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MINUTES

SOLID WASTE FEES AND INCENTIVES STUDY COMMITTEE

September 23, 1997 - First Meeting of Two

MEMBERS PRESENT

Senator Mary Lou Freeman, Co-chairperson
Senator Patty Judge
Senator Wilmer Rensink		 Representative Ralph Klemme, Co-chairperson
Representative Geri Huser
Representative Henry Rayhons

MEETING IN BRIEF

Minutes prepared by Kathy Hanlon, Research Analyst
Organizational staffing by Tim McDermott, Legal Counsel

  1. Procedural Business.
  2. Recycle Iowa.
  3. Iowa Department of Natural Resources.
  4. Assistance to Small Businesses.
  5. Local Landfill Agencies.
  6. Recycling Interests.
  7. Written Materials Filed With the Legislative Service Bureau.

COMMITTEE BUSINESS

1. Procedural Business.
Call to Order. The first meeting of the Solid Waste Fees and Incentives Study Committee was called to order by temporary Co-chairperson Senator Mary Lou Freeman at 10:40 a.m., Tuesday, September 23, 1997, in the Supreme Court Chamber of the State Capitol Building in Des Moines, Iowa.
Preliminary Business. After the roll was called, Senator Wilmer Rensink moved the permanent election of temporary Co-chairpersons Senator Freeman and Representative Ralph Klemme. The motion was unanimously approved on a voice vote. Representative Henry Rayhons then moved approval of the rules governing the Committee, which were also unanimously adopted by voice vote.
Adjournment. The meeting recessed for lunch at noon, reconvened at 1:00 p.m., and adjourned at 3:00 p.m.
Next Meeting Date. Tuesday, November 18, 1997, was tentatively set as the next meeting date, though the date was later changed to November 14, 1997
2. Recycle Iowa.
Recycle Iowa is a state agency that operates as a partnership of the Department of Economic Development (DED) and the Department of Natural Resources (DNR). It receives moneys from the U.S. Environmental Protection Agency (EPA), from DNR tonnage fees, and receives inkind resources from DED. Ms. Leisha Barcus, Director, Recycle Iowa, began her presentation with an overview of the agency's history. Recycle Iowa, she said, resulted from work begun under a grant issued to DNR and DED by the EPA's Jobs Through Recycling Initiative. The EPA's goal focuses on recycling market development, which she described as taking action to create new markets or expand existing markets, stimulating demand for recycled materials and products, and assisting the components of the recycling system to work more efficiently.
Ms. Barcus told members the grant funding supported three assessments of recycling in Iowa; recycling market development outreach to local and state economic development and solid wastes/recycling professions, as well as to out-of-state manufacturers utilizing recyclables; and interagency coordination and business partnerships. Those partnerships have continued under Recycle Iowa.
Recycle Iowa's goal, according to Ms. Barcus, is to assist in diverting waste from Iowa's landfills and to create positive economic activity in Iowa. The state is generating a number of recyclables, and the agency has been successful in providing technical waste diversion assistance to business and industry through programs like the Iowa Waste Exchange and the Waste Reduction Assistance Program. As proof of this success, she cited a study that reports as of January 1, 1997, nearly 1,300 jobs and $360 million in manufacturing income have come from Iowa companies using recycled materials.
Recycle Iowa's targeted customers include the state, its businesses, and local communities. The agency assists the state by promoting Iowa's recycled commodities and working with Iowa planning areas and waste generators to find homes for material otherwise destined for landfill. The agency provides Iowa business and industry with access to a recycling market information network and with recycling technical assistance. The agency assists Iowa's communities in creating sustainable long-term environmental protection with positive economic impacts.
Program objectives listed by Ms. Barcus include the following: Recycle Iowa's barriers include imperfect flow in recycling markets, market uncertainty, undervaluing of public interests and benefits, high transportation costs, demand for recycled products lower than for new products, and aversion to risk by investors.
3. Iowa Department of Natural Resources.
Overview. Ms. Teresa Hay, Administrator, and Mr. Garth Frable, Program Planner, Waste Management Assistance Division, Department of Natural Resources (DNR), spoke on behalf of DNR.
Waste Tires. Ms. Teresa Hay updated members on a six-year waste tire management program created by the Legislature in 1995. In this, the second fiscal year of the program, she noted that $1 million in state funds has been allocated to counties for FY 1997-1998 for waste tire collection. More than 60 counties have received grants.
Landfill Tonnage Fees. Ms. Hay provided members with information regarding the state's landfill tonnage fee, currently set by the Iowa Code at $4.25 per ton of solid waste that enters a landfill. Of that fee, 95 cents is retained by the local government or the landfill: 50 cents to be used for environmental protection and 45 cents to be used for waste reduction and recycling activities.
Ms. Hay reported that landfills located in planning areas that achieved the 25 percent waste reduction recycling goal collect 50 cents less in tonnage fees. Currently, 38 out of 50 planning areas have achieved this goal. The 12 planning areas that have not achieved their goal are assessed an additional fee of 50 cents. This additional 50 cent fee is deposited in the Landfill Alternatives Financial Assistance (LAFA) program.
