IT MIGHT NOT APPEAR AS IF the 109th Congress will have much impact on the waste industry — at first glance. Emboldened by their success in the November 2004 elections, Republicans have set an ambitious agenda and have vowed to take action on Social Security, energy legislation and tort reform. Meanwhile, proposals on interstate trash and e-waste do not appear likely to advance very far. However, a closer inspection of the congressional landscape reveals that a number of items of interest to the solid waste industry — such as landfill gas (LFG) tax credits and power takeoff credits — could be included as part of larger legislative proposals. Here is a look at the topics of interest to the waste industry.
Interstate waste issues are not going away in 2005. On the first legislative day of the new Congress, Jo Ann Davis, R-Va., offered two bills: one to impose certain limitations on the receipt of out-of-state waste (HR-274) and the other to authorize states to regulate the receipt and disposal of out-of-state waste (HR-70). Seven Michigan Republicans co-sponsored legislation (HR-593) offered by Mike Rogers, R-Mich., to authorize states to restrict receipt of foreign municipal solid waste. Michigan's primary concern is Canadian waste imports. Sen. Debbie Stabenow, D-Mich., offered her own foreign waste bill (S-370) a week later. The only other interstate waste bill that has been introduced so far is Paul Kanjorski's, D-Pa., bill to authorize certain states to prohibit the importation of solid waste from other states.
Although none of the interstate/international waste bills are on the fast track to passage, the issue will not die, and now there are more factors involved. The issue used to be focused on New York City's waste exports, now it is focused on waste from Toronto, New Jersey, Maryland and New England. The recipients — primarily Pennsylvania, Virginia, Michigan and Ohio — are screaming the loudest, and members from other states are taking notice and getting involved as bill co-sponsors. With Paul Gillmor, R-Ohio, still serving as chairman of the House Energy and Commerce Subcommittee on Environment and Hazardous Materials, new legislative efforts will likely start in his subcommittee. However, there currently is no action planned on any of the interstate/international waste bills.
Three years ago, federal and industry officials began to talk about how to cope with electronic waste (e-waste). Despite government and industry efforts, more e-waste is being generated. Americans dispose of 2 million tons of electronic products per year — including 50 million computers and 130 million cell phones. By 2010, the nation is predicted to be discarding 400 million electronic units annually. Today, e-waste is one of the fastest-growing sectors of the country's solid waste stream, and technology products now account for as much as 40 percent of the lead in U.S. landfills, according to the U.S. Environmental Protection Agency (EPA), Washington.
Environmentalists say the rising tide of e-waste, which contains neurotoxins and carcinogens, is slowly degrading in landfills and rivers here and abroad and threatens our water and air. Congressman Mike Thompson, D-Calif., is leading the effort to find a legislative solution. He wants to establish a grant/fee program via the EPA to encourage the recycling of used computers, while Congressman Randy Cunningham, R-Calif., favors tax incentives to promote recycling. In the Senate, Jim Talent, R-Mo., and Ron Wyden, D-Ore., have proposed tax incentives for businesses and individuals and an eventual ban on landfill disposal of electronics with display screens. The biggest concern continues to be how to pay for e-waste recycling and disposal.
Most manufacturers have balked at paying the additional costs associated with e-waste disposal. A disposal fee placed on electronic components at the time of purchase has made little headway. And while the waste industry supports a more environmentally responsible approach to disposing of electronic waste, it does not wish to be stuck with the additional costs. Discussions on how to resolve the e-waste issue will continue, but it's unlikely that a plan will be acceptable to manufacturers, consumers and the waste industry anytime soon.
The focus of the highway bill will be construction of and repairs to bridges, tunnels, roads and other infrastructure projects. However, transportation-related issues such as tax credits for power takeoff functions in waste vehicles and relief from the new federal excise tax calculation on tires could fit under the highway bill umbrella. The major obstacle to including those industry-specific issues will be money.
