‘Complicated’ recycling bill faces uphill battle

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A measure designed to hold producers of packaging products sold in New Jersey accountable for the costs associated with recycling and disposing of their material will likely face an uphill battle in the state Legislature.

Under Senate Bill 426/Assembly Bill 111, introduced in January 2022, producers and manufacturers that use packaging materials would be required to develop a stewardship plan to help manage, collect, transport, recycle, reuse and dispose of those products. The bill – whose sponsors include state Sens. Bob Smith, D-17th District, and Richard Codey, D-27th District, and Assemblymembers James Kennedy, D-22nd District; Shama Haider, D-37th District; and Raj Mukherji, D-33rd District – would also encourage those companies to increase post-consumer content in packaging products, as well as reduce the amount of waste generated from discarded packaging products.

To reach that goal, the legislation sets out several benchmarks, including:

• By Jan. 1, 2032: All single-use packaging products be reduced 25% by volume. At least 10% of this would be achieved by shifting to refillable or reusable products or eliminative plastic.
• By Jan. 1, 2034: All single-use packaging products be readily recyclable or compostable.
• By Jan. 1, 2036: All packaging products have a recycled rate of no less than 65%.

Stewardship plans, which would require state Department of Environmental Protection approval, must provide for the costs of collecting, transporting, recycling or disposing of discarded packaging products, according to the bill.

Producers, in conjunction with the DEP, would also develop a financing system to ensure prompt payment to counties, municipalities, trash haulers and recycling companies for handling the products, the legislation states.

The regulations would include several exemptions, according to Smith. For instance, nonprofits, public entities or producers that have a gross revenue of less than $5 million for their most recent fiscal year, or that have sold less than one metric ton of packaging or less than five metric tons of beverage containers in the most recent fiscal year, would not be required to comply.

An exemption would also be granted to a restaurant, food cart or other similar business that primarily sells food that is generally intended to be consumed immediately and without need for further preparation, or a producer that operates a single retail sales establishment, has no online sales, and is not supplied or operated as part of a franchise or a chain, Smith said.

Following its introduction in 2022, the bill was referred to the Senate Environment and Energy Committee, which took testimony last summer and resumed discussions on the proposal Jan. 30.

While Smith, who chairs the committee, acknowledged the legislation was “big” and “complicated,” he said the overall intent is the creation of “sustainable, long-term solutions” for managing end-of-life products.

“Producers that are responsible for managing their products at the end of their useful life have an incentive to design products that don’t use toxic and polluting ingredients, even if safer substances are more expensive upfront. Those manufacturers also have an incentive to use recyclable materials and to design products for easy disassembly to retrieve the components that still have value when a product is no longer useful,” he told NJBIZ.

“Without this incentive, economics encourages producers to use materials with the cheapest upfront costs and externalize the cost of safe disposal. This often results in the development of non-recyclable products and products for which there are no truly responsible disposal options,” Smith explained.

An earlier version of the bill was introduced in 2021, but it was shelved after concerns were expressed by stakeholders at both ends of the spectrum. While environmental advocates believed the original proposal did not do enough to address plastic pollution, industry groups maintained such a program would be too costly, too difficult to implement and enforce, and too soon after other recently enacted environmental initiatives by the state.

‘Shift from the status quo’

New Jersey is among more than a dozen states that have considered – or are actively considering – incentivizing manufacturers to make product packaging more easily recyclable or making the companies, rather than municipalities, pay the cost of managing packaging waste.

The approach, known collectively as extended producer responsibility, has attracted more attention in recent years amid growing public concern over the environment and sustainability as well as rising recycling costs.

Matthew Karmel, an environmental lawyer and head of Offit Kurman’s environmental and sustainable practice group, said, “Across the country, these proposals and laws come in a variety of different forms and often are paired with comprehensive circular economy strategies, such as recycled content mandates, grant and incentive programs, and education initiatives. New Jersey has several such policies, including a recycled content mandate that is still being implemented through intensive stakeholder meetings.”

“With its recent recycled content mandate, the environmental justice law and implementing regulations, and other recent enactments, the recycling and waste management industr[ies] in New Jersey are experiencing a lot of legislative action in a relatively short amount of time. New Jersey’s EPR legislation will need to be tailored to the local realities given the highly structured nature of New Jersey’s waste and recycling sphere. It will also need to accommodate the concerns of haulers, private recycling facilities, municipalities, brand owners, and the public. It’s even more important than ever for regulated entities to be part of the conversation and looking forward to compliance issues,” Karmel told NJBIZ.

In parts of Canada and Europe, EPR policies have been considered an effective strategy to boost recycling rates for materials like paper, cardboard, aluminum cans and plastic. Within the past two years, four states – California, Colorado, Oregon and Maine – have enacted EPR laws, while at least a dozen others have considered bills.

Smith – who noted that several aspects of New Jersey’s bill were inspired by parts of those recently passed measures – said, “We are monitoring these other states as they continue to implement their EPR legislation so that we may learn from them and adapt our legislation in response. Additionally, we have tapped on stakeholder groups who focus on EPR legislation in the U.S. and industry stakeholders that are familiar with New Jersey’s waste management and recycling landscape to ensure that the bill reflects New Jersey’s needs and established best practices.”

Colorado’s law – which requires companies that sell packaged products, paper products or foodware to cover the cost of a statewide system to recycle those materials – scored rare public endorsements last year from big business, including a few large consumer packaged goods companies based in New Jersey: Mars Inc., Reckitt Benckiser and Unilever United States.

