Vermont Legislature SmartTranscripts:

[Chair Amy Sheldon]: Committee. This afternoon we are going to be having a committee discussion on H204, the tire EPR bill. Michael, it would be very helpful to us if you would just sort of probably do a high level reminder overview walkthrough, not detail, unless people have questions.

[Michael O’Grady, Legislative Counsel]: Sure. So would you like me to put it on the screen?

[Chair Amy Sheldon]: I don't think so. I think if folks we'll we'll need to bring it up anyway, I think.

[Michael O’Grady, Legislative Counsel]: Okay. Thanks. Well, this is an extended producer responsibility program for the collection and disposition of waste motor vehicle tires. It would create on page one of the bill, line 11, a new chapter entitled 10 for the collection and recycling of waste motor vehicle tires. There are several definitions. The I would say the first important one is page two, line one, the definition of collection rate. It's effectively the number of tires collected in a year, waste tires collected in year divided by the average amount sold over the previous three years. And ultimately, you will see what the collection rate goals are in the bill. A covered entity in this program means any person that delivers tires to a collection site, collection facility. It's for any number of tires, but you'll see later on that there's the ability for a collection site to limit it to 12 tires per visit. There's a definition of legacy waste tire pile, an accumulation of 50 or more waste tires that's located on a parcel of property and is not enclosed by a building. It also does not include those tires that are used for on farms for holding down silage. There's that definition of manufacturer going from page two to page three. This is the definition of manufacturer that's used in almost all EPR programs. It's the person that manufactures in the state. They're not manufacturing in the state. It's the person that sells in the state under their brand manufactured by somebody else. If if they're not actually selling, but they're licensing their brand to someone else, then that's also a manufacturer. And if they're importing to The US by purse for a person without a present presence in The US, that's also a manufacturer, and it's also a manufacturer who manufactures tires for sale without affixing their brand name. And then last, in that definition of manufacturer, it's it's the that entity who assumes the responsibilities of all of those previous entities for the purposes of complying with the requirements of this chapter. On page three, line 17 through 20, you don't need that definition of motorized electric powered bicycle or tricycle. That's because on page four And the definition of motor vehicle that is already incorporated into the definition of motor driven cycles. That was an oversight on my part, but I, as I was going through the bill yesterday, I I noted that you can get rid of definition seven.

[Chair Amy Sheldon]: Can you pause for a second and I don't know if it's on your end or end, but you're kind of quiet far away. If if you can get closer to your mic.

[Michael O’Grady, Legislative Counsel]: Okay. Hold on a second.

[Representative Rob North]: Mine is up.

[Chair Amy Sheldon]: Mine up. Is

[Michael O’Grady, Legislative Counsel]: Is that better?

[Chair Amy Sheldon]: Oh, maybe. We'll try that.

[Michael O’Grady, Legislative Counsel]: Okay.

[Chair Amy Sheldon]: Or, Sarita or Mike, can you see if you can turn that up? Mine's all the way up. Too.

[Representative Rob North]: Yeah. Yeah.

[Chair Amy Sheldon]: Oh, we'll try.

[Michael O’Grady, Legislative Counsel]: Okay. Well, then the next main definition is the definition of motor vehicle. And this is important because it's the scope of the program. Is that not better?

[Chair Amy Sheldon]: I think it's worse, actually. I think it's on your end and maybe go back the way you were. Okay.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: I don't

[Representative Weber]: know what. I don't know. Sorry.

[Michael O’Grady, Legislative Counsel]: Any better?

[Chair Amy Sheldon]: I think we can hear you, but it's just yeah. And also, I think we we don't need to go too in the weeds. I think just the high level of the sections and because I I wasn't here for the testimony, but I think folks have things they're ready talk about. Okay.

