
    participants agree, for example, that future initiatives should
    all include financial incentives to encourage consumer
    participation, new collection programs targeting containers
    wherever they are consumed, both at home and away, and most
    fundamentally, because there is a net cost to beverage
    container recycling, there is a need for a long term, stable
    funding source to support the programs.
        They also agreed on certain concerns, too, such as the need
    to ensure adequate markets for recovered materials, as has come
    up already, and the need to develop implementation strategies
    that can be fair to all parties involved, in particular,
    industry. So the problem, the need to solve it and the elements
    of the solution are all relatively clear. The question isn't
    really what needs to be done, it's how.
        MSRP participants discussed three possible approaches and
    very importantly agreed that it should be possible to
    significantly increase recovery rates at unit operating costs
    that are relatively low. The first approach discussed is called
    optimized deposit systems. These are programs that seek to
    improve on the traditional bottle bills operating in nine U.S.
    States.
        The surprising lesson from California that Darryl has just
    described is that the net operating costs of traditional
    programs that we calculated at about 2.6 cents per container
    recovered can be greatly reduced to as much as .55 cents per
    container recovered. This is less than typical curbside
    programs, which we estimated at 1.7 cents. So it's quite a
    reduction.
        This can be achieved by using a central fund, so that
    containers need not be sorted by brand, by using highly
    efficient buy-back centers that completely eliminate the need
    for the beverage industry to handle recovered bottles, by using
    automated technologies like reverse vending machines, and by
    relaxing the requirement that all grocery stores accepted
    returned bottles in the store.
        Some have critiqued the California program due to its
    complex and controversial funding mechanism, the processing
    fee. Our analysis does show that it is in fact vastly over-
    funded. But the ability to greatly reduce the net operating
    costs of deposit systems through the means I just described
    seems to me to be an indisputable fact, documented through the
    MSRP by the California data and also by data covering certain
    Canadian programs.
        The over-funding problem that I just mentioned could
    actually be designed out of a national system by allowing
    industry to use the unredeemed deposit revenue to offset their
    costs and to develop its own funding mechanism. These are both
    elements of the system proposed in S. 2220.
        In terms of effectiveness, deposit programs work in tandem
    with curbside programs as a system and other programs as well.
    In 1999, the overall recovery rate in deposit States was 72
    percent compared to about 28 percent in non-deposit States.
    That compares with the overall national average of about 41
    percent. The nine traditional bottle bills had an average
    redemption rate of 78 percent for those containers that they
    covered, which is typically limited to carbonated soft drink
    and beer, at least it was in 1999 before the California program
    expanded.
        Though not analyzed in the MSRP, deposit systems in certain
    Canadian provinces achieve overall recovery rates between 74
    and 85 percent. So deposit systems are very effective in
    recovering beverage containers, and I think that's a fact
    that's difficult to dispute.
        Another approach discussed in the MSRP was to strengthen
    municipal programs. This is where much of the effort has
    largely been focused to date. There is no doubt that many
    municipal programs could increase their effectiveness and their
    efficiency, and there have been a variety of targeted programs
    in particular communities in the U.S. An example of a more
    comprehensive program is the system being developed in Ontario,
    Canada, in which industry will pay up to one half of the
    municipal recycling costs.
        But because of their limited scope, the potential to
    significantly increase the national recovery rate by focusing
    on municipal programs is actually very low. To illustrate this,
    if a sustained major national education and promotion
    initiative were to boost participation rates, the number of
    people who actually participate in curbside programs, by 20
    percent, and I'll just point out this is an extremely
    aggressive goal that has never been attempted, and would need
    to be sustained over time, that 20 percent increase in
    participation rates and curbside programs would yield only
    about a 5 percent increase in overall national recovery rates.
        The third and final possible solution that the MSRP
    participants discussed is the idea of a non-deposit system that
    would have a stable, long term funding mechanism at its core.
    There is little experience with such programs in the U.S., and
    there is much room for innovative ideas. To have a sustained
    impact, such a system would need a long term funding mechanism,
    such as a fee levied at some point within the beverage value
    chain. And by way of illustration, a one half penny charge per
    beverage sold in 1999 would have yielded about $950 million
    that could have been used in a variety of ways to boost
    recovery.
        Though not analyzed in the MSRP, an example of such an
    approach is the network of extended producer responsibility
    systems that are in place in European Union nations, and that
    are beginning to be implemented in other nations in Asia.
    Because the consumer incentive is not likely to be as great,
    these types of approaches are not likely to be as effective as
    the optimized deposit systems I discussed a moment ago.
        In closing, I want to acknowledge the individuals within
    the beverage industry who have sincerely tried to find workable
    recycling solutions. And in particular, those in Coca-Cola
    North America, who participated in the MSRP. And also, Coke and
    Pepsi's publicly announced decisions to use 10 percent recycled
    content in plastic bottles is certainly a step in the right
    direction. But U.S. beverage industry support for broadly
    boosting recycling recovery rates nationwide has been limited
    to date even as aggressive producer responsibility policies
    have been implemented elsewhere, as I just mentioned.
        The most important MSRP result is that there is great
    potential to solve the problem through innovation and
    cooperation. These are qualities that are certainly not in
    short supply in the beverage and recycling industries. The main
    questions to ask of any proposal are, how effective will it be,
    how much will it cost, who will pay and can it be implemented
    in a way that is fair to all players. The ultimate answer must
    involve a system of producer responsibility that is fair,
    efficient and effective, all three.
        Given its flexibility in implementing a proven approach,
    the system called for in S. 2220 deserves careful consideration
    by Congress and by all stakeholders in recycling. In
    conclusion, again, I want to thank Senator Jeffords once again
    for sponsoring this important hearing and for allowing me to
    provide this testimony. I'll try to answer your questions as
    best I can.
        Senator Carper. Thank you very much.
        Mr. Dietly?

        STATEMENT OF KEVIN S. DIETLY, NORTHBRIDGE ENVIRONMENTAL
                         MANAGEMENT CONSULTANTS

        Mr. Dietly. Thank you, Senator. My name is Kevin Dietly.
    I'm a principal with Northbridge Environmental Consultants in
    Westford, Massachusetts. I'm here today representing the
    Coalition for Comprehensive Recycling, which is a group of
    associations and corporations that represent container
    manufacturers in the country, the beverage industry, retailers,
    restaurants and labor unions.
        I'm here to talk about producer responsibility in the
    beverage industry and would like to make several points. First,
    the notion of producer responsibility is hardly a new concept.
    Producer responsibility may be a new label, but it's something
    that's been around for a long time, given the long duration of
    deposit legislation in this country. So this is something that
    the beverage industry has lived with for some time, and as
    evidenced by Mr. Boisson's testimony and information, there is
    a great deal of evidence by which we can evaluate these
    programs and their history over the last 30 some years.
        I'd like to make two general points in my remarks. First,
    I'd like to talk about the environmental benefit that producer
    responsibility legislation would have, given the focus on the
    beverage industry and beverage containers in particular. I make
    the point that there is really very limited opportunity for
    significant environmental benefit as a result of focusing on
    beverage containers. It is critical to remember that even with
    the unprecedented scope of S. 2220, which would include more
    beverage containers than are included in any deposit
    legislation in the country, we're still only talking about
    affecting a little over 4 percent of the solid waste stream in
    the United States.
        Given that we're not operating from a situation where there
    is zero recycling, but in fact we already have a significant
    level of recycling of those beverage containers, we're talking
    about incremental changes in the level of recycling for that 4
    percent of the waste stream. Our calculations indicate that if
    a nationwide deposit legislation were implemented, we would
    only be talking about an increase perhaps of about 1 percent in
    the U.S. recycling rate. For reference, that would move EPA's
    28 percent nationwide recycling rate to 29 percent. That would
    be the magnitude of effect that a nationwide deposit
    legislation would have, given its focus on beverage containers.
        The situation with regard to litter is similar. Beverage
    containers account for a little less than 9 percent of litter
    based on studies that have been done across the country. That
    means that you're still leaving over 90 percent of the problem
    of litter out there and unaddressed by the deposit legislation.
    Even if you were to magically eliminate all beverage container
    litter through a deposit law, which even evidence in deposit
    States indicates you don't eliminate everything, you reduce it
    significantly but you don't affect litter that comes from the
    significant other sources.
        So in general, we would not expect to see a significant
    environmental benefit, given the focus of this legislation
    solely on beverage containers. There is a much broader problem
    out there that needs to be addressed, that includes paper and
    other commodities that have already been discussed that have
    issues regarding supply and demand that need to be addressed
    comprehensively.
        The second general area I'd like to address is the system
    that would be required to implement a nationwide deposit
    program. First of all, it's important to realize that things
    have changed a lot in the last 30 years. It's no longer a case
    that implementing a deposit program is the first and only kid
    on the block with regard to recycling. There have been billions
    of dollars of taxpayer money invested in infrastructure
    throughout the country to create drop-off and curbside
    programs. We have nearly 10,000 curbside programs today. When
    the first deposit law was passed, nobody even knew what
    curbside was.
        What you're talking about with a national deposit system is
    layering another system of infrastructure on top of an existing
    recycling infrastructure that's in place. You've got to realize
    that there are significant consequences of superimposing those
    two systems. The most important thing is to look at what effect
    it would have on existing recycling programs that are out
    there.
        Beverage containers contribute between 40 and 70 percent of
    the revenue earned by existing recycling programs. If you
    eliminate beverage containers from existing recycling programs,
    you're taking revenue away from those existing programs that
    have been funded and promoted by local and State governments.
    The city of Columbia, Missouri recently voted to eliminate its
    unique municipal container deposit ordinance on the strength
    that, among other things, their existing curbside program was
    being damaged by the deposit law. In fact, since they repealed
    the deposits in April, they've seen record high levels of
    recovery through their curbside program, and the city expects
    to actually make additional money as a result of having the
    beverage containers in the waste stream.
        We did an analysis several years ago of a proposed deposit
    law in Pennsylvania which suggested that Pennsylvania recyclers
    would lose over $30 million a year on aluminum as a result of
    the deposit law. It would move from the municipal to the
    deposit system.
        Let's talk a little bit about the deposit system itself and
    what exactly that system entails. The deposit system requires
    consumers to take an extra step in recycling. If you currently
    go and put your containers in a curbside bin at the end of the
    driveway, you could no longer put containers in the curbside
    bin and expect to get your deposit back. You would have to make
    a separate trip, go to a separate place and separately store
    those containers. Right now, consumers are seeking more
    convenient and simpler ways to recycle, not more complex ways
    to recycle.
        You also need a redemption network that needs to be out
    there. That means peoples, facilities, equipment, lots of
    infrastructure that already exists in large measure to cover
    these same materials, but that doesn't exist under the guise of
    a beverage container recovery system.
        There is a lot of redundancy that would be established by
    this program, and there is a lot of cost that would come with
    this program. Just based on the 40 States that do not have
    deposits currently, we have estimated that the cost of
    establishing a nationwide system of beverage container recovery
    would be about $4 billion a year. That cost would ultimately be
    passed through to consumers.
        In addition, we have computed that the unclaimed deposits
    in those 40 States would amount to an additional $4.8 billion.
    So that's $8.8 billion in consumer costs every year to operate
    this program.
        I would also submit to you that you don't have to be a bad
    person in order to not claim your deposit. If you choose to use
    the existing curbside infrastructure and don't have the time or
    simply are making the tradeoff that the deposit is not worth
    it, you use your curbside bin. When you do, you lose the 10
    cent deposit. So even though you're recycling, the deposit
    turns into a tax for those consumers.
        In summary, I think it is important to realize that there
    is limited environmental benefit that's out there to be
    achieved by focusing solely on beverage containers. There is a
    much broader issue out there with regard to participation,
    capturing a much broader range of materials, and utilizing
    infrastructure that has the capacity to handle more materials.
    That comprehensive system can be operated less expensively,
    more conveniently and is much more what people are looking for.
        Yes, people can do better, yes, all of us can do better in
    terms of encouraging and promoting recovery, whether it's at
    home or away from home. But the creation of a new system and a
    duplicate system to provide that infrastructure is not one
    that's appropriate at this time, in our view.
        Thank you. I appreciate the opportunity to testify.
        Senator Jeffords [resuming the chair]. Thank you all for
    your testimony.
        Mr. Young, what parts of California's beverage container
    recycling program were you suggesting for a national deposit
    law?
        Mr. Young. Well, we are not going to suggest is that our
    program is a perfect fit for all the United States, but there
    are certainly certain elements of our program that you may want
    to consider. First of all, the dynamic nature of our system
    allows for adjustments because of the creation of this fund. So
    you want to consider that if you're going to go forward with
    this, to have a fund that allows you to have the flexibility.
        I notice that your bill establishes a requirement that puts
    a lot of the burden on the manufacturers, which I think is
    perfectly fine. Because what it does is allow them to decide
    what works for them the best. So I would try to replicate that.
        The other thing I would try to do is increase the overall
    opportunity for recycling. It's very important that people can
    recycle when they are away from home. We all know that at the
    convenience stores and gas stations, people simply don't want
    to take their stuff home to the curbside to recycle it. So your
    program ought to hopefully include the opportunity to increase
    opportunities wherever you go, you ought to be able to recycle.
    Those are the basic things I would recommend we need to include
    that we have in our program.
        Senator Jeffords. Mr. Boisson, I understand that the BEAR
    report found that the average cost of collecting containers in
    deposit States was a little higher in those deposit States than
    the non-deposit States. The report also found that deposit
    States recovered containers per capita roughly two and a half
    times more than the non-deposit States. It seems that the
    deposit program delivers more bang for the buck at very low
    cost. Is this an accurate assessment? Can you elaborate?
        Mr. Boisson. Thank you, Mr. Chairman. I think there are
    different ways of looking at it. The numbers you cite are in
    fact accurate, based on our report. The per capita recovery in
    deposit States, which includes both the deposit program and
    other programs operating in the State, again, they operate in
    tandem, was about 490 containers per capita at a cost of about
    1.53 cents per container, combined for this program. And in
    non-deposit States it was 191 containers per capita versus 490,
    and the cost was 1.25 cents on average typical costs. So
    there's about a .25 cent per container difference with the
    deposit States costing that much more and as you say, yielding
    fairly significantly more containers.
        I guess I'd like to make a couple more points about cost.
    Deposit systems vary tremendously in how they are structured
    and in things like how the unredeemed deposit funds are used,
    whether there's a handling fee, who pays it, who pays it to
    whom, that sort of thing.
        But in stepping back and in the optimized deposit systems
    that I described, there is great opportunity to make the system
    as efficient as possible by learning from existing programs. So
    for example, if a national program would have a deposit cost of
    $4 billion, and indeed would have unreclaimed deposits in the
    amount of $4.8 billion, as Mr. Dietly said, those unredeemed
    deposit funds could offset that cost, resulting in a net cost
    of only $.8 billion to industry. And that certainly still
    sounds like a lot of money.
        But if you take $.8 billion and you divide it by 192
    billion containers, which in 1999 is what was generated, you
    get .4 cents per container generated. So I think you need to
    put things in perspective. And again, there are many different
    ways of looking at it. But to come back to your original
    question, there's no question that the deposit States do
    recover far more containers. They have a slightly increased
    cost. And again, they vary tremendously.
        Senator Jeffords. Describe the BEAR findings on the
    environmental impacts of landfilling and generating 114
    beverage containers annually.
        Mr. Boisson. Yes, again, thank you, Mr. Chairman. There are
    environmental benefits, I think, that are often described in
    terms of what we might call back end issues. And I think
    certainly about 10 years ago, when the recycling movement in
    municipalities and States really took off, this is what most
    people described. So they talked about the weight of the
    containers, and again, it's about 4.3 percent of the overall
    waste stream being disposed are beverage containers. And people
    talked about the need to save landfill space. We calculated
    that the beverage containers wasted in 1999 would have saved
    about 47 million cubic yards of landfill space.
        They talked about a particular commodity's percentage of
    the recyclable waste stream, which would be somewhat more than
    4.3 percent, certainly, because that's what our goal is. And
    then we also talk about things like roadside litter. I would
    just anecdotally, as someone who has lived in two deposit
    States, including Vermont, and someone who lives now in a non-
    deposit State, it's very clear that roadside litter is a very
    high percentage beverage containers. I see that daily.
        But those are all back end issues that are very important.
    But I think in terms of environmental benefits, you really need
    to look at the upstream side of the equation. When you hold a
    beverage container in your hand, in particular an aluminum can,
    you really are looking at a footprint that extends far beyond
    that can. There is the mining of bauxite, which is often done
    in South America and other countries, the transportation, the
    processing, highly energy intensive.
        When you add up all of that whole materials flow that is
    embodied in that beverage container, you get a much different
    picture. For example, aluminum cans are about 0.7 percent of
    the discarded waste stream, but they have an energy savings and
    a greenhouse gas savings that is at least three times as high
    per ton than any other material in the waste stream. That comes
    from EPA's greenhouse gas report.
        The next highest components are paper, certain components
    of the paper stream. Plastic and glass, while having much less
    benefits, still have a positive benefit. So increasing
    recycling of those materials will increase the benefits
    proportionally.
        I want to make one other point, too, which I think is
    related to your question. We often talk about why are we
    talking about beverage containers, and hopefully I've just
    given some reasons that justify it. But even apart from that,
    to me 4 percent is a sizable chunk. We really need to go after
    the whole waste stream. We need to be comprehensive about it.
    And it's a question of approach. Beverage containers in my view
    are sort of an indicator species of recycling. They were one of
    the first types of materials to be targeted in municipal
    programs and in Government supported policies. They had amazing
    success, both through the deposit systems and through municipal
    programs. They peaked in recycling in the early 1990's, and as
    we've been discussing, and the reason for this hearing, they're
    in bad shape now, for all of the reasons that have been
    discussed.
        So that causes folks in the recycling community a great
    deal of concern. Because if we're losing on beverage
    containers, what's next. And I'll leave it there.
        Senator Jeffords. Mr. Dietly, you often represent the
    National Soft Drink Association, which has criticized deposit
    laws on the grounds that deposits take valuable aluminum
    revenue away from municipal curbside recycling programs.
    Opponents say that the most potential aluminum can revenues are
    not being stolen from curbside operators; instead, they are
    being lost to landfills. They cite a 12 point decline in the
    national aluminum can recycling rate during this same decade
    that American's access to curbside recycling tripled. They
    point to 28 percent increase in can wasting.
        How do you explain this paradox?
        Mr. Dietly. I think there a couple of ways to explain that,
    Senator. One of the things that's critical to understanding and
    taking a little bit of the sheen off of the deposit legislation
    is to realize that concurrent with the lowering of the overall
    recycling rate has come the drop in redemption rates in deposit
    States. Consumers are simply finding that deposit laws are no
    longer addressing the needs that they have as consumers and
    providing convenient ways of recycling.
        There are several States that track recycling rates in
    their deposit programs. Each of those States is currently
    showing record low levels of recovery of beverage containers. A
    lot of the decline that you've seen has come through reductions
    in what's being returned under the deposit States.
        But I think it's important to realize that the beverage
    containers being in bad shape, as Mr. Boisson said, is a
    relative thing. Beverage containers are still America's most
    recycled package. They are highly recycled and highly
    recyclable. This package is not exactly the worst performer in
    terms of environmental attributes. Aluminum cans, for example,
    and plastic containers have been significantly lightweighted,
    providing source reduction benefits and providing a lot more
    product to consumers for a lot less packaging waste over the
    last 30 years.
        Beverage packaging is also recoverable and highly
    recognizable as recoverable in a number of programs. I think
    it's critical that these indicator species, if you will, of
    recycling, be given the opportunity to lead and to support the
    comprehensive programs that are out there. If you take beverage
    containers out of the recycling stream, you get circumstances
    like you have seen in New York City where a lot of the material
    that's left is not as valuable a material, and along with one
    of the previous witnesses, I question some of the rationale of
    what's going on in New York City right now as to dropping the
    collection of glass and plastic. I think it's pretty clear that
    if beverage container material were in the waste stream in New
    York City, it would not be as easy a decision to drop the
    collection, because there would be more valuable commodities in
    that waste stream than there are now.
        Senator Jeffords. The beverage industry often says bottle
    bills rob aluminum revenue from city curbside programs. Yet
    aluminum can manufacturers themselves operate recycling buy-
    back centers which buy cans from consumers for cash. Do these
    industry-run centers also take revenue away from curbside
    programs? If so, why hasn't the beverage industry criticized
    them?
        Mr. Dietly. Well, it used to be that buy-backs, prior to
    the advent of curbside and municipal recycling programs,
    provided the sole infrastructure for recovering aluminum. That
    infrastructure existed and was the primary way that the
    companies got back the valuable materials. To a large extent,
    first of all, deposit bills eliminated altogether the buy-back
    operations or in the case of California, co-opted them into the
    redemption system. But curbside as well has drawn significant
    amounts of material away from the buy-back centers. Given the
    lightweighting of aluminum containers, the fact that you need
    to bring more and more and more in to get a pound of material,
    which is a good thing from an environmental standpoint, may not
    be as good a thing from the perspective of supporting a buy-
    back center.
        So frankly, what's happened is the material has followed
    the drive for convenience and the motivation for consumer
    convenience. If the material can be more conveniently and
    appropriately recycled at the home or in municipal programs, I
    think that's where it's gone. So the success and the
    pervasiveness of those buy-back centers has declined
    significantly. There are really very few of them left.
        Senator Jeffords. We have seen a tremendous explosion in
    the sale of plastic bottles. These are very expensive for
    curbside operators to collect, due to their high volume to
    weight ratio. The scrap value for PET is comparatively low. So
    they seem to be a losing proposition if collected. The
    situation is even worse for glass. Yet curbside operators are
    forced to pay to collect these in States without deposits.
        Why would taxpayers pay for expensive programs to collect
    these items instead of the industries who profit from the sale
    of the throwaway containers?
        Mr. Dietly. It's the $64,000 question today, isn't it?
        I think it's very important to realize a couple of things
    about the question. First of all, container recycling, and all
    recycling, is inherently an expensive undertaking. You're
    handling materials and commodities individually, collecting
    them from literally millions of separate locations, trying to
    consolidate them and trying to manage them in an efficient and
    effective way. Simply pointing out the fact that it's expensive
    to recycle glass and PET through a curbside program doesn't
    diminish the fact that trying to collect them through a deposit
    program is also very expensive. Any way in which you choose to
    handle these materials individually by themselves, especially
    if you isolate certain types of them, only these PET bottles,
    only these glass bottles, only these aluminum cans, only these
    steel cans, only these cardboard cartons are going to have
    deposits and the rest don't.
        You bifurcate the system. You tell consumers that you can't
    recycle everything all one way. We're not going to make it
    simple for you, we're going to make it hard for you. You've got
    to take this stuff and put it here, and take it back to get
    your dime, and you've got to take this stuff and we still want
    you to put it out at the curb.
        I think there's no question that recycling is an expensive
    undertaking. The public demands recycling and there are
    underlying, good economic reasons why recovery of this material
    is justified. The point is that it should be done as
    efficiently as possible. The fact that it's costly doesn't mean
    we shouldn't do it. The fact that it is costly means we should
    find the most efficient ways of recycling. In our view,
    recycling through a deposit system is not the most efficient
    way of collecting the material.
        Senator Jeffords. Senator Carper.
        Senator Carper. About 20 years ago, in my State, our
    Delaware Solid Waste Authority, which is responsible for
    overseeing the collection of waste throughout the State,
    invested a fair amount of money in a central processing system
    in northern Delaware where large building trucks would come in
    with refuse, literally just drop it out on the floor, and
    bulldozers would push it onto conveyor belts, and it would go
    through a processing system, a sorting system. Fairly
    sophisticated. And it would separate the glass and the plastic
    and the paper products and the aluminum and so forth.
        They continued to have problems, a couple of decades ago,
    keeping it working. The price for the products that they came
    up with was, as was said earlier, volatile and in many cases
    low. Ultimately they gave up on that process. We have a lot of
    igloos around the State where we collect, people voluntarily
    drop off their recyclables. They can be in schools or shopping
    centers or park and rides or State parks, a variety of places.
    And some people do, most people don't take advantage of that. A
    good deal of the refuse that is collected now by Delaware State
    Solid Waste Authority goes to southeastern Pennsylvania to a
    trash to energy facility where it's burned.
        I want to ask you about, I must say, I was always intrigued
    by the idea that trash could be brought in from throughout our
    State to this one central processing State, and through the
    wonders of technology, we could separate the different waste
    into streams and sell it. The technology that we had then was a
    generation old. My guess is that there are some places around
    the world or some places around the country where some
    municipalities are operating a modern facility and doing it
    well, and doing it a lot more efficiently and effectively than
    we ever did in my State.
        Can you share with us any success stories where this might
    be happening?
        Mr. Young. In California, the need for minimum recycled
    content in bottles has helped to persuade different refuse
    people to start to sort the glass. Now, in order to reduce the
    cost of handling all these different materials and to make it
    easier for consumers, much of the State has gone to what's
    known as a single bin system. People take all the materials
    that are recyclable and put them in a single bin.
        The problem you have when you do that though----
        Senator Carper. Where are the single bins?
        Mr. Young. The single bins are on the curbside. People who
    are at home put their paper, their glass and aluminum. The
    problem is that the glass is easily crushable, so it becomes
    very finite, and it becomes hard to sort by color and type.
    What waste management has done, with the Gallo Corporation, is
    develop a new system that's a laser sorting system. It uses
    lasers and optically sorts the glass by color and type. That's
    a new system, there's a lot of bugs in it, they're still
    working on it. But that's the type of new advance.
        One has to question, ultimately, which is ultimately
    easier, if you spend all this high tech money to sort the end
    or are consumers willing to simply say, OK, I have two
    different kinds of bottles, or I have a bottle and I have an
    aluminum can, and I have a plastic bottle, glass, plastic, and
    aluminum, is that an easier way.
        The handling of the material, it's easier to have a single
    bin. It's a quandary that we're in, but that's a new technology
    that's being implemented right now.
        Senator Carper. Mr. Boisson.
        Mr. Boisson. Just to add a little bit to that, there have
    been a couple of stories recently about the move toward single
    stream or single bin that Darryl refers to. There is a definite
    trend in that direction in municipal programs. And it does have
    a devastating impact on glass recovery and on paper recovery,
    as I'm sure the gentleman from the previous panel would agree.
    Broken glass contaminates paper streams and decreases its
    value, and the broken, mixed color glass, unless there is a
    very, there may be potential for technologies to overcome this,
    but I don't think it's widespread at this point. So there is a
    movement among municipalities that are using single stream to
    drop glass from the program or to cut it back and curtail it,
    perhaps bring it to a drop-offsite or something like that.
        So I think it just brings up the point again that this is a
    system we're looking at, there are different ways to get at the
    different components. And it's worthwhile to look at what mix
    of different recovery schemes will work best. That should be
    the perspective we're looking at. But it's another contributing
    factor to declining recycling rates for beverage containers in
    particular.
        Senator Carper. Mr. Dietly.
        Mr. Dietly. One of the things you see with single stream
    collection is it's simply the swinging of the pendulum. At one
    point it was considered state-of-the-art to have everything
    sorted at the curb, and communities were willing to spend
    significant amounts on the collection side of the cost equation
    having trucks that had multiple bins in the back of them and
    the drivers literally on the routes were sorting stuff so that
    it would go right from the bins on the trucks right to the
    processing facility and would need no further sorting.
        The pendulum has now swung to assuming that one way of
    getting more participation and greater recovery of materials is
    to simplify the whole collection end for consumers, don't make
    them do the separation, give them one 96 gallon toter or
    something like that into which they can put everything. Then
    we'll spend more on the processing end, because then we're
    getting more material into the system on the front end and
    we're transferring some costs from the collection side over to
    the processing side. I agree with that, it's just a question of
    which system is appropriate.
        Something I would point out particularly for the Delaware
    example is that in order to make a process like that viable and
    practical, you do need high volumes. A drop-off program, even
    statewide for Delaware, is not achieving the kinds of volumes
    that Delaware should be recovering. There should be curbside
    programs in Delaware. Whether it would be a Delaware specific
    facility or tying into the capacity that already exists around
    Philadelphia for processing, better to cooperate in a larger
    facility and achieve the economies of scale and processing than
    necessarily have a Delaware specific program.
        Mr. Young. There is also, I forgot to mention, a downside
    to the larger bin. It's nothing against larger bins, but my
    parents, who are somewhat old, are scared of a giant bin that
    they have to fill up. They're afraid it's going to tip over if
    they move out there. So there's been a great deal of confusion
    and a great deal of work. There are recyclers and
    municipalities that are working to get people comfortable,
    because they've been so used to sorting . The ultimate debate
    is, if you have a single bin system, will you get more
    materials and therefore offset the downside of having a single
    bin system.
        Senator Carper. In the city of Wilmington, where my family
    and I live, trash is collected twice a week in our
    neighborhood, Mondays and Thursdays. We have no curbside
    recycling. There are a couple of recycling centers where we can
    drop stuff off within less than a mile of our neighborhood.
    Some do, some don't. My family actually uses a commercial
    company which comes and picks up our recyclables, we pay them
    to do that.
        I have sometimes thought, for example, looking for ways to
    harness market forces and people's interest in holding down
    their out of pocket expenses, if you say to a family, if you
    voluntarily sort your recyclables to some considerable extent
    you pay less for your collection. And maybe you would get
    better service, you would get pickups twice a week instead of
    once a week. Have you seen any experience with that sort of
    thing?
        Mr. Young. In California, we have a requirement that
    municipalities have to reduce their solid waste generation by
    50 percent. So what's been happening is local municipalities
    have been incentivizing this by saying, if you can reduce the
    number of garbage cans you have and recycle more, we will
    charge you less. That's been done on a municipality by
    municipality basis.
        Mr. Boisson. I would just add, too, what you're speaking of
    is often referred to pay as you throw, that's sort of the buzz
    word used for it. And there has been a huge trend in that
    direction nationwide, I forget the exact number, but it's
    several thousand municipalities, I believe, have adopted pay as
    you throw pricing systems that do provide the incentive you
    speak of.
        Senator Carper. How are they working?
        Mr. Boisson. I think they work well. They are usually
    implemented in conjunction with a new recycling program or
    something that will ensure there are opportunities for the
    household to recycle. And you see an immediate blip in the
    amount of recycled materials collected.
        I do want to just highlight, though, that if we're talking
    beverage containers, as I tried to make clear in my
    presentation, pay as you throw is an excellent program. It
    makes sense. It should be adopted far more widely. But again,
    for many reasons, municipal collection programs really aren't
    in a position to solve the beverage container problem alone,
    because of the trend toward away from home consumption
    primarily. But also because the infrastructure is fairly
    limited, participation rates are fairly limited and what it
    takes to get people to participate and to get new programs out
    there is difficult.
        Senator Carper. Mr. Chairman, I'd like to ask each of the
    witnesses the same final question, if I may.
        Senator Jeffords. You certainly may.
        Senator Carper. I'm no longer Governor, I'm a Senator.
    Although I still think like a Governor most of the time. But
    putting on my Federal legislator hat and trying to think of
    what is the appropriate role for us here in the U.S. Senate to
    try to encourage recycling efforts around the country, Mr.
    Young, just give me in 30 seconds what you make as our priority
    as Federal legislation.
        Mr. Young. You need a system that can adapt to market
    forces. You need a system that provides as many opportunities
    for people to recycle everywhere they go.
        Senator Carper. Thank you.
        Mr. Boisson. I certainly would agree with that.
        Senator Carper. I've been wanting to call you Boisson all
    day. Is that the way it's supposed to be pronounced, Boisson?
        Mr. Boisson. I guess I would have to admit it is, yes.
        Senator Carper. Monsieur Boisson.
        Mr. Boisson. Oui.
        [Laughter.]
        Mr. Boisson. I think I'm always surprised at the amount of
    agreement by different stakeholders on many of the aspects of
    this whole issue. Again, why recycling rates are declining, the
    broad elements of what is needed, financial incentive, a
    funding mechanism, away from home services, so on and so forth.
    The problem isn't what, it's how. And obviously there's much
    disagreement about that.
        I think what we need is a fair, efficient and effective
    system that involves producers in the equation, because
    municipalities quite honestly have gone almost as far as they
    can, and done heroic efforts. So we need something.
        As I mentioned earlier, I think the program outlined in S.
    2220 deserves a good look, since so much of it is open, it's
    open in terms of how it could be administered. I realize the
    beverage industry is going to oppose it, and I think the best
    thing you could do is provide forums such as this, sort of
    utilize the convening power of the Government to bring the
    players together and keep this dialog going, a dialog that we
    launched or at least brought forward to some degree in the MSRP
    I described earlier. So that's one thing.
        Second, there are a few specific programs that have been
    highly successful and honestly did not cost very much money.
    I'm thinking of the Jobster Recycling program that EPA handled
    for many years. It was a grants program to the States and
    others for market development. For a very tiny Federal
    investment, it resulted in a huge network of trained
    professionals in all the States who understand the issues and
    are working cooperatively with businesses. It was a real smart
    investment.
        I think just more broadly than that, other types of
    financial incentives and support is critical.
        Senator Carper. Thank you. Mr. Dietly.
        Mr. Dietly. Senator Carper, I guess I would counsel from
    the perspective of the Federal role some caution in not
    treading too heavily on issues that are traditionally and
    logically dealt with at the local level. There are significant
    tensions between just local, county and State level
    authorities, where States try to over reach and make
    declarations to locals about what they should do in the area of
    waste policy.
        This is such a local issue because the economics of waste
    management, waste collection, of alternatives of markets are
    all site-specific. It becomes very difficult for the Federal
    Government to insert itself too directly into the operational
    components of this. Even though S. 2220 argues that the Federal
    Government would step back and let the manufacturers create the
    system, I think it's dangerous to be at the Federal level
    meddling in systems that have evolved in response to, and are
    funded by, local individuals and taxpayers. Taxpayers have
    created the recycling systems they want and presumably are
    willing to pay for the kinds of systems they have at home.
        There is a need to keep up the energy that was once was
    devoted to recycling in the early 1990's and mid 1990's when
    curbside was young and recycling was a big issue that was in
    front of people all the time. Keeping awareness up, an issue
    that Mr. Young is dealing with in California, is a constant
    battle. In response to things like increased away from home
    consumption, I think that the industry, as well as governing
    organizations, need to respond to where the problem is. If the
    issues are away from home, let's address getting consumers to
    behave the way we want away from home. I don't think that
    creating a deposit system is going to be any greater solution
    to the away from home problem than a curbside program is,
    because if you're not going to recycle a container when you're
    away from home, you're probably not going to shlep it around
    for a dime, either.
        So I think there's plenty to be done, and a lot of it from
    the Federal level, I would argue, would be in the area of
    awareness, and leave recycling opportunities and program design
    and logistics to the locals.
        Senator Carper. Our thanks to each of you. Mr. Chairman,
    thank you for holding this hearing.
        Senator Jeffords. Thank you very much. I think I may have a
    few more questions to submit to you for the record. But I just
    want to thank you very much for extremely helpful testimony and
    helping us understand the problem.
        Thank you, and thank you, Senator Carper, for very
    excellent participation.
        [Whereupon, at 11:35 a.m., the committee was adjourned, to
    reconvene at the call of the chair.]
        [Additional statements submitted for the record follow:]

     Statement of Debra Yap, Director, Environmental Strategies and Safety
      Division, Office of Business Operations, Public Buildings Service,
                        General Services Administration

        Mr. Chairman and Members of the committee, I am Debra Yap, Director
    of the Environmental Strategies and Safety Division in the General
    Services Administration's (GSA's) Public Buildings Service. I
    appreciate the opportunity to discuss what the Federal Government is
    doing to ensure the Federal procurement of recycled-content products,
    and what can be done to improve these efforts. With me is Matthew
    Urnezis from the Federal Supply Service, Pacific Rim Region.
        Section 6002 of the Resource Conservation and Recovery Act (RCRA)
    established the Federal buy-recycled program. Executive Order (EO)
    13101, ``Greening the Government Through Waste Prevention, Recycling,
    and Federal Acquisition'' expands, strengthens, and promotes the
    Federal Government's commitment to recycling, waste prevention and the
    acquisition of recycled content items, and environmentally preferable
    products, including biobased. The Environmental Protection Agency (EPA)
    designates products that should be purchased with recycled content. EPA
    identifies the products in the Comprehensive Procurement Guidelines
    (CPG) and provides recommendations for purchasing the products in
    Recovered Materials Advisory Notices (RMANs). The recommendations
    primarily pertain to the levels of recycled materials that the
    designated products should contain. For the purposes of this
    discussion, I will refer to products that meet the RMAN recommendations
    as CPG-compliant products.
        Executive Order 13101 also established the Federal Environmental
    Executive who oversees implementation of Federal purchase of these
    products. Each year, the top six agencies, in terms of Federal
    procurement expenditures, are required to report CPG purchases to the
    Office of the Federal Environmental Executive (OFEE) and the Office of
    Federal Procurement Policy (OFPP). The Department of Defense,
    Department of Energy, National Aeronautics and Space Administration,
    Department of Veterans Affairs, Department of Transportation, and the
    General Services Administration were the agencies reporting in the
    March 2002 report on implementation for Fiscal Years 1998 and 1999.
    These agencies account for more than 85 percent of total Federal
    procurement expenditures. Final numbers for 1999 indicate that of the
    $774 million spent on EPA designated products, $492 million, or 64
    percent, was spent on CPG-compliant products.
        Environmental stewardship is the responsibility of each Federal
    agency and GSA takes this role seriously. This commitment is reflected
    in our strategic plan, performance measures, and our active Affirmative
    Procurement Program. GSA has the mission of helping other Federal
    agencies better serve the public by offering, at best value, superior
    workplaces, expert solutions, acquisition services, and management
    policies. I would like to relate to you how GSA has attempted to
    leverage its unique mission to promote the Federal procurement of
    recycled-content products. We have sought to encourage and promote
    environmental stewardship both internally and governmentwide and have
    relied on our relationships with the Office of the Federal
    Environmental Executive (OFEE), the White House Task Force on Waste
    Prevention and Recycling, and the Office of Federal Procurement Policy
    (OFPP). While I will discuss the efforts of the GSA's Public Buildings
    Service (PBS), Federal Supply Service (FSS), and the Office of
    Governmentwide Policy (OGP) separately, our efforts have been a
    coordinated response to promote Federal procurement of recycled-content
    products.

