[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

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                                                                   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.

                                 
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