[Michael O’Grady, Legislative Counsel]: Generally, the motor vehicle is is most everything you think intuitively of. It's ATVs. It's motorcycles. It's your motor car, but it's not it's not electric bicycles or or adaptive electric devices or lawnmowers. It will include farm tractors. So that is different from the general definition of motor vehicle. Generally, farm tractors are exempt from that definition. But in this program, the tires from farm tractors are going to be part of the program. That can take you out of the definition section to page six. This is the creation of the program. The first thing is the page six line seven through 10, the sale ban beginning 01/01/2027. You can't sell a motor vehicle tire unless you're implementing your own white waste tires tire stewardship plan or part of a stewardship organization. Now all of the dates in this likely need to change. From Matt Chapin's testimony, he recommended pushing every date out by two years. One thing that you will see here that the manufacturer for Waste Hard Stewardship Organization pays a fee for their plan. You will see later on that it's a $15,000 a year fee per plan. All of the manufacturers need to have their brands and their type of tires on a website, but they can satisfy that on page seven. This is the requirement for registration of the manufacturer or the stewardship organization. So in order to sell, you have to register with A and R. A manufacturer can meet that requirement by participating in the stewardship organization. Those dates need to change. There's a registration form. You have to list your brands. You have to list contact information. You have to list somebody that can be contacted in order for a new manufacturer to join. That brings you to page eight, line 15. This is the requirements for a waste tire stewardship organization. They have to commit to assume the responsibilities and liabilities of any manufacturer that's participating in the organization. They can't create unreasonable barriers for others to enter, and and they have to maintain website with all their brands and participating manufacturers. Then you get to the plan. The plan has to list all its manufacturers and brands. It has to have free collection of waste tires for all persons, all covered entities at no cost. They can't refuse collection of waste tires that are a brand or a manufacturer from another SO or manufacturer. They have to have convenience. They have to allow all retailers and all solid waste management facilities the opportunity to be a collection facility, and they have to provide at least two collection facilities per county underneath the underneath the plan. As I referenced earlier, page 10, line 16 through 18, they have to allow for up to 10 waste tires to be delivered per visit, but they can accept more. They have to have a a way that they're going to address legacy waste tires, including through incentives, bounties, or other incentives. They have to have a collection rate in the first year of 50%. So they have to collect as waste tires 50% of what they sold on average over the previous three years. They have to provide how they are disposing of the tires they collected, provided that they have to recycle or reuse at least 50% and using tire drive fuel is not reused for recycling. They have to have an education and outreach program that provides education to the public. It also needs to provide education to retailers about their ability to participate as collection facilities. They have to comply with environmental standards, and then they have to have a provision for reimbursement. This is one of those programs where maybe not everybody plays nice together. So they have to have a way that if they're collecting tires from someone else that they have a way to get reimbursed for their cost of that collection. Now a key part of this is is bringing in the the retailers and the solid waste management entities and paying for them to be part of the collection program. So you will see on page 12 lines 11 through 20 and going on to page 13 that they have to include in their plan how they're going to implement collection. And they have to, they can't impose transportation costs on any of their collection facilities or recycling costs. And they have to provide to any of the collection facilities of retailers, the solid waste management entities or the municipalities cost for setting up as a collection point for part of their program. On the term of the start, the plan is five years max. They have to have an annual report to you effectively on how the program's working. They have to have on page 14, line 13, they have to have a plan audit by an independent auditor regarding the effectiveness of the plan, its cost effectiveness, and how it compares to tire stewardship programs and other jurisdictions. There's a provision for how new manufacturers who who weren't manufacturing or selling at the beginning of this program to join. There's also an exception page 15 line 14 through 16 for small manufacturers who sell less than $5,000 total retail value of motor vehicles in the state. A and R has some responsibilities under this program. They have to approve the plan for any manufacturer or stewardship organization. They have to assess the manufacturer stewardship organization's performance, including whether they achieve collection rate. They have to approve plan amendments. Bottom of page 16, line 19 going on to page 17. They have to put the plan out and any amendment out for public input. Page 17 A and R needs to register the SOs, the stewardship organizations. Page 17, line seven, they serve in a supervisory capacity over the SOs in their implementation of the plan. They have to set the special handling requirements for tires and they have to post the plan to their internet for the agency. 18, this is the retailer obligations. Sales are prohibited unless the manufacturer is implementing its own planner, part of the member search organization that is implementing a plan. There is an inventory exception, two exceptions. You purchased the motor vehicles prior motor vehicle tire prior to a specified date. You still get to sell it, or you purchased it while the manufacturer was in compliance, and then they came out of compliance. You get still get to sell that manufacturer's tire, even though they're no longer in compliance. Retailers have to be given educational materials about how they can service collection facilities. Page 19, this is penalties for failure to achieve your collection goal. So if the manufacturer achieves less than 50% of the collection rate, less than 50% of the collection rate, so 50% of 50%, they pay a penalty of $1 per tire difference between the collection rate performance goal and the actual number of waste tires collected. If they achieve 50% or greater of the collection rate performance goal, so more than 25% of the 50%, they pay a penalty of 50¢ per tire difference between the collection rate performance goal and the actual number of waste tires collected. All of that money goes into the solid waste management assistance account for proper disposal of waste tires. And then page 20, this is the sub chapter three about reimbursement. I'm not going to go into a lot of detail here. It's very technical, but it allows for the manufacturer, the stewardship organization to seek reimbursement from another manufacturer stewardship organization. There's the ability for them to get the cost of their transport recycling and other costs that they incurred in disposing of the other manufacturers. Buyers, there's a process that they had to follow on page 21 of requesting, the reimbursement waiting. The requested manufacturer can seek an audit. If the audit by the independent third party comes back as valid, then the requesting party has to pay the cost of the audit. If it's not valid, the original manufacturer also has to pay the cost. And then page 22, line six, there's a private right of action. If there's a manufacturer that's not participating in any plan or SO and another manufacturer collects theirs, tires, there's a private right of action that's allowed. If the manufacturer collects a tire of another manufacturer who has a plan, but they don't respond to the reimbursement request, there is a private right of action against that manufacturer or stewardship organization. And there's a lot of detail about how those rights of action work. One thing to note is that ANR won't have any role in the reimbursement process or in the private right of action. You'll see that or at least one clause regarding that on page 24 lines nine through 12. And then you get to some of the general provisions about EPR programs. Page 24 line 18, the data that's submitted, that's trade secrets is confidential. The secretary may publish information regarding the program provided it's an aggregate or non confidential form, but the total number of waste tires that are collected under a plan is not confidential and is subject to inspection and review. Page 25, line 18, that's the antitrust accepting under state laws because they will be working together to establish plans and cost and collection. Page 26, line 17, this is the fee the manufacturer stewardship organization pays to ANR. As I stated earlier, it's $15,000 annually, and that's for ANR's cost in administering the program. That money's deposited into the environmental permit fund. The environmental permit fund is where all permit fees go, almost all, and they are used to pay the cost of programs at the Department of Environmental Conservation. And then page 27, line three through five, A and R will have rulemaking authority. Page 27, line six, section two, this is A and R's appeal or a and r's enforcement authority. Needs to be a change on page 27 line 17 because this bill was introduced last year. Subsequent program has taken the number of Subdivision 33 so that will have to be Subdivision 34 if you amend this bill. And then page 28 Section three, this is an ars appeals authority. Are being added to one of the programs where a person can appeal an actor decision of the Secretary to the environmental division. Section four is amending the provisions in title 24. This is municipal government law. This is where the ban on burning waste is. And on page 31, what's being added is that a person shall not transfer possession of a waste tire to an unlicensed solid waste hauler for disposal. So the agency is concerned about existing persons who pick up waste tires at a cost, and they are not licensed to be a solid waste hauler. They want it to be clear that if you're picking up tires for disposition elsewhere, you need to be a solid waste hauler. And that doesn't mean you need a really, really good truck. Can have a pickup truck or as long as you're hauling it for consideration. And then page 32, line 16 through 17, that's the effective date. The bill goes into effect on passage, but you have all the effective dates and dates for submission and plan approval and sale ban built into the bill, but they're all too early.