    The Public Buildings Service (PBS)
        The PBS mission is to deliver a superior workplace to the Federal
    worker and at the same time superior value to the American taxpayer. As
    the largest commercial-style real estate organization in the Nation,
    PBS provides workspace for a million Federal employees nationwide, and
    real estate and related services to more than 100 Federal
    organizations. It controls approximately 40 percent of the Federal
    Government's office space. PBS constructs, leases, manages, maintains,
    and protects office buildings, Federal court-houses, border stations,
    laboratories, data processing centers, warehouses, and child care
    centers. We consider three options to meet our client agency
    requirements for quality work environments: construction and
    acquisition of new facilities; repair and alteration of existing
    facilities; or leasing space from the private sector. Leveraging our
    role as the Federal Government's landlord, PBS was able to integrate
    provisions into its leasing agreements for energy efficiency and
    sustainable design. Included is a mandatory provision addressing
    recycled-content products referencing the Resource Conservation and
    Recovery Act, Section 6002, and the EPA's CPG program. In its role as a
    Property Manager for Federal buildings, PBS includes a clause requiring
    the use of recycled-content tissue paper in its janitorial services
    contracts. But PBS also provides design, acquisition, and construction
    of major Federal capital projects such as courthouses. The Design
    Excellence Program Guide includes evaluation of an architect/engineer's
    experience in energy conservation, pollution prevention, waste
    reduction, and the use of recovered materials as selection criteria.
    PBS has also formally incorporated the principles of sustainable design
    into its Facilities Standards for its building projects. This includes
    encouraging the use of recycled-content products and a list of the
    construction products from EPA's Comprehensive Procurement Guidelines.
    My division and the GSA Environmental Executive continue to work
    closely with the Federal Environmental Executive, John Howard, and the
    White House Task Force on Waste Prevention and Recycling to ensure we
    are maximizing opportunities within PBS to promote the use of recycled-
    content products.

    Federal Supply Service (FSS)
        The Federal Supply Service (FSS) leverages the purchasing power of
    the Federal Government to provide Federal agencies with best value in
    commercial products and services. FSS programs provide customers with
    economical, efficient and effective service delivery, saving agencies
    time and administrative costs.
        Through their supply system, FSS provides customers with access to
    more than 4 million professional services and commercial products. The
    business of FSS is entirely dependent on customer revenues. Because its
    services are non-mandatory, FSS must strive to maintain customer
    loyalty.
        To assist customer agencies in their efforts to purchase recycled-
    content products, FSS has developed a number of useful tools. The
    Environmental Products and Services Guide, available at fss.gsa.gov/
    enviro, identifies CPG-compliant products using a ``CPG'' icon. It
    should be noted that this icon was homegrown as there is no standard
    logo or labeling practice. GSA developed the icon to make it easier,
    faster, and less costly for customer agencies to identify CPG-compliant
    products. This guide also provides the amount of recycled content in
    the product. Additionally, GSA's Customer Supply Catalog identifies
    environmental attributes to include the specific percentage of recycled
    content.
        The FSS website I just referenced also contains a wealth of
    environmental information, including applicable laws, regulations,
    Executive orders, and links to other agency sites. The CPG items are
    identified and a person using the site can click on a specific item and
    be connected to GSA Advantage! or the Schedules E-Library.
        Using its online ordering system known as GSA Advantage!, FSS
    assists agencies looking for CPG-compliant products by adding a ``CPG''
    icon to identify stock and special order items that are compliant.
    Stock and special order items include a wide range of paper products,
    including such items as copier and other office use paper, folders,
    binders, envelopes, boxes, containers and other packing materials, and
    a variety of kitchen and breakroom supplies. Some of the non-paper
    items include desktop accessories, pens, pencils, binders, award
    plaques, carpeting and even paint. Working together, FSS, the GSA
    Environmental Executive, and the GSA Office of Governmentwide Policy,
    Office of Acquisition Policy, developed a clause change that will
    require new and renewing schedule holders to not only identify
    recycled-content products, but also CPG-compliant products at proposal
    submission. This rulemaking is nearing final publication in the Federal
    Register at this time. Once implemented, this will greatly facilitate
    an agency's search for CPG-compliant products.
        Finally, FSS has been instrumental for the yearly report to OFEE
    and OFPP by reporting expenditures for other agencies that order
    certain products through FSS, most notably, CPG-compliant copier paper.

    The Office of Governmentwide Policy (OGP)
        GSA's Office of Governmentwide Policy (OGP) is responsible for
    carrying out the policy and regulatory functions assigned to GSA by
    Congress, and exercises GSA's authority as one of the central
    management agencies of the Federal Government. OGP brings interagency
    groups together to collaborate on developing the policies and
    guidelines for the implementation of Federal laws, executive orders and
    other executive branch guidance. Under OGP, the Office of Acquisition
    Policy develops regulations and policies for the Federal acquisition
    community that enable them to acquire goods and services at best value.
    Along with NASA and DoD, the GSA Senior Procurement Executive is one of
    three signatories to the Federal Acquisition Regulation (FAR) and sits
    on the FAR Council as well. The Office of Acquisition Policy chairs the
    Civilian Agency Acquisition Council (CAAC) that allows for interagency
    collaboration on acquisition regulations. Together with NASA, DoD, and
    the CAAC, the Office of Acquisition Policy has developed regulatory
    guidance that specifically address requirements for and purchasing of
    recycled-content products from the earliest stages of requirements
    analysis, market research, and acquisition planning, through source
    selection and contract administration. A FAR solicitation provision and
    contract clause were added to inform suppliers of products and services
    alike of their responsibility to use recycled-content products,
    specifically, those that are CPG-compliant. The Office of Acquisition
    Policy also works closely with the Office of Federal Environmental
    Executive, the White House Task Force on Waste Prevention and
    Recycling, and OFPP to refine the coverage in the FAR and is, in fact,
    working on some refinements through a rulemaking at this time.
        This office also plays another important role that helps to close
    the circle on GSA's coordinated approach to promoting Federal
    procurement of recycled-content products. GSA, under OFPP direction,
    manages the Federal Procurement Data System (FPDS). FPDS captures
    contract award information for the entire Federal Government on awards
    over $25,000.00. GSA also chairs the interagency working group that
    develops new data elements for tracking new requirements for OFPP
    approval. In October 2001, the committee developed a new data element
    capturing information on CPG-compliant contracts. A reporting subgroup
    of the White House Task Force on Waste Prevention and Recycling has
    been working to refine the new data element with the purpose of easing
    manual Resource Conservation and Recovery Act (RCRA) reporting by
    agencies and to provide a basis for measuring CPG-compliant purchasing.
    GSA will participate with the Task Force in these subgroup meetings.

    Opportunities for Improvement
        Reporting and measuring continue to challenge this program
    governmentwide. While we applaud efforts to refine the FPDS data
    element, dollar or volume amounts of individual CPG items within an
    individual contract cannot be captured. Also, it is important to
    understand that purchases under $25,000.00 are not required to be
    reported through FPDS. The reporting subgroup of the White House Task
    Force on Recycling and Waste Prevention continues to address these
    reporting challenges and make recommendations for improvement. The Task
    Force and GSA will continue to work with agencies to stress the
    importance of agencies' commitment to environmental stewardship through
    acquisition planning, contract development and aggressive Affirmative
    Procurement Programs. GSA's Environmental Executive and Senior
    Procurement Executive have partnered to maintain the momentum of the
    GSA Affirmative Procurement Program and to monitor its progress.
        While some interesting research is being conducted regarding the
    tracking of credit card purchases, we do not currently have the ability
    to do this. Compounding the credit card challenge, is that a card
    holder cannot identify CPG-compliant products at retail establishments
    as there is no program for labeling products under this program.
    Without such a labeling program, we must focus our attention on
    education for credit card purchasers and making it easy to purchase
    CPG-compliant products. GSA is trying to help through its continuing
    efforts to identify compliant products through FSS. We believe that a
    periodic review of the EPA list of CPG items would help to ensure that
    suppliers of such products are available and responsive and new
    entrants into the market are included on the supplier lists. We
    understand that EPA is reviewing their supplier list and we recommend
    that this be done periodically.
        We must be vigilant regarding our education and guidance and this
    should include the contractor community. Without a labeling program,
    suppliers need to understand how to accurately identify a product's
    environmental attributes.
        In closing, I would like to offer a copy of an electronic survey we
    used this year in our agency to identify strengths and weaknesses in
    our Affirmative Procurement Program. We will use the results of this
    survey as a basis for a plan of continuous improvement. Perhaps other
    agencies might find it useful and can modify it for their use. We will
    provide a copy of it to the Office of Federal Environmental Executive.
        Mr. Chairman, this concludes my formal statement. We would be glad
    to answer any questions that you or Members of the committee may have
    about our efforts to promote Federal procurement of recycled-content
    products.
                                     ______

     Responses of Deborah Yap to Additional Questions from Senator Jeffords

        Question 1. GAO recommended that the Federal Environmental
    Executive and EPA, in conjunction with the major Federal procuring
    agencies, develop a process to (a) provide agencies with current
    information on the availability of recycled-content products and (b)
    better promote these products. Has this occurred? If not, why not?
        Response. On its Comprehensive Procurement Guidelines web site,
    www.epa.gov/cpg, EPA provides lists of known manufacturers and vendors
    of the CPG-compliant products. Prior to this year, the lists were
    updated annually and, therefore, were often out of date. This year, EPA
    changed the lists to a new, dynamic listing that can be updated
    frequently. The agencies were invited to beta test the new listings
    this past spring, and EPA is completing the revised version this
    summer. The Federal Environmental Executive (FEE) will inform the
    agencies when the revised listing is available.
        The FEE chairs an inter-agency Executive Order 13101 Interagency
    Advisory Group (EOIAG), which is comprised of representatives from 30
    agencies. The EOIAG meets monthly. Information on recycled content
    products is shared during these monthly meetings. The FEE also provides
    information through the quarterly Closing the Circle News. In addition,
    the FEE's web site, www.ofee.gov, provides information on sources of
    re-refined oil and 30 percent postconsumer recycled content paper.
        The General Services Administration (GSA) and the Defense Logistics
    Agency (DLA) also have a role in providing information through the use
    of icons in their electronic catalogs. As noted during Ms. Yap's
    testimony, GSA has already identified EPA-designated recycled content
    products that contain a percentage of recycled content within EPA's
    recommendations in their supply (stock and special order) program.
    These products are highlighted with a ``CPG'' icon in both the on-line
    ordering system, GSA Advantage! as well as the electronic and print
    versions of the Environmental Products and Services Guide (which has
    been enclosed as background materials). The catalog is also available
    on-line at http://www.fss.gsa.gov/enviro. Also, as noted in Ms. Yap's
    testimony, GSA has already received public comments on a proposed
    rulemaking and will soon be issuing a final rule that will require
    Federal Supply Schedule vendors to clearly identify whether their
    products are CPG-compliant. This clarifies the current requirement that
    requires contractors to identify other environmental attributes,
    including products containing recovered material to include those
    identified in EPA procurement guidelines. This clarification will allow
    GSA to identify these offerings, which are outside of the supply
    program, with the ``CPG'' icon.

        Question 2. GAO recommended that OMB provide the agencies with
    better guidance on how to review and monitor the effectiveness of their
    procurement programs. Have you received such guidance?
        Response. The Office of Federal Procurement Policy (OFPP) and the
    White House Task Force on Waste Prevention and Recycling (the Task
    Force) co-chair an interagency reporting workgroup, which is
    recommending methods to streamline and improve Resource Conservation
    and Recovery Act (RCRA) reporting. GSA is a member of this workgroup.
    The workgroup recently recommended further streamlining of RCRA
    reporting for fiscal year 1902 and 1903, including a recommendation
    that agencies audit their affirmative procurement programs. The
    committee recommended questions to be asked during the audit process.
    These recommendations were approved by the E.O. 13101 Steering
    Committee--James Connaughton, Chair of the Council on Environmental
    Quality, Angela Styles, OFPP Administrator, and John Howard, the FEE.

        Question 3. GAO recommended that OMB, in conjunction with Federal
    agencies amend the ``common rule'' to ensure that grantees purchase
    recycled-content products as required by RCRA. Are you aware of any
    such action or timeframe for such action to occur?
        Response. GSA does not have a grants program and, therefore, cannot
    respond to this question.

        Question 4. As I understand it, the new data field included in the
    Federal Procurement Data System will provide information on these types
    of purchases made only by contractors and not agency purchases
    themselves, Federal procurement card purchases, and grantee purchases.
    Is this correct? And if so, what additional steps could be taken to
    capture purchase data from the other sources?
        Response. The Reporting Workgroup co-chaired by OFPP and the Task
    Force recommended actions to address record keeping and reporting on
    purchases through contracts, credit cards, and grantees. The change to
    the FPDS will capture data on purchases of EPA-designated products made
    through contracts in excess of $25,000. While it will not identify the
    specific products purchased, it will provide an indication of
    compliance with RCRA. Agencies will be able to use this data to look
    for patterns of non-compliance and provide education, training, and
    oversight to correct the noncompliance.
        FPDS does not track purchases made by contractors. As noted, it
    collects information on agency purchases awarded by contract in excess
    of $25,000. As a result, FPDS does not capture purchases made with
    credit cards under this dollar value or on grants of any dollar value.
    While collecting information on credit card purchases of these items
    can be done if the purchaser uses GSA Advantage!, there is no
    governmentwide management information system for information collection
    of purchases made outside of this system. Even if a reporting
    requirement for credit card purchasers were established, the resulting
    reports would not be satisfying. Without a labeling requirement for the
    commercial sector, credit card holders are unable to reliably identify
    compliant products at retail establishments and other sources outside
    of the GSA and DLA programs described above that identify compliant
    products.
        The Reporting Workgroup recommended a credit card pilot to
    determine whether the credit card companies can report purchases of
    EPA-designated products. In essence, reporting would require the
    merging of vendors' inventory and billing systems. While this is
    possible to do, the agencies want to determine whether both large and
    small vendors will be able to provide the data.
        There currently is no requirement for grantees to report to
    agencies on their purchases of EPA-designated products using Federal
    funds.

        Question 5. OFPP and the Task Force committed to Congress that the
    Federal Government would develop electronic tracking systems so we
    could report on purchases of CPG items. This led to changes to the
    Federal Procurement Data System, which are being implemented for the
    first time this fiscal year. Data originates with the SF 279, which
    contracting officers complete for each contracting action greater than
    $25,000. The FPDS guidance manual has the new version of the SF 279,
    but as of last month, if you went to GSA's on-line forms, the 2000
    version of the SF 279 was still posted. We have twice requested, via
    OMB, that GSA post the correct version of the form. What are they
    waiting for? Why can't they post the correct version? What are they
    doing to inform agencies about all of the changes to the SF 279,
    including the change to capture data on purchases of CPG items?
        Response. Thank you, Senator Jeffords, for bringing this problem to
    the attention of the GSA Office of Governmentwide Policy (OGP). The SF
    279 at the on-line forms library, has been updated to reflect the
    latest version of the form at the Federal Procurement Data Center
    (FPDC) site and in their guidance manual. FPDC has worked out a process
    to ensure the latest form will always be displayed in the on-line forms
    library. Because most agencies use other means of obtaining updates on
    FPDS and inputting information to FPDS, such as FPDS agency
    coordinators and agency-unique feeder systems, the interagency FPDS
    committee, chaired by OGP, submits proposed amendments to each agency
    for comment before changes are made final. This allows agencies advance
    notice of changes so they can begin programming their electronic
    procurement systems or feeder systems in advance of the change being
    formally issued. The committee, working with its OMB FPDS manager,
    reviews any comments, makes appropriate changes and issues the final
    amendment. The current data element designed to capture compliance
    information on the purchase of EPA-designated products includes
    extensive explanation that amounts to a quick education on the subject
    to assist contracting officers. OMB and the committee felt that this
    explanation was necessary to fill in any knowledge gaps in this area
    among agency contracting officers. The Reporting Workgroup developed
    further guidance this year. OFPP and the FPDS interagency committee
    included this guidance in Amendment 8 of FPDS and it is out for agency
    comment now. Agency coordinators will ensure appropriate distribution
    of this guidance throughout their agencies and it will appear at the
    FPDC webs ite as well.

        Question 6. Why did GSA continue selling virgin paper long after
    the Executive Order mandated that all Federal purchasers buy paper
    containing at least 30 percent post-consumer content?
        Response. We have had copier paper items in our supply system for
    many years. The National Stock Numbers (NSN5) date prior to 1974. We
    introduced recycled content copier paper items into our supply system
    long before they were required by the Executive Order. While initially
    the marketplace didn't have the capacity to absorb the potential
    Federal demand for recycled-content paper, industry geared up in
    anticipation. In an attempt to help realize this potential Federal
    demand, FSS reduced the price of the recycled paper to be ``five
    cents'' ($.05) less than the non-recycled paper that we had in our
    supply inventory to eliminate the higher ``traditional'' cost for
    recycled paper. Based on this action, DOD and a number of other
    agencies authorized GSA to automatically change any requirements for
    noncompliant items to the compliant items. This resulted in a
    significant increase in the purchase and use of recycled content copier
    paper.
        Executive Order 13101, signed September 14, 1998, included the
    requirement to purchase 30 percent post-consumer content paper and
    paper products on December 31, 1998. We expediently revised our
    specifications, technical purchase descriptions, and contracts to
    include the required minimum recovered materials content level for
    paper. We modified our copier paper contract for the 75Xl supply
    schedule to increase the minimum content level from 20 percent to 30
    percent effective February 5, 1999. We also modified our NIB/NISH
    agreements to require a minimum of 30 percent post-consumer material
    content effective January 1, 1999. We continued selling other than 30
    percent post-consumer content paper simply to deplete what was already
    in stock.

        Question 7. Is GSA looking at environmental attributes other than
    recycled-content and energy-efficiency?
        Response. Yes. We have introduced an array of environmental
    products and services into our supply system. Products that have
    recycled-content and energy-efficiency attributes capture the attention
    of our customers because environmental laws (RCRA and EPACT
    respectively), FAR regulations (Parts, 7, 10, 11, 15, 23, 42, and 52),
    Executive Orders and Memoranda, and agency affirmative procurement
    programs require Federal buyers to purchase these items. We contract
    for the recycled content and energy efficient items and highlight them
    in our printed publications (the Environmental Products and Services
    Guide, Supply Catalog, and Marketips) and online purchasing system
    GSA4dvantage!. We also highlight the following environmental attributes
    in our catalogs and our Environmental web site: reduced hazardous
    waste, non-toxicity, chromate free, chromium free, hexavalent-chromium
    free, lead free, mercury free, benzene free, low volatile organic
    chemical (VOC), as well as chlorofluorocarbon (CFC) free/non-ozone
    depleting substances. In GSA Advantage! we highlight non-toxicity,
    chromate free, hexavalent-chromium free, lead free, mercury free,
    benzene free, low volatile organic chemical (VOC), as well as
    chlorofluorocarbon (CFC) free/non-ozone depleting substances. In
    addition, we highlight environmental products that meet industry
    standards and test methods.
        The GSA Affirmative Procurement Program (APP) gives a preference to
    CPG-compliant, environmentally preferable, and biobased products. We
    also have developed implementation plans for the APP in all 11 regions,
    and each of our three services and our staff offices. The GSA Federal
    Supply Service (FSS) and the Public Buildings Service (PBS)
    participated along with EPA in the Environmentally Preferable Products
    (EPP) pilot program for cleaning products. This became the prototype
    for EPA's EPP Pilot program. Additionally, as noted in Ms. Yap's
    testimony, PBS has incorporated specific guidance throughout the Green
    Buildings Program to include their facilities standard (P100), the
    Design Excellence Program, and the evaluation criteria for prospective
    Architect/Engineer contractors. To reiterate the written and oral
    testimony, the GSA and Department of Defense (DoD) FAR staffs, in
    coordination with the Civilian Agency Acquisition Council (CAAC), the
    Defense Acquisition Regulations Council (DARC), and OMB have revised
    the FAR to fully incorporate green purchasing guidance covering energy
    and water efficiency, recycled-content products, environmentally
    preferable products, hazardous materials, and others. Green purchasing
    is covered throughout the acquisition cycle in the FAR, from describing
    agency needs and market research, through contract administration.

        Question 8. The GAO report concludes that agencies reviewed, and
    that would include GSA, told GAO that agencies are ``often'' not aware
    of EPA-designated recycled-content products, and ``the agencies have
    made little effort to ensure that grantees are aware of their
    obligations to purchase recycled-content products.'' Has GSA identified
    any specific legislative needs that would address these problems?
        Response. GSA does not administer grants. However, the Task Force
    has an on-going education and training program to reach the Federal
    acquisition and grants communities. The Task Force has expressed an
    opinion that absent a revision to the ``common rule,'' there is no
    assurance that Federal grants-administering agencies will revise their
    grants regulations or inform their State and local grantees of the
    requirement to purchase CPG-compliant products.
        Executive Order 13101 required the head of each major agency to
    designate an Agency Environmental Executive (AEE) at the level of the
    Assistant Secretary or equivalent. The function of the AEE is to make
    sure that their agencies are in compliance with the E.O. 13101
    directives, including the purchasing of CPG-compliant products. GSA's
    AEE, Paul Lynch, initiated a ``roll out'' campaign to re-invigorate the
    EQ. 13101 and RCRA requirements. This campaign was a 360-degree effort
    that resulted in a number of meaningful improvements. The AEE worked
    with various GSA organizations and those in senior leadership to
    include the Office of Acquisition Policy, GSA's Senior Procurement
    Executive (SPE), David Drabkin, the Federal Supply Service (FSS), the
    Public Buildings Service (PBS) and its Environmental Strategies and
    Safety Division, and the Federal Procurement Data Center (FPDC). Many
    of these offices worked closely with OMB, the FEE, and the Task Force
    to improve on GSA's support of their efforts. This coordinated effort
    has resulted in the following improvements:

          FSS identification of CPG-compliant products in the
    supply program, supply catalogs, on-line ordering systems using a
    ``CPG'' icon.
          A campaign kickoff for the regional environmental
    coordinators hosted by the AEE in Washington, DC where the Office of
    Federal Environmental Executive (OFEE) spoke to their responsibilities.
    This resulted in each regional Head of Contracting Activity (HCA)
    developing formal APP Implementation Plans for their region.
    Implementation Plans were also developed for the central office
    services and staff offices.
          A year after developing the Implementation Plans, an
    electronic survey was created and administered to GSA environmental
    coordinators to identify the strengths and weaknesses of their
    implementation plans for the APP.
          Implementation of GAO recommendations for the current
    reporting element in FPDS. GSA was instrumental in writing the
    instructional language for this element in coordination with OMB.
          An active awards program.
          nationwide training completed on the requirements of the
    RCRA, E.0. 13101, and the GSA APP.

        As noted in our written and oral testimony, however, we believe
    that the single most helpful way of increasing awareness would be
    through a comprehensive commercial labeling program similar to Energy
    Star. Part of the problem with identifying CPG-compliant products is
    that the purchaser has to know the specific EPA recommendations for
    each individual product as contained in the Recovered Material Advisory
    Notice (RMAN) prior to making the purchase. This is further complicated
    by the fact that the RMAN identifies both total recovered material
    content and post-consumer material content levels for some products,
    while others recommend simply total recovered material content
    percentages. This requires an understanding of these terms and research
    on the part of the purchaser. While this is a realistic expectation for
    a program manager developing specifications for a contract purchase or
    for a contracting officer, it is much less realistic for credit card
    purchasers ordering outside of the supply systems identified that
    highlight compliant products. This becomes exceedingly difficult when
    purchasers go to a retail establishment, for instance, where even if
    they had researched the content requirements for their purchases, the
    products are not identified as compliant.

        Question 9. The GAO report (at 24) States, ``Defense, the largest
    procuring agency, believes efforts to monitor and report on recycled-
    content product purchases conflict with the streamlining goals of
    procurement reform.'' Does GSA similarly believe these two areas are
    inherently in conflict?
        Response. GSA does not believe the problem of developing more
    effective monitoring and reporting is one of inherent conflict with
    streamlining but there is a cost associated with it that is not
    minimal. This cost cannot be absorbed across government and it is not
    otherwise funded.

        Question 10. As GAO observed (at 5), ``Defense and GSA have a dual
    role--first, as procuring agencies subject to RCRA and Executive Order
    13101 and second, as major suppliers of goods and services to other
    Federal agencies.'' Given this central role for GSA, would GSA provide
    as many specific examples as possible of instances in which
    specifications have been changed to ``require the use of recovered
    materials to the maximum extent practicable'', as directed by RCRA?
        Response. Our records indicate that there were 133 Federal Product
    Descriptions (FPDs) that the Federal Supply Service (FSS) converted
    from a virgin materials requirement to a recovered materials
    requirement. As a result of a change in our buying practices, we have
    reduced the number of FPDs from 133 to 19 active FPDs that contain the
    recovered materials requirement. We have moved from a specification
    driven approach to acquiring products to a Multiple Award Schedules
    (MAS) commercial acquisition approach in support of the Federal
    Acquisition Streamlining Act (FASA) requirements and to better
    accommodate the buying practices of our Federal customers.
        In addition, our specifications, Commercial Item Descriptions
    (CID's) and technical purchase descriptions which were developed or
    revised after Public Law 94-580, as amended, include reference to use
    of recovered materials. These specifications, CID's and purchase
    descriptions cover a wide spectrum of products made with recovered
    materials. Our National Furniture Center offers many specific examples
    of instances where specifications have been changed to ``require the
    use of recovered materials to the maximum extent practicable.''
        The National Furniture Center (NFC) developed specification
    requirements for the wood furniture needs of the Huntsville, Alabama,
    U.S. Army Corps of Engineers (COE) dormitory and quarters and for use
    in COE projects worldwide. In addition to inclusion of the ``maximum
    extent practicable'' language referenced above, the NFC expanded
    language to encourage products with other environmental attributes (a
    subject addressed in another of the Senator's questions). For example,
    where tropical hardwood is used, specifications require that the wood
    come from forests managed for sustainability. Written manufacturer's
    certification of sustainability is required from a recognized entity
    such as the Forest Stewardship Council.
        A new Special Item Number (SIN) description was added to Multiple
    Award Schedule 72-I-A to accept only flooring products with recycled
    content. Initially, the description referred to carpet products only,
    but since, has been expanded to include the whole spectrum of flooring
    products (mats and matting, carpet cushion, linoleum, vinyl tile,
    etc.). Further, a reference has, been added to highlight the NFC's
    desire for suppliers to offer biobased products that we expect to have
    on contract in the near future.
        Our General Products Center also has many specifications that have
    been changed to ``require the use of recovered materials to the maximum
    extent practicable.'' All of the CPG-compliant National Stock Numbers
    (NSNs) managed by the General Products Center required a specification
    change or modification of some type. In some cases, the addition of the
    recycled content is contained solely within the item purchase
    description. For example, approximately 90 percent of our forms state:

      This form must be printed on recycled paper and must be printed with
        a recycle logo. The logo must be positioned on the page as not to
        interfere with the image or usage of the form.''
      REGULATORY REQUIREMENTS. GSA is promoting the use of recovered
        materials in its contracts to the maximum extent practicable,
        provided all specification requirements are met. The offeror/
        contractor shall use recovered materials, in accordance with
        Section 505 of Executive Order 13101, dated September 14, 1998.

        Additionally, our rolled, paper towel used in the fire program (NSN
    8540-01-169-9010) contains the following language:

      The towels shall be 100 percent paper with 4010 100 percent recovered
        fiber and a minimum of 40 percent post-consumer recovered materials
        as specified by the EPA Guidelines For Federal Procurement of Paper
        and Paper Products Containing Recovered Materials (40 CFR 247) and
        the EPA Paper Products Recovered Materials Advisory Notice (Federal
        Register, Vol. 61, No. 104, May 29, 1996).

        All of the repack boxes in the fire program are CPG-compliant and
    meet the following requirements:

      The boxes shall contain recovered materials in accordance with the
        EPA Comprehensive Procurement Guideline For Products Containing
        Recovered Materials (40 CFR 247). As a minimum, the boxes shall
        contain the recommended recovered fiber content levels as stated in
        the EPA Paper Products Recovered Materials Advisory Notice (Federal
        Register, Vol. 61, No. 104, May 29, 1996). For example, corrugated
        containers (less than 300 psi) are required to have recovered fiber
        content of 25-50 percent and contain postconsumer fiber of 25-50
        percent. Corrugated containers (300 psi and greater) are required
        to have recovered fiber content of 25-30 percent and contain
        postconsumer fiber of 25-30 percent.

        One final example would be the description for traffic cones (NSNs
    9905-00-424-9829 & 9905-00-537-4997) containing the following:

      Traffic Markers (Cones), produced in plastic or crumb rubber, shall
        contain 50 to 100 percent recovered materials as specified by the
        EPA Comprehensive Guideline for Procurement of Products Containing
        Recovered Materials; Recovered Materials Advisory Notice Ill; Final
        Rule (40 CFR Part 47), Federal Register/Vol. 65, No. 12/Wednesday,
        January 19, 2000/Rules and Regulations.

        Leveraging our role as the Federal Government's landlord, GSA's
    Public Buildings Service (PBS) was able to integrate provisions into
    its leasing agreements for energy efficiency and sustainable design.
    Included in the lease agreement is a mandatory provision addressing
    recycled-content products referencing the Resource Conservation and
    Recovery Act, Section 6002, and the EPA's CPG program. In its role as a
    Property Manager for Federal buildings, PBS includes a clause requiring
    the use of recycled-content tissue paper in its janitorial services
    contracts. PBS also provides design, acquisition, and construction of
    major Federal capital projects such as courthouses. The Design
    Excellence Program Guide includes evaluation of an architect/engineer's
    experience in energy conservation, pollution prevention, waste
    reduction, and the use of recovered materials as part of the selection
    criteria. PBS has also formally incorporated the principles of
    sustainable design into its Facilities Standards for its building
    projects. This includes encouraging the use of recycled-content
    products and a list of the construction products from EPA's
    Comprehensive Procurement Guidelines. The PBS Environmental Strategies
    and Safety Division and the GSA Environmental Executive continue to
    work closely with the Federal Environmental Executive, John Howard, and
    the White House Task Force on Waste Prevention and Recycling to ensure
    we are maximizing opportunities within PBS to promote the use of
    recycled-content products.
        We would also like to note that the GSA Affirmative Procurement
    Program contains the following regarding specifications:

      12. Specification Control
      a. The procurement originator is responsible for reviewing product
                performance specifications, product descriptions, and
                standards of EPA-designated CPG items during the
                acquisition planning stage. Specifications and standards
                regarding a CPG product line must relate to the performance
                of that product. Product specifications and standards that
                prevent the purchase of CPG items or ``environmentally
                preferable'' products must be revised or eliminated in the
                actual procurement specifications.'' b.