In 2004, President George W. Bush set the ceiling for the highway bill at $256 billion. The Senate passed a $318.9 billion bill while the House price tag was $283.2 billion, down from an original cost of $375 billion. When neither bill met the President's requirement, the legislation faded as the elections approached.
In 2005, all sides appear willing to give a little to get a bill passed. The House recently passed a $284 billion highway measure and the White House has given its support to the legislation but warned the Senate not to exceed $284 billion. The Senate will likely comply, as Congressional members want funding for a multitude of projects back in their home states and districts. The President's willingness to compromise stems from his re-election and inability to run again in 2008. The temporary funding for highway and infrastructure projects runs out in May, so the pressure is on to enact a new highway bill before then.
A new energy policy fell victim to the same fate as the highway bill in 2004, fading away as the elections drew near. Although the President made a new energy policy a top issue early in his first term, legislation never materialized due to philosophical differences. A debate that started with increased domestic production versus greater conservation ultimately turned sour over liability relief for producers of the fuel additive methyl butyl tertiary ether (MTBE).
With larger majorities in both the House and the Senate, Republicans feel empowered to pursue their increased production agenda. The GOP will again seek to open Alaska's Arctic National Wildlife Refuge (ANWR) to oil exploration and, likewise, look to increase exploration of the U.S. coastline. To succeed, they will need support from at least a half dozen Senate Democrats.
Greater use of alternative fuels has been gaining momentum. Recognizing that alternative fuels are going to be more prevalent in our society, Congress already has held hearings this year on wind and solar power, hydroelectric and geothermal energy, and natural gas, including LFG. The question is how to encourage the production and conversion of these alternative energy sources into electricity for industrial, commercial and residential use. The easiest way is tax credits. This theory was validated when limited tax credits for renewables, including the conversion of landfill methane gas to electricity and waste-to-energy incineration, were added to Corporate Tax Overhaul legislation that passed in October 2004. A new energy bill presents an opportunity for additional LFG tax credits, although the competition will be tough.
Healthcare costs continue to be one of the fastest growing business expenses, and Congress wants to expand insurance coverage to more Americans. Small businesses feel the biggest crunch as they pay more per person than large companies that generally receive lower rates due to the larger number of insured employees. One area Congress will look into further is association health plans, which allow businesses to purchase health insurance together and thus take advantage of the economies of scale. Congress already has taken one step to help with escalating healthcare costs by creating health savings accounts (HSA). These tax-free accounts allow individuals and families to save money for medical purposes. While employers who establish these accounts must comply with the Health Insurance Portability Protection Act (HIPPA), credit unions and banks that offer them to individuals have limited reporting requirements.
Another way Congress will attempt to reduce healthcare costs is through legal reform. Physician malpractice insurance costs have increased significantly during the past decade due to large jury awards. The expenses are passed onto patients via increased fees. The House passed comprehensive medical malpractice reform legislation in 2003, but the Senate was not able to pass even limited malpractice legislation targeting specific segments of the medical community. Senate Majority Leader Bill Frist, R-Tenn., a surgeon prior to becoming a senator, is committed to passing malpractice reform.
Medical malpractice is just one piece of tort reform that the GOP will pursue in the 109th Congress. Senate leadership announced class action reform will be the first legislative item on the Senate agenda. True to its word, the Class Action Fairness Act was passed on Feb. 10, 2005. The following week, the House passed the legislation. The President signed the bill into law on Feb. 18, 2005.
New Senate Judiciary Committee Chairman Arlen Specter, R-Pa., has made asbestos liability a priority. Resolving the liability issue over respiratory ailments caused by asbestos exposure is critical to broader product liability reform. Sen. Specter has set an early April deadline to pass a bill. If the deadline is not met, he will move onto other matters before the committee. It is no coincidence that the business community, which supported Republicans in past elections, strongly supports tort reform. Conversely, trial lawyers have been the biggest financial supporters of Democrats in the past.
