Individual Producer Responsibility for Containers, Packaging & Printed Matter 1

Individual Producer Responsibility for Containers, Packaging & Printed Matter1

Final Report to Éco Entreprises Québec – DRAFT Product Stewardship Institute May 1, 2011

The Product Stewardship Institute

The Product Stewardship Institute (PSI) is a national, membership-based nonprofit committed to reducing the health, safety, and environmental impacts of consumer products across their lifecycle with a strong focus on sustainable end-of-life management. Headquartered in Boston, Mass., we take a unique product stewardship approach to solving waste management problems by encouraging product design changes and mediating stakeholder dialogues. With 47 state environmental agency members, along with hundreds of local government members from coast-to-coast, and 95 corporate, business, academic, non-U.S. government, and organizational partners, we work to design, implement, evaluate, strengthen, and promote both legislative and voluntary product stewardship initiatives across North America.

Project Contact

For more information, please contact Scott Cassel, PSI Chief Executive Officer and Founder, at , or (617) 236-4822.

Acknowledgements

This project has been sponsored by the Connecticut Department of Energy and Environmental Protection. A significant amount of material used in this updated report was taken from PSI’s September 8, 2010 Battery Stewardship Briefing Document, which was sponsored by Call2Recycle, Inc. PSI would like to thank the many individuals who provided input in the development and review of this Battery Stewardship Briefing Document.

Individual Producer Responsibility for Containers, Packaging & Printed Matter1

Final Report to Éco Entreprises Québec – DRAFT Product Stewardship Institute May 1, 2011

Table of Contents

I. INTRODUCTION

II. OVERVIEW OF KEY ISSUES

III. SUSTAINABLE FINANCING

IV. ELEMENTS OF AN EXTENDED PRODUCER RESPONSIBILITY (EPR) BILL FOR BATTERIES

V. BATTERY INDUSTRY AND PROCESSING...... 9

VI. BATTERY MANAGEMENT

VII.POTENTIAL STRATEGIES RELATED TO PROJECT GOALS

DRAFT Battery Stewardship Briefing Document – May 30, 20141

Product Stewardship Institute, Inc.

I.Introduction

Purpose of this Briefing Document

The purpose of this Battery Stewardship Briefing Document is to prepare participants for a PSI-facilitated meeting that will be held in Hartford, Connecticut on June 11-12, 2014. The meeting will be national in scope but focused on the northeast region. It will also serve as a basis for additional discussions on battery management in the United States.The briefing document includes background information on battery composition, markets, and lifecycle management. It also proposes a project focus, issue statement, project goals, and meeting outcomes. Finally, it presents potential solutions pertaining to each of the project goals.

A significant amount of material used in this updated report was taken from PSI’s September 8, 2010 Battery Stewardship Briefing Document,[1]which was sponsored by Call2Recycle, Inc. The information in that report was derived through discussions with key stakeholders, as well as a review of available literature. It also included stakeholder input from discussions that took place at the PSI National Product Stewardship Forum on July 21, 2010, in Boston.For that earlier report, PSI spoke with representatives of 40 different agencies, companies, and organizations through a series of one-on-one interviews and group calls. Interviews included representatives of 18 government agencies across the U.S. and Canada, 7 manufacturers or manufacturer associations, 4 retailers or retail associations, and 11 companies or organizations that collect, process, or otherwise manage batteries at end-of-life. PSI updated the 2010 report with additional targeted interviews and updated data.ThisBriefing Document reflects varying perspectives on the management of batteries and not a unanimous approach.

Scope of Project

This project is focused on consumer-type batteries, including those that are rechargeable (also known as “secondary” batteries) and single-use (also known as “primary” batteries). These battery types are used in a wide range of portable devices, including common household items ranging from calculators and clocks to cameras and flashlights. This project also includes small sealed lead acid (SSLA) rechargeable batteries, but does not address lead acid or electric vehicle batteries, or batteries used in a residential or industrial setting to store power generated from renewable energy installations.

Proposed Issue Statement

The following issues regarding battery stewardship have been identified as reasons for engaging stakeholders. These issues are representative of a range of perspectives. They do not represent a consensus among all stakeholders. Instead, they are indicative of the concerns expressed to PSI staff regarding the management of batteries.