        Question 11. According to the GAO report, information on the
    purchases of recycled-content products is largely unavailable. If
    agencies do not reliably track their purchases of these products, how
    can we be sure that they are being purchased? Why, after 25 years, can
    we still not know how much, or if, Federal agencies are purchasing
    recycled-content products?
        Response. GSA is not in a position to answer this question for all
    agencies and for the entire program, however, we are certainly aware
    that reporting and measuring continue to challenge this program
    governmentwide. While we applaud efforts to refine the FPDS data
    element, dollar or volume amounts of individual EPA-designated products
    within an individual contract cannot be captured. Though a clause used
    in contracts over $100,000 requires contractors to report estimates at
    contract completion, obtaining these estimates yearly for the RCRA
    reporting would require levying a yearly reporting requirement on
    contractors and then a process and system for compiling this contract-
    specific information governmentwide.
        The Reporting Workgroup of the White House Task Force on Recycling
    and Waste Prevention continues to address these reporting challenges
    and make recommendations for improvement. The new change to the FPDS
    implemented in October 2001, will allow agencies to capture, for the
    first time, compliance with Section 6002 of RCRA in purchases made
    through contracts. Because purchases made through contracting is
    significant, this will enable the agencies to report on large scale
    compliance. As noted above, the credit card pilot will determine
    whether agencies can receive data from vendors without unduly burdening
    the vendors.
        GSA has taken a proactive role in identifying recycled content
    products to assist agencies in their efforts to purchase these
    products. The Environmental Products and Services Guide identified CPG-
    compliant products using a ``CPG'' icon. GSA developed the icon to make
    it easier, faster, and less costly for agencies to identify CPG-
    compliant products. GSA Advanfage', our online ordering system, uses
    the CPG icon to identify supply (stock and special order) items that
    are CPG-compliant. Multiple Award Schedule contractors are voluntarily
    identifying CPG-compliant items. And a soon-to-be published final rule
    that was already published for public comment, clarifies a requirement
    that GSA schedule vendors specifically identify CPG-compliant products.
    This will assist agencies in identifying and reporting on orders placed
    directly with the schedule vendor.
        GSA has the capability to capture sales data on recycled-content
    products that we have in our supply system that have an assigned
    national stock number (NSN). We use NSNs to track and report sales data
    for recycled-content items that we order for our Federal customers. For
    example, GSA has been able to track purchases of CPGcompliant copier
    paper in our supply system; we have seen a demonstrated increase in the
    purchase of CPG-compliant copier paper since 1997. This summer, we will
    also capture sales data for multiple award schedule items acquired
    through the CPG icon on GSA Advantage!. Ultimately, sales data is
    provided to the OFEE for all of these types of purchases.

        Question 12. What steps do you believe we should take to more
    effectively ensure that Federal agencies purchase recycled-content
    products?
        Response. While GSA is trying to help agencies identify recycled-
    content products through the Federal Supply Service supply and
    schedules programs, GSA is not a mandatory source. We believe that all
    stakeholders, including the private sector, must continue to work
    toward making CPG-compliant products, regardless of where they are
    purchased, easy to identify. While GSA will be requiring schedule
    vendors to identify CPG-compliant products, we believe that at least a
    voluntary labeling program should be investigated. This would
    significantly facilitate identification of compliant products not only
    for Federal purchasers, but also for distributors of categories of
    products, only some of which might be compliant. Marking a product with
    a recycle logo is not sufficient to ensure we are purchasing CPG-
    compliant products. Without a labeling program, suppliers need to
    understand how to accurately identify a product's environmental
    attributes.
        We believe that a periodic review of the EPA list of CPG items
    would help to ensure that suppliers of such products are available and
    responsive and new entrants into the market are included on the
    supplier lists. We applaud the EPA's recent efforts at reviewing their
    supplier lists and we recommend that this be done periodically. We
    would also recommend that these lists be prominently displayed at the
    EPA website so no ``drilling down'' into the site is required. This
    would make it easier for agencies to inform their purchasers where to
    find suppliers of compliant products.
        We must be vigilant regarding education or we run the risk of
    losing the attention of acquisition personnel, both program managers
    and contracting officers, as new requirements for new programs
    constantly compete for their attention. This is why the GSA Agency
    Environmental Executive, Paul Lynch, and the GSA Senior Procurement
    Executive, David Drabkin, have partnered to maintain the momentum of
    the GSA Affirmative Procurement Program and to monitor its progress.

        Question 13. GSA currently captures data on purchases from its
    supply centers. What about capturing data on recycled-content purchases
    from your supply catalogs? Can you estimate what percentage of total
    recycled-content purchases for Federal agencies this data represents?
        Response. The data we capture on recycled-content purchases
    includes items that are published in our supply catalogs. Items listed
    in our supply catalogs have uniquely assigned National Stock Numbers
    (NSNs). We use NSNs to track and report sales data for recycled-content
    items.
        We do not have the necessary information to estimate what
    percentage of total recycled-content purchases for Federal agencies
    this data represents. However, the OFEE receives sales data on
    recycled-content items from Federal agencies as part of the RCRA
    reporting efforts. Agencies are required to submit to OFEE the
    aggregate dollar amount spent on a designated item (virgin materials
    included) and total dollars spent on recycled-content items. The OFEE
    is in a better position to produce a valid estimate of the percentage
    of total recycled-content purchases for Federal agencies. It is
    important to note that we provide the OFEE with sales data--that
    includes items made with virgin materials and recycled materials--for
    items where we process the requisition and consummate purchase orders.

        Question 14. In 1991, the Senate Governmental Affairs Committee
    held a hearing on Federal Procurement. GSA was asked whether schedules
    could reference other schedules that had green products. The answer
    given back then was yes. I understand that this has not been done. Why
    not?
        Response. We are aware of the hearing and believe the reference was
    to the GSA Supply Catalog. The comments criticized our publishing of
    the GSA Supply Catalog without more prominent identification of green
    products. We took actions that ensured our next GSA Supply Catalog
    included a ``green'' dot that indicated that a particular product
    contained an environmental attribute. Over the years, the GSA Supply
    Catalog expanded the use of environmental designations. Currently, we
    use several commercially and federally recognized logo designations to
    convey the environmental attributes contained in products that are
    listed in our Supply Catalog to differentiate them from those products
    that are made with virgin materials. Also, we publish a very popular
    Environmental Products and Services Guide (EPSG) to further promote and
    facilitate the Federal acquisition of products that contain an array of
    environmental attributes.
        In recent years, the FSS Environmental Programs web site
    (fss.gsa.gov/enviro) has emerged to be one of our most frequently used
    web sites. It contains a wealth of information that Federal buyers can
    use as a tool to locate the various environmental products and services
    that we offer, in addition to researching the environmental laws, the
    Federal Acquisition Regulation (FAR) Part 23, and Presidential
    Executive Orders that support the environmental products and services
    that we offer. The FSS Environmental Programs web site also facilitates
    the acquisition of environmental products and services by establishing
    links to our on-line ordering system--GSA Advantage!
    (www.gsaAdvantage.gov) and our on-line schedule vendor information
    system--the Schedules e-Library (fss.gsa.gov/elibrary). We have also
    established links to relevant environmental web sites in the Federal
    Government including links to the Office of the Federal Environmental
    Executive (OFEE) web site, and the EPA Environmentally Preferable
    Purchasing (EPP) web site and the EPA Comprehensive Procurement
    Guideline (CPG) web site.
        In addition, the use of the CPG icon is being expanded to include
    Multiple Award Schedule items. We plan to assist purchasers in the
    identification of CPG-compliant items when using GSA Advantage! by
    adding a new search feature that will allow the customer to identify
    and search for CPG items identified by the contractors.

        Question 15. I have heard the suggestion that GSA add a pop-up
    banner at the beginning of a schedule to remind the purchaser to buy
    green and inform them that this particular schedule includes EPA-
    designated products. Why can't GSA do this to provide information to
    the customer?
        Response. We do not publish schedules electronically. We believe
    that this question refers to GSA Advantage!, not a schedule. GSA
    Advantage! is our electronic online shopping and ordering system. It
    provides online access to several thousand contractors and millions of
    services and products.
        GSA Advantage! will soon have a message on the GSA4dvantage! home
    page (www.gsaAdvantage.gov) that asks all buyers if they have
    considered environmental products and services. There will be a link to
    information on how GSA assists Federal customers with procurement
    responsibilities outlined in Federal environmental laws and
    regulations. In addition, we have instituted changes to GSA Advantage!
    that enable vendors to identify products in their catalogs as CPG-
    compliant. Also, a change will be made to the GSA Advantage! search
    subsystem shortly that will display a ``CPG'' icon next to products
    identified as CPG-compliant by vendors. The icons already appear for
    GSA supply items. When the change is instituted, users will be able to
    filter searches on ``CPG-compliant'' as they do now for NIB/NISH and
    other special interest items.
        The FSS Environmental Programs web site also facilitates the
    acquisition of environmental products and services by establishing
    links to our on-line ordering system--GSA Advantage!
    (www.gsaAdvantage.gov) and our on-line schedule vendor information
    system--the Schedules e-Library (fss.gsa.gov/elibrary).

        Question 16. GSA has a critical role to play in educating
    purchasers. The Federal Acquisition Institute is supposed to develop
    green purchasing training for the acquisition community. I understand
    the Institute began to develop an on-line training but it was never
    completed. Why not?
        Response. Environmental purchasing guidance was being incorporated
    throughout the basic contracting course, CON 101, beginning with
    acquisition planning. However, before completion, it was determined
    that FAI would no longer develop course material covering broad subject
    areas such as CON 101. However, FAI has more recently partnered with
    other agencies and organizations to deliver ``just-in-time'' on-line
    seminars on focused topics. We believe that green purchasing could be
    covered in such a seminar. GSA has been in contact with the President
    of the Defense Acquisition University (DAU), General Frank Anderson,
    Ret, and would be pleased to open discussions with OFPP, OFEE, and DAU
    on how such a seminar might be developed and delivered to the Federal
    acquisition workforce. An additional option is the Lunchtime Learning
    Seminars jointly hosted by DAU and FAI. While these seminars are
    available just in the D.C. area, they can be video taped and delivered
    to the broader workforce.

        Question 17. For each CPG product that GSA has in the stock
    program, why can't GSA stock only recycled content products?
        Response. Federal agencies may purchase other than CPG-compliant
    products if they find either the price, availability or performance ofa
    CPG-compliant product does not meet their requirement. We fully support
    Federal efforts to procure CPG-compliant products and other recycled
    content products, and we have implemented strategies to inform
    customers of the requirement to purchase those items. GSA's mission,
    though not a mandatory source of supply, is to efficiently and
    effectively serve as a source of supply for all Federal agencies. In
    this role, GSNFSS provides agencies with both CPG products and, if such
    CPG products do not meet the agency's needs in terms of price,
    availability, or performance, non-CPG products. This determination,
    according to E.O. 13101, rests with the procuring agency and they are
    required, if the purchase is over $2,500, to complete a justification
    for not purchasing a CPG-compliant product.

        Question 18. Is GSA willing to promote reduced packaging and
    packaging that contains recycled materials?
        Response. As the Senator recognized in an earlier question, GSA has
    a dual responsibility in meeting the requirements to buy products that
    contain recycled materials. On one hand, GSA is, like all other
    agencies, a consumer and must abide by the requirement to purchase CPG-
    compliant products, which include packaging materials. In this role, we
    attempt whenever possible to specify the least amount of packaging
    material required to provide adequate protection of the product during
    the shipment, storage and distribution of products from our supply
    distribution centers.
        We operate two large distribution centers located in Stockton,
    California, and Burlington, New Jersey. Our practices at these two
    facilities illustrate our progress in following environmental
    initiatives in the area of packing and packaging materials.
        The primary opportunities for environmental responsibility fall in
    our selection of shipping cartons, paper jiffy bags, and in carton
    ``fill'' material. At present, both of our facilities utilize shipping
    boxes and jiffy bags containing recycled materials.
        Our evolution and experimentation in the area of fill material has
    been ?Iively over the years as we have sought to identify the most
    practical, economical, and environmentally responsible fill material.
    Even before it became apparent some years ago that styrofoam peanuts
    were not desirable, our facilities experimented with low-tech solutions
    that attempted to reuse available packing materials. For example,
    various arrangements existed to reuse available packing paper (output
    from computer printing rooms, newsprint) rather than consign such
    material to landfills. Over the years, as recyclable disposal streams
    for such material became more uniform, attention turned to commercially
    available alternatives to styrofoam peanuts.
        Today, our two facilities differ in choice of fill material, and
    they are still experimenting. Our Stockton facility is approximately 1
    year into use of air-filled plastic bags. The same approach is being
    tested at our Burlington facility. Using what is essentially ``air'' as
    packing fill is very efficient from a transportation standpoint, since
    it reduces the energy needed to ship a given product weight. According
    to information available to us, these bags also take only 4 percent of
    the volume of paper at the landfill for an equivalent amount of packed
    material. This method of fill also takes less energy to produce. The
    air bags used at both Stockton and Burlington are recyclable (Nos. 2
    and 4, respectively).
        While Burlington is testing the air bag, it is continuing to use a
    recyclable, renewable, and biodegradable paper that is specifically
    designed for efficient package fill use.
        In our other role, GSA through FSS is a source, albeit a
    nonmandatory source, and contracts for, and makes available to Federal
    buyers, a variety of products that includes packaging materials. We
    have eliminated all requirements for products that contain virgin
    materials from our specifications to enable us to offer to Federal
    agencies with CPG-compliant packaging materials. In addition, we
    emphasis the importance of purchasing these items in our publications
    and GSA Advantage! by placing a CPG icon next to products that meet the
    minimum recycled content levels established by the EPA. Equally
    important, our Environmental Products and Services Guide (EPSG)
    contains numerous paperboard and packaging products that are CPG-
    compliant as follows:

          FSC 8105 class groups includes envelopes and mailers for
    packaging small non-hazardous products; trash bags; burn bags; and
    grocery bags;
          FSC 8110 includes postal mailing tubes;
          FSC 8115 includes shipping boxes and containers;
    cushioning materials; cassette and disk mailers; and kraft paper; and,
    FSC 8135 includes corrugated fiberboard sheets; freezer wrap, pre-
    packing trays, and wax paper.

        We also partner with the U.S. Navy in the PRIME (Plastics Removal
    in Marine Environment) program in which we eliminate all plastic
    packaging and packing materials in specific NSN's commonly used aboard
    ships (thereby requiring packaging materials that are recyclable).

        Question 19. Since GSA controls the contract management and
    procurement of tens of thousands of government cars which are both
    purchased and leased, and, since in 1995, GSA issued a memorandum
    recommending re-refined oil use in government vehicles, why doesn't the
    General Services Administration require that all those car come
    equipped with re-refined motor oil and retread tires when we acquire
    them in the first place? When GSA did this for seat belts it was highly
    successful and resulted in first Detroit and then foreign carmakers
    installing seat belts in cars as original equipment. The same thing
    could would with re-refined oil. Has the government ever asked the
    companies which supply our cars if this could be done? I note that
    General Motors already does this when it supplies new locomotives.
    ``Factory fill'' lubricating oil from GM for locomotives is re-refined.
    Additionally, Mercedes-Benz supplies all it's cars from the factory in
    Europe with re-refined oil.
        Response. The automobile manufacturers with whom we contract (Ford,
    General Motors, and Chrysler) do not deliver newly manufactured
    vehicles with either re-refined oil or retread tires to the Federal
    Government or to their commercial dealers. This continues to be their
    position despite our discussions with them. While the Federal
    Government does purchase a large number of vehicles annually, our total
    purchases represent less than 1 percent of total automotive sales.
    Because of the small percentage, we have not been able to influence the
    use of re-refined oil or retread tires.

        Question 20. Also, when we lease cars, why doesn't GSA require, as
    a condition of the lease, that the dealer who services the car provide
    re-refined oil for regular oil changes? Normally, GSA leases a number
    of cars from the same dealership. Shipment of rerefined oil in case or
    drum lots to those dealerships from the Defense Logistics Agency seems
    highly feasible to implement such a condition of lease.
        Response. GSA Fleet leases vehicles to Federal agencies. The
    customers are dispersed throughout the country and may use various
    venues to service their vehicles. However, in the instructions we
    provide to the lessor and commercial maintenance provider, we do
    encourage the use of re-refined oil.

        Question 21. A few years ago, GSA very successfully eliminated all
    sales of virgin copier paper. Why is it that you still sell virgin desk
    top accessories, toner cartridges, binders and other virgin paper
    products when the recycled products have been proven to perform as
    well, to be cost competitive and readily available in the marketplace?
        Response. Except for copier paper, Federal agencies may purchase
    other than CPGcompliant products if they find either the price,
    availability or performance of a CPGcompliant product does not meet
    their requirement. According to E.O. 13101 this determination rests
    with the procuring agency, which must document it in writing if the
    purchase is over $2,500. FSS, therefore, offers the full range of desk
    top accessory products, There is no requirement that only recycled-
    content desk top accessories be bought and made available. We would be
    restricting competition if we only offered recycled-content desk top
    accessories. Further, there may not be equivalent products in all
    categories that are cost effective and available in quantities to meet
    the needs of a wholesale program. We encourage our commercial partners
    to offer the maximum amount of recycled content in their products. We
    comply with the requirements of Executive Order 13101. Offerors must
    identify energy-efficient office equipment and supplies that contain
    recovered material, remanufactured products, or other environmental
    attributes. These items are identified in Government catalogs and
    pricelists, including GSA Advantage! to assist Federal agencies in
    purchasing products with environmental attributes.

        Question 22. Why can't you eliminate the virgin products altogether
    from your catalog when there is a CPG equivalent?
        Response. Federal agencies may purchase other than CPG-compliant
    products if they determine either that the price, availability or
    performance of a CPG-compliant product does not meet their
    requirements. This determination should be based on a life cycle cost
    assessment to ensure that they consider, for instance, the cost of
    disposal of non-compliant products, We fully support Federal efforts to
    procure CPG-compliant products and other recycled content products, and
    we have implemented strategies to inform customers of the requirement
    to purchase those items and identify the compliant products. However,
    GSA's mission is to efficiently and effectively serve as a source of
    supply for all Federal agencies. In this role, GSA/FSS provides
    agencies with both CPG products and, if such CPG products do not meet
    the agency's needs in terms of cost, availability or performance, non-
    CPG products.
        However, the products listed in our Environmental Products and
    Services Guide (EPSG) are not made with virgin materials. The EPSG is
    published with the intent of promoting products and services that are
    beneficial to our environment. Therefore, the EPSG does eliminate
    virgin products altogether. It is important to note that the hard copy
    version of the EPSG is printed with soy ink on 100 percent recycled
    paper, made without chlorine, including 30 percent post-consumer
    recovered material. We make the EPSG available to Federal buyers via
    the Internet, while reducing the amount of copies that we distribute in
    print. We are pleased to inform you that this year's on-line edition of
    the EPSG has a feature that allows Federal buyers to produce a faxable
    purchase order form to further encourage the acquisition of products
    that contain recovered materials, in addition to other environmental
    attributes.

        Question 21. How is GSA prioritizing the environmental attributes
    it is examining?
        Response. Existing environmental laws and regulations, as well as
    Presidential Executive Orders that pertain to environmental product
    procurements are given the highest consideration. Also, we actively and
    willingly participate in interagency workgroups that are tasked with
    implementing uniform environmental policy strategies. We assess
    recommendations that are generated by these workgroups and prioritize
    them accordingly.
        In the construction and major modernization of buildings, PBS is
    using the U.S. Green Buildings Council's building rating system,
    Leadership in Energy and Environmental Design (LEED). This system
    identifies a number of environmental attributes across the range of
    building phases including: Sustainable Sites, Water Efficiency, Energy
    and Atmosphere, Materials and Resources, Indoor Environmental Quality,
    and Innovation and Design Processes. Each of these attributes is
    assigned a point range dependent on what the project demonstrates and
    culminates in a total score that can earn the Green Building rating of
    ``Certified, Silver, Gold or Platinum.'' In this respect,
    prioritization of environmental attributes is achieved through a peer-
    reviewed, third party system.

        Question 22. Is GSA working with EPA's Environmentally Preferable
    Purchasing Program to develop ways of identifying more environmentally
    preferable products?
        Response. We fully support and applaud the efforts of the EPA
    Environmentally Preferable Purchasing (EPP) Program. Since 1993, GSA
    has been working with the EPA Office of Pollution Prevention and Toxics
    to identify opportunities to promote and encourage the acquisition of
    environmentally preferable products. The GSA Public Buildings Service
    (PBS) and the Federal Supply Service (FSS) participated with EPA in the
    Environmentally Preferable Products (EPP) pilot program for cleaning
    products. The joint effort of PBS and FSS focused not only on products
    offered in the supply system, but also on the use of these products in
    our Federal buildings. This became the prototype for EPA's EPP Pilot
    program. Since the inception of Executive Order 13101, in 1998, GSA has
    worked with EPA on pilot projects to assist with the implementation of
    the EPP guidance. Federal case studies of EPP are examples where
    environmental preferability was factored into purchasing decisions.
    These ``success stories'' can be found in EPA's EPP website and include
    the cleaning products studies performed jointly by GSA and EPA.
        In 1998, the Federal Supply Service also released a guidance
    document for reporting information on environmental and performance
    attributes of architectural interior/exterior latex paints. Since then,
    we have published various documents and bulletins to advise Federal
    agencies on the environmental and performance attributes that they
    should consider while making their purchasing decision.
        In addition, our FSS Environmental Programs web site was developed
    to promote the use of environmental products and services. We have
    posted a matrix of coating specifications (Federal and military) on the
    web site. It contains information that is intended to be a useful
    reference tool for Federal agencies interested in purchasing coatings
    that are less detrimental to the environment. This matrix can be used
    to locate a coating specification or commercial item description (CID)
    that meets a specific performance requirement and, at the same time,
    view the environmental attribute that is associated with that
    performance requirement. Also, we have links on the FSS Environmental
    Programs web site to The EPA Environmentally Preferable Purchasing
    Program web site. These web links give our customer agencies access to
    EPP training tools, EPP pilot projects, and important EPP documents.
        We also support the EPA EPP program by providing Federal agencies
    with value-added information so they can make an informed and well-
    justified purchase decision, in accordance with EPA EPP guidelines. We
    obtain, evaluate and disseminate information from applicable Commercial
    Item Descriptions (do), Federal Specifications and Military
    Specifications. These ClDs and specifications are often the driving
    force behind certain prescribed environmental product attributes as
    well. Product information is organized within the GSA Environmental
    Product and Services Guide, as well as in GSA Advantage!--our on-line
    ordering system.
        Our schedule contractors often provide Federal agencies with
    environmental information (e.g., environmental claims, product
    profiles, etc.) about their products either on the label or through
    product literature. This information is passed on to Federal agencies
    via published product descriptions contained in printed pricelists and
    other marketing advertisements and GSA Advantage!.
        And last, we obtain, evaluate and disseminate environmental
    information obtained from ``third-party'' non-governmental entities.
    Two of the primary third party, nongovernmental certification
    organizations in the United States are GreenSeal and Scientific
    Certification Systems. GreenSeal is the primary independent
    certification organization in the United States and has already worked
    with private industry, U.S. EPA, the Department of Defense, General
    Services Administration (GSA) and others to develop environmental
    certification criteria for 34 product categories. Scientific
    Certification Systems' specifications are based not only on product
    characteristics, but the situation in which products are manufactured
    and the environment in which they are used. GSA architectural and anti-
    corrosive paint, and adhesive suppliers now have the option of
    ``certifying'' their product(s) and/or manufacturing processes against
    either of these established ``third-party'' certification standards
    and/or specifications. Certification is not required, and GSA does not
    endorse any certification option over another. However, any
    manufacturer who becomes ``certified'' under one or more of the above
    mentioned standards/specifications would be properly delineated for
    customer reference.

        Question 23. Does GSA have a team devoted to environmental
    purchasing issues? If so, how large is the team? What is the funding
    level? How is it structured? Who manages it? What is needed to make it
    more successful? What are the challenges facing the team?
        Response. Yes. FSS has a team devoted to environmental purchasing
    issues. The team has four associates whose full time responsibilities
    are devoted to furthering environmental initiatives and compliance with
    a broad range of environmental laws and regulations. The annual
    salaries and benefits of these associates is $390,636. The team is
    located within the Office of Acquisition and organized as the
    Environmental Programs Branch within the Environmental and Engineering
    Division, FSS Acquisition Management Center. A branch chief manages the
    branch's responsibilities. We believe the team is successful in
    furthering environmental initiatives, not only on an agency basis but
    governmentwide. For example, FSS publishes an Environmental Products
    and Services Guide, as the best source of information on all the
    environmentally oriented products and services that are available from
    GSA's Federal Supply Service. Other examples of the team's initiatives
    were provided in the written testimony. Higher levels of success and
    challenges are interrelated. FSS continues to work on those challenges
    that we can control such as identifying best solutions and promoting
    these products through the GSA Schedules program. FSS will continue to
    strive to assist customer agencies to meet their environmental program
    mission objectives.
        Additionally, PBS has an Environmental Strategies and Safety
    Division with a Director who reports directly to the GSA Agency
    Environmental Executive. This division is staffed with 12 employees
    responsible for a wide range of issues related to both safety and
    environmental initiatives, including managing and monitoring the agency
    Affirmative Procurement Program (APP) and the PBS Green Building
    Program. Annual salaries and benefits for this division total
    $1,170,194. This division continues to work with FSS to make CPG-
    compliant purchasing easier through their on-line ordering system and
    schedules programs. They have partnered with the GSA Office of
    Acquisition Policy, which chairs the FPDS interagency committee and is
    responsible for the FAR and the GSA supplemental acquisition
    regulations. The Safety and Environmental Strategies Division also
    works closely with the OFEE and the Task Force and will continue to do
    so to improve GSA's environmental stewardship, both internally and in
    its governmentwide role.

        Question 24. How does GSA determine which products are more
    environmentally preferable?
        Response. GSA, through the Federal Supply Service, makes a wide
    range of products and services available to Federal agencies, on a non-
    mandatory basis, to satisfy their mission needs. We do not make a
    determination for the agency about which products are more
    environmentally preferable than others. To assist the agencies in
    compliance with the requirements of various environmental orders and
    other regulations, GSA offers products that have recycled content, are
    CPG-compliant, are energy and/or water efficient and are less
    detrimental to the environment. It is up to the procuring agencies to
    determine their needs and select the most appropriate items. With
    respect to environmental preferability, a given item may be more
    appropriate in one area of the country while a different item may be
    more appropriate in another. An example of this is contained above
    under Question 24 wherein a matrix of coatings was mentioned that GSA
    has posted on the Environmental Programs web site. The matrix can be
    used to locate a coating specification or commercial item description
    (CID) that meets a specific performance requirement and, at the same
    time, view the environmental attribute(s) associated with that
    performance requirement.
        Since 1993, GSA has been working with the EPA Office of Pollution
    Prevention and Toxics to identify opportunities to promote and
    encourage the acquisition of environmentally preferable products. In
    1998, the Federal Supply Service also released a guidance document for
    reporting information on environmental and performance attributes of
    architectural interior/exterior latex paints.
        Since then, we have published various documents and bulletins to
    advise Federal agencies on the environmental and performance attributes
    that they should consider when making their purchasing decision.

                                   __________
         Statement of Dobbins Callahan, Buy Recycled Business Alliance

        Thank you, Senator Jeffords, Senator Smith and the full committee
    for the opportunity to speak today.
        I serve as chair of the Buy Recycled Business Alliance (BRBA), an
    organization within the National Recycling Coalition dedicated to
    bringing purchasers and vendors of recycled content together in order
    to advance the purchase of recycled content products. My company, C&A
    floorcoverings Inc, has been involved with BRBA for several years. We
    manufacture and sell high performance carpet products, available in a
    wide range of colors and styles and available with significant levels
    of recycled content. All of our products are also 100 percent
    recyclable.
        Before I begin, I also want to commend the work of the ad hoc
    coalition--National Recycling Coalition, Steel Recycling Center,
    American Plastics Council, Recycled Paperboard Alliance, American Zinc
    Association, Consumer's Choice Council--for recognizing the importance
    of green procurement and recycling, and working together to focus
    congressional attention on the GAO report.
        The two aspects of Federal purchasing of recycled content products
    with which I am most familiar are, first, EPA's issuance of
    Comprehensive Procurement Guidelines (CPG's) and the Recovered Material
    Advisory Notices (RMANs) as prescribed by the Resource Conservation and
    Recovery Act 6002 (RCRA); and second, the General Services
    Administration's procurement process through the use of contracts with
    vendors. I am particularly familiar with issues involving Federal
    procurement of products that represent new and innovative technology,
    as would be the case of course with recycled content products.
        Through my company's efforts to bring recycled content products
    into the Federal marketplace, I have personally been involved with the
    process of having products ``designated'' through the U.S. EPA.
    ``Designation'' means that EPA has studied a product category, found
    suitable products within the particular category to be available with
    meaningful recycled content, and has determined the practical levels of
    recycled content that are commercially available to the Federal
    marketplace. Once products have been ``designated'' by EPA, the
    purchase of those products with recycled content is essentially
    mandated for Federal purchasers.
        While I have the greatest respect for the people at EPA who are
    doing this work, and are impressed by their commitment, dedication, and
    hard work, intrinsic to the designation process are two obstacles to
    making innovative products available to Federal purchasers. The first
    obstacle in the Comprehensive Procurement Guideline process is that
    before ``designation'' can occur, there must be competitive products
    available offering comparable levels of recycled content. This is both
    a disincentive for a company to be first in the market place and also
    delays the imprimatur to purchase recycled products that EPA
    designation can provide.
        I understand, and support, the wisdom of not mandating a product
    when there is only one supplier. Even the best of companies could be
    tempted under those circumstances. But the inability to designate a
    product because it is too advanced to have direct competition means
    that these products cannot be promoted in the Federal market place and
    are not given the benefit of the progressive procurement efforts
    conducted by the Office of the Federal Environmental Executive (OFEE).
    Until there is formal recognition under EPA's CPG process, OFEE is
    somewhat limited in what it can do to promote purchases of a product
    regardless of the quality of the product or the recycled content.
        My suggestion is that there be another category in the CPG / RMAN
    process. A product could be ``recognized'' to meet the intent of
    Executive Order 13101 and RCRA 6002, but not be designated because of
    lack of competition. This recognition would allow Federal agencies to
    use procurement of these products to meet 13101 goals, but procurement
    of these products would not be mandated. Currently, a recycled content
    product can be available with high levels of recycled content and
    suitable performance characteristics but will not be designated by EPA,
    and cannot be used by Federal purchasers to meet recycled content
    purchasing goals, simply because there is no similar competitive
    product with recycled content. I'll address pricing concerns in a
    moment.
        The other obstacle to having recycled content products promoted to
    Federal purchasers is the sheer amount of time it takes to go through
    the designation process. It literally can take years to go through the
    evaluation process, the public comment period, the review period, and
    the designation. I want to reiterate that the people I have worked with
    at EPA are, without exception, hard working, dedicated and committed
    people with a willingness to do the right things. This is not an issue
    of the quality of people. To the contrary, faced with the Herculean
    challenges they face, I think they have had remarkable success. The
    first problem is that they simply don't have the resources available,
    in my opinion, to accomplish their task in a timely fashion. The second
    problem lies within industry itself. EPA has a very open process of
    inviting industry to participate from the inception of the review of a
    product category through its final designation. Along with the
    opportunity to influence regulations that this affords to industry
    should come an obligation to be responsible in the process. My
    experience is not encouraging in this area. Unfortunately, the research
    and designation process can be manipulated by less than complete
    information. Obviously, it is in the best interest of a manufacturer to
    appear to be complying with the intent of the proposed CPG designation.
    It is apparent that in this process some industry members have not been
    as forthright as the process is designed to encourage. If EPA had
    additional resources it would be able to at least spot-check some of
    industry's claims in greater detail. EPA could also require companies
    submitting information to state they are in compliance with the FTC's
    Guide to Environmental Marketing Claims. The other aspect of Federal
    procurement that I would like to address is the General Services
    Administration and particularly the National Furniture Center in
    Arlington. GSA changed its procurement process several years ago from a
    ``single award'' schedule or contact to a ``multiple award schedule''
    (MAS). Rather than vendors submitting products for bids in narrowly
    defined product categories, and having only one vendor for each
    contract, GSA now defines categories broadly, assigns specific criteria
    for a product to be included in the category, and then negotiates
    pricing with the vendor rather than obtaining competitive sealed bids.
    A means of negotiation is for the prospective vendor to document to GSA
    that its is offering the product at the lowest price it offers the same
    product to its best customers in the commercial market place. GSA
    therefore obtains for its customers the best price that competitive
    forces have established for the product. Because GSA uses the best
    competitive price, the need for sealed bids is eliminated and the
    Federal customers are still assured of ``best value'' purchases. While
    there are many advantages to this approach, the advantage that is
    significant to this issue is that GSA can and has placed recycled
    content products on the GSA contract, even if there is no other
    comparable products available with recycled content, and Federal
    purchasers can purchase these products without having to further
    competitively bid them. The Federal Acquisition Regulations recognize
    this process as establishing best value. If EPA can overcome the
    barrier of not recognizing products, which have no competition, GSA
    offers a vehicle to get these products to the Federal marketplace
    without the agencies having to be concerned with finding competitive
    recycled content products and with full assurance that pricing is at
    best value levels.
        GSA is effective through other efforts as well. GSA nationally has
    a program, ``Planet GSA,'' specifically structured to bring Federal
    agencies into contact with those companies that are providing products
    meeting Federal agencies needs for environmentally preferable products.
    These meetings, conducted periodically at strategic GSA locations
    across the country, provide the perfect venue for Federal customers who
    are interested in ``buying green'' to meet vendors with the best
    products for their needs. My experience with Planet GSA shows they have
    been exceptionally well done and are successful.
        The next two programs are specific to the National Furniture
    Center. Through the NFC, the companies with the very best efforts in
    environmental initiatives are recognized with the ``Evergreen Award.''
    Not only does this award provide an incentive for vendors to offer more
    recycled content products; it also gives those companies who have won
    the award credibility and recognition with Federal purchasers, thereby
    encouraging the purchase of recycled content products. Also, several
    years ago, the Furniture Center established its ``Quality Partnership
    Council.'' The purpose and result of the QPC is to bring vendors and
    Federal purchasers together to develop more effective and efficient
    means of procuring products through the Multiple Award Schedules. I was
    a participant of the QPC meetings for several years and saw as an
    observer how very effective this organization was in streamlining
    Federal purchasing; including purchasing recycled content products. The
    QPC meetings have all the appearance of the most aggressive corporate
    board meetings, except they are run more efficiently. My suggestion is
    that all Procurement Centers expedite adopting the QPC concept. It is a
    model of efficiency and of industry and government working
    cooperatively for everyone's benefit.
        The theme I have tried to develop is that most of the mechanisms
    are in place for much more effective purchasing of recycled content
    products by Federal purchasers. With adequate resources, a resolution
    of the ``competitive'' requirement, and a means to hold industry more
    accountable for comments made regarding proposed CPG's, EPA can be
    effective in designating more products quickly. GSA, through its
    Multiple Award Schedule has the vehicle to take these products to the
    Federal marketplace, and innovative programs like ``Planet GSA, the
    Evergreen Award, and The National Furniture Center's Quality
    Partnership Council can reinforce the good work being done by the OFEE
    in its efforts at affirmative procurement.
        Thank you.