[Chair Amy Sheldon]: Alright. Thank you. I think the committee also asked you maybe to look into the Connecticut program.

[Michael O’Grady, Legislative Counsel]: Yes. Yes. So Connecticut is the only state right now that has retired stewardship plan. Their plan came out August 8. What happened is that they, there was a five zero one C three corporation that was formed to BBSO and then that five zero one c three created another one just for Connecticut. The plan, it's pretty detailed, and it's it's, let's just say your bill is a lot more detailed than Connecticut's bill setting up their program. And I was surprised to see how well their plan or how detailed their plan looks in comparison to their bill. But this is it's a pretty. It's a pretty vigorous plan. Has things like retailers being collection sites having collection site agreements with them how they're gonna process those collected waste tires. They have a hierarchy for how they're going to dispose of their tires. It's it's it's a good plan. But it doesn't I don't even think it's in effect yet. I think it doesn't come to effect until probably January 2026. And then you also ask me to look at Canada.

[Chair Amy Sheldon]: You mean twenty seven

[Michael O’Grady, Legislative Counsel]: twenty seven twenty seven. Sorry. I have the Connecticut bill here. Right?

[Chair Amy Sheldon]: There's something else I've asked them to do.

[Michael O’Grady, Legislative Counsel]: Oh, it's two years after the implementation of their program, so it's probably '27. You also asked me to look at Canada. Canada has an association of tire recycling agencies and they publish information about the performance of the different programs across their provinces. There are multiple provinces that have a EPR program. There are other provinces that manage it through, basically it says the the state or the province has to establish a collection program, and then they seek reimbursement from the manufacturers. That Canadian Association of Tire Recycling Agencies asserts that they divert a 100% of all regulated tires away from landfills and that they collect 450,000 tons of tires annually. They do allow for tire drive fuel, but they also have some recycling requirements depending on your province.

[Representative Rob North]: So

[Michael O’Grady, Legislative Counsel]: do you have any more questions?

[Chair Amy Sheldon]: I think that's all for now. I guess I wanna hear from committee members about their perspectives after taking testimony on this last week. Representative North.

[Representative Rob North]: Yeah. We had kinda just talked about things. I can't remember if it was on while

[Paul Burns, Executive Director, VPIRG]: we were in

[Representative Rob North]: on camera or not, it might have been afterwards I first put to leave, but there were several of us talking about it. And I thought that maybe a full up EPR was, especially after the testimony we heard from the tire manufacturers, that the EPR was like pretty hard. Since we're such a small market, they thought it might really deter the more cost effective suppliers of tires. The suppliers of more cost effective tires we'd just say forget it, it's not worth it, and the the B would just be left with more expensive tires available. So, we were bouncing some ideas around and I kind of took the action, I think, to to write some of those things around and emailed it out to everybody. Just, you know, a much simpler non EPR non EPR based, but just more collective fee at at sale, have the state manage the fund of the fees collected together, and then make it so that there was no fee to get rid of your old, as long as you were swapping it with another new tire, then provide amnesty days, collection of free tires, things like that. So I tried to pull some of that together and something kind of made sense in an email I sent around everybody else, it makes sense. It's place to just start all her ops.

[Chair Amy Sheldon]: Representative Logan?

[Representative Kate Logan]: Where did the idea for this bill come from? It looks like Taylor

[Chair Amy Sheldon]: two members from the kingdom.

[Representative Kate Logan]: And that was motivated by, like, legacy tire piling and some things like that. Yeah. Okay. I guess I

[Michael O’Grady, Legislative Counsel]: would And tires are either the first or the second most, problematic piece of waste to dispose of with either crop and or disposition. Right. I think I think carpet might be one, carpet or mattresses, and then Mattresses. Yeah.

[Representative Rob North]: Okay.

[Chair Amy Sheldon]: So problematic for solid waste management districts or Always

[Representative Kate Logan]: Probably specifically for Coventry. Is that why it's coming from these folks in particular?

[Chair Amy Sheldon]: I think it's just the legacy piles. It's the legacy piles there. Okay. Others represent Chapin.

[Representative Ela Chapin]: I think what we were hearing and trying to problem solve around is that we have a really good collection system that's working really efficiently right now, and that's something that generally we've heard from various stakeholders. Legacy piles are a problem and the fact that we still charge a fee when you actually go to get rid of a tire seem to be the things that we would like to change in a way to ensure we capture old tires that are no longer used, have a useful life without totally disrupting a generally pretty effective system for collection in a fairly complex, what I was hearing was sort of a fairly complex set of manufacturers, distributors, retailers, such that there quite a few arguments we heard from the private sector saying you're going to lose access to certain kinds of tires because those manufacturers and distributors are gonna shift. There just isn't a good case yet in The United States that an is a good solution. So I think that's what we were hearing and trying to problem solve around. If we have a good collection system, I guess the question here, and I don't know if we could maybe get a little more testimony on this from the state side of things, could a state run program be more just as effective at solving the waste tyre problem and switching the fee so that it's at the beginning of the cycle, not at the end, instead of, in this case, having a full on private sector EPR. And I don't know, Michael, you have thoughts on the pros and cons of that, or if we could ask Chittenden. I

[Michael O’Grady, Legislative Counsel]: would just note that there are states that have the mandatory fee per tire sold, and that that money goes into a fund that's used to pay for the cost of tire collection. That has been proposed before in Vermont. Just anecdotally, from what I recollect, there was a lot of pushback on that from tire retailers who are located along the borders, with New Hampshire. But it could put them at at their argument. It puts them on a competitive disadvantage. But just for context, New York's is $2.50 on each new tire sold. Maine is a dollar. California is a dollar 75. And I think there's there's approximately 30 states with that type of program.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: I

[Chair Amy Sheldon]: noticed Matt Chapin's in the room. I'm wondering if I could put him on the spot. I we haven't heard from you on this. I I don't believe so. Would you be willing to comment?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: So for the record, Matt Chapin.