Businesses complain that frivolous lawsuits cause economic harm to their companies. Many businesses opt to settle out of court because it is cheaper. The recently created class action law will move more suits from state to federal courts, limit damage awards and ensure plaintiffs don't get coupons while their attorneys get the cash. Moving class action suits from state to federal courts should severely reduce venue shopping by lawyers. If lawyers cannot search for a sympathetic court, they will be less likely to file frivolous lawsuits because the likelihood of success is significantly reduced in federal court.
Similarly, product liability awards have been steadily increasing to the point where some businesses have closed their doors, although they were not directly responsible. Pharmacies have been sued for distributing Food and Drug Administration (FDA)-approved drugs, only to find out later that there was a problem. Distributors have been sued and closed shop as a result of an award for unknowingly marketing a defective product.
In 2003, the most recent year data is available, the rate of increase slowed, but tort costs still grew faster than the economy: to $246 billion. That's equal to 2.2 percent of the gross domestic product (GDP), or $845 for every man, woman and child. Reform advocates refer to this figure as the “tort tax.”
Bill Sells is the director of federal relations for the EIA, Washington.
NO TIME TO WASTE
Congressional bills of interest to the waste industry will likely be attached to larger measures in 2005. Below is a brief look at some waste industry issues.
Interstate/International Waste — This includes legislation introduced in the House to regulate the receipt and disposal of out-of-state waste, impose certain limitations on the receipt of out-of-state waste and to restrict receipt of foreign municipal solid waste. All House bills are referred to the Energy and Commerce Committee, while Senate measures go to the Environment and Public Works Committee. No action is planned on any interstate/international waste bills.
E-Waste — Legislation has been introduced to establish a grant/fee program via the EPA to encourage computer recycling and promote development of a national program to recycle used computers. Other legislation proposes tax incentives for manufacturers to establish sound recycling programs for used devices.
Power Takeoff Credit — The House and Senate have legislation pending to provide a $250 income tax credit for licensed and insured waste hauling vehicles that also use the engine for non-propulsion purposes. Language would be added to a larger bill, such as the highway bill or a broad based tax cut package.
Landfill Gas Credit — In October 2004, legislation passed to provide a tax credit for LFG and waste-to-energy (WTE) facilities. The gas/energy collection equipment must be placed in service between Oct. 22, 2004, and Dec. 31, 2005, and the payout period is for five years. The President proposes extending the placed-in-service date on landfill gas-to-energy projects but not WTE projects. A larger credit and longer payout periods would provide greater incentive for project development. The energy bill is the most likely vehicle for a change in the current credit.
Tire Tax — The federal excise tax calculation for heavy vehicle tires previously was based on tire weight. The new calculation is based on maximum rated load capacity. Under the new formula, $0.0945 in tax is added for every 10 pounds a vehicle's tire load capacity exceeds 3,500 pounds. The greater a tire's load capacity, the larger the increase in the federal excise tax. The best chance for fixing the tire tax is a broad tax bill or the highway bill.
Health Savings Accounts (HSAs) — The President wants Congress to promote health savings accounts by offering employers a $500 tax credit for each employee participating in HSAs. No companion legislation has been introduced yet.
Low Income Health Care Tax Credits — Tax credits to low-income workers to buy health insurance have been proposed by the President. Congress has yet to offer its own healthcare package, but low-income credits are likely to be included.
Association Health Plans (AHPs) — No legislation has been introduced to help small businesses buy group health insurance through association health plans. Association health plans will be difficult to pass without the support of state insurance commissioners.
Medical Malpractice — Congress will again attempt to cap medical malpractice awards to reduce doctor's malpractice insurance rates and reduce healthcare costs. Patient's rights groups and trial lawyers will fight against changes to the system. The President has identified malpractice reform as part of his overall tort reform package. Previous legislation that capped pain and suffering damage awards at $250,000 passed the House but failed in the Senate. Legislation is anticipated, but none has been introduced.
Product Liability — The most difficult tort reform will be product liability. Businesses want protection from what they view as egregious jury awards in product liability suits. However, consumers need protection from defective products that can cause injuries or death. There is no product liability legislation under consideration at this time.
— Bill Sells