                                     ______

       Responses of Dobbin Callahan to Additional Questions from Senator
                                    Jeffords

        Question 1. You recognized the good work being done by GSA's
    National Furniture Center in promoting the purchase of recycled content
    products through a variety of innovative approaches. Do you have a
    specific perspective on how well Federal purchasers across the board
    are being trained to bring about the intent of 13101 / RCRA 6002?
        Response. From my perspective as an industry representative and as
    Chair of both the Buy Recycled Business Alliance (BRBA) and The
    National Recycling Coalition (NRC), I don't have insight into the
    mechanics or the magnitude of training of Federal purchasers. Frankly,
    I cannot determine how active The Defense Acquisition University (DAU),
    the Federal Acquisition Institute (FAI) and others have been in
    developing and offering training courses on green purchasing. It is my
    perception, however, that progress has been made in this area. Five
    years ago, virtually no Federal purchasers that we called on were aware
    of the requirements of 13101. In my estimation, today close to half of
    the purchasers we call on have at least a working knowledge of their
    recycled content purchasing requirements. While obviously ``close to
    half'' is not good enough, it's a big improvement. I believe that a
    comprehensive, broad-based training program that provides agency staff
    with not only the background on 13101 but also an overall briefing on
    RCRA, the EO's, and some concrete examples of purchases that have met
    the 13101 requirements is essential. Both BRBA and NRC have held
    training sessions targeted to local, regional and State government
    procurement officials. Additionally, BRBA and NRC have targeted
    corporate purchasing professionals with not only direct training
    sessions but also developed a Managers Purchasing Guide that includes
    basic ``how to purchase recycled products'' along with simple steps for
    companies.
        At issue is more than just training regarding the ``mechanics'' of
    13101 purchasing. I am certain that there is a largely unaddressed need
    for better training in evaluating environmental marketing claims being
    made by vendors to the Federal Government. As I will discuss below,
    purchase decisions are being made based on incorrect conclusions due to
    Federal purchasers being unable to differentiate between various
    claims. The fault is not with the purchasers. They are doing far better
    than could be expected based on the challenges they face in trying to
    make informed decisions. I will develop this further in my answer to
    the next question.

        Question 2. In your testimony, you referred to ``ambiguous''
    environmental marketing claims and FTC's potential role in reducing
    these claims. How widespread do you think the problem is? I know that
    you were representing BRBA and not the carpet industry specifically,
    but it would be appropriate for you to call upon your carpet background
    to answer the question.
        Response. In my opening testimony, and in the question and answer
    portion that followed, I referred to ``ambiguity'' in marketing claims
    and the subsequent confusion created by these claims. The use of
    misleading marketing claims creates one of the most significant
    barriers to purchasing recycled content products in commercial markets,
    as well as the Federal marketplace.
        It is my personal philosophy, and that of my company, to ``take the
    high road'' in marketing our products and in talking about competitors.
    While my answer was consistent with my desire not to criticize
    competitors, upon reflection, I think that my answer was a disservice
    to the hearing. As you know, I do believe that misleading information
    within environmental marketing claims is widespread and, at least to a
    significant degree, intentional.
        My perspective is based on the fact that I have spent most of my
    working career in the carpet industry, and my specific observations are
    on the carpet industry. I do, however, have broader perspectives coming
    from my involvement with the BRBA and the NRC, and my strong personal
    commitment to environmental issues. I am convinced that the problem of
    misleading marketing claims is by no means unique to any one industry
    and is far more widespread than we would all desire.
        Before I get to specifics, I would like to assure you that I am not
    trying to position my company as perfect or as the arbiter of what is
    right and wrong in industry. I would add, however, that we do
    everything within our power to understand and comply with responsible
    environmental marketing practices.
        We see project after project within the carpet industry in which
    the customer is given so much conflicting information by vendors that
    it is virtually impossible for a reasoned choice to be made. Obviously,
    these same projects are awarded based on erroneous conclusions made as
    a result of misleading information provided by vendors.
        For example, we see claims of recycled content in products in which
    we know the recycled material is not available or at least is not
    available in reasonable quantities.
        We see claims of products available with very high-recycled
    content, but with obscure qualifiers, separate from the claim, saying
    that the manufacturer reserves the right to substitute virgin content
    at any time without notification to the customer. We have seen claims
    of ``up to 100 percent recycled content'' when we know the recycled
    content is 0 percent. Unfortunately, in these examples and others, we
    know that the vendors making the claims are aware that the claims are
    not consistent with the FTC Guides.
        In the past, Corporate America could be relied upon to be extremely
    competitive though essentially honest. It was this intense competition,
    along with basic integrity, that brought about huge technological and
    social advances in our economy.
        Today there seems to be, among some companies, a disregard for
    honesty in marketing, with ``closing a deal'' being more important than
    fundamental ethics in business. I don't think it would be a
    mischaracterization to say that the same disregard for principles that
    has led to the recent corporate accounting scandals is driving at least
    some environmental marketing programs.
        When companies can be successful in environmental marketing through
    misleading claims, they have no incentive to actually develop the
    innovation that can bring improved systems and products to the
    marketplace. While it would not be fair to say there is a lack of
    effort in developing recycling programs, I am convinced that it is not
    happening as fast as it should or could if corporations were holding
    themselves accountable, or being held accountable, by their
    shareholders or by the Government.
        I want to add that I do not think that the majority of American
    companies are misleading customers either intentionally or
    unintentionally. Those who are doing good things, however, are being
    harmed by the few who are getting away with not trying to do the right
    things.
        Misleading information also causes a hardship for Federal
    purchasers. No matter how well trained or intended Federal purchasers
    are, I don't think it is possible, in many cases, for them to make
    informed choices. As a result, they either make choices that don't
    accomplish what they intend or they give up in frustration.
        I think the solution is multifold.
        1. In addition to being taught the mechanics of purchasing under
    13101 / RCRA 6002, etc., Federal purchasers should be taught how to
    recognize and avoid misleading marketing claims. Immediately upon
    becoming aware that there was a problem in making and interpreting
    environmental GSA's Furniture Center, which I mentioned in my
    testimony, began a program to better educate vendors and purchasers
    regarding the FTC guides. GSA at the Furniture Center is helping
    purchasers and vendors alike to understand how to present and evaluate
    marketing claims. While this is a non-regulatory approach, as Federal
    vendors find that Federal purchasers are equipped to interpret
    misleading claims, they will be more constrained to tell the truth. The
    education program also will provide a forum for vendors to suggest
    improved accountability among themselves, with GSA's oversight.
        2. Industry trade groups should be encouraged to establish programs
    of accountability. Because the consensus nature of trade groups can
    squelch the influence of the most innovative members, an independent,
    third party organization could be set up as both a training
    organization to ensure that the corporate community is briefed on the
    FTC Guides. An independent third party organization could provide the
    necessary accountability and oversight needed to ensure compliance and
    reduce misleading claims.
        3. The National Recycling Coalition is undertaking a program
    (similar to GSA's) to educate purchasers and vendors. The difference is
    that NRC's audience embraces State governments, private corporations
    and NGO's, in addition to Federal customers. Like GSA, NRC's approach
    will be educational in nature with no intent of establishing
    regulations or penalties. It would be within the mission of NRC to help
    industry groups develop the self-assessing programs I suggested in
    number 2, above. A suggestion from this committee that such an
    undertaking would be valuable would serve as a great encourager to NRC.
    4. As much as I believe in the effectiveness of educating purchasers
    and vendors and in industry self-regulation, I suggest that there will
    have to be some degree of enforcement also. This will protect the vast
    majority of ``good actors'' from the few who aren't. While the FTC does
    not have staffing to evaluate most, or even many, claims, a few high
    profile, well-publicized cases in which misrepresentations have been
    brought to light would be very effective. Just as not every accounting
    malpractice can be prosecuted, neither can every misleading marketing
    claim. If a few are, however, the possibility of discovery will
    certainly encourage others to be more ``careful.''
        If it becomes apparent that the FTC is serious about uncovering
    corporate misrepresentations, especially to the Federal marketplace,
    this would have a huge impact on these claims. The companies that are
    doing the right things would celebrate accountability in their
    marketplace. It would become much more practical for Federal purchasers
    to do their jobs responsibly, and the purchase of recycled content
    products would move forward much more aggressively.
        Thank you for the opportunity to clarify my remarks. I don't think
    that there is any single greater barrier to Federal purchasing of
    recycled products than the confusion caused by misleading (ambiguous)
    marketing claims. Through better education of purchasers, better
    industry self-regulation, and the high profile involvement of the FTC
    in enforcing existing guidelines, more recycled content products will
    be purchased to the significant betterment of the environment.

                                   __________
       Statement of Clifford P. Case, National Recycling Coalition, Inc.

        I am grateful to Senator Jeffords, Senator Smith and the full
    committee for the opportunity to speak today on behalf of the National
    Recycling Coalition about the importance of Federal procurement of
    recycled products. Recycling makes environmental sense and economic
    sense; it is enduringly popular with citizens of all ages and
    backgrounds throughout the Nation; it is thoroughly bipartisan; and it
    deserves the full support of all agencies of the Federal Government.
    But while much has been accomplished since the first Earth Day focused
    public and governmental attention on recycling, much, much more remains
    to be done.
        I am an attorney, and co-direct the Environmental Practice Group at
    my firm, Carter, Ledyard & Milburn in New York City and Washington, DC.
    For over 30 years I have maintained a significant interest in recycling
    and tried to do what I could, as a lawyer, to make it grow, including
    founding the National Recycling Coalition in 1978 to unite the diverse
    groups who wish to see recycling succeed. The Coalition has 5,000
    members representing all aspects of recycling: volunteer recyclers,
    State and local government officials, businesses collecting and sorting
    materials for recycling and manufacturers of recycled products.
        It is fitting that we speak here of Federal procurement of recycled
    products, because it was the passage of the Resource Conservation and
    Recovery Act and its signature by President Ford in October, 1976 that
    was a major catalyst for the organization of the National Recycling
    Coalition. Recycling has always been recognized as a prime method of
    conserving resources, and consequently, RCRA contained an important
    provision, Section 6002, that for the first time required that the
    Federal Government's purchasing power be used to support recycling. An
    important reason for the formation of the National Recycling Coalition
    was to work for the implementation of Section 6002 and later efforts to
    use Federal procurement to strengthen the markets for recovered
    materials and thus make more recycling possible.
        Have we done enough in the past quarter century to comply with
    Section 6002 and the executive orders subsequently issued by the first
    President Bush and by President Clinton on procurement of
    environmentally preferable products? Unfortunately, no. Things started
    off on the wrong foot when the Environmental Protection Agency failed
    to issue guidelines for the purchase of recycled products by deadlines
    added to Section 6002 by Congress in the face of agency inaction,
    forcing the National Recycling Coalition and Environmental Defense to
    sue EPA, successfully, for an order directing guideline issuance.
        Since that time some progress has been made, but as documented by
    the General Accounting Office's June 2001 report, ``Federal
    Procurement: Better Guidance and Monitoring Needed to Assess Purchases
    of Environmentally Friendly Products,'' by no means has that progress
    been sufficient. There have been limited successes and isolated
    achievements, but anecdotal accomplishments are not enough.
        In general, Federal agency procurement does not take advantage of
    the broad range of high-quality recycled products available in the
    marketplace today. As the GAO report makes clear, most agencies do not
    know what recycled products they are purchasing, and government buyers
    lack knowledge as to what products are available or how to get them.
    Purchasing data is fragmentary, in most cases based only on estimates,
    and incomplete. Many agencies report little or no information, and
    important components of many agencies (for example, in the case of the
    Department of Defense, the Army, the Navy and the Air Force) provide
    little or no information.
        Moreover, the programs that do exist cover direct agency purchases
    only. I know of no instance in which agencies make any effort
    whatsoever to assure compliance with Section 6002's affirmative
    purchasing requirements by their contractors and grantees. This is of
    vital importance because purchases by contractors and grantees using
    Federal funds are often much more significant than those of the
    agencies themselves: GAO notes that in fiscal year 1999, 85 percent of
    the total outlays of the Department of Housing and Urban Development
    were for grants to States and local governments, and 69 percent of the
    total outlays of the Department of Transportation were for such grants.
    It is safe to say that none of those grantees knew that by law, they
    were required to give a preference in purchasing to recycled products.
        A review of agency responses to the GAO report demonstrates that
    while most agencies give lip service to the importance and desirability
    of recycling, they do not take responsibility to make procurement of
    recycled products work, either for themselves or for their contractors
    and grantees. Moreover, these agencies make no effort to justify their
    failures to perform. While noting that training of buyers in
    procurement of environmentally preferable products is needed, the
    agencies show no indication of any attempt to provide such training,
    either on their own or in conjunction with others, despite being
    charged by Congress with the duty of affirmative procurement of
    recycled products. Such blatant disregard of the law should no longer
    be condoned.
        This bureaucratic foot-dragging, prolonged for over two decades, is
    immensely frustrating to those of us who have been advocates for more
    recycling over the years, but it is also important to society as a
    whole, because the ability to recycle more, and thus achieve the
    benefits of conservation of resources, reduction of pollution and
    savings in energy--all important to our national security as well as to
    the environment--depends directly on strong markets for recovered
    materials, and these markets depend directly in turn on strong markets
    for the recycled products made from those materials. Every time a
    Federal agency fails to buy a product made from recovered paper,
    plastic or metal, it condemns that material to the landfill instead of
    to a new, productive rebirth as a recycled product. Every time a
    Federal agency fails to require its contractor or grantee to use
    construction products made from recovered materials, it ensures that
    those materials will be thrown away and not recovered.
        This is not by any means an academic issue. This past July 1, in my
    home of New York City, the Department of Sanitation stopped collecting
    recovered glass and plastic bottles and paperboard drink containers.
    The reason asserted by the City administration? A lack of markets for
    these recovered materials. One may be somewhat skeptical of the City's
    reasoning here--I know I am--but the fact remains that a number of
    municipalities have recently cited a lack of markets as a reason for
    cut-backs in recycling collection efforts. Furthermore, data from the
    Environmental Protection Agency show that after a decade of significant
    growth, the nation's recycling rate leveled off in the late 1990's:
    waste generation began to increase faster than recycling. Moreover,
    many of the products entering the waste stream today, in particular the
    ever-growing flood of obsolete electronic equipment, are particularly
    tough to recycle, and require even more effort to achieve success in
    recycling than the simpler waste materials of the past.
        Given this background, it is especially infuriating to encounter
    the bland assertions of procurement bureaucrats that purchasing
    recycled is too difficult to do, or requires more information that is
    not easily available, or more training that someone else needs to
    provide, and so on ad finitum.
        It is evident that we need to do more than we have been to break
    down the barriers to greater success in government programs to buy
    recycled. Most importantly, every responsible procurement official
    needs to make buying recycled an important part of his or her duties,
    and every government contractor and grantee needs to receive clear
    instructions on its obligation to recycle. If these duties and
    obligations are not fulfilled, definite sanctions should be imposed,
    proportionate to the seriousness of the offense. For a procurement
    official, a failure to buy recycled should be recognized as a failure
    to perform his or her duties of office. For a contractor or grantee, a
    failure to buy recycled should be recognized as a failure to perform
    the terms of its contract or grant agreement.
        Several promising initiatives have been proposed to increase the
    success of the government's procurement programs for recycled products.
    The National Recycling Coalition has not taken an official position on
    these initiatives, but we hope this committee will consider some or all
    of them. They include: codification of the existing executive orders on
    procurement to, among other things, give statutory sanction to
    principles of design for recyclability, life-cycle costing and reliance
    on environmentally preferable products; requiring major improvements in
    the woefully inadequate information collection system for purchasing
    recycled products, so that year-over-year progress--or its absence--can
    be more clearly tracked; providing for mandatory training programs for
    government buyers, to take the mystery out of buying recycled; and a
    congressional award program to recognize those dedicated public
    servants who, despite all the current obstacles, have nevertheless
    managed to buy recycled products successfully.
        Coupled with these new initiatives must, however, be a continuing
    interest in this subject on the part of Congress, because no
    legislation is self-executing and careful oversight is essential. If
    nothing else, the history of Section 6002 of the Resource Conservation
    and Recovery Act since 1976 teaches us that!
        We commend this committee for its interest in government
    procurement of recycled products. As we know you agree, the benefits of
    recycling are great and have been repeatedly documented. But we cannot
    achieve these benefits unless we take buying recycled seriously. The
    government represents us all and should be the leader, not the laggard,
    in doing just that. The National Recycling Coalition looks forward to
    working with you over the coming months to make sure that this vision
    of true government leadership becomes reality.

                                   __________
    Statement of Fred von Zuben, Chief Executive Officer, the Newark Group,
             on behalf of the American Forest and Paper Association

        Mr. Chairman, and members of the committee, my name is Fred von
    Zuben and I am pleased to have this opportunity to present the views of
    the American Forest & Paper Association on a subject of critical
    importance to our industry: recycling. I am CEO of The Newark Group,
    Inc., a 100 percent recycled paperboard manufacturing company
    headquartered in Newark, New Jersey. My company has over 100 years of
    experience manufacturing recycled paper products, and I am pleased to
    lead a committee of CEO's in the industry focused on issues related to
    recycling and recovered fiber.
        The American Forest & Paper Association (AF&PA) is the national
    trade association representing more than 240 member companies and
    related associations that engage in or represent the manufacturers of
    pulp, paper, paperboard, and wood products. America's forest and paper
    industry ranges from paper mills employing thousands of workers to
    family owned sawmills and millions of woodlot owners. More than 80
    percent of our manufacturing members from the smallest to the largest
    producer rely to some extent on recovered paper as a raw material.

    Paper Industry Record on Recycling
        Over the past two decades recovered fiber became an integral
    component of the paper industry. Capital investment, raw material
    sourcing, and product design decisions now often include consideration
    of the use of recovered fiber and greater recycled content. For
    companies such as mine, this is not a new idea, but for others in
    different segments of the industry, the greater reliance on recovered
    fiber came about more recently.
        In the 1980's, we saw a great increase in the public's interest in
    recycling and a willingness to participate in collection programs
    spawned by concerns over possible landfill shortages and the media
    coverage given the ``garbage barge'' looking for a home for urban solid
    waste. In very short order cities across the country put in place
    residential curbside collection programs and offices sorted out the
    valuable white papers for sale to our mills.
        AF&PA responded to pressures from the public and elected officials
    to increase our use of these recovered materials. In the early 1990's
    our industry pledged to recover for recycling 40 percent of all U.S.
    paper produced. This was an unprecedented goal and as you might imagine
    many--including some in our own industry--were skeptical of our ability
    to meet such a goal. But we did meet it--as billions of capital dollars
    went into upgrades of our facilities and building of brand new mills.
    We institutionalized the market for clean, sorted papers coming from
    residential and commercial users across the U.S. Our recovery goal is
    now 50 percent and we expect to meet that level within the next few
    years.

    Status of Paper Recycling & Utilization in the Paper Industry
        As the committee considers the progress of national recycling
    efforts we believe you will agree that the paper industry represents an
    outstanding success story. According to EPA statistics, more paper is
    recovered in the U.S. for recycling than all other materials combined.
    Paper recovery increased 97 percent since 1987 when the recovery rate
    was 28.8 percent. For specific product categories such as newsprint and
    corrugated containers the numbers are unprecedented: 78 percent and 75
    percent recovery levels respectively. (As you may have experienced,
    finding an empty cardboard box behind a grocery store has become much
    more challenging as our customers invest in profitable baling and
    recovery operations.) Printing and writing papers--often scarce in
    curbside programs have climbed to over 42 percent recovery due to the
    greater diligence of commercial establishments and office buildings. So
    far this has worked, but a crisis is looming. (See Attachment 1,
    ``Recovered Paper Statistical Highlights 2002 Edition'') Perhaps even
    more significant than the increase in the recovery rate is the increase
    in the domestic utilization rate for recovered fiber, which now
    accounts for almost 38 percent of the industry's raw material supply.

    Constrained recycled fiber supplies
        Our expectations of an increasingly constrained recovered paper
    fiber supply were confirmed recently in a study prepared for AF&PA by
    Franklin Associates Ltd., a U.S. consulting firm with years of
    experience analyzing domestic recovered paper markets, and EU
    Consulting, located in Starnberg, Germany, and known for its expertise
    in global paper recycling trends. The report concluded that domestic
    paper mill demand for recovered paper will be squeezed in coming years
    by an anticipated 50 percent surge in U.S. exports of recovered paper,
    with much of the incremental demand coming from China. The two largest
    recovered paper grades--news and old corrugated--are expected to be in
    particularly tight supply in the 2004-2006 time period. The report
    calls for collecting as much news and corrugated as is economically and
    logistically feasible and collecting more mixed papers from homes and
    offices to fill the anticipated gap.
        As domestic and export demand for U.S. recovered fiber continue to
    grow, we run the risk of seeing existing recycled paper and paperboard
    capacity idled due to insufficient fiber availability. Our industry
    looks to recovered paper as a valuable raw material, not as a garbage
    or waste problem to be dealt with. As recyclers we continually fight
    against programs which would give financial incentives to those who
    would use paper as a fuel source, or municipal waste managers who would
    deny us access to recovered paper in their communities.
        Misguided Federal procurement policies exacerbate our recovered
    fiber supply. I have heard many calls for raising the content
    requirement for federally purchased copy paper from 30 percent to 40
    percent. This is a simplistic idea that may in fact hurt more than it
    helps, as it may increase the demand for recovered fibers currently
    going into other recycled products, like tissue or paperboard, without
    leading to a corresponding increase in recovery. Currently, 42 percent
    of Printing/Writing papers are recovered, but 35 percent of that is
    exported, almost 25 percent is used for tissue and an additional 21
    percent is used in recycled paperboard. The unobstructed flow of
    recovered fiber into the products in which it can be most efficiently
    utilized will help, rather than hurt recycling in the long run by
    allowing it to continue to develop in a cost-effective manner.
        As our industry faces potential supply shortages for recovered
    paper the Federal Government should rethink its artificial preference
    for so called ``post-consumer'' paper. Arbitrary definitions and
    recycled content percentages, based on the source of the recovered
    fiber, force recovered fiber into specific products and ignores
    underlying economics and technological constraints.
        It is important to note that the RCRA requirements that underlie
    the Federal procurement guidelines were designed to create a market for
    the materials that were being collected in recycling programs. Today,
    96 percent of all paper being collected for recycling is being used to
    make new paper and paperboard products. The rest is used in other
    applications, such as insulation, animal bedding, composting, and
    molded pulp such as egg cartons.
        Our industry worked closely with EPA in developing the existing
    paper procurement guidelines. As a 100-year old recycler, a company
    such as mine stands to lose if the government arbitrarily raises the
    content guidelines for certain types of paper, like copy paper without
    an adequate supply of recovered fiber available in the market.

    Role of Federal Programs in Paper Recycling
        Mr. Chairman, in response to the committee's request for input on
    Federal procurement of recycled-content products, we would like to
    point to the fact that paper products have received more attention in
    this area than any other product. This, I might say, is a testament to
    the great utility of paper, which we use to disseminate information and
    knowledge in the form of newspapers and books, as consumer goods
    packaging, transport packaging, as tissue and untold other uses.
        Federal procurement guidelines for paper products were first
    developed in 1988, pursuant to RCRA Section 6002. Those guidelines
    identified numerous categories of paper products along with targeted
    recycled content rates. The EPA guidelines for paper products were
    updated in 1996, pursuant to Executive Order 12873, which also set
    specific percentage goals for printing and writing papers. A subsequent
    Executive Order 13101, specifically required Executive Agencies to
    purchase printing and writing papers meeting a minimum recycled content
    of 30 percent. Currently 98 percent of copy paper procured by the
    Federal Government meets the 30 percent post consumer content
    requirement. Yet Federal procurement of Printing/Writing papers
    accounts for only 2 percent of the copier paper procurement in the
    United States.
        Implementation of Executive Order 13101 has focused the Federal
    Government's efforts to buy recycled largely on paper products. There
    are, perhaps, similar opportunities in other products and other
    material groups which should be pursued. The successes of the paper-
    recycling program could serve as a guide for success in other product
    areas.

    Recommendations for Improvements in Federal Recycling Policies
        Mr. Chairman, Members of the committee, there are many reasons for
    the government to take the lead in promoting recycling. Leadership,
    however, means taking a leadership role on both sides of the equation,
    supply and demand. Without a doubt, purchasing managers should be more
    cognizant of what they buy, but at the same time building managers
    needs to be more cognizant about what they throw out and what they
    recycle.
        Given the current state of paper recovery in the U.S., and
    unprecedented use of recycled fiber throughout our industry, we would
    offer the following recommendations for Federal Government actions in
    the area of paper recycling:
        1. Enhance the mission of the Office of the Federal Environmental
    Executive (OFEE) to give greater emphasis to recovery of used paper.
    The Federal Government is a huge user of many high grade office papers
    as well as nearly every product grade manufactured by our industry. We
    understand that many Federal facilities do not offer collection
    programs or actively encourage participation in those programs which
    exist. Agency procurement officials seeking to encourage recycling
    through purchase of higher content recycled products may be missing a
    much greater opportunity by allowing the massive amounts of office
    paper generated within the walls of their own buildings to go
    unclaimed. The OFEE would be well positioned to assist agencies in
    devising collections programs and monitoring the progress of those
    agencies.
        2. Work to improve paper recycling in Federal buildings and
    encourage local officials to continue effective collection and sorting
    programs for municipal solid waste processing. As the committee will
    undoubtedly be hearing today, local budget constraints are leading to
    the elimination of many curbside programs. Fortunately, paper recovery
    is often maintained due to the greater economic sustainability, and
    even profitability of paper--primarily due to the investments our
    industry has made in recycled paper manufacturing and processing (see
    above).
        Our industry was a proud forerunner in building the recycling
    infrastructure starting with Boy Scout and church paper drives. As
    cities and counties have taken over these programs it is critical that
    they maintain a reliable, uninterrupted, and clean flow of recovered
    materials. Our industry invested billions of dollars to meet the demand
    for recycled content products on the assumptions that these private and
    municipal collection programs would continue as a reliable source of
    raw material.
        Mr. Chairman, on behalf of the members of the American Forest &
    Paper Association, I appreciate this opportunity to appear before the
    committee today. As you see from our statement, the paper industry is
    proud of its record on recycling and the recovery of paper from the
    waste stream. Use of recovered fiber is not on the periphery of our
    industry--it is a vital component of our economic health and well-
    being. We look forward to working with you and members of the committee
    as you evaluate Federal policies which will encourage ever-increasing
    paper recovery in the U.S.
                                  ATTACHMENTS

             Statement of the American Forest and Paper Association

      SUMMARY OF FINDINGS: DEMAND/SUPPLY OUTLOOK FOR U.S. RECOVERED PAPER

        The U.S. paper industry has greatly expanded its reliance on
    recovered paper since the late 1980's. Indeed, recovered paper's share
    of total industry fiber consumption has climbed from 25 percent in 1988
    to nearly 37 percent today. The increased importance of recovered paper
    as a source of fiber for U.S. mills was facilitated by technological
    advances and by the rapid growth of curbside, office, and retail
    collection programs.
        Looking to the future, the U.S. paper industry may be facing a
    recovered paper supply shortage that is likely to come to full fruition
    during the 2004-2006 period, but for which early signs may already be
    emerging. This is the central conclusion of a new report on the future
    supply/demand balance for U.S. recovered paper jointly prepared for
    AF&PA by Franklin Associates, Ltd., a U.S. consulting firm with years
    of experience analyzing recovered paper markets, and EU Consulting,
    which is located in Starnberg, Germany, and is known for its expertise
    in global paper recycling trends.
        The report focuses on two key years: 2000 and 2006. The year 2000
    was chosen as a starting point because 2001 data were thought to be
    skewed by the industry downturn. The report suggests that domestic mill
    demand for recovered paper will expand approximately 6.5 percent during
    the 6 year projection period, which is about in line with the growth
    outlook for paper and paperboard consumption. However, this balance
    will be offset by an anticipated 50 percent surge in U.S. net exports
    of recovered paper, with much of the incremental demand coming from
    China.
        Specifically, the report suggests that total demand for U.S.
    recovered paper will increase by some 7.9 million tons during the 2000-
    2006 timeframe, with domestic consumption rising 2.1 million tons and
    exports surging 5.8 million tons. Domestic consumption of paper and
    paperboard is expected to rise 6.4 million tons during the same period,
    suggesting that incremental recovery will have to exceed incremental
    supply. The recovery rate would have to rise from about 46 percent in
    2000 to 50 percent in 20006 to accommodate the demand increase.
        But aggregate increases in demand and supply for recovered paper
    mask important changes at the individual grade level. In particular,
    the report suggests that if domestic mills and export customers were to
    obtain all the old newspapers (ONP) they require, the ONP recovery rate
    would need to exceed its estimated maximum level of 72 percent. This
    suggests that some users of old news will be forced to shift to mixed
    papers or wood pulp. The recovery rate for old corrugated containers
    (0CC) is projected to approach, but not exceed, its maximum level in
    2006, which is also estimated to be 72 percent. Moreover, should there
    be a temporary export surge, as has occurred several times in the past,
    OCC demand may for a time exceed maximum recovery rates, leading to an
    ultra-tight demand/supply balance.
        In sum, the report suggests that the two major recovered paper
    grades--ONP and OCC--will be in tight supply by 2006, or perhaps
    earlier. Pulp substitutes, converting scrap and overissue news and
    magazines are already being collected to the maximum extent possible.
    In consequence, to avoid a supply future crunch, the report suggests
    that ONP and OCC collections from non-traditional sources be maximized
    (i.e., OCC from homes and offices and more ONP from offices) and that
    the industry increase its efforts to encourage the collection and use
    of mixed papers. The report identifies paper consumption and recovery
    by grade and location and will serve as a valuable tool in the effort
    to increase recovery at a reasonable cost while maintaining recovered
    fiber quality.
        Technical note: The recovered paper numbers and recovery rates
    cited in the report differ from the measures traditionally reported by
    AF&PA in the following respects: In an effort to improve accuracy, the
    report uses data of importing nations as a preferred measure of U.S.
    recovered paper exports. Also, the report factors newspaper inserts
    into the ONP recovery rate and factors estimated imports of corrugated
    packaging into the OCC recovery rate. These adjustments tend to balance
    out in terms of the aggregate U.S. recovery rate, with exports higher
    than those reported by Census being offset by a larger consumption base
    due to the factoring in of imported packaging. AF&PA contemplates
    incorporating these refinements into its future recovery rate
    calculations, but has not done so in the past.

                                           COMPARISON OF 2000 AND 2006 RESULTS
                                                     (thousand tons)
    ----------------------------------------------------------------------------------------------------------------
                                                                                                   Difference
                                                                      2000         2006    -------------------------
                                                                                                Tons       Percent
    ----------------------------------------------------------------------------------------------------------------
    Newspapers..................................................
        New Supply..............................................       15,024       13,822      (1,202)       -8.0 %
        Recovery................................................       10,805        9,952        (853)       -7.9 %
        % Recovery..............................................       71.9 %       72.0 %                     0.1 %

    Containerboard..............................................
        New Supply (1)..........................................       35,713       38,835        3,122        8.7 %
        Recovery................................................       23,464       27,377        3,913       16.7 %
        % Recovery..............................................       65.7 %       70.5 %                     4.8 %

    All Other (2)...............................................
        New Supply..............................................       56,735       61,230        4,495        7.9 %
        Recovery................................................       15,055       19,866        4,811       32.0 %
        % Recovery..............................................       26.5 %       32.4 %                     5.9 %

    Total.......................................................
        New Supply(1)...........................................      107,472      113,887        6,415        6.0 %
        Recovery................................................       49,324       57,195        7,871       16.0 %
         % Recovery.............................................       45.9 %       50.2 %                      43 %
    ----------------------------------------------------------------------------------------------------------------
    Source: Franklin Associates, Ltd.
    (1) New Supply = AF&PA new supply adjusted for corrugated box imports.
    (2) All Other category consists of mixed papers, high grade deinking, and pulp substitutes.
    Recovery based on EU Consulting exports.
    2006 recovery of ONP capped at 72 % of new supply.

        If you have any questions regarding the study, please contact Remy
    Esquenet, Director of Paper Recovery, at 202-463-5162.

       EXECUTIVE SUMMARY OF FRANKLIN ASSOCIATES AND EU CONSULTING STUDY
               CONDUCTED FOR AMERICAN FOREST & PAPER ASSOCIATION

                                   __________
      Statement of Darryl Young, Director, California State Department of
                                  Conservation

        Mr. Chairman and members, thank you for inviting me to testify on
    the State of California's Beverage Container Recycling and Litter
    Reduction Program (Program). I appreciate the opportunity to provide an
    overview of the California Recycling Program and the various features
    of our program that differentiate it from recycling programs
    administered by other States in the Union.

    California Recycling Program Overview
        The Division of Recycling within the California Department of
    Conservation (Department) administers the Program. The Program was
    created by the passage of the California Beverage Container Recycling
    and Litter Reduction Act (Act) in 1986. Its purpose is to make beverage
    container recycling integral to the California economy. The
    Department's primary goal is to achieve and maintain a recycling rate
    of 80 percent for each beverage container type included in the Program,
    thereby reducing the beverage container component of litter in
    California. Units within the Department's Division of Recycling are
    responsible for participant certification and registration, regulatory
    compliance, grant funding distribution, as well as technical and
    educational assistance to other industries and groups involved in
    beverage container recycling.
        The California Program is unique among the States that have a
    beverage container recycling system. In other bottle deposit States,
    the cans and bottles are returned to the store from which the
    containers were purchased. Californians enjoy a more convenient form of
    container recovery with nearly 3,000 recycling opportunities statewide.
    The recycling system in California provides a convenient and efficient
    way to recycle beverage containers, and also is used as a source of
    non-tax dollar funding of various recycling and litter reduction
    programs throughout the State.
        The Program involves participants from private industry such as
    buy-back recycling centers (offering payment to consumers for
    recycling), drop-off recyclers (such as curbside programs), beverage
    manufacturers, beverage distributors, and retail dealers. Public and
    semi-private entities like local conservation corps and non-profit
    organizations also help achieve the Program's goal of providing
    Californians convenient opportunities to recycle their beverage
    containers.
        The California Redemption Value (CRV) and the way the State
    administers those CRV funds is the engine of California's beverage
    container recycling program. Consumers pay this CRV when they purchase
    a beverage container of any type or brand. That CRV deposit is refunded
    to the consumer when they recycle the container. Similarly, CRV is
    provided to the curbside program or other drop-off program that may
    recycle the container. The CRV is two-and-a-half cents per container
    under 24 ounces in volume and 5 cents for containers 24 ounces in
    volume or larger. Unredeemed funds--that is, when consumers or
    curbsides don't recycle and collect the deposit on a container--help
    support various components of the Program which help promote higher
    recycling rates. The Program's goal is 80 percent recycling rate for
    all aluminum, glass, plastic, and bimetal beverage containers sold in
    California.
        California's Program continues to grow and change. When the Program
    began, only soft drinks, beers, wine and distilled spirit coolers and
    some limited carbonated fruit drinks were included in the redemption
    system. In 1999, Governor Gray Davis signed into law the largest
    recycling program expansion of any State in the Nation, increasing by
    three (3) billion the number of containers Californians can recycle
    under the Program. The expansion added non-carbonated fruit drinks,
    coffee and tea drinks, non-carbonated water, and sport drinks. In
    addition, CRV was applied to beverages sold in all of the seven plastic
    resin types. As of January of 2001, Governor Gray Davis and the
    Legislature added still other beverages, specifically vegetable juices
    in beverage containers of 16 oz. or less.
        The changes effective in January of 2000, combined with normal
    growth in beverage sales volumes, increased the total beverage
    container sales from 1999 to 2000 by 25 percent. Total sales for all
    material types exceeded 16.5 billion in 2000. The addition of vegetable
    juices, combined with normal growth in sales, resulted in an additional
    6 percent increase over 2000 with total sales from beverage containers
    reaching 17.5 billion beverage containers. While recycling rates in
    California under the Program have been as high as 82 percent, recent
    rates have been lower. The addition of new beverage containers to the
    system provides the most obvious reason for the recent rate decline.
    This immediate addition on January 1, 2000 of containers sold under the
    Program has not yet been matched by an increase in the number of
    containers recycled by consumers. Significantly, though, the total
    volume of material recycled has increased every year since 2000.