• Volume/Wasted Resources and Jobs: Large quantities of batteries are generated and disposed of annually, wasting material resources and energy, as well as recycling jobs.
• Toxicity/Hazards: Certain rechargeable batteries may contain toxic materials such as cadmium and lead, or flammable materials such as lithium ion.
• Low Recycling Rate: Only an estimated 12-15 percentof rechargeable batteries, and a much smaller percentage of single-use batteries, are being recycled in the U.S. Many batteries are contained in products that are not recycled, and therefore are “hoarded” (stored for a period of time after use and before disposal) or disposed of in the trash.
• Recycling Cost/Material Value: Single-use battery recycling costs are much greater than those for rechargeable batteries.
• Some Imported Single-use Batteries Contain Mercury: Although federal law prohibits the sale of primary batteries containing added mercury, a small percentage of batteries manufactured overseas (including those shipped in products) contain mercury.
• Municipal Government Cost: Governments must pay to collect and manage consumer batteries that Call2Recycle® does not accept (e.g., button cells and alkaline primary batteries), if they are required to collect them or choose to do so. Governments also pay for batteries that are disposed of in the solid waste stream.
• Low Consumer Awareness: There is a lack of consumer awareness about the need to recycle certain batteries and/or where to recycle. Most consumers do not know the difference between battery types and want to recycle all batteries. (In some places, there is a low motivation for recycling overall.)
• Difficulty in Measuring Program Performance: It is difficult to quantify the number of batteries collected and recycled. Some batteries collected in electronics recycling programs are recycled with the host product and are not reported, and some battery collection programs do not publicly report their collection results.
• Difficulty in Removing Some Batteries from Products: Some batteries cannot be easily removed from products by the consumer, and therefore may be difficult to collect, track, and recycle.
• Collection Safety: Recent U.S. Department of Transportation safety regulations require that some battery terminals be insulatedto ensure safe transport. However, these extra steps make collection and transportation more costly and difficult.
• Sorting Cost: It takes considerable time and resources to separate battery chemistries for processing, particularly because the process is almost always manual and many battery chemistries are not readily identifiable.
• Processing and Lifecycle Impacts: There is a need for greater certainty regarding processing practices, and some believe that environmentally sound recycling standards should be developed. Even if battery recovery and recycling are high, impacts may occur during other stages in the battery lifecycle.
• Lack of Program Harmonization: Local, state, and provincial laws and/or programs contain different provisions for scope of batteries covered, performance metrics, reporting requirements, retailer responsibilities, and other elements.
• Accessibility (convenience):Some jurisdictions (e.g., California and New York)mandate that certain locations (e.g., retailers) serve as collection points. However, despite a robust collection network, consumer participation may still be low. A standard may assist in determining how many sites are enough to maximize participation.

Proposed Project Goals

Based on the current issues and context of battery management in the U.S., PSI proposes the following three project goals:

Goal 1: Maximize the collection and recycling of rechargeable and single-use batteries (and thus the environmental benefit) while minimizing cost.

Goal 2: Develop a long-term financing system (e.g.,

extended producer responsibility) to manage

spent batteries in a manner that alleviates the financial burden faced by governments and minimize the overall cost of battery management.

Goal 3: Develop a model battery bill that can be

harmonized acrossdifferent states in the U.S., and perhaps throughout North America.

Proposed Meeting Outcomes

The following proposed meeting outcomes for the June 11-12, 2014 PSI Battery Dialogue Meeting in Hartford, CT are intended to establish joint expectations:

1. Develop a greater understanding of stakeholder perspectives and priorities;
2. Identify key remaining issues and potential strategies for resolution;
3. Agree in concept on elements of a model battery product stewardship bill;
4. Agree on a process for resolving remaining issues and finalizing a model bill;and
5. Agree on a coordinated plan for introducing bills in state legislatures.

II.Overview of key issues

The following issues regarding battery stewardship have been identified as those issues that have posed challenges to moving forward on existing battery stewardship bills in the U.S. and are thus reasons for engaging stakeholders. These issues are representative of a range of perspectives. They do not represent a consensus among all stakeholders. Instead, they are indicative of the concerns expressed by stakeholders.

Primary Battery vs. All Battery Legislation

A bedrock issue for any discussion on battery stewardship is how to maximize the collection of primary and rechargeable batteries. Those businesses operating existing programs want assurance that those systems will not be disrupted by any new or expanded program. There are many key questions that need to be answered, such as whether legislation in a state will be introduced for only primary batteries or for all batteries,and whether there will be one collection network and one stewardship organization or a manufacturer’s ability to meet its legal obligations individually or through a stewardship organization of its choice. Such a consideration might depend on whether a state already has an existing law covering primary or rechargeable batteries. Certainly, consumers do not distinguish between the two types of batteries, so any system(s) created must be convenient and clear to maximize consumer participation.

Reimbursement

If multiple battery collection and recycling systems are set up by battery manufacturers, it becomes a challenge to apportion the cost so that each producer pays for its fair share. Inevitably, batteries paid for by one or more manufacturers will end up in the collection system operated by another set of manufacturers. In this case, a system for cost reimbursement is needed. Additionally, provisions in an EPR bill for independent audits can ensure the accuracy of reimbursement claims.

Stewardship Organization(s)

An EPR bill will typically define whether responsible parties can meet their legal obligations as an individual company or whether they are free to join a representative stewardship organization in complying with the law. Some laws require that all manufacturers join a single stewardship organization, while other laws permit the formation of multiple stewardship organizations. If the law allows for multiple stewardship organizations, there will need to be a reimbursement provision. In addition, multiple stewardship organizations, while creating competition that can potentially lower costs, might also duplicate infrastructure and increase inefficiency and system complexity.