[Chair Amy Sheldon]: I guess I'm yeah, go ahead.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: Director of the Waste Management

[Chair Amy Sheldon]: and Prevention Division. In particular, I would like to follow-up on the comment that representative Chapin made that we don't really have a a problem, but we have a system that's working. But I think we have a problem if we have these piles that are are they I guess I'd like your thoughts on the scale of the problem we're trying to solve.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: So I think from the agency's perspective that when you look at the problem materials that are out there, We've done, I think, pretty good job looking at a lot of the EPR programs and working our way through many of them. Tires are one of those problem materials where we have illegal disposal issues. We have, I'm gonna call them poor actors in the system that improperly manage them. I think it's a small section of the total amount of tires that are are sort of worked back and forth in the state. But this is definitely it's a from the agency's perspective. It's a sort of reoccurring challenge and issue that we have to deal with.

[Chair Amy Sheldon]: How do we know where the tires go? When I get new tires, how do I know where my old tires are going?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: Well you don't, right? And so the majority of retailers who are taking tires back are using certified haulers, and most of those tires are either going for, the lion's share of them are going for tire derived fuel in May. That's where most of the tires from Vermont are taken.

[Chair Amy Sheldon]: Is there a better alternative than that for tire reuse?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: There are limited recycling options for tires. I mean, it's certainly something that I think we have an interest in encouraging market development in these areas, but there, you know, there's not a significant market development. Certainly there are smaller uses for reclaiming that rubber and using them in certain applications and there are some construction applications where tires are an appropriate use, but it will probably not cover the totality of the tires that we generate as a society on an annual basis.

[Chair Amy Sheldon]: And are you aware, are these tire piles in Vermont increasing in number or are they getting bigger?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: We have we have had several complex enforcement situations that we've had to deal with with new large tire piles over the past two or three years.

[Chair Amy Sheldon]: What? In in the Northeast Kingdom?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: It's been in, like, the Glover Harquick area. It's the one that is immediately running behind.

[Chair Amy Sheldon]: Are they resolved?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: The individual who is responsible likes to declare bankruptcy and leave the pile to the person that he had a lease agreement with.

[Chair Amy Sheldon]: Representative Chapin.

[Representative Ela Chapin]: Yes. I I would just love to hear your perspective on the concept that

[Chair Amy Sheldon]: Do you wanna join us? Yeah. Oh, yeah. Thanks. Go ahead.

[Paul Burns, Executive Director, VPIRG]: Thanks. I wasn't sure

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: whether this one's going to be a long testimony or a short one. So

[Representative Ela Chapin]: And just is could there be a simpler solution here? I mean, you've probably listened to most of the testimony we heard over the past week and a half from the industry saying that a lot of potential unintended consequences from a tire EPR. And it hasn't been proven in The US to be a great mechanism for how the industry is structured. And we have a very good collection mechanism that's capturing something like 90 to 95% of the tires in the state right now. So is there a way to just have a state run program that would support switching the fee from the end when you go to dispose of a tire to when you purchase the tire in a way that then the state can fund something that will then deal with legacy tire piles and address the bad actors that are causing new tire piles and just generally create a system so that solid waste districts and others can collect them for free and people don't have a reason to drop them off on the side of the road rather than Sure. At the solid waste district.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: So I'm gonna So I am the I guess I would say a concern well, guess let me put it this way. I am not I don't know what we're talking about as far as the program, and I have not had an opportunity to sort of discuss internally what a point of sale fee look like. My general impression is that if we're putting a fee on consumers at the point of sale, that's not the type of thing the administration normally supports. So I will just put that out there as not having seen the proposal or knowing what the context of it are, sort of just like framing the normal policy position of the administration. Having said that, I think there's also a suite of externalities the agency has historically been concerned about when we create a state program that pays the costs of cleanup for people who have accepted tires for compensation. So when you have someone who, and I'm just going to say some of these historic tire piles are at salvage yards or closed salvage yards or illegal salvage yards. And we've always had these concerns that we go up, we clean the tire pile up and we come out in six months and there's a new tire pile there that we have to clean up again. So I think that I think there's probably a number of different things that need to maybe in listening to both the testimony last week and some of the concerns that have been raised in that and listening to the concerns that we have historically had with sort of running a state program effectuating sort of a cleanup after the fact approach. I wonder and I I hate putting this recommendation out there, but whether this is maybe one of those situations where the agency works with the various stakeholders that are involved in this process to try and look at all of the options that are out there on the table and comes back trying to eliminate some of these externalities and issues that that you're seeing with a proposal that's more refined and and maybe at least we understand very well where the problems are and have tried to minimize them to the extent that we can. I don't think I'm here. I'm there today, but

[Chair Amy Sheldon]: What's that offer?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: I think that it's something we can do. I guess the one request that I would have is the language that Mike went over, expanding the prohibition or the requirement that you use a certified hauler that's in '24 VSA 2201. So again, there's clear enforcement authority. That enforcement authority exists not just for A and R but also for municipalities and swimming. So again, to the extent that there are people illegally doing work, that's also a municipal violation as well as an ANR

[Chair Amy Sheldon]: violation. Grab that language and put it in the DC miscellaneous bill. One could do that, and

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: you could even, frankly, put a study in there as well.

[Chair Amy Sheldon]: Yeah. So I'd like to definitely bring that paragraph in, Michael, on the enforcement authority In the six

[Representative Rob North]: thirty. Yep. And

[Chair Amy Sheldon]: then committee discussion on that offer. Oh, Representative Chapin.