    Fundamental Differences--California vs. Other States
        Three fundamental tenets of the California Program set it apart
    from other States' programs. California has a centralized deposit fund,
    administered by the State for the benefit of consumers, private
    industries, and semi-private/public entities participating in the
    Program. California makes a concerted effort to create and promote
    convenient recycling opportunities. The Program seeks to use existing
    private recycling industries--and promotes new recycling modes--to
    offer consumers convenient places to recycle. California law also
    creates a Manufacturer or Producer Responsibility for the recycling of
    certain material types. Here the goal is to help internalize the cost
    of recycling and ensure that cost is covered when a material type's
    inherent scrap value isn't enough to drive the recycling of a material
    type.

    Statewide Deposit Fund
        California's Program centers around the Beverage Container
    Recycling Fund. Distributors of beverages pay an amount equal to the
    CRV for each container they sell to a California retailer or dealer.
    The State pays that CRV deposit back to recyclers, via processors, for
    each container they collect from a consumer. In the case of the
    recycler, the State compensates the recycler for a prior payment of CRV
    to a consumer. The Department has the duty of collection and payment of
    these CRV funds, as well as auditing the records of the distributors
    and recyclers who pay CRV moneys to, and receiving CRV moneys from, the
    State.
        This method of collecting the CRV from consumers and paying them
    back for recycling is virtually transparent to the consumer. Consumers
    pay the CRV at the check-stand when they purchase beverages, seeing
    only that CRV was included but seeing none of the collection mechanism.
    When they recycle or ``redeem'' their containers, an equal amount of
    CRV is returned to them. Again, how the recycler gets funds is
    transparent and the consumer is not required to sort containers by
    manufacturer or by store-of-purchase. In some cases, consumers are even
    offered an additional amount of ``scrap value'' from the recycler.
    While this isn't required by law, many recyclers opt to pay some of the
    scrap value to induce consumers to frequent their recycling center.
    Most commonly, recyclers pay some scrap value for aluminum cans,
    largely due to the traditional and relatively high scrap value for
    aluminum.
        This method of collecting CRV and distributing it when containers
    are recycled carries an additional benefit beyond being transparent and
    easily facilitating consumer participation in recycling. The State-run
    deposit is also more efficient and less labor-intensive than a
    traditional bottle bill. California's Program mixes the deposits on all
    containers. This frees retailers from handling the deposits on
    containers they sell. It also allows retailers to operate like
    retailers and doesn't force them into the role of ``recycler,'' as
    well. This system also benefits private industry recyclers. Recyclers
    do not have to track individual manufacturer's containers through the
    recycling system. Recyclers are principally interested in one factor--
    weight--and not which manufacturer actually made the container or the
    product that was in the container. Under the California Program,
    recyclers collect containers from consumers based on individual counts,
    but more often collect by weight. Reporting and claims are done based
    on weight.
        Lastly, California's deposit system allows an accurate accounting
    of recycling rates. Actual volumes of containers sold in California are
    reported with the payment of CRV by distributors. Verifiable volumes
    and numbers of containers recycled are reported as claims for payment
    from the Recycling Fund. These values are audited regularly by the
    State to ensure accuracy of payment to and from the Program fund.
    Knowing actual numbers helps provide reliable recycling rate figures.
    This compares quite favorably to other deposit States where the
    reported numbers of sold and returned containers may be based on
    anecdote and are not verifiable.

    Convenient Recycling Opportunities
        Unlike traditional bottle bill States, California does not mandate
    redemption of containers inside actual retail establishments. However,
    consumers must be able to reclaim the deposits they made on containers.
    If those deposits aren't readily reclaimable, Program founders believed
    the deposit might actually be construed as a tax, which it is not. The
    Program relies on participation by a number of types of private
    industry recyclers to provide these convenient recycling options. The
    State does not operate recycling centers, but provides funds and
    incentives for businesses to operate recycling centers.
        A recycling infrastructure already existed on some level before the
    program was established. Most recyclers were located in scrap yards,
    often found in heavy commercial-and industrial-zoned areas. Some
    recyclers operated recycling kiosks near retailers, though they mostly
    accepted only aluminum containers. With the advent of the Program,
    though, a retailer must ensure that a recycler is operating within a
    half mile ``convenience zone'' of that retailer, if the retailer
    grosses a significant and specified volume of annual sales. Failure to
    have such a recycler located within half mile has consequences.
    Retailers in that ``convenience zone'' can be required to take-back and
    pay deposits on containers inside their stores if a convenience zone is
    not served by a recycler.
        The Program helps develop these ``convenience zone recyclers'' by
    offering subsidies to cover the unique costs of providing a convenient
    recycling opportunity near retailers. The Program also offers subsidies
    to curbside recycling centers to promote use of curbside recycling.
    Over its life, the Program has proven quite adaptable in assisting
    varied types of recycling operations create more consumer recycling
    convenience.
        Significant to the consumer convenience model, a recycler seeking
    to offer consumers redemption value for their recycled containers must
    redeem all material types. Absent this mandate, some recyclers might
    choose to only accept aluminum recycled containers. This is because
    aluminum has a scrap value that exceeds the cost a recycler incurs to
    ``recycle'' it. That is, a recycler will get more in scrap value from a
    processor of aluminum containers than it will cost the recycler to
    collect, sort, and deliver those aluminum cans to the processor. The
    same is not true for glass and plastic, materials whose cost of
    recycling almost always exceeds the scrap value paid to a recycler.
        This requirement that certified recycling centers accept all
    material types ensures that convenience of recycling isn't simply a
    matter of location. A consumer visiting a single recycler can redeem
    all of their material types at one time. While this mandate to accept
    all material types might appear to force recyclers to engage in
    revenue-losing business practices, California's Program takes those
    potential losses into account and provides a Processing Payment to
    ensure recyclers do not lose money by participating in the Program.

    Manufacturer/Producer Responsibility
        As noted above, some material types in the California Program do
    not ``pay their way'' through the recycling stream. That is, the
    inherent value of the material of the beverage container (the ``scrap
    value'') is insufficient to pay for the costs associated with
    collecting, handling, storing, and transporting (the ``cost of
    recycling'') that beverage container material. When this occurs for a
    container material type, California's Program imposes a Processing Fee
    on the beverage manufacturers who choose to package in that material
    type.
        The Department determines the need for a Processing Fee by
    conducting surveys of recyclers' actual costs of recycling and the
    scrap values received by recyclers. The difference between the scrap
    value and the cost of recycling is calculated on a per container basis
    and this amount, per container, becomes the Processing Payment due to a
    recycler. Processing Payments are made to recyclers at the same time
    reimbursement for CRV paid to consumers is made.
        Processing Fees are collected from manufacturers to pay Processing
    Payments to recyclers. The Department calculates the amount of
    Processing Fee due from the beverage manufacturer using statutory
    guidelines for survey methodology and for some cost values. In 1992,
    the State reduced the Processing Fees collected to reflect the fact
    that only a fraction of the containers sold by manufacturers are
    actually recycled. The intent of the change was to eliminate surplus
    Processing Fee collections, though opponents of that provision now
    argue that it served to induce lower recycling rates (lower recycling
    rates equated to a lower Processing Fees). Since 1996, the Program has
    further reduced the amount of Processing Fee paid by beverage
    manufacturers with subsidies of moneys from unredeemed CRV deposits.

                    CALIFORNIA RECYCLING PROGRAM CHALLENGES

    Fraud
        With a program as large and complex as California's, some potential
    for fraud is bound to exist. Re redemption can be a problem. Containers
    each have ONE deposit paid to the Recycling Fund when the container is
    sold to a consumer. However, an unscrupulous person can seek to re-
    redeem a post consumer container, collecting a deposit on the same
    container or containers multiple times. Importation of out-of-State
    containers is another potential avenue of fraud. No deposit is paid
    into the California system on a container sold in Arizona or another
    neighboring State. Once shipped to California, though, the containers
    can be difficult to distinguish from legitimate California bottles and
    cans.
        The Department, working with local, State, and Federal law
    enforcement, has intercepted several schemes to defraud the Recycling
    Program. Truckloads of imported materials have been intercepted at the
    border and in-State. Department investigators have found warehouses of
    imported containers. The Department has had notable successes combating
    fraud, but must continue to pursue cases on a regular basis. The
    Department does this to ensure the integrity of the Recycling Program
    and the Recycling Fund and to help maintain a fair, competitive
    environment for legitimate recyclers who might otherwise be forced to
    compete with recyclers enjoying unfair and illegal advantage by
    committing fraud.

    Level of Manufacturer Responsibility
        When initially conceived, the California Program offered no subsidy
    to manufacturers for the Processing Fee. Since 1996, the unredeemed CRV
    in the Recycling Fund has been used to reduce the amount manufacturers
    would otherwise pay in Processing Fees. More recent discussions of the
    Processing Fee now revolve around the amount of subsidy that will be
    offered to further reduce the proportion of the Processing Payment to
    recyclers that manufactures pay as a Processing Fee. The Department has
    noted that using nothing but unredeemed CRV deposits and relying on no
    contribution from manufacturers could cause the Program to bankrupt
    itself and be unable to pay consumers back their deposits. Avoiding
    that problem requires acceptance of a lower recycling rate goal than is
    currently expected (80 percent).

    Accurate Reflection of Recycling Markets
        Originally, Processing Fee/Payment calculations of scrap value and
    cost of recycling were conducted annually. Changes in the Recycling
    Program in recent years have attempted to fix either cost of recycling,
    scrap value, or both in statute. However, these values change as cost
    factors and markets change. Recyclers have, in some cases, been forced
    to lose money when Processing Payments don't match real need to remain
    viable in the Program by redeeming all container types. To ensure the
    Processing Fee/Payment system remains viable, surveys of scrap value
    and cost must be conducted regularly to reflect market changes, not
    negotiated compromises.
        Additionally, what is counted in evaluating the cost of recycling
    or scrap values can negatively impact survey results. For instance,
    counting PVC plastic contamination as a reduction in the scrap value of
    loads of PET plastic could result in a surveyed lower scrap value for
    PET, resulting in a higher PET Processing Fee when the problem actually
    originated from the PVC. The current Program has difficulties in
    accounting for this kind of contamination.

    Addition of New Containers
        California recently added millions of new beverage containers to
    its Recycling Program. The addition of these containers to the CRV
    system did not result in an immediate increase in recycling rates,
    however. Educating consumers that these containers are now part of the
    Recycling Program remains a significant challenge to the Department.
    One difficulty in educating consumers about the California Program
    remains differentiating between the container's material type and what
    was packaged in the container. California's Program defines whether a
    container is ``in'' the Program or not by what was packaged in that
    container. The glass in a jar holding mayonnaise or some other product
    is essentially identical to the glass containing sparking water, yet
    the water bottle is included in the Program and the other jar is not.
    This difference creates consumer confusion and, notwithstanding the
    addition of millions of new beverage containers, remains one of the
    California Program's biggest hurdles.

                                   CONCLUSION

        California's Beverage Container Recycling and Litter Reduction
    Program is unique among the States. We have experienced considerable
    growth over the years, and our program continues to evolve and change
    to meet new circumstances. Moreover, our system is one in which all
    participants--beverage manufacturers, retailers, recyclers and
    consumers alike--make valuable contributions to the program's overall
    success. Thank you for the opportunity to give you a brief overview of
    California's program. I look forward to answering any questions you may
    have.

                             California Beverage Container Recycling: How Are We Different?

    ----------------------------------------------------------------------------------------------------------------
                                                  Traditional bottle bills                   California
    ----------------------------------------------------------------------------------------------------------------
    Deposit vs. Refund Value................  Retailers refund a specific         No ``deposit''; instead,
                                               deposit (usually 5 cents) for     consumers receive CA Refund Value
                                               each container..                  (CRV) plus may receive scrap value.
                                                                                  CRV originates with
                                                                                 ``redemption payments'' paid by
                                                                                 beverage distributors on number of
                                                                                 containers sold; distributors may
                                                                                 pass cost to retailers and
                                                                                 consumers.
                                                                                  Recyclers generally redeem
                                                                                 by weight, instead of count.
                                                                                  CA has lowest ``deposit''
                                                                                 of all U.S. States (2.5 cents for
                                                                                 <24 oz. and 5 cents for 24 oz. or
                                                                                 more).
    Recycling Centers and Convenience Zones.  Consumers return containers to      Independent recyclers,
                                               retail stores. Containers are     rather than retail stores, receive
                                               sorted by brand..                 empties and pay refunds to
                                                                                 consumers.
                                                                                  All brands are commingled.
                                                                                  Network of Convenience
                                                                                 Zones (CZ) provides consumers with
                                                                                 convenient access to recyclers.
                                                                                 (Area within half-mile of a
                                                                                 supermarket with $2 million in
                                                                                 sales constitutes a CZ; recycler
                                                                                 generally must serve zone or store
                                                                                 must redeem containers.)
                                                                                  Recyclers must certify
                                                                                 with Department of Conservation
                                                                                 (DOC)..
    State Fund Administration...............  Program moneys usually remain in    Beverage manufacturers and
                                               private hands; manufacturers      distributors pay directly into Fund
                                               and retailers administer          monitored by DOC. After consumers
                                               program..                         redeem empties, DOC releases moneys
                                                                                 from Fund to processors and
                                                                                 recyclers.
                                                                                  DOC prevents fraudulent
                                                                                 redemption, monitors compliance,
                                                                                 oversees Convenience Zones,
                                                                                 certifies recyclers and processors,
                                                                                 conducts market research.
                                                                                  Statewide recycling data
                                                                                 are more comprehensive and
                                                                                 verifiable, because DOC doesn't
                                                                                 release funds until auditable
                                                                                 reports are submitted.
    Use of Unclaimed Funds..................  Beverage companies keep             Refunds unclaimed by
                                               unclaimed deposits (except MI     consumers are controlled by State.
                                               and MA)..                          Unclaimed funds are
                                                                                 reinvested in specific recycling
                                                                                 activities, including program
                                                                                 administration, fees to recyclers,
                                                                                 local recycling grants, market
                                                                                 development, technical assistance,
                                                                                 outreach and education.
                                                                                  Unclaimed refunds also
                                                                                 offset Processing Fees (below).
    Producer Responsibility: Processing Fees  Producers' financial obligations    Beverage manufacturers pay
                                               are limited to administering      Processing Fees (PF--difference
                                               the program and reimbursing       between scrap value of each
                                               retailers for their costs..       material and actual cost to recycle
                                                                                 that material) to DOC.
                                                                                  DOC distributes Processing
                                                                                 Payments to processors, who, in
                                                                                 turn, pass them to recyclers.
                                                                                  Processing Fees help
                                                                                 ensure returned containers actually
                                                                                 will be recycled by paying
                                                                                 recycling costs up front. Goal is
                                                                                 to help recycling industry recycle
                                                                                 materials when actual cost of
                                                                                 handling, processing, storing, and
                                                                                 transporting containers exceeds
                                                                                 value of material.
                                                                                  Each material ``pays'' its
                                                                                 own way; aluminum is worth more, so
                                                                                 has no PF.
    Producer Responsibility: Minimum          Mainly address the supply side      Program also addresses
     Recycled Content.                         of recycling (collection of       demand side (use of materials):
                                               containers)..                     glass container manufacturers must
                                                                                 use 35 percent recycled glass.
                                                                                  Other CA laws require
                                                                                 minimum recycled-content for
                                                                                 fiberglass (30 percent) and rigid
                                                                                 plastic packaging (25 percent
                                                                                 content is one option for
                                                                                 compliance).
    Expanded Beverage Types.................  Typically cover beer and soft       CA expanded in 2000 to
                                               drinks (except Maine)..           include still water, coffee and tea
                                                                                 drinks, sport drinks and others.
                                                                                 Currently about 16 billion
                                                                                 containers total per year.
    Curbside Programs Share Redemption Funds  Curbside collection programs        Local curbside programs
                                               usually do not share redemption   receive CRV based on proportion of
                                               payments due to high cost of      all CRV containers collected (the
                                               sorting by brand..                ``commingled rate'').
                                                                                  Also receive supplemental
                                                                                 payments from Fund to defray costs,
                                                                                 as well as population-based block
                                                                                 grants.
    ----------------------------------------------------------------------------------------------------------------

                                   __________
              Statement of Edward Boisson, Boisson and Associates

        I am honored to present this testimony to the Senate Committee on
    Environment and Public Works, and I thank Senator Jeffords for calling
    this important hearing. More than ever, we need a solution to the
    beverage container waste problem that includes a fair, efficient and
    effective system of producer responsibility, and after 30 years of
    deadlock among the stakeholders, leadership such as that provided by
    Senator Jeffords is badly needed.
        I am Edward Boisson, a consultant with 14 years experience
    evaluating, developing and implementing materials recycling policies
    and programs with the government, industrial and non-profit sectors.
    Last year, on behalf of Businesses and Environmentalists Allied for
    Recycling, a project of Global Green USA, I facilitated a dialog among
    beverage container recycling stakeholders including representatives of
    Coca-Cola North America, Waste Management, Inc., Tomra North America (a
    major recycling company), Beaulieu of America (a major carpet producer
    using recycled plastic as raw material), State and local government,
    environmental organizations and many others. Even though the
    participants held strongly opposing views, they were able to agree on
    many of the facts about the benefits, costs and comparative
    effectiveness of existing U.S. beverage container recycling programs as
    well as trends affecting recycling rates. My testimony is largely based
    on the final report from this project, entitled Understanding Beverage
    Container Recycling: A Value Chain Assessment Prepared for the Multi-
    Stakeholder Recovery Project, prepared by a team of well-known,
    experienced consultants and jointly released by the project
    participants.\1\
    ---------------------------------------------------------------------------
         \1\The report is referred to hereafter as ``MSRP Final Report.''
    The authors are R.W. Beck, Inc., Franklin Associates, Ltd., the Tellus
    Institute, Sound Resource Management Group and Boisson & Associates.
    The report is available online at www.globalgreen.org/bear.
    ---------------------------------------------------------------------------
        I was asked to provide information to assist in evaluating the
    concept of producer responsibility as specifically applied to the
    beverage industry, and I will try in my comments to honor the mutual
    trust and respect developed during the MSRP project. I have three main
    points to offer. First, there is in fact a serious beverage container
    waste problem, and there are well-documented, compelling economic and
    environmental reasons for solving it. Had the 114 billion beverage
    containers disposed in 1999 been recycled, for example, it would have
    saved the energy equivalent to 27.4 million barrels of oil and
    decreased greenhouse gas emissions by 4.8 million metric tons carbon
    equivalent, while fueling a plastics recycling industry in need of new
    raw material resources.\2\ But unfortunately, recycling rates for all
    container types are heading down, not up. My second point is that many
    stakeholders agree about both why rates are declining and the
    ingredients of a long-term solution, such as the need for financial
    incentives, a stable funding source and new collection services
    targeting beverage containers wherever they are consumed. My third and
    final point is that experience with existing programs shows that new
    initiatives should be able to significantly increase recovery at
    relatively low unit costs, while addressing many of the concerns raised
    by industry and others. Optimized deposit systems such as the program
    called for in S. 2220, for example, can achieve very high recycling
    rates and, if maximum innovation is allowed, have the potential to
    operate very efficiently. The MSRP report shows, for example, that the
    net operating costs for traditional deposit systems can be reduced from
    2.21 cents per container recovered to as little as 0.55 cents through
    innovative design. Concerns to be addressed include the need for market
    development and the need to design funding mechanisms and
    implementation strategies that treat all companies fairly. Non-deposit
    based systems that include a long-term, stable funding mechanism may
    have the potential to increase recovery rates, though not nearly as
    high as deposit systems. And, although strengthening municipal programs
    is beneficial, it is not likely to yield significant results because of
    their limited scope. I expand on these points below.
    ---------------------------------------------------------------------------
         \2\Based on data in the MSRP Final Report, Table 4-1, page 4-5.
    ---------------------------------------------------------------------------
    THE BEVERAGE CONTAINER WASTE PROBLEM AND THE ECONOMIC AND ENVIRONMENTAL
                             REASONS FOR SOLVING IT

        Beverage containers may be the single most ubiquitous and visible
    form of waste in our society. In 1999, for example, over 192 billion
    pre-packaged beverages were sold and over 114 billion beverage
    containers were disposed.\3\ Recycling these disposed containers would
    have saved the energy equivalent of 27.4 million barrels of oil,
    reduced greenhouse gas emissions by 4.8 million metric tons carbon
    equivalent, saved over 41 million cubic yards of landfill space and
    removed approximately 1 billion containers from roadside litter.\4\
    (Exhibit One lists estimated environmental benefits associated with
    beverage container recycling in 1999.) Recycling beverage containers
    has significant economic benefits too. Recovered containers are needed
    to fuel investment and job growth in the currently stagnant plastics
    recycling industry that is seeking new long-term, stable sources of
    quality raw material. Recycling collection activities employ a sizable
    number of people and each collection job supports upstream employment
    in processing and manufacturing.
    ---------------------------------------------------------------------------
         \3\MSRP Final Report, Table 2-1, page 2-2.
         \4\Based on MSRP Final Report, Table 4-1, page 4-5.
    ---------------------------------------------------------------------------
        But, as shown in Exhibit Two, recycling rates for all types of
    beverage containers are now steadily declining. Recycling rates for PET
    plastic have dropped to 22 percent from a high in 1994 of 38 percent,
    and rates for glass are down to 31 percent after peaking in 1995. Most
    disturbing, the rate for aluminum cans, long a staple of recycling
    programs, peaked at 65 percent recycling in 1992 and in 2000 dropped a
    whopping 6.5 percent to 49.2, dropping below 50 percent for the first
    time in many years. The overall recycling rate for beverage containers
    in 1999, based on the number of units, was 41 percent. In short, as a
    highly visible, recyclable waste stream, beverage container recycling
    is an integral part of a sound materials management policy that should
    be applied to all products, and if we don't act urgently, the huge
    advances achieved over the past several years may erode away.

         WHY RATES ARE FALLING AND THE ELEMENTS OF A LONG-TERM SOLUTION

        There is a surprising amount of agreement about the causes of
    declining beverage container recycling rates and even over the broadly
    defined elements needed in any long-term solution. For example, MSRP
    participants agreed that the reasons for declining recycling rates
    include:\5\
    ---------------------------------------------------------------------------
         \5\Trends affecting declining recycling rates are discussed in
    Section 2.2 of the MSRP Final Report.

          Beverage sales growth is dominated by plastic (with a
    relatively low recycling rate) at the expense of glass and aluminum
    (with relatively high recycling rates);
          Increasing sales of single-serve beverages that are
    increasingly consumed away-from-home (and away-from-recycling
    services);
          Increasing diversity of beverage types like water and so-
    called ``new age'' beverages (many of which may not be covered under
    existing recycling programs);
          The stalling of growth in new municipal programs and
    reduced funding available;
          The reduced relative value of deposit amounts in deposit
    States. Additionally, at least 20 municipalities have recently either
    dropped glass from their curbside programs or greatly curtailed it.\6\
    This is apparently a growing trend triggered by a switch to single-
    stream recovery systems. While they increase overall efficiency, single
    stream collection systems do not handle glass well because they yield
    low quality, low value, mixed-color broken cullet that contaminates
    recovered paper.
    ---------------------------------------------------------------------------
         \6\Resource Recycling Electronic Newsletter, April 3, 2002.
    ---------------------------------------------------------------------------
        MSRP participants agreed in a joint letter releasing their final
    report that the following conclusions should guide future efforts to
    increase recovery:
          Financial incentives should be established to ensure the
    long-term sustainability of high recovery rates and strong markets;
          New systems should both strengthen existing programs
    (such as municipal curbside) and support a range of new recovery
    mechanisms (especially targeting away-from-home consumption); and
          New initiatives should be able to significantly increase
    beverage container recovery at relatively low unit costs.
        Most fundamentally, because there is a net cost to beverage
    container recycling (since only recovered aluminum cans typically have
    sufficient market value to cover collection and processing costs),
    there is a need for a long-term, stable funding source. MSRP
    participants also agreed on a set of principles that guided the
    project, including the need for members of the supply chain to share
    responsibility, the need for solutions that are economically
    sustainable, continually improving and adaptable to changing
    technologies and markets.
        MSRP participants also expressed some concerns that must be
    addressed in new systems, for example, over the need to ensure that
    adequate markets will exist for recovered materials, and over the need
    to ensure funding mechanisms and implementation approaches are fair to
    all companies and as efficient as possible.

          EXPERIENCE WITH EXISTING PROGRAMS SUGGESTS RECOVERY CAN BE
         SIGNIFICANTLY INCREASED AT RELATIVELY LOW UNIT OPERATING COSTS

        The MSRP Report compared the costs and effectiveness of existing
    U.S. beverage container recovery programs as they operated in 1999, and
    the results are shown in Exhibits Three and Four. The following
    conclusions can be drawn from these data.

    Through innovation, deposit systems can achieve unit operating costs at
            or below most existing beverage container recovery programs
        An important MSRP finding is that the operating cost of traditional
    deposit systems can be greatly reduced, for example, by using a
    centralized fund to eliminate the need for brand sorting, by
    eliminating the need for beverage distributors to handle recovered
    bottles, by relying to some degree on existing infrastructure
    (including independent buy-back centers and municipal programs), by
    using highly efficient technologies like reverse vending machines and
    by strategically identifying the retail locations where bottles can be
    returned. For example, the California deposit system that includes
    these mechanisms had a net operating cost in 1999 of 0.55 cents per
    container compared to 2.21 cents per container for traditional deposit
    programs that require brand sorting and rely heavily on in-store
    recovery.\7\ (This compares with typical curbside net operating costs
    of 1.72 cents per container recovered.) There are legitimate concerns
    over the California system, and many of these could be addressed
    through careful design of a new, national system such as the one called
    for in S. 2220. For example, critics have charged that the unredeemed
    deposit funds amount to a major system cost, though unrelated to
    operating recycling facilities. (Unredeemed deposit revenue results
    from consumers' decisions not to redeem containers to receive their
    deposit back.) Unlike in California, industry could use these funds to
    directly offset its costs of operating the system in S. 2220, and
    depending on the recovery rate and system efficiency, these funds could
    potentially cover the vast majority of costs. Another concern is over
    the complexity and fairness of the funding mechanisms used in
    California. Presumably, the beverage industry could design a system
    that is fair to all market players and is far simpler than the
    California processing fee system that is regularly adjusted through
    legislation and litigation.
    ---------------------------------------------------------------------------
         \7\Program cost estimates are from the MSRP Final Report, Table 3-
    1, page 3-2.
    ---------------------------------------------------------------------------
    Deposit-based systems have the highest potential to significantly
            increase beverage container recycling
        Among the existing U.S. programs, only deposit systems have all the
    elements of a long-term solution listed above, and the recovery rates
    of existing programs reflect this. Combined, the ten deposit States
    result in an overall recovery rate of 71.6 percent compared to 27.9
    percent in non-deposit States.\8\ These figures are ``overall recovery
    rates'' for all types of beverage containers, a new measure developed
    in the MSRP that systematically accounts for differences in the types
    of containers accepted and other important program differences. Most
    U.S. traditional deposit systems accept only carbonated soft drinks and
    beer and, in the study year 1999, achieved redemption rates for these
    container types of 72 percent--95 percent. In the MSRP study year of
    1999, California's unique system achieved a somewhat lower redemption
    rate of 69 percent, and in the following year, after it was expanded to
    cover the vast majority of all beverage container types, redemption
    rates initially fell to 52 percent (resulting in very large surpluses
    of unredeemed deposits). The program called for in S. 2220, however, is
    likely to achieve far greater redemption rates than California, given
    its ten-cent deposit amount compared to California's typical deposit of
    2.5 cents.\9\ The only other U.S. deposit system with a ten cent
    deposit, in Michigan, has consistently achieved recovery rates for the
    container types targeted in the range of 95 percent or higher.\10\ One
    issue that needs to be addressed in any new program to significantly
    increase recovery is market development, and in implementing the
    program the beverage industry would need to take steps to ensure that
    supplies increase incrementally and that actions to step up demand are
    taken concurrently.
    ---------------------------------------------------------------------------
         \8\Program effectiveness estimates are from the MSRP Final Report,
    Table 2-7, page 2-19.
         \9\Though not covered in the MSRP report, five Canadian provinces
    have implemented modified deposit systems covering virtually all
    beverage container types (except milk), achieving overall redemption
    rates of 74% to 86%. Deposit amounts are typically 10 cents (Canadian)
    with the exception of Saskatchewan with tiered deposits ranging as high
    as 40 cents (Canadian) and achieving an 86% overall recovery rate.
    Source: An Analysis of the Costs and Benefits of Beverage Container
    Recovery in Canada. Prepared by CM Consulting, January 2002.
         \10\Redemption rates in US deposit systems have fallen in recent
    years. According to the Container Recycling Institute, this is due to
    the declining value of the typical 5-cent deposit, which has lost 67%
    of its value since the first state deposit system was adopted in Oregon
    in 1971. Industry sources also point to the rise of curbside recycling
    services in the past decade that has drawn some containers away from
    deposit systems.
    ---------------------------------------------------------------------------
    Non-Deposit systems can potentially increase recovery rates, though far
            less than deposit-based systems. To succeed, an essential
            component is a long-term, stable funding source
        The potential for new, non-deposit-based systems to increase the
    national recovery rate was explored in the MSRP, though not fully
    developed. As long as they include a long-term, stable funding source
    dedicated to beverage container recycling, they have the potential to
    address many of the needed elements of a long-term solution by
    supporting and encouraging collectors to innovate and implement new
    programs, thereby increasing recovery rates. However, because the
    incentive to consumers is not likely to be as strong or as
    comprehensive as a deposit system, these programs are not likely to
    achieve nearly as high of a recovery rate.\11\ Options for funding
    mechanisms include assessing a fee at some point in the beverage value
    chain (e.g., on the sale of raw materials to container manufacturers or
    on the sale of beverages at the retail level).
    ---------------------------------------------------------------------------
         \11\Although not evaluated in the MSRP, examples of non-deposit-
    based systems include the industry consortia established in European
    nations as required by a European Union directive. Another example is
    the newly developing system in Ontario, Canada in which industry will
    share half the net cost of municipal recycling.
    ---------------------------------------------------------------------------
    Focusing exclusively on strengthening municipal recycling programs,
            though beneficial, is not likely to yield significant results
        To date, the modest support provided by industry organizations for
    recovery programs has largely been focused on strengthening municipal
    programs. Municipal programs account for the vast majority of the
    average 27.9 percent recovery rate in non-deposit States, and typical
    net costs are 1.72 cents per container recovered. There is certainly
    room to decrease costs and increase recovery through efficiency
    measures, and such efforts are laudable. However, because curbside
    programs are only capable of targeting a relatively small percentage of
    containers and opportunities for initiating new programs may be few,
    these efforts are not likely to achieve significant results in terms of
    increasing the national recovery rate. For example, even if education
    and program restructuring increased participation and capture rates in
    existing curbside programs by 20 percent (a very aggressive goal) it
    would result in an overall national recovery increase of only 5.6
    percent.\12\ Furthermore, as mentioned above, the trend toward single
    stream collection is causing some municipal programs to reduce, not
    increase, glass beverage container collections.
    ---------------------------------------------------------------------------
         \12\Based on data from the MSRP Report, Table 2-7, page 2-19.
    ---------------------------------------------------------------------------
               CONCLUSIONS--WIN/WIN SOLUTIONS THROUGH INNOVATION

        To solve the beverage container waste problem we need a win/win
    solution that includes a system of producer responsibility that is
    fair, efficient and effective. Recycling companies can win by securing
    new sources of raw material and new market growth opportunities.
    Municipalities can win by reducing their costs while increasing the
    overall amount of recycled materials. Federal, State and local
    government agencies and their citizens can win by realizing the
    environmental, economic and social promise of recycling beverage
    containers. And the beverage industry itself can win by potentially
    reducing their costs associated with existing systems and by resolving,
    once and for all, this issue that has clearly represented a thorn in
    its side for many years. The pre-requisite for a win-win solution is
    earnest innovation by companies throughout the beverage value chain, an
    openness to openly consider all options and a willingness to provide
    tangible support for recycling while working cooperatively with other
    stakeholders. The program called for in S. 2220 addresses all the
    elements needed in a long-term solution to the beverage container waste
    problem and provides maximum flexibility in its implementation,
    encouraging precisely the type of innovation and cooperation that is
    needed. For these reasons, it deserves careful consideration by all
    stakeholders in beverage container recycling.
        I want to once again thank Senator Jeffords for sponsoring this
    important hearing and inviting me to participate. I look forward to
    answering your questions as best I can.