Ms. Hay noted that, of the total $3.75 tonnage fee paid by 38 planning areas, $2.80 is received by DNR; and of the total $4.75 tonnage fee paid by the remaining 12 planning areas, $3.80 is received by DNR. Planning areas that achieve a goal of 50 percent reduction are able to reduce the tonnage fee by another 50 cents to $3.25, decreasing the amount received by DNR to $2.30. As of September 22, 1997, two planning areas meet this criteria. No additional penalty is assessed for failure to achieve the 50 percent reduction goal. The majority of LAFA moneys go back to counties and landfills in the form of grants. The 12 planning areas that have not yet reached the 25 percent goal are eligible for, and most have received, grants under the LAFA program. Two are ineligible for grants, because they have not submitted approved comprehensive plans.
Tonnage Fee Uses. The moneys received by DNR from tonnage fees support the LAFA program; the Special Waste Authorization Program administered by the Environmental Protection Division of DNR; the Iowa Waste Exchange Services; the Iowa Waste Reduction Center at the University of Northern Iowa; Household Hazardous Materials Regional Collection Centers to establish permanent county collection sites; the Geographical Information Systems, a digital mapping system run by the Geology Bureau of DNR; the Waste Reduction and Assistance Program, operated by DNR and which provides free and confidential waste reduction assessments to large Iowa businesses and industries; Regional Collection Centers Support; and Recycle Iowa. The remaining 74 cents per ton received from fees by DNR is used for administrative purposes, funding 23 staff positions statewide in the Environmental Protection Division and eight staff positions in the Waste Management Assistance Division. For FY 1997-1998, DNR expects to deposit $7 million in its Solid Waste Account, mainly from the collection of tonnage fees.
Waste Reduction Goals. Mr. Garth Frable noted that waste reduction goals can be reached only through waste reduction and recycling. Population change, employment, inflation, and taxable sales are factors considered in determining whether the goals have been reached. Anomalous factors, such as natural disasters, major construction, and rural usage, may also be considered.
Cross-Border Migration. In answer to a question, Ms. Hay noted that cross-border migration of waste primarily occurs on the western border with Nebraska, some occurs on the eastern border, and very little occurs between Iowa and Missouri; waste is likely to come into Iowa from Minnesota, which has higher fees.
Public Education Efforts. In closing, Ms. Hay stressed the importance of public education efforts, which are handled inconsistently throughout the state by the various local governments and planning areas. The Waste Management Assistance Division is participating in meetings held in Sheldon, Red Oak, Des Moines, Waterloo, and Burlington, the purpose of which are to gather information from stakeholders regarding the LAFA program and DNR's recycling and technical assistance efforts. The information will be used to determine how best to serve the future needs of the stakeholders.
4. Assistance to Small Businesses.
Mr. John L. Konefes, Director, Iowa Waste Reduction Center, described the Center's activities. Assisting Iowa's small businesses to meet environmental regulations through prevention or reduction is the sole mission of the Iowa Waste Reduction Center, according to Mr. John Konefes. The center focuses on applied research projects that find solutions for small businesses and conducts workshops to communicate those solutions. The center matches every $1 of state funding with $1 in federal or private grant funds. Services provided to small businesses are free and confidential.
Small businesses may request center services. Upon request, a staff person from the center will conduct an on-site study of a facility and will send the business a response or review. Of those returning the center's evaluation survey, 79 percent rate the center as excellent or very helpful.
Related Programs. Waste reduction is a secondary concern to small businesses, which primarily wish to know from the center whether they are in compliance with environmental regulations. The center offers small businesses a number of programs. The Iowa Air Emissions Assistance Program assists small businesses in achieving Clean Air Act compliance. The program eases the burden for small business and aids DNR, and the center is developing a contract with DNR for these services. A cooperative agreement with the federal EPA enables the center to operate the Small Business Pollution Prevention Center, which conducts applied research to develop cost-effective technologies for specific industries. State funds support this program, and without those funds, the center could not qualify for the matching federal dollars. The Pollution Prevention Assessment and Implementation of New Tools and Techniques Project is designed to create a package of tools to help small businesses involved in painting. After the initial on-site review, a representative returns with suggested equipment, which is loaned to the business, and provides training on the equipment. The Spray Technique Analysis and Research Program teaches spray technicians how to optimize the efficiency of an entire spray system through improved spray painting technique. There is, Mr. Konefes said, a demonstrated need for more waste reduction assistance.
5. Local Landfill Agencies.