Creating a Level Playing Field

A level playing field is critical to ensuring fairness for companies paying for battery collection and processing. However, while some batteries are sold individually, others are included in products, such as toys, electronics, and medical devices. Making sure that the manufacturers of all batteries contribute their fair share to the collection and processing system requires that all product manufacturers use batteries covered by a collection program. State agency enforcement is an important component of maintaining fair competition, and any legislation should clearly define allowable exemptions (e.g., for some embedded medical batteries).

Inclusion of Battery-Containing Products

Many products, from toys to medical devices, are sold with batteries included. Capturing these batteries for recycling remains a challenge, particularly if they are embedded in the product. Another challenge is to fairly apportion the costs of managing these batteries to the appropriate brand owner. In addition, retailers find it difficult to determine whether products containing batteries are in compliance with the stewardship law (e.g., that the batteries inside the product are made by an obligated battery manufacturer and that they are in compliance with the law).

Compliance Enforcement/Private Right of Action

EPR programs create a level playing field for battery producers. However, this system relies on adequate enforcement against non-compliant producers to ensure that they contribute their fair share to the recycling program. In some instances, however, enforcement by state agencies has been inadequate. For this reason, compliant producers seek the ability to legally recover recycling costs from “free riders” – those manufacturers that benefit from the recycling program but don’t contribute funding. Allowing a “private right of action” in an EPR bill would provide compliant producers with the authority to bring a civil action against a non-participating producer responsible for the costs of battery management, damages, and legal fees. If a reciprocal reimbursement provision is included in the EPR legislation (whereby batteries from one manufacturer are collected by another manufacturer’s system), a private right of action provision would cover this situation as well.

Definition of Responsible Party

The definition of “responsible party” in an EPR law will affect the range of firms and industries included, as well as the scope of products covered. Existing U.S. producer responsibility laws and bills for batteries identify responsible parties differently and define them in various ways (or not at all). Most state legislation requires the “manufacturer,” “marketer,” or “cell manufacturer” to participate. Note that terms such as “brand owner” or “first importer” are more precise in the global marketplace than “manufacturer” or “producer.” Washington’s scrap electronics recycling law exemplifies this type of detail and takes into account manufacturers of products that used to be sold into the state, as well as including specific provisions for retailer-branded products. Current EPR battery bills in the U.S. also specify requirements for brand owners and importers in addition to manufacturers, distributors, retailers, and/or wholesalers. Some batteries are part of a “closed loop recycling system,” and these batteries are excluded from the definition of responsible party. Some legislation considers a product manufacturer to be the responsible party unless they use “compliant batteries” that are part of an authorized collection program.

Opt-Out Provision

Each battery that is exempt from regulation creates a potential unlevel playing field for compliant brand owners. For this reason, there is interest by battery manufacturers to include a narrow opt-out provision, such as for batteries embedded in products implanted in human beings.

Appropriate Level of Government Oversight(Prescriptive vs. Outcome-Based Program Design)

As the collection and recycling of batteries becomes regulated to create a level playing field, the battery industry and government agencies will need to develop the appropriate role for state agency oversight of the stewardship program and the amount of fees that a stewardship organization must pay to reimburse state agencies for that oversight. These entities will need to determine howmuch oversight of program operations is really needed given that there are federal and state laws for the management of batteries.

Environmental Outcomes

Most stakeholders want a yardstick by which to measure program success and to ensure a competitive market for producers and recyclers. Programs can differ greatly, however, in how much a state agency relies on these metrics, whether they are enforceable, and the degree to which manufacturers have flexibility in designing a program to meet those requirements. Others emphasize that cost must be a key factor, asking “how high” and “at what cost?” Collection targets and recycling efficiency are two basic performance measures that are often included either in legislation or in a manufacturer or stewardship plan submitted to the state agency for review and approval. Collection targets refer to the amount of batteries recovered as a percentage of all batteries available for collection. Recycling efficiency refers to the percentage of those collected batteries actually recycled. Other stakeholders, however, emphasize that environmental outcomes must be broader and include the net environmental benefit from a lifecycle perspective, which assesses the “environmental footprint” of any collection and recycling program.

A related measure is a consumer convenience standard, which specifies the minimum collection infrastructure needed in a given geographic area that is considered “convenient” for consumers to drop off their batteries for proper management. Whether retail locations are required to collect batteries, or if they can do so voluntarily, is another related element for consideration, as are collection incentives, which are often financial payments to consumers or collection locations to maximize participation in a battery recycling program.

Preemption

A preemption provision in a state EPR bill for batteries would overrule current local government laws relating to battery management. Local governments typically fight such provisions unless a state bill will be strong enough to satisfy even the most aggressive local agency. Preemption can eliminate the regulatory cost and confusion of having multiple local laws. However, if the state law is not strong, preemption will likely reduce opportunities for reaching joint collection and recycling goals.

Anti-trust

With competing producers working together toward a common goal, limited anti-trust protection in any bill is important to manufacturers to allow for appropriate conversations without fear of anti-trust filings. Other stakeholders have expressed concerns, however, that anti-trust provisions can create a monopoly that erodes the competitive marketplace.