                     SELECT ENVIRONMENTAL BENEFITS DUE TO U.S. BEVERAGE CONTAINER RECYCLING IN 1999
    ----------------------------------------------------------------------------------------------------------------
                                                                                        Plastic
                                                        Glass       Aluminum  --------------------------    Total
                                                                                   PET          HDPE
    ----------------------------------------------------------------------------------------------------------------
             Baseline Recycling Statistics
    Recycled in 1999 (thousands of tons)...........        2,000          840          333          220        3,393
            Reduced Greenhouse Gas Emissions
    Avoided GHG Emissions (MTCE per ton)\1\........          .16         4.09          .72          .44
    Avoided GHG Emissions (Thousands of MTCE)\2\...          320        3,436          240           97        4,093

                     Energy Savings
    Avoided Energy per Ton (Million Btu)...........         1.37       158.19        26.25        15.17
    Avoided Energy (Billion Btu)...................        2,740      132,880        8,741        3,337      147,698
    Equivalent (Thousands of Barrels of Oil)\3\....          472       29,910        1,507          575       32,464

                     Avoided Litter
    Containers Per Ton.............................        4,581       66,225       26,702       26,702
    Avoided Litter (Millions of Containers)\4\.....         91.6        556.3         88.9         58.7        795.5

                 Avoided Landfill Space
    Volume (Cubic Yard Per ton)\5\.................          3.0          8.4          9.8         15.6
    Avoided LF Space (Millions Cubic Yards)........          6.0          7.0          3.3          3.4         19.7
    ----------------------------------------------------------------------------------------------------------------
    \1\Avoided GHG emissions are from the EPA's GHG Emissions From Management of Selected Materials in MSW (GHG
      Report). The avoided emissions per ton recycled instead of landfilled are taken from Table 8-6, adjusted to
      ``as marketed'' from ``as collected,'' using loss data in Table 4-3 for aluminum and plastic and a Tellus
      estimate for glass of 44 percent losses.
    \2\Avoided Energy is based on the difference in energy consumption between recycled and virgin feedstock. It is
      based on the ``Franklin Data'' in Tables 2-3 to 2-6 of the GHG Report, adjusted for losses using Table 4-3 and
      a Tellus estimate for glass as above. Franklin data were used because it provided data on all four materials.
    \3\Computed using 5.8 million Btu's per barrel, as shown on page 581 of the 1999 U.S. Statistical Abstract.
    \4\Avoided Litter is based on an assumption that 1 percent of containers which are not recycled are littered.
      The ``1 percent litter rate'' is used for illustrative purposes.
    \5\Avoided landfill space is based on loose material densities, compaction factors and a 13 percent addition for
      cover. This calculation was taken from the Tellus analysis used in Recycling For The Future--Consider the
      Benefits, White House Task Force on Recycling, November 1998.
    Source: Understanding Beverage Container Recycling: A Value Chain Assessment Prepared for the Multi-Stakeholder
      Recovery Project.
    Prepared by R.W. Beck, et al for Businesses and Environmentalists Allied for Recycling. January 2002. Table ES-
      2, Page ES-8. The estimates were developed by the Tellus Institute and Sound Resource Management Group as
      detailed in footnotes 1-5.

      Source: Source: Aluminum Association, American Plastics Council and
       Glass Packaging Institute, as reported in Understanding Beverage
     Container Recycling: A Value Chain Assessment Prepared for the Multi-
        Stakeholder Recovery Project. Prepared by R.W. Beck, et al for
     Businesses and Environmentalists Allied for Recycling. January 2002.
                           Table ES-1, Page ES-2.\1\
    ---------------------------------------------------------------------------

         \1\Source: Aluminum Association, American Plastics Council, Glass
    Packaging Institute. Rates shown are for all product types within each
    container type--not just beverages. Aluminum Association recycling rate
    data were adjusted by subtracting imports from the numerator.

                                            COMPARISON OF BEVERAGE CONTAINER RECYCLING PROGRAM EFFECTIVENESS AND COST
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Effectiveness Measures  Alternative Cost Comparisons (cents/
                                                                 Uniformly Accounting              unit recovered)
                                                                  for Differences in   -------------------------------------
                                                   Population  Containers Accepted and
                                                   in Covered      Other Variables.                  Net Cost     Net Cost
         Recovery Program and Targeted States        States   -------------------------             (Including   less funds       Funding Responsibility
                                                   (millions)              Normalized     Gross      Material       from
                                                                Overall    Per-Capita    Cost\3\      Sales      Unredeemed
                                                                Recovery   Containers              Revenue)\4\  Deposits\5\
                                                                Rate\1\   Recovered\2\
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Deposit States\6\............................
        Traditional Deposit System (Manual)......        47.7     43.1 %         295         4.07        2.67         1.26   Consumers (unredeemed
                                                                                                                              deposits), beverage
                                                                                                                              distributors (handling fees) &
                                                                                                                              retailers
        Traditional Deposit System (RVM).........        47.7     18.5 %         126         2.53        1.13       (0.28)
        Weighted Average, 9 Traditional Deposit          47.7     61.6 %         422         3.61        2.21         0.80
         States.
        CA Redemption System.....................        33.9     54.5 %         373         1.62        0.55       (0.42)   Consumers (unredeemed deposits)
                                                                                                                              & producers (processing fee)
        Curbside.................................        81.6      9.5 %          65         2.48        1.72         1.72   Local governments, tax payers,
                                                                                                                              rate payers
        Residential Drop-Off.....................        81.6      1.6 %          11         1.10        0.30         0.30
        Other (e.g., non-residential and buy-            81.6      1.8 %          13      Unknown     Unknown      Unknown   Varies
         backs).
          Subtotal, 10 Deposit States............        81.6     71.6 %         490         2.69        1.53         0.53

    Non-Deposit States...........................
        Curbside\7\..............................       199.9     18.5 %         127         2.48        1.72         1.72   Local governments, tax payers,
                                                                                                                              rate payers
        Residential Drop-Off.....................       199.9      4.5 %          31         1.10        0.30         0.30
        Other (e.g., non-residential and buy-           199.9      4.8 %          33      Unknown     Unknown      Unknown   Varies
         backs).
          Subtotal, Non-Deposit States...........       199.9     27.9 %         191         1.91        1.25         1.25
            Total U.S............................       281.4     40.6 %         277         2.32        1.39         0.88
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\The overall recovery rate is a measure for comparing the effectiveness of recycling programs that consistently accounts for their differences. For
      all programs except ``other'' the overall recovery rate is calculated by multiplying: a) the percentage of all beverage container types that are
      accepted in the program; b) The percent of all containers remaining after redemptions in deposit States; c) A factor to account for the generator
      sectors targeted (i.e., at home or away from home); d) The access rate; e) The participation and capture rate; and f) a factor to account for yield
      loss in intermediate processing. The ``other'' category was calculated by allocating the remaining known recovery to deposit and non-deposit States,
      adjusting for the lower availability of containers in deposit States due to redemptions.
    \2\Normalized per capita recovery figures are based on average annual consumption data for the Nation and do not reflect regional differences in
      beverage consumption patterns. Therefore they may not be consistent with State-reported recovery figures.
    \3\Gross costs include all operations costs associated with operating collection and intermediate processing activities, as well as administrative
      costs. Cost figures listed for deposit States and non-deposit States as a whole are a weighted average based on population and do not reflect the cost
      of programs in the ``other'' category since no data were available. A crucial ``reality check'' on the cost figures was provided by the consulting
      team and MSRP participants, who scrutinized these figures and agreed they are reasonable. Gross cost figures for traditional deposit system (manual)
      are based on a confidential Franklin Associates study adjusted for consistency. Reverse vending machine gross cost estimates are from Tomra North
      America, as adjusted by Franklin Associates Ltd. for container mix. California redemption system gross costs are based on cost survey data from the
      California Department of Conservation, Division of Recycling. They include recycler and processor costs, administrative costs and handling fee
      payments. DOC data were adjusted to conform with the scrap values and material densities used in this report, and to subtract out curbside recovery
      impacts. Gross costs for curbside programs are an average of three sources: American Plastics Council, National Solid Waste Management Association and
      a confidential waste hauling industry source. Drop-off gross costs are from an R.W. Beck study for Ocala, FL.
    \4\Material sales prices used are 24-month averages based on survey data from R.W. Beck. Differences in the unit revenues of each program are related to
      differences in the mix of containers handled. The same per ton values are used for each program.
    \5\Unredeemed deposit for traditional deposit systems is derived based on assumed average redemption rate of 78 percent and a ``typical'' 5-cent deposit
      amount.
    \6\Ten States have adopted deposit systems. ``Traditional deposit systems'' operate in Connecticut, Delaware, Iowa, Maine, Massachusetts, Michigan, New
      York, Oregon and Vermont. California's redemption system is a hybrid deposit system with distinct differences from traditional deposit systems. These
      terms are defined in detail in Section 2.3 and Appendix C.
    \7\The study analysis did not generate separate cost estimates for curbside and drop-off programs in deposit and non-deposit States. The analysis used
      data from non-deposit States.
    Source: Understanding Beverage Container Recycling: A Value Chain Assessment Prepared for the Multi-Stakeholder Recovery Project. Prepared by R.W. Beck,
      et al for Businesses and Environmentalists Allied for Recycling. January 2002. Table ES-1, Page ES-7. See notes 7-11.

                                   __________
      Statement of Kevin S. Dietly, Northbridge Environmental Management
                                  Consultants

        Good morning Chairman Jeffords, committee members, and staff. I am
    Kevin Dietly, a Principal of Northbridge Environmental Management
    Consultants in Westford, Massachusetts. I am speaking to you today on
    behalf of the Coalition for Comprehensive Recycling. The Coalition
    consists of trade associations, companies, and unions dedicated to
    promoting State and local comprehensive recycling programs across the
    United States. Container manufacturers, union groups, retailers,
    restaurants, beverage industry suppliers, and beverage manufacturers of
    all types are part of this broad-based coalition.
        I appreciate your invitation and the opportunity to address S.
    2220, the ``National Beverage Producer Responsibility Act of 2002'' and
    the broader issue of producer responsibility as it relates to the
    beverage industry.
        ``Producer responsibility'' for beverage industry containers is a
    new label for programs that date back as much as 30 years. The core
    elements of these old programs, generically referred to as ``bottle
    bills,'' are also contained in S. 2220--a mandatory deposit on selected
    product containers and a requirement that manufacturers coordinate the
    recovery of redeemed containers. Research suggests that these programs:
          Offer limited environmental benefits. Because these
    containers account for a small part of the solid waste stream and a
    small part of the litter problem, the incremental impact of additional
    container recovery brought about the deposit program is limited. For
    example a nationwide deposit program for beverage containers would
    likely raise the nation's recycling rate by 1 percent or less.
          Hurt existing recycling programs. Creating a duplicate
    recycling infrastructure for selected containers draws valuable revenue
    away from existing programs. Equipment utilization rates and operating
    efficiencies also suffer as consumers pull materials out of the
    existing recycling system to put them into the new deposit system.
          Raise costs and consumer prices. Regardless of how it is
    constructed, a duplicate system to handle a limited set of containers
    would impose a high cost on consumers. Consumers would ultimately pay
    for the labor and equipment to operate the recovery system and lose
    billions in unclaimed deposits if they chose to continue using their
    local recycling programs for deposit containers.
          Are inconvenient for consumers and are increasingly
    unpopular. The performance of existing deposit programs is in decline.
    Return rates are at record low levels; research indicates that
    consumers prefer more convenient ways to recycle that a deposit system.

    Background
        Mandatory deposits on beverage containers are among the oldest
    ``producer responsibility'' programs in existence. The origins of the
    programs had little to do with many of the arguments made in their
    support today. In fact, mandatory deposits were a response to growing
    litter problems in the 1960's. Mandating deposits was also an attempt
    to force beverage companies to keep selling their products in
    refillable bottles, even though refillable packaging was becoming less
    popular with consumers. As consumer beverage demand has grown and
    evolved, the beverage industry has responded with new types of products
    and packaging. And now, 31 years after Oregon's bottle bill, S. 2220
    would mandate that the deposit mechanism be imposed nationwide on
    virtually all liquids for human consumption.
        Of course consumer preferences for certain beverages and packaging
    are not the only things that have changed since the 1970's. Many in
    State and local government as well as the private sector responded to
    concerns about litter by developing new programs for preventing and
    cleaning up litter of all types. Today States that adopted
    comprehensive litter control programs are demonstrably cleaner than
    those with no litter control programs and are, on average, cleaner than
    States with deposit programs. On the solid waste front, nothing short
    of a revolution in recycling has brought residential and commercial
    recycling to a prominence never before imagined. Recycling is taught in
    schools and has taken root with a new generation. At home, recycling is
    now viewed as a basic local service in most communities. Business and
    commercial recycling continues to grow and to account for most of the
    materials diverted from disposal.
        Producer responsibility for beverage containers must be evaluated
    in the context of the changing consumer market and the alternative
    opportunities for waste management and diversion available. The issue
    is one of comparative costs and benefits: What does a producer
    responsibility system seek to accomplish and what benefits does it
    offer vs. the current system? What incremental cost and economic impact
    result from the proposed system?
        I would like to provide the committee and staff with answers to
    these questions, based on my experience conducting over 20 research
    projects and reviewing data on this issue over the past 16 years.
    During this time I have directed primary research into the operation
    and economics of deposit systems in each deposit State in the United
    States as well as analysis of proposed programs in the United States
    and abroad.

    Summary of S. 2220
        The proposal would impose a federally mandated fee on the sale of
    beverage containers. Beverage containers are any containers made of
    glass, metal, plastic, and/or paper that contain or may contain a
    beverage. All liquids for human consumption are included except milk
    and other dairy products. The primary impact of the bill would be the
    establishment of a new materials collection system to recover beverage
    containers from the waste stream. This system would substantially
    duplicate existing recycling infrastructure created through the
    investment of public and private funds over the past 15 years.
    Consumers would pay substantially higher prices for everyday products
    to support this system. And it is a system which many find cumbersome
    and inconvenient. Our summary of the bill and its key provisions is
    provided in Attachment 1.
        In my testimony I would like to highlight three major issues:

          Focus on the potential benefits of this measure
      What the bill seeks to accomplish and what incremental effect
        it would have
          Elaborate on the new materials recovery system that would
    be mandated as a result of the bill
      How the system would operate, its costs, and the impact it
        would have on existing recycling efforts
          Discuss the economic impact of the measure in terms of
    costs to U.S. consumers
      The bill would have many direct and indirect effects costing
        consumers billions of dollars per year

    A Producer Responsibility System Offers Limited Benefits
        Beverage container materials are already among the most widely
    recycled materials in the country. Even as the beverage industry has
    responded to consumer demands and packaging innovations through the
    years, the new package types (aluminum cans in the 1960's, PET in the
    1980's) have become accepted and widely recognized as recyclable and
    valuable. Undeniably, the rate of recovery for beverage container
    materials as well as other recyclables has been in decline for the past
    several years. While many theories have been advanced, it is clear that
    the novelty and high profile accorded to recycling programs in the late
    1980's and early 1990's has worn off and the American public needs to
    be reminded of the value of recovering certain commodities from the
    waste stream.
        This producer responsibility measure focuses on a subset of
    consumer packaging that accounts for approximately 4 percent of all
    municipal solid waste generated each year. The identification of
    beverage packaging as the target for the bill is arbitrary as many
    other products are packaged in these same materials (metals, glass,
    paperboard, plastics), but are not singled out for punitive fees and
    special handling.
        With a substantial fraction of these containers already recycled,
    what is the incremental benefit offered by the proposed deposit system?
    Based on current recycling rates and realistic levels of recovery under
    the proposed system, we believe that the recycling rate would probably
    increase by 1 percent or less. That is, the national average recycling
    rate computed by EPA each year would rise from approximately 28 percent
    to 29 percent. As we will see later, the economic impact for such a
    small move would be quite significant.
        It is also important to highlight that recovery rates under
    existing deposit laws are at all-time lows. The few States that track
    and publish their return rates are all on the same downward trajectory
    (see Exhibit 1). These three States (California, Massachusetts, and New
    York) contain three-fourths of those who live with deposit systems in
    the United States. In these States the reported return rate averages
    less than 65 percent.
        Given the broad scope of S. 2220 (no existing deposit program
    affects as many types of beverages and containers), the expected return
    rate would be even lower than that experienced in deposit States today.
        In short, mandating a deposit is no guarantee of achieving the 80
    percent recovery goal in this proposal. In fact, through their lack of
    participation, consumers are sending a plain signal that these programs
    are inconvenient and unpopular.

        Turning to litter control, the traditional rationale for imposing
    mandatory deposits on beverage containers, the data indicate limited
    potential benefit, especially given the costs required to achieve the
    results. Beverage containers consistently account for less than 9
    percent of roadside litter, measured in visual litter surveys conducted
    over the past 25 years. Even if a deposit measure were capable of
    eliminating beverage container litter (which it would not), roadsides,
    parks, and beaches would still need to be cleaned periodically and
    anti-litter education would still be necessary to address the remaining
    91+ percent of the litter problem.
        Proponents of this measure point to a wealth of benefits ranging
    from reduced dependence on foreign oil to fewer blown tires on
    bicycles, but alternative forms of recycling and litter control achieve
    these same benefits (however they may be measured). The key point is
    that the forced deposit systems offer only marginal gains in these
    various categories. Further, the real impact of this proposed system
    cannot be accurately stated until the net effect of extra trips to
    redemption centers, new trucks and traffic, and other environmental
    consequences of the new redemption and collection system can be
    documented.
        In sum, the rationale for special treatment for this small part of
    the country's waste stream is questionable at best. Additional recovery
    of many other materials in the waste stream could offer equal or
    greater societal benefit and may very well be feasible at a
    substantially lower cost than the scheme envisioned in S. 2220.
    Singling out beverage containers for management through a separate
    system also has significant economic consequences as we will describe
    below.

    Establishing a Duplicative, Costly Redemption System
        Today most Americans can recycle a wide range of materials right at
    the end of their driveways or in their apartment buildings. About 60
    percent of us have access to curbside recycling and most of the rest
    can drop recyclables off where we dispose of trash or at other
    convenient locations in our communities. It is no coincidence that at
    the time the last forced deposit measure passed in California in 1986,
    none of us had ever even heard of curbside recycling.
        As we walk through the practical implications of the new materials
    recovery system required by this bill, we will highlight the system's
    expense, inconvenience, and adverse impact on the recycling programs
    already in place.

    Redemption System Elements
        All forced deposit programs (which are in place in 10 States
    containing 29 percent of the population) mandate the collection of a
    fee when the product is sold. The fee is refundable upon return of the
    container to a designated ``redemption'' site which may be at a retail
    facility or a separate redemption center. These systems contain myriad
    complications and hidden costs, but we will only focus on the major
    ones at this time.

    Consumer Time
        A forced deposit system requires consumers to segregate deposit
    containers from other recyclables or trash, store them, and return them
    to a designated location. Sometimes consumers return containers while
    on shopping trips, other times they make special trips, especially to
    separate redemption centers. For their effort, consumers earn a refund
    of the deposit they already paid--no compensation for their time, only
    the repayment of money they paid out weeks before when they purchased
    the beverage containers.
        Consumer marketing and packaging have changed dramatically in the
    last 20 years and one of the driving forces behind these shifts is
    consumers' demand for convenience in everyday products. Families with
    two wage-earners and day-care deadlines, seniors with limited resources
    and mobility, and young professionals are not looking for ways to spend
    more time managing their trash. The time and effort expended by
    consumers in deposit systems represents one of the great unquantified
    burdens of these systems. And, as documented earlier, deposit systems
    are increasingly unpopular and burdensome to consumers resulting in
    lower utilization of the systems and increased incidence of consumers
    forfeiting their deposits.

    Redemption Sites
        The costliest component of a forced deposit system is establishing
    a network of sites to accept returns from consumers. Traditionally,
    these sites have been co-located with product retailers forcing food
    stores into the recovered materials business, despite the obvious flaws
    (sanitary and otherwise) with such a system. Deposit programs have
    imposed high costs on stores with notoriously slim margins and
    particularly penalized the small and medium-sized stores where
    redemption costs are the highest.
        In addition to the formidable health and environmental concerns
    with handling returned containers in food stores, retailers face
    logistical problems finding space for storage, coordinating the sorting
    and removal of containers from stores from the many product
    distributors involved (especially since S. 2220 would include an
    unprecedented range of products and containers), and managing
    containers that would be impractical to redeem through reverse vending
    machines (because of their size or material composition).
        Either as a complement or alternative to retail redemption, some
    forced deposit programs rely on separate redemption centers where
    redemption is the sole or primary business. In order for this model to
    operate, beverage distributors must subsidize the operation of these
    facilities through the payment of fees for each container handled. Not
    surprisingly, States with high handling fee subsidies have the most
    redemption centers; those with no subsidies have virtually none.
    (Interestingly, the presence or absence of stand-alone redemption
    centers does not appear to affect return rates.)
        The cost elements at all redemptionsites are similar: labor to
    accept containers from the public or to service machines that accept
    returns; capital for constructing new space to accept, sort, and store
    containers; operating expenses for leasing and operating machines,
    increased sanitation, cleaning, and supplies.

    Collection System
        Finally, a system is required to collect returned containers from
    all redemptionsites, transport them to central locations, and process
    the materials into market-ready commodities. The costs include
    vehicles, drivers, warehouses, processing equipment, accounting, and
    administration to track funds including deposits and refunds. Revenues
    from the sale of materials are used to defray collection and processing
    expenses.

    System Cost Estimates
        A redemption and collection system in the 40 States without deposit
    laws currently would cost about $4 billion annually. This estimate was
    derived from our 1991 analysis of a national deposit law and was scaled
    to reflect the number of containers subject to deposits under S. 2220.
        Several factors would tend to inflate the cost further. Two of the
    most significant are:

          We did not account for the substantially higher costs
    associated with collecting plastics, steel, paper, and composite
    material packages that were not part of the 1991 analysis
          Some incremental costs would be incurred in the 10 States
    that already have deposits. The first reason for this is that even for
    products already covered by the deposit, the return rates are less than
    80 percent: at least three-fourths of the population living with
    deposits have redemption rates below 70 percent. Therefore the existing
    deposit system would not be sufficient to avoid the imposition of the
    Federal system. Second, we know that many products regulated under S.
    2220 are outside the existing deposit systems, so manufacturers of
    these products would face new requirements in all 50 States.

        The bill's proponents argue that the flexibility provided to
    industry in S. 2220 should result in operating efficiencies which would
    reduce costs below those associated with existing deposit programs. We
    will address that theory next.

    Impact of a ``Performance Standard''
        One unique feature of S. 2220 is the establishment of a
    ``performance standard'' of an 80 percent recovery rate for each
    beverage manufacturer's products. Note that this is no assurance that
    the rate would be achieved, it is simply a target like a State
    recycling goal. This contrasts with the traditional approach of U.S.-
    forced deposit laws which mandate how the redemption and collection
    infrastructure is to operate.
        In theory, this approach is intended to provide flexibility to the
    beverage industry to develop a redemption and collection system that is
    as efficient as possible, thereby reducing costs compared to
    traditional deposit systems. In practice, this deceptively simply
    standard masks a number of hidden problems.
        First, the system design, even for an individual manufacturer,
    would be extremely complex. The bill would require that within 6 months
    of passage, each manufacturer would have established recovery systems
    covering all States including commitments from all entities who are to
    provide both redemption and collection services. This task would be
    daunting for the largest and most sophisticated beverage companies, but
    may be nearly impossible for smaller firms in the market. Such a plan
    would require detailed agreements with hundreds of retail and other
    entities within the companies' marketing areas. The administrative
    expense of establishing and maintaining these systems would at least
    partially offset any operating efficiencies they might offer.
        Another factor that would reduce the hoped-for cost reductions is
    the difficulty of cooperation across different beverage companies and
    sectors. Literally thousands of manufacturers sell products that would
    be subject to this proposal, creating a patchwork of sales and
    distribution territories in which their products are available. The
    complexity comes in trying to allocate financial responsibility for a
    recovery system in which the portfolio of products available for sale
    varies literally from store to store. Making the problem worse is the
    fact that beverage manufacturers who sell through distributors may not
    know where their products are offered for sale. Integrating sales and
    market territory information across hundreds or even thousands of
    manufacturers would be costly and time-consuming. The obvious
    alternative is to leave smaller and regional companies to establish
    their own systems which would drive up their cost of recovery
    substantially.
        Third, it is unclear how the Federal and existing State deposit
    laws could co-exist. For example, one manufacturer in Oregon may comply
    with the 80 percent standard and be exempt from the Federal law. Yet
    the redemption system and 5 cents deposit value would conflict with the
    systems and deposit value established for other products. It is likely
    that the Federal system would, in fact, supersede all existing State
    programs.
        It is clear that this kind of producer responsibility system would
    discriminate against small and mid-sized beverage companies who would
    lack the resources and volumes to command the attention of larger
    service providers (or ``agents'' as they are called in the bill). The
    cost and scale disadvantages faced by these beverage companies would
    put them at a distinct disadvantage to their larger competitors. This
    would be a particularly acute problem for small regional companies such
    as dairies (who produce much more than just milk products), water, and
    juice manufacturers. In sum, the argument that a performance standard
    will reduce costs needs to be carefully evaluated in light of the
    realities of the product manufacturing and distribution system in place
    for beverages, the complex and unprecedented range of products subject
    to deposits in S. 2220, and the potential for anti-competitive outcomes
    that disadvantage small and mid-sized producers. As we can observe from
    the unique California deposit program, administrative complexity can
    impose significant costs that defeat the hoped-for operating
    efficiencies of a centralized system.

    Impact on Existing Recyclers
        The imposition of a national deposit system for beverage containers
    cannot be evaluated without considering the implications for the vast
    recycling infrastructure that has been developed over the past 15
    years. State and local governments have invested billions of dollars to
    build recycling collection and processing capacity for household and
    commercial recyclables. A deposit system would seek to pull commodities
    out of that existing system and transfer them to a new handling system,
    outlined above. Much of the material that would be recovered under the
    system proposed by S. 2220 is material that is already being recovered
    through taxpayer-funded programs in communities all over the United
    States. While we would argue that there is no economic rationale for
    that shift, there is also a question of whether there is any
    justification for the Federal Government to mandate that policy.
        Beverage container material, especially aluminum and the most
    common plastics, provide significant value to recycling programs.
    Research has indicated that beverage container material accounts for
    between 40 percent and 70 percent of revenues earned from the sale of
    residential recyclables. Of course scrap revenue does not fund the cost
    of recycling programs, but it does offset operating costs
    significantly.
        Individual communities and States have examined the implications of
    container deposit programs on their recycling economics and documented
    the harmful effect of a deposit system. The adverse impact of deposits
    was a critical factor in the repeal of the Columbia, Missouri municipal
    deposit ordinance in early April of this year. The City's Public Works
    Department computed positive benefits from eliminating deposits and has
    already seen historically high recovery levels through the City's
    curbside program since repeal. For States without deposits, adding them
    would pull revenue and material out of the existing programs. In
    Pennsylvania, for example, recyclers would lose over $30 million in
    annual revenue if a deposit system were implemented. A similar analysis
    in New Hampshire estimated the loss to community recycling programs at
    $3 million per year.
        In addition to the adverse impact on revenue, deposits would
    decrease the utilization of existing recycling infrastructure and could
    jeopardize the viability of programs to recycle other containers not
    subject to deposits. Pulling deposit material out of existing recycling
    programs would do little or nothing to reduce costs of providing
    recycling in those communities. The same equipment would still be
    required, the same trucks and drivers following the same routes--they
    simply would be collecting fewer containers than they do now. (Of
    course many consumers would continue to recycle deposit containers
    through curbside bins as they do now, so some deposit material would
    remain in the system.)
        There is, however, a risk that removing the beverage containers
    from the system could irreparably damage the viability of container
    recycling. Communities may find that the remaining containers are
    simply too expensive to collect for recycling, especially given the
    greatly reduced revenue. Though the container recycling issue in New
    York City is complex and politically charged, it is clear that one
    factor in the high cost of container recycling there is the lack of
    valuable beverage containers in the stream: containers that are
    diverted to the deposit system instead.
        The relationship between State and local governments on solid waste
    issues has always been tense because of the difficulty of crafting
    State-wide or regional policies that reflect the diverse local
    circumstances faced by towns and cities. Strong justification is
    therefore required to shift that policymaking role up to the Federal
    level and to mandate a new system to overlay the recycling systems
    built with taxpayer and ratepayer funds over the last 15 years. In our
    view, this shift is ill-advised and certainly not justified by the
    limited, potential benefits offered by S. 2220.

    Economic Impact on Consumers and Businesses
        Whether it is called a producer responsibility measure, an anti-
    litter policy, or a bottle tax, mandatory deposit programs impose a
    substantial cost on consumers. Under this proposal, the range of
    products and consumers affected would be unprecedented. More beverages
    and types of beverage containers would be included in this program than
    in any other deposit program. That means that the economic impact of
    the measure would affect every U.S. consumer--the effects would not be
    limited to those who consume only certain products.
          Consumers pay with their time. We have already described
    how time-consuming a deposit system is for consumers. Separating
    containers from other recyclables; making a trip to a designated
    location to redeem bottles, cans, and cartons; and waiting in line for
    workers or machines to accept containers takes time that consumers just
    don't have. It is hard enough to get most consumers to recycle at all
    let alone recycle one set of materials at home and haul another set to
    a redemption center.
        Consumers who live with both systems prefer comprehensive
    recycling. While deposit law proponents cite high popularity for
    deposits in the ten States (e.g., ``Do you like the deposit law?''),
    when asked if they prefer recycling at the curb or through the deposit
    system, consumers prefer the comprehensive option 2:1.
          Consumers pay for the system. Earlier we provided a rough
    estimate of $4 billion as the cost of a national system to redeem and
    collect beverage containers captured by S. 2220. This system must be
    developed by the companies that manufacture and distribute these
    products. Ultimately, it is the consumers of these and other food
    products that will bear the cost of the system. (The beverage industry
    will suffer its own setbacks in the form of lower sales resulting from
    higher prices charged for its products.) But in the long-run, consumers
    will pay billions of dollars in higher prices for these and other
    products.
          Consumers pay the unclaimed deposit tax. The decline in
    return rates in deposit States is proof that for many consumers their
    time is worth more to them than the value of the refund. These
    consumers are making a rational tradeoff between the refund and the
    time it takes to obtain it. For them, the deposit simply functions as a
    tax on the price of these products.
        Consumers who choose to support their local recycling programs or
    simply prefer the convenience of curbside recycling also forfeit their
    deposits, even though they are still recycling the containers.
        For at least one-third of consumers in deposit States the deposit
    functions like a tax. We estimate that the unclaimed deposit tax would
    equal at least $4.8 billion per year, just in the 40 States without
    deposits now. As noted earlier, the Federal program would likely be in
    force in several if not all of the existing deposit States as well
    since they are not achieving the target 80 percent recovery rate.
        We have only estimated the 40-State cost of the redemption system
    and the unclaimed deposit, but the combined annual cost to consumers
    from these two elements of the proposal is $8.8 billion. If we factored
    in the value of consumers' time to redeem containers, the cost would be
    substantially higher.
        Beyond the direct impact on consumers, the affected businesses also
    suffer from being singled out in this legislation. Higher actual and
    perceived prices would reduce sales of soft drinks, juice, water, beer,
    tea, and other products. This not only affects manufacturers, but their
    suppliers and retailers as well. In the soft drink industry, for
    example, each dollar of output by bottlers produces another $2.70 in
    economic activity elsewhere in the economy.
        The bill would also have an adverse effect on tax collections at
    all levels of government. The soft drink industry pays $17 billion
    dollars in Federal and State taxes each year; tax payments would drop
    as a result of lower sales and profits. The tax implications of this
    bill would be particularly pronounced on alcoholic beverages, where
    excise taxes represent a much higher share of product price than for
    soft drinks.
        Beverage companies, retailers, and their suppliers would also
    experience job losses as a result of the higher prices and lower sales.
    A University of Kentucky analysis, for example, projected 1,200 lost
    jobs in Kentucky alone as a result of a more limited deposit proposal
    considered in that State.

    Alternatives
        Building separate recycling systems for not just certain types of
    materials, but for selected products packaged in those materials is not
    a rational direction for U.S. solid waste policy. Labor and equipment
    for handling waste are costly; industry professionals have long
    recognized that efficiency results from minimal handling of materials
    and from large scale operations. Recycling is no different, especially
    for commodities that are widely recycled, have existing markets, and
    pose no special environmental hazards. Recycling programs that target
    multiple materials, minimize handling, and maximize volume are likely
    to be the most successful and efficient way to keep waste out of
    landfills and incinerators. Providing disincentives to disposal such as
    pay-as-you-throw trash programs is a useful supplement--in fact it is
    the single most effective policy instrument to increase waste
    diversion.
        Decisionmaking on appropriate waste management systems is best kept
    at the local and regional levels where demographics, market conditions,
    and the wishes of taxpayers and voters can dictate policy. Imposing a
    costly new system on top of existing recycling infrastructure means
    higher costs for U.S. consumers. Enhancing the systems in place to make
    better use of existing infrastructure is a far better use of time and
    resources directed at recycling.
        Recovery rates for many materials have slipped, largely as a
    function of decreased education and promotion about the value of
    recycling. On the litter front, consumers, especially those most prone
    to littering, could use more frequent and directed reminders to obey
    the law and not litter.
        The soft drink industry has long advocated and supported
    comprehensive and sustainable programs to recycle and reduce litter.
    Spending consumers' money to build a massive new beverage container
    recycling system is simply wasteful. To provide perspective on the
    magnitude of the new costs, the $8.8 billion in new consumer costs
    would be sufficient to fund the curbside collection of nearly 60
    million tons of material--about 25 percent of the entire municipal
    solid waste stream.
        Thank you for the opportunity to appear before you today and
    present this testimony.