In an April 2022 letter to Colorado lawmakers, the companies applauded the legislation, saying they support the “aim to shift from the status quo toward a waste and recycling future with high recycling rates, activated consumers, and circular use of materials, including recycled content in our packaging.

“Our companies are investing in the improvement of recycling systems around the world, innovating our packaging designs, and collaborating with suppliers, local communities, and customers to advance solutions that are good for consumers, the environment, and our industry. As producers, our companies have learned through decades of experience that EPR systems can be an effective way to improve and manage collection and recycling systems depending on a set of critical design features. Producers need to be empowered to run the program under the supervision of public authorities, with appropriate provisions for transparency, reporting, performance, auditing, and compliance,” the letter said.

After New Jersey enacted a strict plastic bag ban in May 2022 and revised its recycled content law to prohibit polystyrene packing peanuts as well as establish requirements starting next year for certain plastic, glass and paper packaging, the Sierra Club believes EPR is “the logical next step in order to reduce plastic packaging.”

In June 2022, Anjuli Ramos-Busot, New Jersey director of the Sierra Club, released a statement after testifying before the Senate Environment and Energy Committee on the previous version of Smith’s bill, calling the measure “a great start to develop a dynamic and effective EPR bill for New Jersey.”

“A strong EPR bill should incentivize producers with monetary rewards for the reduction of overall packaged materials used for increased recycled content, reduce the use of virgin materials, benefit the environment by decreasing toxins in the air and water, benefit Environmental Justice Communities burdened with a disproportionate number of incinerators and landfill areas, and will enforce reduce, reuse, recycle in a circular economy,” she said.

“Ultimately, a strong EPR bill focuses and pushes for circularity and It transfers the responsibility for managing packaging waste to the companies that have caused the packaging waste problem, shifting this burden away from taxpayers,” Ramos-Busot added.

Stakeholders sound off

Mary Ellen Peppard, vice president of the New Jersey Food Council, an alliance made up of food retailers and their supplier partners, said that while members “are committed to long-term sustainability and working toward a circular economy, which includes increasing recyclable content, minimizing packaging and reusing material wherever possible,” they oppose the bill.

Describing the measure as “extremely complex and not feasible to implement,” Peppard said the legislation would place “onerous requirements on producers to achieve specific source reduction goals and recycling rates by certain dates.”

She continued, “The goals in the proposed legislation can only be achieved after many years of research and testing. Manufacturers may run into unexpected challenges, such as a low supply of alternative materials. This legislation also includes refillable and reusable mandates without accounting for food safety considerations.”

Moreover, NJFC members are “concerned that this legislation includes heavy-handed enforcement mechanisms, rather than a sensible focus on education and compliance,” Peppard said. “Many manufacturers are already struggling with implementation of the new recycled content mandate. Legislation, at this point, should be focused on increasing recycling rates instead of a complete system overhaul.”

Dennis Hart, executive director of the Chemistry Council of New Jersey, a group that represents the interests of more than 75 manufacturers in the business of chemistry, said, “Our industries are committed to reducing plastic waste and continue to work with Chairman Smith to reduce waste through increased recycling.”

He went on to point out, “The Legislature has recently passed two major pieces of legislation.  The ban on plastic bags and polystyrene food packaging is now being implemented and revealing unintended consequences that must be addressed. The second one concerns the recycled content of plastic packaging containers. The regulations to implement the new requirements are being drafted now and, in many ways, could be contrary to what is being proposed in this new bill. “

He added, “To avoid more unintended consequences while complying with many federal laws and regulations concerning packaging, we encourage the chairman to schedule stakeholder meetings so that all interested parties can work together toward a workable solution.”

The National Federation of Independent Businesses, which represents more than 7,500 independent member businesses in New Jersey, also opposes the legislation.

In a statement earlier this month, the organization said, “While NFIB supports efforts to recycle materials and reduce waste in our landfills, this legislation has an extraordinary scope that would significantly increase packaging costs impacting all businesses.

“At a time when small businesses continue to struggle after the costly and devastating pandemic, New Jersey should not pass legislation that drives up the cost of doing business. Instead, policymakers should take a step back, gather input from all stakeholders, and truly examine how to improve the recycling system while mitigating costs to small businesses,” the NFIB said.

The National Waste & Recycling Association said it believes New Jersey should “let existing recycling laws work before moving onto an EPR regime.”

In expressing his opposition to the bill, Lew Dubuque, vice president of chapter management for NWRA, stated, “New Jersey recently passed post-consumer content legislation to create more robust markets for materials recovered through recycling programs. It is vital the state gives this new law time to have an impact.”

During the recent Senate committee hearing, New Jersey Business & Industry Association Deputy Chief of Government Affairs Ray Cantor told lawmakers that with the continuing issues from the ban on single-use plastic bags, as well as mandates for more recycled content without completed rules, this newer bill would be even more challenging to pull off.

“Through this legislation, you’re trying to re-do an entire structure,” Cantor said. “That is a very worthwhile goal. But there are a lot of other irons in the fire.”

“DEP has not even come up with their food waste recycling regulations. They have not come up with their dirty dirt regulations. We’re just beginning to have stakeholder meetings on recycled content. And it was a multiple-hour meeting just on small aspects of it,” he said. “I and others left that meeting overwhelmed by the complexity of trying to regulate hundreds of thousands of products that are coming into New Jersey that all might have their own individual stories and aspects to it.”

Cantor added, “I’m not at all saying we shouldn’t be moving in this direction. I’m saying we appreciate doing this for consideration only and we continue to have this dialogue to try to do it right. Let’s not rush to a solution where we’re ultimately back here doing a fix-it bill. Let’s try to do it right the first time.”