[Representative Ela Chapin]: I would just add or ask if maybe as part of that work with all the stakeholders, looking at what's happening in Connecticut and seeing if it does potentially make sense for Vermont to tag on to the plan that Connecticut's developing. It's so early for us to tell and the industry still has questions and and yet they are putting something in place in Connecticut. I guess that's the other piece I'd be interested in learning about. I mean, I think

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: one of the things that we've been and so we're actively watching Connecticut and we actually know the folks who are administering it down there. They're our counterparts and we're in touch with them. I certainly have heard one there are two challenges. One is retailer participation and making sure that this doesn't create an unwieldy burden on retailers. The other and this is it came recently to us and it also was through testimony. I did not know that Vermont Tire did distribution beyond what it but that is a problem in Connecticut. Like, because basically, if I'm a distributor that is bringing tires into Vermont and then selling them regionally in New Hampshire or Vermont and other places, they're getting charged whatever the product stewardship is on on those distributed tires that aren't gonna be a part of the system. So we that's, I think, another thing we have to sort of work through how that gets addressed. It's been that has been a my understanding has been a fairly significant challenge in Connecticut.

[Chair Amy Sheldon]: Others have thoughts, representative

[Paul Burns, Executive Director, VPIRG]: North?

[Representative Rob North]: Jim Wall, one of the pieces that we also took testimony and had some discussion about was the closing the loop of the circular economy that last quarter of the point you raised, which is what you do with the used tires and how can they be brought back around made something new. In that if we're going to do a study, looking at that last quarter, new development in that area. Seemed like the tire manufacturers of

[Chair Amy Sheldon]: Yeah, US tire management.

[Representative Rob North]: That seemed like they had their finger on that pulse. There was some activity going on in the University of Georgia or something like that, which is good, but by the way, kind of depends on time. Be real, move forward and should get something out of it.

[Paul Burns, Executive Director, VPIRG]: That's always the hardest part. As opposed to burning them,

[Chair Amy Sheldon]: is that what you're saying? Is there a way for us to influence, considering we find it something we don't want to participate in in Vermont, but we're sending them to Maine to get burned, how is it that we could help incentivize the creating of a market for reuse or recycle? Whether it's asphalt or whatever.

[Representative Ela Chapin]: I was just thinking the same thing either. Like, I want to know if Maine is expanding, if they're planning on expanding or if new technologies coming along.

[Chair Amy Sheldon]: Representative Satcowitz.

[Representative Larry Satcowitz]: Yeah. Matt, we heard from the tire one of the tire folks that there is a tire recycling organization that's trying to fund some research. I was just wondering if you know, like, how robust a program that is and if if they're really making if they're really making products. Do have any insight into that?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: So I think that that's there are people on my staff who are more connected to the research of how how alternative tire, what what the alternative tire markets are than I am. You know, I I know that there are things developing, but I don't think they're particularly mature. There have been some, like, asphalt alternative uses that have been out there that that have not they they sort of have not met VTrans specs, though my understanding is that there may be new technologies that are coming online that are different, that are might be a better use of some of these materials. So I guess, again, I think that's something if the committee wanted to fold in the agency reporting back on what's taking place out in the reuse recycling world of tires and its potential viability for Vermont's tires. There is a point I think when shipping them so far that, you know, it starts becoming the carbon impact of shipping them outweighs the benefits you receive from using them in another application, but we can look at those types of things.

[Chair Amy Sheldon]: Representative Weber.

[Representative Weber]: Thank you, chair. Ironically, this morning on my way in, about a tenth of a mile from the Albany elementary school Right. Where the the mountain of fires is piled up, piled. There was a unit there with a clam, large trailer, picking up tires. Destiny unknown, but there was too much snow on his plate. Mhmm. I suspect it was probably going to Maine. But given our climate, and most of the testimony we received was from people who were familiar with Arizona, New Mexico, states where their climate is not as severe as ours. They were mixing fires in a reclaimed form into their asphalt. I don't see that as being a practical application here in Vermont simply because your asphalt manufacturers, like Pike and Hutchins, they're shut down for six months.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: Certainly, there's that, and it's it's it's actually the the asphalt is harder than typically VTrans and some of the municipalities like for it to be. There's some spec related issues associated with using it. Again, I've been told that technology is improving regularly with how you process the tires and put it into asphalt, and that is potentially an option.

[Chair Amy Sheldon]: All right. So maybe you can provide us with some ideas for what we've after this discussion.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: I'm happy to work on some. Thank you.

[Representative Ela Chapin]: Thanks.

[Chair Amy Sheldon]: Thank you. Next up, we have Paul Burns on the committee bill for redemption, Euro for redemption centers.

[Paul Burns, Executive Director, VPIRG]: Madam Chair and members of the committee, for the record, my name is Paul Burns. I'm the Executive Director of VPERG, the Vermont Public Interest Research Group. I appreciate the opportunity to testify before you again on the updated draft of the proposed changes to the bottle bill program. First, I should say I'm really pleased with the conversations and the direction. I think that this latest draft is taking. And, you know, the big issue or certainly a big issue out there is the funding, if any, for the PRO program. And I know this came up last week in testimony and conversation. It is true that most of the state's extended producer responsibility programs, so called EPR programs, of which this PRO would be one, the state is not typically paying the PRO or manufacturers in each of those cases, whether it's light bulbs or electronics or paint or other things. Paint is actually a little bit different. But in most cases, the state is not paying the manufacturers to take responsibility. After all, this extended producer responsibility is the idea. But I also recognize we really want to make some changes in this program. We have been talking about this and trying different approaches for many years here. We, the PERG, has always felt that use of the unclaimed deposits might best go to solid waste programs, like improving recycling, for instance. And so it is we accept this notion that some of the unclaimed deposits could, for a limited time and for specific purposes that are now being envisioned under this draft, that we think that that would be an appropriate use of some of those funds. And we hope it is not an example that carries over to every other kind of or instance of extended producer responsibility that the state considers, again, supposed to be the producer's responsibility. But in this particular case, given where we are and the needs that we have to move this forward, I guess I would consider this a compromise, but it is also a compromise where these funds really are being used for a very good purpose, make this law and this program work more effectively. Work more effectively for consumers, to take back their containers, for the smaller retailers, for redemption centers, and even for manufacturers who want a greater hand in controlling how this program works. There is something for all of these different stakeholders in this process. I don't see this moving forward without some give in this area. I think that is a political reality that we are facing here. And so with that in mind, we support the notion of limited use of some of those unclaimed deposits, and at present the last draft of the draft that was talked about last week was up to $3,500,000 over a four year period. I would hope that that's the upper limit of consideration, but again, there are expenses being incurred, we understand that. I mean, we do need to improve the processes and the infrastructure, and that will work to the benefit of consumers who want to bring back their cans and bottles, and I think that's a good thing. So I just want to say that kind of off the top. Don't have recommended changes to that section. And as I say, if that is a compromise that we have to live with here, so be it from our perspective. It's not an insignificant give, I guess I would say, in this case, but that's where we come down on that important provision or proposal. With that, I would move to some other suggestions that we