                                     ______

                                  Attachment 1

        SUMMARY OF NATIONAL BEVERAGE PRODUCER RESPONSIBILITY ACT OF 2002

    Reference: S. 2220 (Jeffords); April 22, 2002
    Provisions
          Imposes a 10 cents refund value on all beverage
    containers offered for sale except those offered for on-premises sale
          Beverages include alcoholic or nonalcoholic carbonated or
    noncarbonated liquids for human consumption except milk or dairy
    products.
          Beverage containers are ``primarily constructed of metal,
    glass, plastic, or paper (or a combination of those materials;'' have a
    capacity of not more than one gallon; contain or may contain a
    beverage; and are offered for sale.
          Requires that the refund value be adjusted every 10 years
    based on CPI changes, with changes rounded to the nearest 5 cents
    increment
          Beverage manufacturers, distributors, or their agents
    must:
          Submit a plan for EPA approval outlining an industry-
    devised system to collect, transport, reuse, and recycle beverage
    containers
          Collect the refund value from customers
          Label beverage containers with the refund value
          Submit to EPA for public release an audited annual report
    of the return rate for beverage containers and an accounting of
    deposits collected and refunds paid
          Pay an undetermined fee to EPA to administer the program
          Plans must be submitted for EPA review within 180 days of
    enactment. Plans must contain:
          Brands included in the plan
          Agreements with entities that will accept container
    returns and pay refunds
          Explanation of how consumers will be provided with
    ``convenient'' return sites
          Ways in which the recovery rate for containers will reach
    80 percent in 2 years
          How the returned containers would be managed
          Additional requirements applicable to beverage
    manufacturers, distributors, or their agents:
          Prohibited from disposing of any deposit container in a
    landfill or incinerator
          EPA may require payment of unclaimed deposits to States
    in which containers were sold if 80 percent of containers are not
    recovered.
          If operating in existing deposit States and achieving an
    80 percent recovery rate, the Federal program would not apply in those
    States

                                PRACTICAL IMPACT

    Scope
          Beverages: includes all liquids for human consumption--
    well beyond the scope of any existing deposit program. Even the Maine
    law which is the most inclusive deposit program in the country excludes
    milk and dairy products as well as products such as soups, broths,
    flavorings, and infant formula.
          Beverage Containers: metal, glass, plastic, paper and
    combinations of those extend the scope of the bill well beyond any
    current deposit program. Paperboard cartons and drink boxes would be
    included. Any container than may contain a beverage is subject to the
    law which would include plastic and paper cups (filled or not, sealed
    or not) and glassware. So, a sleeve of 100 paper cups in the grocery
    store would have a $10 deposit.
    Refund
          10, equal to the Michigan deposit, the highest in the
    United States. The deposit would increase 5 cents every 10 years if the
    annual CPI change averaged 2.3 percent (a likely scenario).
          Collected on all containers sold and refunded to
    consumers at designated redemptionsites, as noted below
    Manufacturers' responsibility
          As a ``manufacturers' responsibility'' bill, the measure
    leaves the development and operation of a system to redeem and handle
    returns entirely to the manufacturers, distributors, and importers.
          While this is done in the guise of appearing reasonable
    and flexible, it is borrowing from the European Green Dot system and
    other similar efforts to force the establishment of an industry-
    financed, reverse distribution system for products. The electronics
    industry is currently involved in a similar issue.
          The logical extension of such an approach is a network of
    producer-backed waste hauling operations, duplicating the services
    provided by thousands of local governments and private haulers
    throughout the country.
    Redemption system
          No requirements are imposed on product retailers unless
    they are part of the system proposed by the industry.
          Beverage companies must devise a plan, subject to EPA
    approval, that will achieve 80 percent recovery of deposit containers
    within 2 years. The use of the deposit mechanism is mandated, but the
    operation of the system and compensation for redemptionsites (i.e., a
    handling fee) are not prescribed in the bill.
          Developing such a system for all products nationwide
    would represent a significant undertaking. Many small producers would
    be obliged to pay any price in order to get access to a system set up
    by larger companies. The impact would be extremely anti-competitive and
    anti-consumer.
    Exemptions
          No State program affects this range of products and
    containers, so no State could achieve the 80 percent level required for
    exemption from the Federal requirements. Companies would therefore have
    to develop nationwide plans for redemption.
          Even if only conventional beverage containers were
    affected, most deposit States don't achieve an 80 percent rate anyway.
    Disposal prohibition
          Many of the proposed deposit containers have limited
    recycling opportunities (e.g., composite material packages, certain
    plastic bottles and paper cartons, paper and plastic cups). It is
    unclear what the fate of these materials would be if they were
    collected but not be disposed.
          Collection of these materials would contaminate loads of
    more valuable commodities and would result in expensive collection of
    materials for which no practical use could be found.
                                     ______

                                                         July 25, 2002.
    Senator James M. Jeffords, Chairman
    Senate Environment and Public Works Committee
    Washington, DC 20510.

    Dear Senator: I am responding to your e-mail of July 17 containing a
    follow-up question from the July 11 hearing related to producer
    responsibility and the beverage industry.
        Question. During the question and answer period of the Hearing, you
    testified that the industry believes that efforts to impose bottle
    deposit legislation is a local issue. If it is a local effort, why did
    the beverage industry work to repeal the bottle bill in Columbia,
    Missouri?
        Response. First I should clarify that my remarks were intended to
    emphasize that local and county governments are the appropriate levels
    at which to make specific decisions about which materials are recycled
    and how they are managed. There is clearly a role for coordinating
    State policies that set guidelines and standards, but local entities
    need flexibility to accommodate local circumstances in the design and
    operation of their waste diversion programs. Policy considerations, not
    political ones, should govern the particulars of such an inherently
    local matter.
        The reason I emphasized the point in my testimony and my response
    to questions is that I believe the Federal Government has a limited
    role to play in this issue. Federal mandates, even cloaked as
    ``producer responsibility'' measures, limit the flexibility and
    authority of State and local decisionmakers. As I pointed out in my
    testimony, a federally mandated deposit and redemption system would
    overlay and in many cases damage existing recycling infrastructure
    funded and supported by local taxpayers and rate payers.
        The question about the bottle bill campaign in Columbia is
    completely separate from the discussion about where solid waste
    decisions should be made. The beverage industry did support the work of
    the local supporters of the Yes on 1 Committee in Columbia. The
    referendum was devised and put on the ballot as a result of a
    grassroots organization in Columbia with which the beverage industry
    had no involvement. In fact, the industry came somewhat late to the
    campaign since the groundwork had already been laid by the local
    organization.
        The industry promoted a position that was directly or indirectly
    endorsed by local recyclers and the City's Public Works Department. The
    City's analysis showed that incorporating the bottles and cans into the
    City's blue bag (curbside) program would yield a net benefit of about
    $160,000 per year to the curbside program budget. It would also help
    support the operation and expansion of the City's new materials
    processing facility--a significant step in controlling recycling costs
    since the recycled materials were being shipped considerable distances
    for processing. The jump in recycling tonnage since repeal seems to
    support the petitioners' claims that residents would continue to
    recycle these containers. Eliminating the deposit system also avoids
    $1.5 million in annual operating costs to retailers and beverage
    distributors--savings which benefit local businesses and consumers
    alike. Finally, the repeal ends the pervasive fraud problem which
    attracted millions of bottles and cans into the redemption system for
    which no deposit was ever paid.
        On balance, the Columbia vote mirrors the widespread feelings about
    deposits in bottle bill States. While consumers, especially older ones,
    are used to the deposits and support the programs, they prefer simpler
    ways of recycling. If presented with the choice, these consumers would
    rather recycle all of their household materials at once and avoid the
    extra time and higher prices forced on them by a bottle bill system.
        I would like to thank the committee again for the opportunity to
    testify and would be pleased to provide you with additional information
    and assistance in the future.
                Very truly yours,
                                               Kevin S. Dietly,
                                                             Principal.
                                   __________
    Statement of David E. Bonior, Former U.S. Representative from the State
                                  of Michigan

        Many people forget that until the late 1950's, most beverage
    containers were made from glass and redeemable for deposits under a
    system voluntarily maintained by bottlers. Eventually, the glass
    industry, wanting to expand their profits, developed the ``no-deposit,
    no-return'' concept and soon our highways and beaches were cluttered
    with empty bottles and cans--prompting complaints from residents of
    Michigan and tourists alike.
        I was in the Michigan State Legislature back in the early 1970's
    when Oregon and Vermont enacted the first bottle bills in the Nation. A
    group of us tried to get a bottle bill through the Michigan
    legislature, but were stymied by special interests. So we took it
    directly to the people. The Michigan United Conservation Clubs (MUCC)
    led a petition drive to get it on the ballot and we made it! Voters in
    Michigan overwhelmingly approved a ten cent bottle deposit law,
    becoming the first industrial State to enact one.
        Our bottle bill is the most progressive in the country--and it's
    working. In 2001, 98 percent of the deposit containers purchased were
    returned for a deposit, which is higher than the average recovery rate
    of about 85 percent for the 10 States--including Vermont--that have a
    bottle deposit, and significantly higher than the national recovery
    rate of 42 percent.
        In fact, Pat Franklin, from the Container Recycling Institute, once
    stated, ``Michigan does more than its share--Michigan and the other
    bottle bill States are doing the lion's share of recycling in the
    U.S.''
        The trouble is, for all our hard work and due diligence, our
    deposit law is being undermined by out-of-State and Canadian trash.
    Nearly 4 million tons of waste from other States and Canada were dumped
    in Michigan landfills last year--almost 20 percent of all solid waste
    disposed of in Michigan. A national bottle bill would level the playing
    field for States like Michigan and Vermont that already have effective
    recovery programs. Our neighboring States like Illinois, Indiana and
    Ohio would reduce the amount of trash they generate. By simply reducing
    the amount of cans and bottles in the overall waste stream, we will
    curb the justification for other States to export garbage to Michigan.
    I am also supporting efforts in our State to prevent Canadian cans and
    bottles from being dumped in our landfills. There is no reason Michigan
    should be taking in other people's garbage just because we've been
    responsible with our own.
        The proposal by Senator Jeffords, the National Beverage Producer
    Responsibility Act, is a fresh approach to ensuring comprehensive
    beverage container recycling. It puts beverage brand-owners in charge
    of developing an efficient deposit return program to achieve an 80
    percent recovery rate. It basically tells beverage companies, ``your
    responsibility doesn't end with the sale of your product. You need to
    have a plan to collect empty containers after consumption.'' It's a
    cost-effective, sound approach, and one I think we should explore in
    the House. I commend Chairman Jeffords for holding the first hearing on
    this issue in 10 years. I know our friend the late Paul Henry would be
    pleased to know that his former colleague has taken up the cause to
    enact a national bottle bill. Thank you for all the good work you are
    doing, and thank you for taking my testimony.

                                   __________
                     Letter of Wayne Turner, Greensboro, NC

    Mr. Douglas N. Daft
    Chairman of the Board of Directors and Chief Executive Officer
    The Coca-Cola Company
    P.O. Box 1734
    Atlanta, GA 30301

    Dear Mr. Daft: I wistfully recall my grandfather pulling a chilled Coke
    from the drink box in his eastern North Carolina country store and
    gulping it down in just a few swallows. The drinks from his drink box
    always seemed to be the coldest and could cut the dust from a parched
    throat almost instantly. Even so, I stood amazed at how he could slug
    down a 7 ounce Coke so quickly. I aspired to duplicate that feat
    someday--but never did. I also remember how, on many hot summer days, I
    made a few dollars by picking up drink bottles from the fields where
    farm workers had left them and redeeming them for the two-cent deposit.
    That was in the 1960's, when two cents alone was enough to buy two
    pieces of bubble gum or two Mary Jane's or one Tootsie Roll Pop. Pick
    up enough bottles and you could easily buy a complete snack: a drink, a
    bag of chips and a candy bar.
        I also recall the deep understanding and appreciation my
    grandfather had for his community and the social fabric from which it
    was woven. His store was located in a poor, rural county where farming
    was the primary occupation. Often, my grandfather would extend credit
    to shoppers who couldn't afford to pay him for the basic goods they
    purchased from his store. And frequently, he would simply forgive the
    debt or allow someone to ``work off'' the money they owed if he thought
    payment created a special hardship. My grandfather knew the value of
    money, but more importantly he knew the value of responsible
    citizenship even if it meant he didn't profit as much on some days as
    others. His sense of community, fairness and altruism had no price.
    Although not wealthy by any means, his success was determined more by
    his contributions to the community than by how much money he made.
        These wonderful, nostalgic memories of my grandfather, his country
    store and Coca-Cola are a part of my past that I shall always treasure.
    It is classic Americana.
        During my work in the environmental field, which spans 13 years, I
    have witnessed many successes and failures. I count as a success the
    announcements made by both Coke and Pepsi that they will begin using
    plastic beverage containers made from10 percent post-consumer PET.
    Although late in coming, I applaud theses efforts and hope that the
    carbonated soft drink industry will increase the amount of post-
    consumer recycled content in its plastic bottles in the future. On the
    other hand, I count as a failure the National Soft Drink Association's
    (predictable) attempt to discredit the sincere efforts and technically
    exhaustive work of the Multi-Stakeholder Recovery Project undertaken by
    BEAR (Businesses and Environmentalists Allied for Recycling) in its
    beverage container value chain assessment report. It is a failure of
    immense proportions on the part of the carbonated soft drink industry
    to refuse to come to the table and work closely with other community
    stakeholders to address a persistent and pervasive waste--used plastic
    beverage containers. With national average recycling rates for all
    beverage containers languishing, even declining in some areas, the soft
    drink industry has no excuse for remaining on the sidelines during this
    national dialog.
        It is particularly troublesome that the carbonated soft drink
    industry seems to have sold its corporate conscience to the National
    Soft Drink Association, a group that ostensibly exists only to insulate
    the industry from the voice of its consumers while portraying it as
    inherently patriotic. I take exception to the NSDA's use of the slogan
    ``Soft Drinks--A good part of America'' while it continues to package
    its products in non-returnable, non-reusable, non-recyclable plastic
    bottles. There is nothing good about the millions of plastic beverage
    containers that end up in landfills across America because Americans
    that consume your products have no place to return or recycle them.
    There is nothing good about the fact that plastic beverage containers
    are one of the most commonly found items in roadside litter across
    America. There is certainly nothing good about how the soft drink
    industry, through the NSDA, disputes these immutable facts and openly
    works against efforts to find ways to reduce plastic beverage container
    waste in America.
        The soft drink industry must accept responsibility for its used
    packaging and return to the negotiating table to help craft practical,
    effective bottle recovery programs. Until such time as it does, my
    American family of four will no longer purchase any of your products in
    plastic containers. We want your products but not your trash! And I
    know that if my grandfather were alive today, he would support our
    decision.
                Sincerely,
                                               B. Wayne Turner.
                                                 Andrea Turner.
                                              Alex Turner (12).
                                             Hayley Turner (6).
                                   __________
    Statement of Fran McPoland, Federal Environmental Executive 1994-2000,
            and Chair, White House Task Force on Recycling 1998-2000

        My name is Fran McPoland, and from 1994 until 2000, I was honored
    to serve my country as this nation's first Federal Environmental
    Executive, and later also as Chair of the White House Task Force on
    Recycling. It is in light of those experiences and the insights gained
    in implementing Section 6002 of the Resource Conservation and Recovery
    Act that I am pleased to submit these comments for the record.
        As the Federal Environmental Executive I was directly responsible
    for the implementation of Executive Order 12873, and subsequently,
    Executive Order 13101 which provided additional requirements
    implementing the broad intent of RCRA Section 6002. I was also the
    principal author of Executive Order 13101 which aims at increasing
    compliance with overall government environmental procurement programs.
    Because of these experiences I believe I bring to this hearing the
    unique perspective of having been on the front lines of ``Greening''
    Federal procurement.
        I believe the core question before this committee is whether RCRA
    Section 6002 has been a success or a failure. And why? The answer to
    the first question is a qualified yes. The provision has been
    successful in a number of areas and has not been successful in others.
    The answer to the second question is more complicated and I believe
    this committee needs to understand that the successes that we had are
    not likely to be easily replicated across a broad swath of product
    categories.

    What did Congress intend to accomplish with the drafting of RCRA
            Section 6002?
        In reading the language of the law and the report, it is clear that
    Congress considered recycling to be a critical part of the Nation's
    waste management hierarchy and that the Federal Government, through its
    procurement actions would be key to steering materials away from
    disposal by providing a robust end-market for products made from such
    materials. Clearly Congress intended that the Federal Government would
    use it's purchasing powers to move recycled products through the
    system. In effect, to ``pull'' products back into useful commerce and
    away from the landfills and the incinerators.

    Has RCRA 6002 been successful?
        As I noted in my summary, in my view the answer is mixed. Congress
    directed EPA to determine if there were products containing recovered
    materials that the Federal Government could buy and to develop
    specifications calling for recycled content in those products. EPA, as
    you well know, got off to a very slow start. From the time the law was
    passed in 1976 until 1988 there were only 5 products designated (and
    that was only as a result of a lawsuit brought against the Agency by
    the Natural Resources Defense Council and others). After 1988, EPA
    didn't designate a single product until 1993, when Executive Order
    12873, directed both that the process be streamlined and that EPA meet
    a schedule established in that Order. After that things picked up
    dramatically so that by 2000 more than 50 products had been designated.
        The most dramatic success of the statutory provision and the far
    reaching actions of the Clinton-Gore Administration in implementing
    Congress's intent was in the area of copier paper. To understand that
    success, it helps to realize both how much of an improvement was made
    in a relatively short time and to understand the unique features of
    that product which may temper our natural enthusiasm for trying to
    transfer that success to other products.
        First, how far did we get in expanding the use of post-consumer
    recycled content copier paper? Up through 1992, the Federal Government
    was buying only 12 percent of the quantity of its paper with recycled
    content--and the post-consumer waste content of that paper was only 10
    percent. By the end of 1998, we had achieved a governmentwide
    compliance rate of 98 percent of our copy paper was 30 percent post-
    consumer paper. That constitutes a 2,450 percent improvement.
        There were a number of factors which contributed to that success--
    unfortunately, some of these factors may not be reproducible for other
    commodities. First of all, paper is the very life-blood of the Federal
    Government. It has been for years, and despite the electronic
    communications revolution, and the anticipated ``paperless office'',
    there has been no appreciable drop-off in the Federal Governments' use
    of paper. Because of the critical day-to-day importance of paper to the
    operation of the government, and because procurement of nearly all
    paper occurs through centralized procurement agencies such as GSA and
    GPO--the number of ``points of control'' for achieving the Presidential
    mandates in Executive Orders 12873 and 13101 was minimal. However, very
    few items are bought through centralized procurement systems anymore.
    With the dramatic decentralization of government procurement authority
    and growth of virtually uncontrolled use of government credit cards,
    replicating the paper success across the board would be impossible,
    especially since OMB has consistently resisted efforts to require the
    banks which issue the credit cards under contract to the government to
    report on transactions at the level of specificity needed to ensure
    compliance with buy recycled efforts. Because the vast majority of the
    copy paper is purchased through GSA and GPO we were able to carefully
    track, and report to the Congress on our progress in increasing
    government purchasing. OMB, however, continues to oppose essential
    reporting tracking on credit card purchases. Since public funds are
    being expended it seems implausible that OMB is not interested in
    whether those funds are being obligated in ways that comply with the
    law. Until tracking and reporting is required, voluntary compliance
    without oversight is doomed to fail. There is a saying in management
    that sums it up: ``What gets measured gets done.''
        A clear example of this was at the Department of Energy under
    Secretary O'Leary who had established a 100 percent compliance goal
    with RCRA Sections 6002 in her performance agreement with the
    President. DOE measured and rapidly improved its performance
    dramatically in the following years.
        Another reason that our experience with copier paper is not
    replicable is that EPA tends to ignore how the government purchases
    products when it sets CPG Guidelines. The clearest example of this is
    the CPG required product, ``cement containing fly ash.'' The government
    really doesn't buy much ``cement'' as a single line item--we buy
    buildings and parking lots. And, unless language is put into the
    appropriate contracts for these construction projects and some
    mechanism is found to track compliance--this CPG item will continue to
    be ignored. The same can be said for the other construction products in
    the CPG like paint, wallboard, insulation, etc.
        The fact that getting to 100 percent for all commodities is not
    feasible should, however, not deter us from maximizing our efforts to
    increase the governmental purchasing of recycled content and
    environmentally preferred products. Why? I believe there are some very
    sound reasons for maintaining and increasing our focus on promoting
    procurement of recycled content and environmentally preferable
    products. This envisions: 1) energy/environmental economics; 2)
    Promoting technical change/leadership/markets.
        First, the quantifiable multi-media environmental life-cycle
    benefits of making products from post-consumer recycled materials and
    other Environmentally Preferable Products are enormous. The
    environmental benefits of Federal purchasing of just recycled content
    copier paper within the RCRA 6002 program as compared to buying that
    same quantity of paper made from virgin fiber are summarized in the
    following list:

          450,000--500,000 fewer trees cut down annually
          14 percent reduction in greenhouse gasses and air
    emissions
          13 percent reduction in solid waste generation and water
    pollution
          12 percent reduction in energy used to produce paper
          16,000 tons of carbon absorbed by trees left remaining
    standing

        But it is not just environmental and energy benefits which this
    program delivers--it has become a major force in our economy. Hundreds
    of industries, large and small, new and old, have come to rely on
    recovered materials as a major source of their production inputs. Work
    done by my staff at the White House Task Force on Recycling reveals
    that fully 67 percent of the steel produced in the United States and 55
    percent of the aluminum cans produced were recovered from the waste
    stream. EPA projects that only the part of the market dealing with the
    recovery of recycled materials will be a $5.2 billion industry by
    2005--not to mention the direct energy and production cost savings of
    using recycled vs. virgin raw materials.

    Without Demand There is No Need For Supply
        What these statistics show is that the widespread success of the
    collection of recyclable materials at the curbside has formed a vast
    supply chain of highly processed materials, and that supply has been
    successfully married to effective demand in a significant and growing
    portion of American industry.
        Unfortunately, some of the most difficult and potentially damaging
    elements of the waste stream specifically intend to be captured by the
    RCRA Section 6002 program have not found the demand the Congress
    promised and which is necessary for reducing the environmental damage
    from these materials and returning these wastes to products in useful
    commerce.
        Exhibits 1 in the list of where we have largely failed is the
    Federal Government's failure to live up to its promise of 25 years ago
    to buy re-refined motor oil and retread tires. The American people were
    appropriately outraged in 1989 when the Exxon Valdez released 11
    million gallons of oil into the Alaskan waters. In that same year, more
    than 190 million gallons of used oil were improperly disposed of by
    ``do-it-yourself'' engine oil changers--nearly the equivalent of 16
    Valdez spills. When you add in additional sources of improper used oil
    disposal it adds up to about 35 Exxon Valdez spills! Much of this could
    be recovered and recycled if there was demand.
        Why do we not recover and recycle the oil? Simply put, it's not
    worth our while to do so because there is not much of a market for it.
    With no market, who wants the hassle of collecting it? At the end of
    1992 we were buying half of 1 percent of the governments' lubricating
    oil needs with re-refined oil made from collected used oil. By the end
    of 1997 we had increased that to a still abysmal 12 percent. I suppose
    I could say that during my tenure, we managed to increase procurement
    by 2,480 percent, but the fact would remain that we are simply not
    getting the job done to get these waste streams out of the environment
    and back into useful commerce. The same story applies to retread tires.
    The Federal Government's procurement of tires and oil is not executed
    exclusively through limited control channels like paper, but the number
    of control points is relatively small and the Federal Government's
    leverage is large. With the will to do so, GSA and DOD could change the
    situation overnight. For example, they could write contracts requiring
    that cars sold or leased to the Federal Government come equipped with
    retread tires and re-refined oil--just as we did with seatbelts in the
    1960's.
        In 1976 the Congress attempted to forge a new direction in national
    waste management priorities--by not merely enshrining recycling in a
    higher place in the hierarchy but by taking steps to ensure the success
    of recycling by providing a stable source of demand for products made
    with collected materials. While the Congress' insight on this matter
    was remarkable perhaps it should have foreseen recalcitrance on the
    part of the Federal bureaucracy.
        Another factor in the success of post-consumer content copier paper
    was the decision on the part of GSA to discontinue sales of virgin copy
    paper. GSA didn't do this voluntarily, they didn't do it happily, and,
    although it was a success--they have no plans to do it again with any
    other products they sell or manage.
        Why is it that, like an ``adult'' providing a cigarettes to
    children, GSA is allowed to continue to sell non-recycled products to
    government users--when recycled products are readily available, are
    cost competitive and of excellent quality? Why is it that GSA won't
    even list the CPG compliant products first on the web site?
        To use Federal ``demand pull'' to successfully form a commercial
    marketplace for collected materials, a lot of very different strings
    have to pull forward at the same rate and force to not imbalance the
    underlying markets. Like the reins of a team of horses used to pull a
    sleigh, the strings to be carefully manipulated, in my view, include:

          Excellent information on the sources which can supply
    recycled content products.
          Support by the purchasing agencies--including EPA setting
    an example. This support must be both top-down and bottom-up to be
    truly successful.
          Provision of quality products at reasonable, although not
    necessarily equal or lower prices.
          Incentives for Agency compliance (or disincentives for
    non-compliance!)
          Program management, with Reporting and congressional
    oversight.

        Mr. Chairman, it has been 25 years since this law was passed and
    more than 10 years since Congress held any hearings on the
    implementation of this law. I applaud this committee for holding this
    hearing today and strongly urge you to continue these efforts.

                                   __________

      Statement of Deborah MacCormac, Florida Department of Environmental
               Protection, Orlando Office of Pollution Prevention

        I am writing to express support for any new legislation and
    initiatives that focus on encouraging recycling at every juncture of
    the product lifecycle. In the 1960's companies were able to pay 2 cents
    and 5 cents for returned bottles. As a child, this was an exciting
    source of Friday night treat funds for my siblings and I. It was a way
    for small children to make a little money on their own, and to help the
    environment. It was such a good thing. We were always looking for
    bottles everywhere we went--24/7. Any legislation that would encourage
    manufactures of recyclable products to creat a refund policy for such
    products would have far reaching social and environmental benefits. In
    2002 a premium of even a mere 10 or 15 cents per item would greatly
    encourage return of recyclables. This not only helps the environment in
    countless ways, it creates incentives, small entrepreneurs, help social
    disfunctionals and generates a small business sub-culture from nothing
    and for those who may otherwise remain lost. I encourage you to support
    any such policy initiative. It's a win-win for all of America.

                                   __________
                                                   Steve Leuty,
                                        201 W. Kalamazoo Avenue
                                      Kalamazoo MI 49007, July 2, 2002.

    Senator James M. Jeffords, Chair
    Senate Committee on Environment and Public Works
    Dirksen Senate Office Building
    Washington, DC 20510

    Senate Committee on Environment and Public Works: Kalamazoo County
    (Michigan) government is committed to promoting a sustainable economy
    by procuring post-consumer recycled-content products when possible. For
    example, for over 5 years, 99 percent of all office paper, copier
    paper, and janitorial paper products purchased by Kalamazoo County
    government contained post-consumer recycled fiber.
        A strong Federal committment to environmentally preferrable
    purchasing compliments local governmental efforts by supporting
    manufacturers which offer environmentally preferrable products.
        I urge Federal departments to renew their committment to
    environmentally preferrable purchasing.
        I also support a national bottle deposit system, so the rest of the
    country can enjoy Michigan's high recycling rate for depositable
    beverage containers.
                Sincerely,
                                                   Steve Leuty,
                                 Kalamazoo County Recycling Coordinator

                                   __________
                                  Larry & Marty Karigan-Winter,
                                              558 Madison 2410,
                                                  Huntsville, AR 72740.

    Senators: We all know how much the Government spends. It's huge. If
    recycling is going to continue to be viable economically, we need
    consistent strong demand for products made with the very materials we
    are keeping out of landfills by recycling. Whatever it takes to
    encourage Sen. Jeffords' efforts, please let him know there is this
    huge need for continued and greater support by government to understand
    the importance to Buy-Recycled and to follow this thru with their
    procurement policies. The recycling industry has grown tremendously
    this last decade and plays an ever-increasing role in our economy. More
    than half of all American citizens now can recycle curbside. More
    citizens recycle than vote. Ten's thousands of jobs have been created.
    But, we need the government to buy the very products made with recycled
    content to get business to further their designs and to tool up to meet
    the demands that only government's purchasing power can boost.
        It's imperative that Federal Government lead where the people are
    wanting their government to go. The people are doing their part. The
    Government needs to do theirs. Thank you for passing this message on to
    the people who need to hear it.
                And, thank you for this opportunity,
                                Larry and Marty Karigan-Winter.

                                   __________
                   Statement of Thomas Ibsen, Saint Paul, MN

        I am writing to voice my support to the Senate Environment and
    Publics Works Committee proposal to strengthen the use of Federal
    procurement practices as a means of strengthening markets for recycled
    goods.
        The Federal Government certainly is the largest employer and
    purchaser in the country. Practices undertaken by the GSA and other
    Federal agencies can play a big part in helping to guide product
    development toward sustainability and reuse. Helping to close the cycle
    of recycling by purchasing products with a higher post-consumer
    recycled content is only one mechanism that the government can use to
    help stimulate product development in these areas.
        The Federal Government might also consider restricting the purchase
    of certain resource intensive products such as those made of plastics
    when products of equal quality and durability already are constructed
    out of biodegradable materials. For example, packing peanuts are
    readily found in a cellulose-based form that dissolves in water and is
    made of plant cellulose produced by American farmers. Styrofoam packing
    peanuts produced from oil-based plastics are a landfill filler and
    litter the streets, parks and waters of our cities after blowing out of
    the trash.
        Similarly, the government should consider the life of the product
    when making purchases. A $5 plastic stapler that breaks after a year
    and ends up in a land-fill is not a good choice when a sturdy metal
    stapler that will last 10 or more years is currently available for $15.
        Our nation's government has the wonderful opportunity to set an
    example for State, county and municipal governments within the United
    States and nations across the world by adopting purchasing practices
    that benefit both the environment AND the tax-payers of this country.
    This is clearly a win-win situation.
        Please investigate and continue strengthening our government's
    purchasing power in shaping the future of our nation and the world.
    Thank you for your time.

                                   __________
          Statement of Julie Daniel, General Manager, BRING Recycling

        Please accept this testimony for your hearing on recycling.
        1) National Bottle Bill. The evidence is crystal clear. States that
    have bottle bills have notably higher container recovery rates than
    States that do not. I urge the Senate to work to get a National Bottle
    Bill in place. The United States, once a leader with regard to
    environmental issues, has fallen behind. We cannot afford to landfill
    precious resources and waste all the energy it took to create them.
    Aluminum can recycling rates are at an all time low. Only a fraction of
    the plastic bottles that are used to package drinks are recyclable. A
    National Bottle Bill should cover all beverage containers with the
    exception of milk.
        2) Federal Procurement. ``Buy Recycled''. Consumers are taught to
    recycle, and to choose products that contain recycled content and many
    of us do. It is disappointing to learn that our leaders are dropping
    the ball on environmental purchasing. Buying Recycled is key to the
    success of the recycling industry. The Federal Government has a
    responsibility to invest in recycled content products. Huge Federal
    subsidies go to extractive industries; mining, oil exploration, timber
    harvests etc., but there are precious few for industries that use
    recycled feedstock to manufacture their products. This huge inequity
    should be addressed. The Federal Government should take a leadership
    position and require all paper products purchased to have a high post
    consumer content. The enormous buying power this represents would go a
    long way toward stabilizing the industry.

                                   __________
                            Statement of C. Williams

        Without strong, concerted Federal procurement of recycled products,
    the investment made by cities, counties and State governments in
    recycling collection and processing will continue to be jeopardized. A
    number of leading-edge companies have made major investments in the
    needed research and technology to develop products that meet the
    recycled content and EPP standards. Strong, concerted purchasing by the
    Federal Government is absolutely necessary for these products to gain a
    foothold within the national economy.
        The GAO report should be the benchmark for measuring what the
    Federal Government has accomplished, as well as the critical need to
    push harder for Federal agencies to implement the requirements of the
    Executive Orders and of RCRA.
        Bottles and cans are turning the landscape of America into one
    continuous landfill. Except for the States that have bottle deposit
    bills, America is being trashed. There is no reason for not having a
    national deposit law. Individual States have proven these laws work.
        Please do not listen to the voices of the lobbyists and big
    business. Listen to the voices of the voters; the people spoke recently
    in Hawaii.
        Please do what is right for all of America.

                                   __________
     Statement of Brenda Pulley, Vice President, Government Affairs, Alcan
                              Aluminum Corporation

        Alcan Aluminum Corporation commends Chairman Jeffords for holding
    this hearing on recycling, in general, and specifically on beverage
    container recycling and appreciate the opportunity to submit testimony
    for the record.
        As background, Alcan Aluminum Corporation is a U.S. subsidiary of
    Alcan, Inc., a multinational leader in aluminum and specialty
    packaging, with facilities located in 38 countries. In the United
    States, Alcan employees over 8,500 men and women at our packaging and
    aluminum primary, fabrication and recycling operations. Alcan owns and
    operates the world's largest, dedicated, used-beverage can recycling
    facility in Berea, Kentucky. We also have two other recycling
    facilities, which are located in Oswego, New York and Greensboro,
    Georgia. Currently, Alcan recycles nearly 40 percent of all the
    aluminum cans recycled in the United States. We are committed to
    increasing the number of aluminum cans that are recycled--not only is
    it the right thing to do environmentally, but it makes good business
    sense also.
        The economics of recycling aluminum. Inevitably, a discussion about
    recycling always focuses on whether recycling programs are cost-
    effective, particularly since the recycling of most commodities does
    not pay for itself and, therefore, does not make good sense
    economically. The same statements cannot be said about aluminum,
    however. Recycling aluminum is a solid value. It is the only beverage
    container material covering its cost of collection and processing, and
    it actually provides significant revenue to the recycling stream. As a
    practical matter, this means that aluminum helps defray the cost of
    curbside collection programs throughout the country. The average cost
    of curbside collection is around $240 per ton. However, the scrap value
    of aluminum is more than $1,070 per ton, making the net profit for
    recycling aluminum cans $830 per ton. No other recyclable beverage
    container in the waste stream has this economic benefit. Aluminum
    should not be considered a ``solid waste.'' Instead, it should be
    recognized as a ``solid value.''

        The environmental benefits of recycling aluminum. In addition to
    the economic value of recycling aluminum, there are numerous
    environmental benefits, as well. These include: the conservation of
    natural resources; reduction in litter; and reduction in the need for
    landfill space. Aluminum is the most unique, because unlike other
    commodities, it is possible to recycle aluminum an infinite number of
    times without losing or sacrificing quality. Recycling of aluminum
    beverage containers typically yields recoveries of 98 percent of the
    metal content.
        Large amounts of energy are invested in the production of virgin
    aluminum. While the industry is constantly improving the energy
    efficiency of its processes, an increase in recycling provides a
    significant opportunity for reducing the demand for energy. Recycling
    aluminum saves nearly 95 percent of the energy and raw materials that
    are required to produce aluminum from ore. As a result, related
    emissions, which include so-called greenhouse gases, also are reduced
    significantly. At a time when there is such uncertainty about the
    future reliability of our energy sources, Congress should recognize
    that recycling aluminum affords the country a significant means of
    reducing our demand on energy, and it should fashion public policies to
    reflect this.

