Breaks on the RISE?Breaks on the RISE?
September 1, 2006
A new day may be dawning for the recycling industry with a bill (S.3654) recently introduced by U.S. Sen. James Jeffords, I-Vt. As intended, the proposed Recycling Investment Saves Energy (RISE) Act would provide recycling companies with tax incentives to invest in technology and make recycling more profitable.
So far, at least 40 organizations and companies have expressed support for RISE, including the Washington-based National Solid Wastes Management Association (NSWMA), the Silver Springs, Md.-based Solid Waste Association of North America (SWANA), the Washington-based National Recycling Coalition and the Washington-based Institute of Scrap Recycling Industries (ISRI). “It will encourage companies to increase investment in their technology and help produce good, clean recyclables,” says Chaz Miller, state programs director for NSWMA. “The feeling is that some of the decrease in recycling comes from the inability to process the materials collected as recyclables.”
Specifically, RISE would provide a 15 percent tax credit or a 50 percent depreciation deduction for the purchase of “qualified reuse and recycling property,” including machinery and some software. Also, recycling facilities would qualify for tax-exempt bond financing.
Jeffords, the ranking member of the Senate Environmental and Public Works Committee, has said that RISE will create recycling industry jobs and expand the country's recycling capacity. He has claimed that increasing the recycling rate of commodities by 10 percent would save about $771 million in crude oil costs.
The bill's text points out that the industry employs more than 1 million people, paying nearly $37 billion each year. Jeffords also mentions that the lack of some types of recycled feedstock depended on by manufacturing facilities has forced some operations to close their doors or resort to using virgin materials.
Calling the financial incentives “a good start,” John Skinner, executive director of SWANA, says they would help level the playing field for recyclables in the marketplace. “Recyclables operate at a disadvantage to virgin materials because [the virgin materials] get favorable tax treatment and financial incentives of different forms from the federal government that have never been available to recycled materials.” Industries such as mining and timber growing, for example, receive billions of dollars in federal incentives every year.
SWANA, while endorsing the act, wants industry members that don't pay federal taxes, such as local governments, to be able to benefit as well. In a letter to Jeffords, the organization — with nearly two-thirds of its membership coming from the public sector — proposed that suppliers of recycling equipment receive the incentives and pass along the savings to purchasers. The association also suggested that equipment used in composting be eligible since organics account for nearly one-third of generated waste but less than 10 percent is composted.
Most likely, the RISE Act will not become law anytime soon. The bill currently is in the Committee on Finance. And with elections coming up this fall, Skinner says it probably will not be passed this year. Also, according to Miller, U.S. Sen. Bill Frist, R-Tenn., has indicated that he won't put any tax-related measures in this year's energy bill.
Both SWANA and NSWMA are encouraged, though, by a version of RISE that was approved by the Senate as part of last year's energy bill (Section 1545) but dropped in conference committee because there was no accompanying legislation in the House. “We were all very encouraged that it passed in the Senate,” Skinner says. “That's a very good sign.”
In the meantime, a representative from Jeffords' office recommends that anyone interested in supporting the legislation contact the Committee on Finance.