[Chair Amy Sheldon]: would We might have a question from Rob, Yeah, and if that goes for

[Representative Larry Satcowitz]: I hear some of your discomfort with where is being proposed. Share your discomfort. I also wonder not just about the actual gross amount of money that the state would be committed to this, but the fact that we would be doing so in a way that gives the manufacturers quite

[Representative Ela Chapin]: a

[Representative Larry Satcowitz]: lot of leeway in terms of how they would spend the money and how they would be accountable to how they spend the money. And it seems typical that when, you know, when we offer essentially grants to folks in all sorts of different ways to the state, that there's some sort of a match that goes on that helps to ensure that the folks who are receiving the money have some skin in the game to ensure that they do things efficiently, more or less as good as probably some other good reasons as well. And so I was wondering if I might get some response from you about the idea of having the manufacturers, basically kick in money, and then the state would match that money up to a certain point rather than simply saying, we'll give you this amount of money to create the infrastructure, and you're gonna bill us for it later, and we'll pay you out of the fund.

[Paul Burns, Executive Director, VPIRG]: Well, I I think it is probably worth noting this does not cover all of the expenses of the PROs in administering the program. It is for particular infrastructure costs. And so I think it has been pretty thoughtful in saying it isn't for everything. We don't intend to cover all of your expenses that you producers or distributors would incur in running this program, it is these types of expenses. You only are essentially reimbursed for that if you meet some sort of expected criteria. The state will control the funds and disperse them when there has been a clearly qualified expense incurred. It's not, therefore, a shared expense on the infrastructure that you're asking about, representative. I understand that. But there is there is shared expense going on, I guess I could say that. I don't have a strong opinion about that. I don't know if this is a case where they're necessarily going to spend inefficiently in this because it is only up to a certain amount as well, and the expectations are there for the redemption rates to increase over time. And so I would think that, too, is an incentive for them to allocate funds or incur expenses judiciously because they still got to they don't have to, but there are goals for them to meet, and if they don't meet those goals, there may be other expectations put upon them. And so they do want to my hope is that they will have an incentive to run the program efficiently, and therefore and if they're only capped at, you know, dollars 1,000,000 for one year and $1,000,000 for the next, and that it's not an unlimited fund. So, I think there are some aspects of this that work toward encouraging efficiency on their part. Not exactly what you're asking about.

[Representative Larry Satcowitz]: I'm not sure that one of the things which just brings up on my mind is

[Paul Burns, Executive Director, VPIRG]: the fact that I don't I don't

[Representative Larry Satcowitz]: think we've actually heard, like, numbers about what the industry actually expects that this this will cost. And so if we're talking about giving them basically a small what amounts to a small fraction of their expected expenses, then your point would be very well taken. But if we're actually talking about these covering, you know, most of their capital expenses, if not all of it, then it's a then it's a really different picture. And I guess we just don't we haven't really heard where we are along that potential continuum. That's

[Paul Burns, Executive Director, VPIRG]: an excellent point, and there are people who could presumably answer that or respond to it, and if I were you, I might try to get those answers.

[Chair Amy Sheldon]: Which, you know, I guess I appreciate this is slightly different language than where it left off when I requested it. And so I guess I'm curious about the changes and what they reflect. Maybe, Matt, you already commented on that, but if you wouldn't mind reiterating where the numbers come from and what are they expected to cover.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: So Are you finished? No. So quickly, numbers represent basically a midpoint and what we believe the cost would be for capital purchases of equipment. Basically, estimate that we received from the beverage industry is that it would be somewhere between 3.3 and $4,000,000. So we landed at 3.5. It's basically a reimbursable grant program, so it would basically authorize them to request reimbursement for eligible costs from the secretary up to a certain dollar amount that the secretary could then transfer from the Clean Water Fund to the Solid Waste Management Assistance Fund to cover those costs.

[Chair Amy Sheldon]: Have you done this before with another program?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: I mean, we have other reimbursable grant programs. I'm not aware of anything that we've done like this, but everything with the bottle bill is a little unique.

[Chair Amy Sheldon]: I guess I'm just wondering, like, what boundaries or guidance would be provided to industry before they spent money? Like, how would they know what was coverable? Well,

[Paul Burns, Executive Director, VPIRG]: we would

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: have a grant agreement with them that outlined what costs are eligible and what they could submit as far as invoices and what they would need to do with respect to that. So there would be a grant agreement that outlined all the eligibility and other requirements. Prior to prior to any reimbursement expenditure of any funds.

[Representative Larry Satcowitz]: So Matt, it does from what you're saying, just to make sure I understand, it sounds like the numbers that we're talking about would be the numbers that the industry would expect for their total capital costs to implement the the bill.

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: I mean, the estimates that we have seen for equipment costs in upfitting the system are somewhere between 3.3 and $4,000,000. Now there are lot of, like I said, there may be other capital related costs that we're not looking at here like ADA accessibility, other things that need to come into play, that that's for the equipment cost with estimate the agency can see.