Mr. Pete Duffy, Director, South Central Iowa Solid Waste Agency, told members that rural access to recycling services is a growing need as rural populations are using solid waste services in greater numbers. He suggested that DNR focus less on percentages and more on program efforts. Despite the agency's efforts, which are based upon an updated, approved plan, its total waste stream increased 21.6 percent. He is concerned that the agency may be economically moved to stop recycling efforts and pay the 50 cent penalty fee. However, he suggested that the fee should be eliminated and the state should implement programs to, as economically as possible, remove recycling products from the waste stream.
Mr. Randy Hartmann, Solid Waste Program Director, Great River Regional Waste Authority, addressed members on the past and present perceptions concerning landfill disposal capacity. He noted that as a result of federal legislation, numerous small landfills have closed, large regional facilities have developed, and waste is now hauled greater distances for disposal. He noted that the industry has consolidated and the trend is for landfill owners to collect and haul community waste to their facilities.
The Great River Regional Waste Authority incurred $8.9 million in debt to construct two solid waste transfer stations, a recycling center, a comprehensive wood and yard waste diversion program, and a new sanitary landfill that complied with federal regulations and was designed to meet the waste generation needs of all its member counties for the next 15 years.
Noncompetitive Rates. To pay off the debt, the authority's tipping fees were raised to rates Mr. Hartmann says were noncompetitive. The higher tipping fees resulted in waste leaving the authority's management system for out-of-state landfills charging $10 to $20 a ton less. The loss of business and higher operational costs caused the authority to cease all recycling collection activities in March 1994 and close its new recycling facility. The 1994 U.S. Supreme Court decision in C & A Carbone, Inc. v. Town of Clarkstown, N.Y., according to Mr. Hartmann, struck down a local government's ability to enforce local flow control ordinances on grounds that the ordinances interfered with interstate commerce. The ruling and the closing of the recycling facility resulted in two member counties pulling out of the authority. The authority has since reopened the facility, but two counties have not rejoined the authority. Their abandonment leaves the counties of Lee and Henry with a system designed for four-county usage and with $8.9 million of debt. Mr. Hartmann warned members of the impact debt repayment will have on the taxpayers in the counties of Lee and Henry. To fund the existing infrastructure and resume cost effective recycling programs in order to comply with the state's 25 percent waste reduction goal, the authority recently implemented a waste management fee.
Mr. Hartmann cited two threats to the authority. First, the community distrusts the authority and lacks confidence in its commission. Secondly, the largest private waste hauler delivering waste to the authority's landfill was recently purchased by the third largest private waste company in the nation, which itself owns and operates a landfill less than one hour from the authority's landfill -- in Illinois. Mr. Hartmann estimates that 25 to 30 percent of the authority's tipping fee revenue could be lost if USA Waste Systems, Inc., takes the waste to its landfill in Illinois.
Mr. Hartman argued for a solid waste tax competitive with that of Missouri and Illinois, state funding assistance, and a review of the risks and costs of implementing the 50 percent waste reduction goal.
Mr. Thomas Hadden, Executive Director, Metro Waste Authority, told members the authority represents 300,000 people in the Des Moines area. He provided members with an account of the many services provided to citizens in the communities served by the authority. He noted the authority is operating in the red, as its tipping fee is $30, but its cost is $36. The authority has reduced its workforce from 59 to 39 employees.
The recent financial struggles, he said, are due to the loss of flow control. The authority's commercial customers, 70 percent of its business, may send waste wherever they wish and are very aggressive about finding markets for waste paper. The authority is working with DNR to stop the flow control problem. Mr. Hadden suggested the 50 percent reduction goal will be difficult for the authority to achieve. The authority will be asking the cities to take responsibility and charge residents a fee. Because of concern for how residents will respond to a fee, the authority is conducting a survey to determine how much residents are willing to pay. The authority's board voted down a proposal to fund costs by increasing tipping fees. He noted that citizens have been supportive of recycling and the authority wants to extend the recycling program to the year 2000. He noted that the authority has private competition and remarked on the challenge created when Des Moines' suburbs take waste elsewhere.
6. Recycling Interests.
Iowa Recycling Association. Mr. Ron Bingham, Weyerhauser Company and member of the Iowa Recycling Association, addressed the Committee. Mr. Bingham identified the Iowa Recycling Association (IRA) as a nonprofit association interested in promoting recycling activities in Iowa. The association gives members a forum for learning about recycling and waste reduction issues, affecting recycling efforts in the community and workplace, and accessing and sharing resources and information. Members include private citizens, private and public sector office and production workers, collectors, processors, end users, and county and state recycling coordinators. The goal of the association is to educate members, the public, private business, and legislators on available recycling and on current program expansion needs. The work of the association is done by volunteers, but he noted that the association is exploring the possibility of grant funding to add a staff person.