    Encouraging Recycling
        We at Alcan are proud that aluminum has over a 50 percent recycling
    rate and each aluminum can is made from post-consumer recycled content
    of approximately 50 percent--no other beverage container comes close to
    achieving this success. However, we are concerned that the rate of
    recycling has decreased since its all time high of 65 percent in 1992.
    While we are currently exploring reasons for this trend, we believe the
    primary factor for the declining recycling rates is the lack of
    interest and attention that recycling receives from policy holders, the
    public at-large, and the media.
        Alcan constantly is searching for innovative ways to increase
    recycling rates. One such innovation is the partnership with Habitat
    for Humanity through the Aluminum Association. This program, called
    Aluminum Cans Build Habitat for Humanity Homes, raises money to build
    homes through aluminum can recycling. The money that is earned by
    recycling aluminum cans is donated by people across the country to
    Habitat for Humanity in order to help fund the building of homes for
    families in need. The backbone of this program is the nearly 2,000
    recycling centers and the 300 Habitat affiliates across the United
    States that participate in the program. Since aluminum is the one
    commodity in the waste stream that has significant value, our
    partnership with Habitat demonstrates quite clearly that aluminum's
    value extends beyond mere dollars and cents to the communities that
    benefit from its value. In addition to Alcan's partnership with
    Habitat, the aluminum industry paid nearly $1 billion to recyclers, and
    schools, charities and local fund-raising groups for used beverage
    cans.
        Throughout the next few months, we are hopeful that Congress, and
    particularly this committee, will consider new ways to increase
    aluminum can recycling. To this end, Alcan respectfully submits the
    following suggestions for your consideration.
        (1) Consumer Education--We believe that one of the most worthwhile
    efforts that Congress can do to encourage recycling is to hold hearings
    like this one, which focus attention on the importance of recycling.
    Consumers are the most important link in the recycling chain; however,
    they need to be informed periodically of the benefits and encouraged to
    recycle.
        (2) Tax credits--Congress should provide a tax credit to encourage
    increased placement of recycling collection facilities in public
    locations. While there is more curbside collection than ever across the
    Nation, with a more mobile society and numerous locations that do not
    have access to curbside collection, the placing of more recycling
    collection centers in public places could help capture those beverage
    containers consumed away from home. One example of such a collection
    facility might include ``reverse vending machines'' placed in grocery
    store and convenient store parking lots.
        (3) ``Recognition for recycled content''--EPA should designate
    aluminum cans as having meaningful recycled content (aluminum cans have
    approximately 50 percent recycled content, whereas other beverage
    containers have hardly any). Such a recognition by EPA would enable
    products in aluminum cans to be listed on the Comprehensive Procurement
    Guidelines (``CPG''), and allow the General Services Administration to
    require that Federal agencies purchase beverages in aluminum cans.
        (4) Recognition for greenhouse gas reductions--For every ton of
    aluminum cans that are recycled, nearly 4 tons of greenhouse gas
    emissions (MCTE) are avoided, as compared to producing virgin aluminum.
    Credits for such greenhouse gas reductions as a result of increased
    recycling should be awarded to recyclers. These credits should be
    eligible for banking or trading.
        In summary, we at Alcan thank you for your efforts to raise the
    interest in beverage container recycling. Recycling aluminum is a
    success--both economically and environmentally, but we can do more. We
    want to capture those cans that are going into landfills, and if this
    occurs, we all will benefit. By recycling more aluminum cans, aluminum
    manufacturers would have an ``above ground mine'' from which to source
    aluminum, and energy demand and emissions (as compared to manufacturing
    primary aluminum) would be reduced by 95 percent. Finally, if just half
    of the cans that were thrown away in 2001 had been recycled instead,
    the proceeds collected from recycling those aluminum cans could have
    built over 5,000 new homes for families in need.
        We look forward to working with you and members of the committee to
    find and implement new ways to build on the success of aluminum cans
    recycling.

                                   __________
     Statement of Pat Franklin, Executive Director, and Jennifer Gitlitz,
        Research Director, Container Recycling Institute, Arlington, VA

        The Container Recycling Institute (CRI) is a nonprofit research and
    public education organization that studies container and packaging
    recycling issues, and serves as a clearinghouse for information on
    container deposit systems. We are pleased to submit written testimony
    for S. 2220, the ``Beverage Producer Responsibility Act,'' at the
    request of Senator Jim Jeffords. Sen. Jeffords' bill, commonly known as
    a national ``bottle bill,'' pertains to a recovery system that relies
    on the financial incentive of a 10-cent container deposit that would be
    refunded to consumers when they return their beverage cans and bottles
    for recycling. Up until the 1960's, all soda bottles were returned to
    be washed, refilled and sold again. The bottle bill is modeled after a
    deposit system invented by the beverage industry nearly a century ago
    to retrieve and refill their empty bottles.
        The refillable system has long since been dismantled, and beverage
    consumption has grown, so that about 190 billion cans and bottles are
    purchased by Americans each year. Several billion of these containers
    are littered along our nation's highways, streets, parks, beaches and
    scenic places, and cost millions of dolloars to pick up. The majority
    of the remaining discarded containers are collected for recycling,
    incineration, or landfilling. The modern beverage industry is a multi-
    billion dollar enterprise, making huge profits on the sale of beer,
    soft drinks and other beverages, but absorbing very little financial
    responsibility for disposing or recycling their cans and bottles after
    the beverages have been consumed. The national recycling rate now
    stands under 40 percent, which means that 119 billion containers are
    still going un-recycled each year. These wasted containers must be
    replaced continually with new containers made with virgin materials,
    using resources and processes that have enormous environmental and
    economic impacts on society.
        In 40 of the U.S. States without container deposit legislation,\1\
    States, government and taxpayers pay those costs, whether it is to pick
    up can and bottle litter, collect and dispose of one-way, no-return
    containers, or recycle bottles and cans. In the ten ``bottle bill''
    States, the deposit on beverage containers shifts the responsibility
    for those costs from taxpayers to beverage producers and consumers.
    ---------------------------------------------------------------------------
         \1\Including Hawaii, which in June 2002 became the 11th State in
    the Union to have a bottle bill.
    ---------------------------------------------------------------------------
        Members of this committee will no doubt be overwhelmed by the many
    facts and figures submitted pertaining to litter, solid waste and a
    multitude of other issues related to beverage containers and bottle
    bills. We encourage you to question every fact and figure, demand
    sources for the data provided and find out who funded the studies and
    reports that are cited, so that you can you make an informed decision
    on S 2220.
        We have tried in this written testimony to address the questions
    that generally arise in a discussion over the merits of bottle bills,
    and have attempted to provide sources for the statements and data
    herein.

                      WHY SINGLE OUT BEVERAGE CONTAINERS?

        There are good reasons to single out beverage containers from other
    packaging waste. Unlike most rigid packaging,
          they are very often consumed away from home for
    ``immediate consumption;''
          they often cost more than the products they deliver;
          their manufacturing consumes huge amounts of energy;
          their manufacturing and replacement causes many types of
    pollution; and
          unlike mayonnaise and pickle jars, their contents are
    consumed in minutes.

                         BEVERAGE CONTAINERS AND LITTER

        Picking up litter is a band-aid solution. In fact, it is no
    solution at all. Putting a deposit on bottles and cans stops litter at
    the source.
        Opponents of bottle bills argue that beverage containers represent
    a small portion of total litter. The studies they site are generally
    conducted by Daniel Syrek who has been conducting litter surveys for
    the beverage industry for more than 20 years. I urge you to seek out
    surveys conducted and funded by groups and/or government agencies that
    do not have a vested interest in the outcome. Such surveys continually
    show that beverage cans and bottles represent 40-60 percent of roadside
    litter. Better yet, conduct your own survey along a roadside or a
    streambed, as the Solid Waste Coordinators of Kentucky did. They were
    told by the beverage industry that beverage containers were a small
    portion of the litter stream. They did their own statewide survey in
    May 1999 and found that beverage bottles and cans and their closures
    made up over 50 percent of roadside litter, as Figure 1 shows.

        The effects of deposit systems on litter reduction are well
    documented, leading to an average of 70-85 percent reduction in
    beverage container litter, and reductions in total litter of 34 to 47
    percent, as Table 1 shows.

                                     Table 1. Litter Reduction in Deposit Law States
    ----------------------------------------------------------------------------------------------------------------
                                           New York   Oregon    Vermont    Maine   Michigan    Iowa    Massachusetts
    ----------------------------------------------------------------------------------------------------------------
    Beverage Container Litter Reduction..    70-80%       83%       76%    69-77%       84%       76%          N/A
    Total Litter Reduction...............       30%       47%       35%    34-64%       41%       39%       30-35%
    ----------------------------------------------------------------------------------------------------------------
    Sources: See Appendix 1

         WHY RECYCLE BEVERAGE CONTAINERS? LANDFILL SPACE REDUCTION OR
                        ENVIRONMENTAL IMPACT REDUCTION?

        Opponents of bottle bills argue that beverage containers represent
    less than 5 percent of the waste stream by weight, and therefore do not
    represent a significant burden on solid waste landfills. It is
    misleading to compare materials in the waste stream on a weight basis.
    For example, according to the U.S. Environmental Protection Agency, 600
    pounds of glass bottles takes up 1 cubic yard of space, while 600
    pounds of aluminum cans takes up 9.6 cubic yards and 600 pounds of
    plastic bottles takes up 17.1 cubic yards of space. Landfills fill up
    by volume, not by weight. Aluminum beverage cans, and even moreso
    plastic bottles, take up a more landill volume per ton than denser
    materials such as paper or yardwaste.
        More importantly, recovery priority should not be based on the
    proportion of materials in the waste stream as measured by weight or
    volume, but rather on the materials that are most energy-and emissions-
    intensive.

    Table 2. Energy Savings from Recycled Beverage Containers and Newspapers
                             (in millions of BTU's)
    ------------------------------------------------------------------------
                                         Energy needed to produce one ton of
                                                    product from
                 Material              -------------------------------------
                                                                Recycled
                                         Virgin Materials      Materials
    ------------------------------------------------------------------------
    Aluminum..........................              194.0               45.0
    PET...............................               97.2               32.2
    HDPE..............................               73.0               13.0
    Steel.............................               56.1               44.8
    Glass.............................               14.5               13.2
    Newsprint.........................               33.5               31.0
    ------------------------------------------------------------------------
    Source: Energy Implications of Recycling Packaging Materials, Linda L.
      Gaines and Franklin Stodolsky, Argonne National Laboratory, 1994.

        Table 2 presents a comparison of the energy requirements of
    producing new products from virgin materials versus recycled materials.
    Aluminum and plastic beverage containers are low in weight but high in
    raw materials and energy usage. At current rates of recycling,
    Americans are squandering the energy equivalent of about 43 million
    barrels of crude oil annually by failing to recycle 119 billion
    beverage cans and bottles, as Appendix B-1 shows.
        Beverage container waste also contributes significantly to
    greenhouse gas emissions compared to other materials in the
    wastestream. As Appendix B-2 shows, 4.7 million tons of greenhouse
    gases were produced to just to replace the 119 billion wasted beverage
    cans and bottles with new containers made from virgin materials,
    compared to 4.3 million tons of greenhouse gases produced to replace
    wasted newspapers. Other environmental effects from replacing 119
    billion wasted containers annually include habitat loss due to strip
    mining for ores, air emissions contributing to acid rain and smog, and
    groundwater contamination.

               BEVERAGE CONTAINER RECYCLING IN THE UNITED STATES

        Beverage containers, especially plastic bottles and aluminum cans,
    are among the most valuable and resource rich materials in the waste
    stream. Unfortunately, recycling rates are declining and beverage
    container waste is increasing. At present, the average national
    recycling rate for beverage containers is about 40 percent, as Table 3
    shows.

                         Table 3. What happens to beverage containers sold in the United States?
    ----------------------------------------------------------------------------------------------------------------
                                                         Sold       Recycled      Wasted     Recycling     Wasting
                                                      (billions)   (billions)   (billions)      Rate         Rate
    ----------------------------------------------------------------------------------------------------------------
    Aluminum.......................................         99.8         49.1         50.7        49.2%        50.8%
    PET............................................         40.0         10.0         30.0        25.0%        75.0%
    HDPE...........................................         13.8          4.4          9.4        31.9%        68.1%
    Glass..........................................         36.1         11.3         24.8        31.3%        68.7%
        Total......................................        189.7         74.8        114.9        39.4%        60.6%
    ----------------------------------------------------------------------------------------------------------------
    Source: CRI calculations based on data from Beverage Marketing Corporation, Glass Packaging Institute, American
      Plastics Council, Aluminum Association, and the U.S. Department of Commerce, for year 2001.
    Notes: Used aluminum beverage cans imported for recycling are not included in the number of cans recycled
      because they were not sold in the U.S. Glass figures are estimates. HDPE rates are for 1999.

        This national average would be even lower if not for the 10 bottle
    bill States that pull it up. Data gathered by CRI from government
    officials in the ten deposit States show that deposit systems alone
    recover an average of 78 percent of beverage containers sold. That
    means that the recycling rates in non-deposit States is approximately
    23 percent on average, and even lower in States with limited curbside
    and dropoff recycling programs.
        In March 2002, a report titled ``Understanding Beverage Container
    Recovery: A Value Chain Assessment'' was released by a unique group
    called ``Businesses and Environmentalists Allied for Recycling.'' The
    report was the culmination of a project that brought together 24
    stakeholders including the Coca-Cola Company, Waste Management, the
    Container Recycling Institute and Tomra North America, a manufacturer
    of reverse vending machines. The report found that container deposit
    systems far outperform curbside recycling systems in recycling beverage
    containers, with deposit systems in the nine traditional deposit States
    recycling 422 beverage containers per capita, as opposed to 127
    containers per capita recycled through curbside programs in the 40 non-
    deposit States.
        The report also found that costs of a traditional deposit system
    can be reduced significantly when reverse vending machines are used to
    recover containers and when the need for brand sorting of containers is
    eliminated.

                       OVERALL STATEWIDE RECYCLING RATES

        Opponents often argue that non-bottle bill States such as New
    Jersey, Minnesota and others are recycling a larger portion of the
    waste stream than bottle bill States. First, it is important to note
    that States do not all use the same methodology to calculate the
    recycling rate, thus it can be like comparing apples to oranges. That
    said, according to a survey conducted by BioCycle Magazine, six of the
    States with the highest recycling rates in the year 2000 also have some
    form of a bottle bill in effect. Deposit systems are enhancing curbside
    programs in ten States. Furthermore, eight out of ten (80 percent) of
    all bottle bill States recycled one third or more of their State's
    municipal solid waste (including yard waste), while only 11 out of 40
    (28 percent) of the non-bottle bill States reached a recycling rate
    greater than 33 percent.

         Table 4. Recycling Rates for All MSW in Selected States (2000)
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    1. Delaware *..................................                      59%
    2. Arkansas....................................                      45%
    3. California *................................                      42%
    4. Minnesota...................................                      42%
    5. New York *..................................                      42%
    6. Maine *.....................................                      40%
    7. Oregon *....................................                      39%
    8. Massachusetts *.............................                      38%
    9. New Jersey..................................                      38%
    10. Missouri...................................                      38%
    ------------------------------------------------------------------------
    * Denotes Bottle Bill State
    Source: ``State of Garbage,'' BioCycl, December 2001.

                          PUBLIC SUPPORT FOR DEPOSITS

        Bottle bills enjoy overwhelming public support. Dozens of statewide
    and national surveys have been conducted over the past twenty-five
    years, and support is almost always in the 75 to 80 percent range. How
    many elected officials win by a 3 to 1 margin? Deposit foes argue that
    the questions in these surveys are worded so as to elicit positive
    responses, and that people prefer the convenience of curbside programs.
    Yet in 30 years, voters in all 10 deposit States have rejected repeated
    attempts to repeal their bottle bills.

                        BOTTLE BILLS AND BEVERAGE SALES

        It is extremely difficult to determine the impact of deposit laws
    on beverage sales. Many factors unrelated to deposit laws have
    contributed to varying consumption patterns, including changes in the
    legal drinking age, fluctuations in tourism, industry price increases
    and general economic conditions. In Michigan, for example, the year the
    deposit law was enacted coincided with one of the worst recessions in
    recent history, with unemployment in double digits and tens of
    thousands of residents moving to the Sun Belt.
        The general pattern of beverage sales in deposit law States has
    been a slight decline followed by a return to normal growth patterns.
    Sales figures for a 3-5 year period after a deposit law was passed show
    sales increased at or above the national average in most of the States
    with deposit laws. Shortly after implementation of the Massachusetts
    bottle bill, Donald Dowd, Vice President of Coca-Cola New England, was
    quoted in a Boston Globe news article as saying, ``Our prices pre-and
    post-bottle bill were the same.''

                           IS THE BOTTLE BILL A TAX?

        Opponents call the bottle bill a tax, but as one Virginia State
    senator puts it, ``I sure wish all my taxes were 100 percent
    refundable.'' Deposit law oppenents also do not acknowledge that at
    present, over 50 percent of Americans are already paying taxes to
    collect beverage containers through municipal, publicly funded curbside
    recycling programs. Millions more without any recycling access are
    paying taxes to have their containers buried in a landfill or burned in
    an incinerator.

                      HAVE ANY BOTTLE BILLS BEEN REPEALED?

        The first U.S. bottle bill was enacted 31 years ago in Oregon. By
    1986, ten U.S. States with 30 percent percent of the American
    population had enacted deposit laws. Despite continued attempts by the
    beverage industry to overturn existing container deposit laws, no State
    bottle bill has ever been repealed. In early 2002, the country's only
    local deposit law, in Columbia, Missouri, was repealed by voter
    referendum after an intense battle in which the beverage and grocery
    industries outspent bottle bill supporters by at least 4 to 1.
    Overshadowing this local defeat was the passage of the nation's 11th
    bottle bill in Hawaii, in April 2002. Despite lobbying efforts by the
    beverage and retail industries, a coaliton of State and local
    government employees, environmentalists, businessines, and citizen
    groups (including elementary schoolchildren) waged a successful
    campaign to pass the historic bill--the first in 16 years. They
    persuaded State legislators that a bottle bill would conserve resources
    and was good for business: keeping waste out of the islands' limited
    landfills, and promoting tourism by keeping Hawaii's exquisite beaches
    and parks clean.

                   ADDRESSING THE DEPOSIT VS. CURBSIDE DEBATE

        The beverage industry contends that they are in favor of recycling
    their products, but says the best way to do so is through publicly
    funded curbside programs and drop-off centers. They believe deposit
    laws should be eliminated because they ``duplicate'' curbside programs.
        This is not true. The bottle bill is not a replacement, substitute,
    or duplication of these important curbside and dropoff programs, but
    rather a complement. An approach incorporating a variety of recycling
    programs achieves a higher recovery rate than any one program alone.
        In addition, only 50 percent of the U.S. population is now served
    by curbside programs. 140 million people live in apartments, rural
    areas, or other locations where curbside service is not available. In
    fact, the national trend of implementing new curbsideprograms has
    leveled off, as these programs have become increasingly expensive for
    municipalities to operate. Some communities--most notably New York
    City--have reduced or even suspended their curbside programs. Without
    deposit laws to pick up the slack, millions more tons of valuable
    resources would be landfilled--at taxpayer expense. By themselves,
    curbside programs have not succeeded in capturing a majority of
    beverage containers in the United States, despite a tripling in the
    curbside access during the 1990's. While the number of curbside
    programs operating nationally rose from 2,711 in 1990 to 9,709 in 2000,
    the aluminum can recycling rate plunged from 61 percent to 49 percent.
    The PET plastic beverage bottle recycling rate has dropped from a high
    of 38 percent in 1995 to 26 percent in 2000, and the glass bottle
    recycling rate has stagnated around 30 percent--with much of the glass
    collected at curbside being landfilled in the end because it it is of
    too low a quality to be successfully marketed. Deposit systems address
    this problem by creating a cleaner material stream for all recyclable
    commodities.

                BOTTLE BILLS ALSO ADDRESS IMMEDIATE CONSUMPTION

        The apparent contradiction between climbing curbside recycling
    access and dropping recycling rates exists in large part due to a
    national trend of increased away-from-home, or immediate, beverage
    consumption. As more beverages are consumed on the go, more containers
    end up in the trash in non-deposit States. Lacking convenience and a
    financial incentive, most consumers do not bring these containers home
    to recycle in their curbside bins. Deposit laws, especially those that
    provide 10-cent refunds, provide the financial incentive needed to
    recycle these immediate consumption cans and bottles.

                WHO SHOULD PAY FOR BEVERAGE CONTAINER RECYCLING?

        There are costs to society associated with the manufacturing,
    disposal and recycling of the estimated 190 billion beverage containers
    sold in the United States each year. While bottle bills are not a
    ``cure-all'' for litter and solid waste reduction, they have
    successfully attained beverage container recycling rates of 70-95
    percent in the States with deposit legislation, as opposed to beverage
    container recycling rates of only 20-30 percent in non-deposit States.
    Bottle bills also shift many of the costs of container collection and
    processing from government and taxpayers to producers and consumers of
    the wasteful products.
        The deposit system has a proven record of success in ten States and
    should be an integral part of a comprehensive approach to waste
    diversion, litter control and resource conservation.

                                     ______

                                   Appendix A

                                                   Sources for Table 1
                                     Table 1--Litter Reduction in Bottle Bill States
    ----------------------------------------------------------------------------------------------------------------
                                                                       Beverage Container
                                 State                                  Litter Reduction      Total Litter Reduction
    ----------------------------------------------------------------------------------------------------------------
    New York......................................................              70-80 % [1]                 30 % [2]
    Oregon........................................................                 83 % [3]                 47 % [4]
    Vermont.......................................................                 76 % [5]                 35 % [6]
    Maine.........................................................              69-77 % [7]              34-64 % [8]
    Michigan......................................................                 84 % [9]                41 % [10]
    Iowa..........................................................                76 % [11]                39 % [12]
    Massachusetts.................................................                      N/A             30-35 % [13]
    ----------------------------------------------------------------------------------------------------------------
    [1] Final Report of the Temporary State Commission on Returnable Beverage Containers, March 27, 1985, p. 62.
    [2] Projection from Center for Management Analysis, School of Business and Public Administration of Long Island
      University. New York State Returnable Container Act: A Preliminary Study (1984).
    [3] Oregon Department of Environmental Quality, Oregon's Bottle Bill: The 1982 Report, p. 26.
    [4] Ibid.
    [5] U.S. General Accounting Office. Report to the Congress by the Comptroller General of the United States,
      Potential Effects Of A National Mandatory Deposit On Beverage Containers, December 7, 1977, p. 54.
    [6] Ibid.
    [7] U.S. General Accounting Office. Report by the Comptroller General of the United States, State's Experience
      With Beverage Container Deposit Laws Shows Positive Benefits, December 11, 1980, p. 9. [8] Ibid.
    [9] Michigan Department of Transportation, Maintenance Division. Michigan Roadside Litter Composition Survey,
      Final Report, December 1979.
    [10] Ibid.
    [11] Iowa Department of Transportation, Highway Division. Litter Survey, April 1980.
    [12] Ibid.
    [13] Environmental Action Foundation. Bottle Bills in the 1980's: A Handbook for Effective Citizen Action,
      August 1987.

                                   __________
            Statement of Scott Cassel, Product Stewardship Institute

        Thank you for the opportunity to testify on Senate Bill 2220. My
    name is Scott Cassel and I am the Founder and Director of the Product
    Stewardship Institute (PSI) at the University of Massachusetts. I also
    served 7 years as the Director of Waste Policy for the Massachusetts
    Executive Office of Environmental Affairs where I was directly
    responsible for the State's beverage return law.
        The bottle redemption law in Massachusetts has been a big success.
    It has been instrumental in reducing litter, jump starting recycling,
    and bringing billions of containers worth of high-quality recycled
    materials to manufacturers for the production of goods. The
    Massachusetts bottle redemption law works because it provides a
    financial incentive to individuals to collect containers, especially in
    places where recycling programs do not currently exist. Even States
    around the country with excellent recycling programs do not often fully
    collect from apartments, public spaces (e.g., parks and stadiums), and
    businesses. These containers currently go straight into our nation's
    landfills and combustion facilities.
        The most striking statistic is that, in 2000, non-deposit
    containers in Massachusetts were recycled at a rate of between 20 and
    33 percent, while the return rate for deposit containers was between 72
    and 80 percent. Over time, the return rate has dropped owing to the
    decreased value of a nickel as a result of inflation. The Senate bill's
    intention to maintain the value of the deposit over time is a positive
    aspect of the bill. I would expect that an 80 percent return rate would
    be easily achievable with a ten-cent deposit in today's dollars,
    although States without bottle redemption laws today may find it
    difficult to reach 80 percent recycling in 2 years.
        Massachusetts is the only State in the country where 100 percent of
    the unredeemed deposits go to the State. I think it is essential for
    government to own the unredeemed containers, although the program will
    be more credible if the unredeemed funds are used only for problems
    associated with beverage containers, and not used to solve other
    environmental problems. In addition, providing financial incentives to
    manufacturers to reach performance goals, as attempted in the Senate
    bill, is another provision worthy of consideration.
        Of all the solid waste issues on which I worked with the State, the
    beverage return law represented its own unique challenges. One of the
    main challenges I had to confront was fraud, particularly related to
    containers sold in non-bottle bill States but redeemed in
    Massachusetts. I have enclosed a memo entitled ``Fraud and the Bottle
    Bill System: Sunmiary, November 2, 1999,'' to illustrate the types of
    fraud inherent in a State bottle bill. A national beverage return law
    will alleviate many of these cases of fraud, although the committee
    should ensure that similar issues would not occur in border States in
    provinces or areas without a bottle bill.
        PSI was created in December 2000 as a national organization to
    assist State and local government agencies to negotiate cooperative
    agreements with industry and to develop other initiatives that reduce
    the health and environmental impacts from consumer products. PSI is
    currently coordinating over 20 States and several dozen local agencies
    on a national electronics product stewardship initiative. We have
    developed a take-back program with Benjamin Moore, the paint company,
    and the Massachusetts Department of Environmental Protection, and have
    begun research and outreach for a potential national dialog on paint
    products.
        PSI was created to assist State and local agencies to manage the
    increasing number and complexity of consumer products that become
    waste. Local governments are the last defense against waste and have no
    choice but to manage these wastes if the proper systems are not in
    place. Managing these products costs a great deal of money, funds which
    government does not have, unless they want to raise taxes. PSI
    developed a set of Principles of Product Stewardship by consensus with
    our State and local members. One of those principles is that the costs
    to manage consumer products should be folded into the purchase price of
    new products. These agencies believe that consumers should be paying
    for these services rather than having all taxpayers pay through
    government-funded programs. The Senate bill is founded on these same
    product stewardship principles.
        I do not know if a national bottle bill is the best solution. State
    bottle bills, from my experience, certainly have been a cost-effective
    and efficient way to recycle beverage containers, and studies conducted
    for Massachusetts' environmental agencies showed that developing a.
    recycling infrastructure and consumer education campaign for containers
    (especially those consumed outside the home), was equally as expensive.
    It is also likely that such an infrastructure and campaign would take
    longer to reach the same performance goals as legislation. Therefore, I
    see no reason why a national bill would not be successful. The key to
    greater environmental protection, however, is for manufacturers to step
    to the plate and work with government officials, recyclers, market
    development specialists, and other key players to reduce the life-cycle
    health and environmental impacts caused by their products. Product
    stewardship and corporate responsibility are here to stay, and all
    interests must find a way to make it work for beverage containers.

                                   __________
             Statement of Jeffrey Becker, President, Beer Institute

        Mr. Chairman and Members of the Committee on Environment and Public
    Works, I appreciate the opportunity to address recycling issues and the
    concept of producer responsibility for recycling beverage containers.
    Members of the Beer Institute include the largest and smallest domestic
    brewers as well as several major international brewers and industry
    suppliers. In the United States, our products are produced by over 1800
    brewers, sold in over 700,000 licensed retail establishments, and
    enjoyed responsibly by over 90 million adult consumers over the age of
    21.
        Our industry has a long history of advocating and implementing
    sound environmental and energy conservation practices. Individual
    brewers along with groups such as Master Brewers Association of the
    Americas, the United States Brewers Association, and the Beer Institute
    have a tradition of environmental stewardship that can be documented
    from the late 19th Century.
        As a mature domestic industry, brewers have been leaders in many
    developments in manufacturing consumer products. Many of those
    developments are practical from a business and economic standpoint as
    well as an energy conservation and environmental protection perspective
        Several of our major brewers have reduced fossil fuel use by
    recycling alcohol and methane from brewing byproducts and using it as
    fuel or for power generation in breweries. These ``bioenergy recovery
    systems'' conserve hundreds of millions of cubic feet of natural gas
    each year. Carbon dioxide is also recovered and used in the brewing
    process.
        Packaging is an essential part of the brewing industry. Since the
    1950's a rapidly growing proportion of beer has been sold in cans and
    bottles. Beer is a staple in the Federal Government's market basket of
    consumer goods, and safe, convenient, and economical packaging is
    essential.
        Brewers have always encouraged responsible behavior by our
    customers. That includes proper disposal of packaging materials and
    containers, preferably in recycling bins. The brewing industry created
    and sustained the Pitch-In Campaign, a highly successful anti-litter
    campaign. Creative materials and a strong network of supportive
    industry members were major factors in that success. The materials from
    the 1960's are still in use throughout the United States, and the U.S.
    Brewers Association allowed public and private reproduction of
    additional campaign materials at no charge. The Pitch-In logo appears
    on millions of trash receptacles today. Individual brewers have also
    sponsored numerous cleanup campaigns in cities throughout the Nation.
    Brewers have been reducing waste and reusing materials for decades
    before recycling became part of our national lexicon.
        Anheuser-Busch and Miller Brewing Company both recycle between 75
    and 90 percent of corrugated cardboard used in shipping and packaging.
        Most grain used in the brewing process is recycled in variety of
    other commercial products for human or animal consumption, further
    reducing the waste stream and maximizing the value of our agricultural
    resources.
        Our members have also developed several major advances in packaging
    technology. These innovations have substantially reduced the weight of
    cans and bottles while maintaining package integrity.
        Since the late 1970's, all beer in cans is packaged in aluminum.
    Prior can designs combined aluminum and steel, making the recycling
    process more difficult because the steel and aluminum had to be
    separated. The lighter weight of aluminum cans also reduces energy use
    in transportation.
        Two of America's largest brewers, Anheuser-Busch and Coors have
    built highly successful aluminum recycling businesses as a natural
    extension of their can manufacturing activity. Anheuser-Busch has
    recycled more than 10 billion pounds of aluminum. The Coors operation
    has been spun off into a separate business operation. Both companies
    recycle more aluminum than they use in their packaging. Enormous energy
    and environmental benefits are achieved through these efforts, and they
    constitute a substantial beverage industry infrastructure for ongoing
    and future recycling activities. A recycled aluminum can requires only
    5 percent of the energy used to produce a virgin aluminum can. Cans
    utilized by brewers contain as much as 50 percent recycled aluminum.
        In the area of glass packaging, significant progress has been made
    with respect to use of recycled glass. Over the last decade, Miller
    Brewing Company employed new technology to reduce the weight of its
    bottles by over 20 percent. At the same time, Miller has increased the
    level of recycled glass in its bottles to 30 percent of the total, a
    savings of more than 8,400 tons of glass each month. The three largest
    domestic brewers, Anheuser-Busch, Miller, and Coors have all made
    substantial progress in increasing the use of recycled glass.
        The success of many curbside recycling initiatives is based on the
    higher value of material from beverage containers relative to other
    materials. Removing beverage containers from thousands of community
    programs will hamper further development of an infrastructure for more
    comprehensive recycling initiatives. This is not a new argument, and it
    is a major reason that most States have adopted policies based on the
    need to conserve resources in an economically efficient and practical
    manner.
        Many major metropolitan areas are just beginning to see some
    success in their recycling programs after years of trial and error as
    outlined in an April, 2002, EPA commissioned report entitled
    Multifamily Recycling, A National Study. Sophisticated sorting systems
    are also being developed that are capable of removing beverage
    containers from other waste streams. Absent the revenue from beverage
    containers, these efforts and future enhancements would be seriously
    set back or even doomed to failure.
        If any type of new national system were superimposed on existing
    recycling activities, a great deal of dislocation and confusion would
    result. Existing businesses, including the Anheuser-Busch Recycling
    Corporation, have established systems to efficiently prepare and ship
    aluminum cans from local gatherers to major prime aluminum producers.
    The cans are then remelted into ingots, which are then rolled into
    fresh beverage can stock.
        With a federally imposed, new system of recycling, transportation
    systems for recycled products would change dramatically. Redemption
    centers, expensive industrial equipment, and other facilities built
    over the last two decades may not be as efficient with thousands of new
    drop off points for beverage containers. Thousands of retail outlets
    would have to deal with the challenges of allocating space and
    maintaining sanitation for container redemption. All of the changes
    necessitated by a new national system would impose substantial new
    costs with no clear benefits.
        Effective recycling requires broad public participation, and a
    national container deposit cannot guarantee the changes in attitudes
    and habits that are required to increase recycling efforts. Communities
    that have achieved the highest levels of participation in curbside
    recycling make sustained commitments to address
        A review of recycling rates in 2001 indicates that rates for
    aluminum cans in States with mandatory deposit requirements are very
    close to those achieved in States in which municipalities have adopted
    voluntary recycling efforts. The mandatory States, with a population of
    81 million, recycled a total of 440 million pounds of aluminum cans or
    5.43 cans per person. The non-mandatory States with a total population
    of 191 million, recycled 5.50 cans per person. The committee should
    review comparisons in this area very carefully because they appear to
    underscore the limited impact of a Federal deposit law on consumer
    habits.
        Members of the Beer Institute believe that a strong foundation
    exists on which a broader recycling infrastructure can be built. Two
    key areas need further attention to improve recycling rates: education
    and system convenience. Mandatory container deposits do not further
    progress in either area. Consumers have become accustomed to
    convenient, single-serve beverages. In many other areas of public
    policy, we have seen that sustained educational efforts will encourage
    most Americans to change their habits in the interest of achieving
    broader public benefits. We must continue to reinforce the message that
    improper disposal of beverage containers has ramifications for raw
    material usage, landfill limitations, and energy costs. All of these
    issues have resonance with a broad cross-section of our society.
        Beyond education, we must continue to make recycling more
    convenient to consumers. Existing drop-off or buy-back centers are
    common all across the country for those who wish to dispose of their
    recyclables in the course of other errands. Over 10,000 locations
    currently exist in the United States, primarily for metals. Over 900
    million pounds of aluminum cans were recycled through this system in
    2001. Another proven component of the existing recycling infrastructure
    is the Municipal Curbside Program, serving more than 60 percent of the
    nation's family residences in the United States. This program generated
    more than 150 million pounds of aluminum cans in 2001. An estimated 50
    million Americans recycle on a regular basis.
        As a matter of general Federal policy, S. 2220 would be a major
    extension of EPA authority over the organization and logistics of
    recycling activities, an area that has developed in the private sector
    without a Federal mandate or fee.
        The proposed national deposit would constitute one more tax on
    beer, which is already among the most highly taxed products in the
    United States. Our members already pay the same taxes as other U.S.
    businesses. In addition, industry members pay beer excise taxes in all
    50 States, local sales taxes that do not apply to many other food and
    beverage products, and container deposits in those States which have
    enacted them. 44 percent of the cost of a beer is attributed to
    Federal, State, and local taxes according to a comprehensive analysis
    of the brewing industry's tax burden. A container deposit would add one
    more level of taxation.
        Over 3000 brands of beer have been registered with Federal and
    State officials for sale in the United States. Requiring a nation-wide
    program for each brand would cause a tremendous burden on industry
    members and the EPA.
        S. 2220 would also change longstanding labeling requirements for
    alcohol beverages, an area that is already governed by Federal law and
    the laws of the 50 States. Under the 21st Amendment, States have
    broader authority to regulate alcohol beverages.
        In summary, members of the Beer Institute will sustain their
    commitment to sound environmental stewardship in the years ahead. We
    have done so because it is part of our responsibility as corporate
    citizens. We have also created economically viable business units that
    have dramatically expanded the potential for recycling of the
    containers our industry produces as well as a variety of other
    materials in the waste stream.
        We respectfully urge the committee to conduct more in-depth reviews
    before formally considering any new mandatory national deposits or
    similar fees. Changes in public attitudes and practices take time in a
    free society, but we have made enormous progress in fighting litter and
    encouraging recycling.
        We would be happy to provide the committee with supplemental
    information on our industry's activities, and we will continue to make
    our best efforts to support stronger voluntary recycling program.