[Paul Burns, Executive Director, VPIRG]: So I will set aside what happens to the unclaimed deposits now and you may have further questions, obviously, as a committee for other witnesses. But let me move then to another issue, which is the handling fee. And as you'll recall, the proposal on the table would eliminate the set handling fee in favor of a negotiated fair compensation between the PRO and the redemption centers. We do remain concerned about the imbalance of power in negotiations between a PRO and a redemption center. This is exacerbated by the fact that the bill is somewhat unclear as to what might define fair compensation. Is it like an obscenity? You know it when you see it. Or are there specific criteria that could be established either in this bill or in guidance from the agency? I just think it is rather vague at this point, and vagueness could move toward the hand of the more powerful entity in the negotiations. So, we would urge you to consider some ways to address that. One would be adding a two year sunset on this provision in the law. If it works well, that is, if no set handling fee and instead the negotiated thing works well, there should be no problem for them to come back and get reauthorization for the permanent implementation of that After two years, that's at least something to consider. Another approach would be to allow a redemption center to appeal to the agency in cases where the fairness of the offer made is in dispute. You could consider a floor. There's been some conversation about that, whether that's a 3¢ or other type of floor. That is an idea. At a minimum, we would think in future, at least one of these reports coming back from the Agency of Natural Resources, there should be some specific analysis, if you do move forward with this, of whether it is working or not. I would have that on the early side, Because if it's not working, there's a question of just how long anybody could hang on if they feel like they didn't get a good deal through this new way of approaching it. I really am just concerned about it. It's just a challenging thing to put out there, and there isn't, as far as I know, any other experience. I don't think any other state has taken this particular approach. So, it's not out of necessarily a sense of somebody's operating at ill will, but there are just dynamics at play here that cause some concern for us.

[Chair Amy Sheldon]: A couple of questions. Do you have a preferred solution?

[Paul Burns, Executive Director, VPIRG]: I don't. Honestly, I'm just trying to ponder out here. I can imagine a sunset is that's tricky if it sunsets, and then you could revert to the current handling fee structure. And again, if it were working well, it wouldn't be a it's always challenging to get something passed on the bottle, but theoretically, just to approve something that seems to be working well from all parties, and that would undoubtedly be a situation where would have differentiated fees or a fair compensation, you know, would differ from redemption center to redemption, certainly by geographic location, by the quantity of materials coming through. But I guess I would say there is, you know, if an entrepreneur adopts a technology, pays for it, makes the capital expense of bringing in a technology that allows them to handle these things mechanically and therefore at a lower cost per container once that machinery is operating, that doesn't mean that that's the price that they should be paid, that lower cost, because they've invested, and we still live in a capitalist society. To encourage entrepreneurs to operate and find ways to do things more efficiently and perhaps a bit more profitably is itself not a bad idea from my perspective. So, I don't think you want to discourage innovation by having this so that it is just so closely tied to exactly what it costs them to handle each container. It has to be expectation that you're considering other costs, and I assume a reasonable person would say that should be part of the analysis of whether it is fair compensation. It's just a little vague right now, and so I wouldn't say that just volume or just the mechanics of what they have means that they should have a lower compensation. You at least have to have some way of considering these other things. It might be an appeal, at least, so that if there were some sort of unfair offer made to somebody who has invested a lot of capital costs in improving their process and so forth, they could go to the agency. Maybe the agency would see the wisdom of that. I don't know. I can add here that there's one other proposal that we have, and I think this may have broad acceptance, but I don't think it's written into the bill now that the PRO itself should be a nonprofit entity, and I think that could perhaps come on, at least on the last week's draft, page 10, line seven, where it could just simply say, which is a nonprofit. In Maine, the PRO is a nonprofit. There could be representation from various stakeholders on that, which would help to mitigate the concern that this is just an entity representing the beverage industry, for instance, if a board of the PRO had some diverse stakeholders on it. So I think that helps here as well, and that is something that we would certainly encourage. Again, I think there may be broad agreement, perhaps I've missed it, but I don't think it's in there now.

[Chair Amy Sheldon]: You said you didn't know if other states had this negotiated, so do they have a floor? How do other states address this?

[Paul Burns, Executive Director, VPIRG]: I believe they all have a set handling fee.

[Chair Amy Sheldon]: I think this might be a holdover from when we were expanding the types of beverage containers covered.

[Paul Burns, Executive Director, VPIRG]: It came in toward the end of last session, so it was in that no, it was not? Okay. Oh, no, sorry. I'm sorry. You're right. It came in last year, not in the last biennium. So, it was not in an expanded?

[Matt Chapin, Director, Waste Management & Prevention Division (ANR)]: No, it wasn't. No.

[Paul Burns, Executive Director, VPIRG]: Was at the end of last year you were when considering this, that that came up. One other protection I think that we would encourage you to consider for the existing redemption centers is, at least again on the last draft, page 14, line 12, when it was talking about recognizing a preference for existing infrastructure. I might just add explicitly including existing redemption centers or redemption locations, because I know in testimony last week it was suggested that might include transfer stations, for instance, for bag drop off. That makes perfect sense to me, but I want them to be thinking about keeping retention centers that we have operating. There should be some thought that you would try to keep those first before opening up any newer ones and having the PRO incur an expense to open up a new facility. That should be a last resort if the others are just not working for some reason or if it doesn't exist in a geographic area where one needs to exist. So, that's it on the handling fee.

[Chair Amy Sheldon]: Did you say a page and a line number?

[Paul Burns, Executive Director, VPIRG]: Yes. On that, was page 14, line 12. Not sure I think there may be a new draft out today, which I haven't had a chance to go through.

[Representative Rob North]: The old one.

[Chair Amy Sheldon]: 02/05 is the date I have on this one, draft 2.1.