The association currently sponsors three programs. The first is called "Clean Out Your Files," and assists companies in sponsoring events to clean files and recycle as much material as possible, freeing valuable storage space and reemphasizing the need for recycling. The second, "Paper Please," is a large ad campaign asking Iowans to pledge to recycle more paper. Under the third program, "Iowa Recycles Day," the association sent packets of information and tools to state recycling coordinators, environmental groups, and area recyclers to assist them in establishing recycling events targeted for November 15, 1997.
City Carton Company. City Carton Company, Inc. of Iowa City, as described by its President, Mr. John Ockenfels, is the largest independently owned and operated recycling company in the state, processing and marketing in excess of 160,000 tons per year of paper, tin, steel, glass, plastic, and fuel cubes. However, at 155,000 tons per year, paper recycling is the primary focus of the company. He argued that scrap paper is a commodity, not solid waste, and landfill operators should not be involved in buying and selling that commodity. The company ships to mills throughout North America and overseas. He noted that their success is notable because the company operates in a most unstable business environment, with large swings in demand in an intense supply market.
While Mr. Ockenfels said he supports programs like the Iowa Waste Exchange, he is concerned about the specter of government involvement and assistance versus competition with private enterprise services. He also expressed concern over landfill agencies that cover their costs of meeting the state's goals by competing directly with private companies to purchase and resell processed recyclable commodities. He asked committee members to consider the extraordinary cost associated with each percentage of reduction demanded and that they be creative in finding ways to fund and promote programs that enhance market development as a method for diverting recyclable material from landfills. He indicated approval, though, of the current structure that applies the bulk of fee moneys to statewide programs.
Oil Recycling. Mr. R. J. Baker, Executive Director, Cherokee Area Economic Development Corporation, Inc., appeared on behalf of oil recycling interests located in the Cherokee, Iowa, area. He provided members with information relating to a motor vehicle oil filter recycling demonstration project carried out by the University of Northern Iowa (UNI) in the early 1990s. The study found that 6.6 million used motor vehicle oil filters are discarded annually in this state, leaching as much as 400,000 gallons of used oil into landfills -- potentially threatening ground and surface water quality. The figures quoted do not include oil filters used on farm equipment or semitractor-trailers. The project demonstrated two alternatives to this harmful dumping: the recovery of used oil from oil filters by hydraulic press compaction; and the recycling of the recovered oil, the metal canister, and oil-saturated filter media generated by the compaction process. A 1992 UNI study recommended that oil filters be banned from landfills and recycled. It also recommended documentation guaranteeing to consumers and vendors that the filters have been recycled.
The interests Mr. Baker represents are investigating the purchase of a new continuous flow oven that bakes oil filters, removing 100 percent of the oil. They are talking to DNR about a LAFA grant or loan to assist in purchasing the oven. The oven can take a product as large as railroad diesel filters and can recycle almost any carbon-based product. The process eliminates the paper and produces a good recyclable steel product. The steel market can consume everything produced in this manner.
Mr. Baker opined that much of the costs of oil filter recycling will be paid by consumers and vendors. Many vendors currently charge a recycling fee of 50 cents to $2 to help pay for the pickup of the filters. There are 160 to 180 oil filters to a barrel. Vendors, like Jiffy Lube, pay between $25 and $80 for barrel removal.
Incontinence Products. Ms. Pam Berg and Ms. Karla Christensen spoke on behalf of Mulberry Creek's Brief Encounters Service. Ms. Pam Berg and Ms. Karla Christensen began Mulberry Creek's Brief Encounters Service in 1992 with a Solid Waste Reduction Grant. The company specializes in the rental of incontinent products to nursing homes, institutions and homebound individuals; and provides assessment, support and training services to its customers.
Based upon their business experience, Ms. Berg and Ms. Christensen identified three problem areas: Those homes and individuals who can prove they have reduced the amount of waste they are sending to the landfill have not seen a reduction in their garbage rate; taxpayers are paying for the purchase and disposal of disposable products and the state is losing valuable farmland to the construction of additional landfills; and, facilities and individuals using reusable incontinent products should be rewarded for making a conscientious effort in solid waste reduction.
7. Written Materials Filed with the Legislative Service Bureau.
a. Ms. Leisha Barcus filed a folder containing the following:
b. Ms. Teresa Hay filed the following:
c. Mr. John L. Konefes filed the following:
d. Mr. Pete Duffy filed the following:
e. Mr. Randy Hartmann filed the following:
f. Mr. Thomas Hadden filed the following:
g. Mr. Ron Bingham filed the following:
h. Mr. John Ockenfels filed a folder containing the following:
i. Mr. R. J. Baker filed the following:
j. Ms. Pam Berg and Ms. Karla Christensen filed a print copy of their testimony.

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