[Paul Burns, Executive Director, VPIRG]: That is easily just that section that deals with a preference for existing infrastructure. That's it. Okay. Thank you. So, moving forward, I've mentioned the PRO is nonprofit. The charge to manufacturers that fail if there is a failure on the part of the producers here to create a PRO, There is a real risk here, and in Connecticut, for instance, they have run into problems with this where some of the manufacturers have refused to participate, so the PRO, even though required by law, has not come together. At least they're having problems. We can give you a witness idea from the Connecticut, their agency, if you're interested. I think they can provide more information. I don't know if they're allowed to testify, but in any case, there are others who could probably speak to this, that there have been challenges in getting the PRO off the ground in Connecticut. To guard against that, one of the things that this proposal has is a 10% assessment. The bill calls for an assessment of 10% of the plan's total costs, the cost that the agency incurs to develop and administer the plan. So, they would cover the cost of the plan and then an additional 10% assessment. We would encourage you to go higher than 10% as an assessment here. As you probably know, The U. S. Has a long history of using financial accountability to incentivize compliance and to ensure that costs of non compliance do not fall onto others, like taxpayers, One for longstanding example is treble damages, which require parties to pay up to three times the original cost when they willingly fail to comply. One example of that is in the federal super fund program, hazardous waste super fund program, also known as CERCLA, which has triple damages. The EPA can recover up to three times the cost from potentially responsible parties that do not comply with administrative orders in that case. That's a strong incentive. You're not just paying the cost, but you're also recognizing that for an agency, they don't just drop. They have to drop something to perform this task. That has implications, particularly in a state like this. There's not fat in the agency now. I mean, something else will not get done if they have to do this. So, it's not merely don't think it's just to say, Well, we should just pick up the tab for that cost plus 10%. 10% is kind of a pittance, honestly. It's not a very strong incentive. So, you could consider treble cost. That's a 300%. Go from 10% to 300%. That's significant, I would say, but I would go significantly higher than 10%. I mean, 50% would be a not unreasonable figure, it seems to me, to recognize that there would be a real cost not just to the agency but to the people of this state if our agency had to deploy its resources to perform these tasks when the responsible parties refused to do so. So, I urge you to consider raising that percentage. There is a question in my mind, and perhaps others could, Mr. O'Grady or others could address it, whether it should fall to distributors as well as manufacturers, as it calls for in the bill now. It's just manufacturers, and if a manufacturer is entirely out of state, are they doing business if others distribute their products here? Perhaps. I'm just thinking about a jurisdictional issue, and does the state have reach to get the appropriate responsible parties, or should it include distributors? Again, that may be a question for Mr. O'Grady as to whether that's necessary or Mr. Chapin. I would then move to convenience standards briefly, if there are no questions on that. Then, as it relates to convenience standards, I think what we're talking about here is that people need to have convenient locations, convenient options to bring back their containers, and each of those facilities needs to meet some minimum standards. The idea that there should be at least three per county redemption centers per county is not much in some of our counties. You could be a long way from a redemption center, even if you've got three somewhere in the county. But one specific change that we would recommend is a bill now calls for at least one of those to provide immediate return of deposit. I would say two of the three should provide immediate return of deposit, and then if you're going have one of something, it should be a bag, I would argue, a bag drop off location, maybe at a transfer station or something like that. Is not an unreasonable thought about what that might be, but other locations, since we are moving to allow for something else, I would have that on the shorter end, the one out of three options for the bag drop off. Any place could allow for both of these things, and that would be most convenient. We give people the greatest number of options when they're dropping off their containers. For other standards that might be added to this, consider requiring that the locations be safe, clean, well lit, open at least forty hours per week, at least one of those days being a weekend day. If it's a location that depends on a technology like a reverse vending machine, a challenge that we hear from people not infrequently is that it doesn't work. So, should you put in a requirement that it has to work 95% of the time? I assume in this technology, someone knows whether that machinery is working, or they should. It should be, if there isn't already, I'm not sure. Is there a phone number on this where people can call and get some attention to? I just worry that we are to Excuse me. One of the things that this bill does is it turns larger retailers into redemption centers, so it removes the smaller mom and pop stores, those of less than 5,000 square feet. This is a real benefit to them. They don't have to participate in the collection of the redeemables any longer. Larger stores do, and no longer will they be able to say, We didn't sell that, so we don't take it back. They will become redemption centers, so they have to take everything back. Well, something needs to improve in the Shaw's downtown Montpelier here, I think, for it to work effectively as a true redemption center, where people are used to bringing bags of containers that they'll empty there, and there's a process involved in it. But I want to make sure that this is a situation that can really work. If we're now calling Shaw's a full redemption center, it seems to me that somehow that technology has to improve there. This is one of the ideas with the PRO, is that they will provide for some increased capacity, I think, at these retail and other redemption center locations, if I'm understanding this correctly. A redemption center will not just mean a redemption center with a little bit of retail in it. It's a retailer that now has to have they have to take back things, and a lot of them have the reverse vending machines, and that may be fine, but I do have some concern that they are not ready for the full participation that may come from this, including liquor bottles, going back to your Shaws, they would be, as I understand it, they would be required to take back all containers that are covered by this law, not just those that they sell. So I'm just thinking about ways to improve this, and so some of these are just ideas that come to my mind about that if they're not in the law, I know that there's some level of specificity that people think may make sense to not put in the law but in some sort of future guidance or something, but I don't know what will be the next step. If it's not required, I worry that we may just be running into some chaos if we don't have some of these ideas. That is the Those are the issues that I wanted to raise, and I really appreciate the opportunity to share those with you. I will present you with this written testimony as well, and happy to answer any other questions if there are.

[Chair Amy Sheldon]: Great. Thank you for that, and we look forward to the written testimony. Do members have questions?

[Paul Burns, Executive Director, VPIRG]: Thank you. Thank you. Alright, we're

[Chair Amy Sheldon]: going take a five minute break.