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October 2007

Recycling provision tied in as amendment

As you read this article, there is a possibility that Congress may have passed the Energy Bill and the Recycling Investment Saves Energy (RISE) Act amendment may be contained in that legislation.

RISE would give companies engaged in recycling an accelerated 50 percent depreciation allowance in the first year of the equipment purchase for recycling operations. The provision would cover all equipment, except for rolling stock.

The House has passed its version of the Energy Bill. The Senate has yet to pass an important aspect of its bill - the energy tax package.

“It is my understanding that the Congress would like to pass the Energy Bill and send it to the president in September,” says Mark Reiter, the assistant vice president for Government Affairs for the Institute of Scrap Recycling Industries (ISRI), “which is why the Senate wants to bring up the energy tax package in September. As it has already passed the substantive energy package sent to the floor by the Energy and Natural Resources Committee, with passage of the tax piece, it can go to conference with the House on an equal basis.

“When you look at the names of Senators who are already co-sponsors, you have Senators across the political spectrum - Democrat and Republican, liberal, moderate and conservative,” he adds, “and we have the bipartisan Congressional Recycling Caucus that ISRI helped to establish a couple of years ago. Part of this effort is coming from the Caucus. The RISE effort has always been a bipartisan effort.”

Attempts were made to enact the provision two years ago.

“ISRI had serious concerns with the original bill,” says Reiter, “which effectively split in half the recycling community. We did not come up with the idea originally - it came from other sectors of the recycling community and from elected officials on Capitol Hill who were looking to do something more for recycling with this concept.

“The concept is good as long it applies to legitimate recyclers and all recyclers can benefit from it,” he adds. “The first bill was written in such a way that only a small portion of the recycling community could take advantage of it. We support the current version of the provision because more recycling, less pollution, reduced energy costs and other benefits will result from it.”

The first RISE provision was attached to an energy bill that passed in the Senate, but was dropped in conference between the House and Senate.

“I suspect the reason [bill was dropped] was that the House members on the Ways and Means Committee objected to this and other provisions because the House conference committee members then had a different view of what special interest legislation is than did the Senate conference committee members,” says Reiter. “A year later, the RISE bill was made better in that the entire recycling industry would be positively affected by the legislation. However, no Energy Bill moved in the Congress a year ago. The RISE provision can’t move as a free-standing bill - it can only move as part of a larger bill.”

Reiter says that while it is theoretically possible to pass the RISE provision as a separate bill, it would be a complicated process that requires the intervention of several Congressional committees, unanimous consent and the goodwill of all House and Senate members to prevent additional non-germane provisions from being attached to RISE in order to ensure its swift passage.

And, if RISE passes as a free-standing bill, it still requires the signature of the president, which is not guaranteed.

Currently, the immediate fate of the RISE provision rests with the Senate which, in June, failed to end a filibuster over certain provisions of the energy tax package.

“Had the Finance Committee’s energy tax provisions been allowed to come up for a vote, Senator Snowe was going to bring up the Rise provision as an amendment to the tax title,” says Reiter.

The chairman of the Finance Committee is Senator Max Baucus (D-MT).

“In the wake of the successful filibuster, Senator Baucus decided that the tax package needed to be modified and would be brought back to the Senate floor at a later date,” Reiter said. “When that occurs, Senator Snowe will offer Rise as an amendment, as originally planned, with a change. The Joint Committee on Taxation had ‘scored’ Senator Snowe’s RISE provision fairly high. Apparently, this was the result of an interpretation of certain language, an interpretation not shared by Senator Snowe and the co-sponsors. That language has been modified to reflect the Joint Committee on Taxation’s concerns.”

“It’s frustrating,” he adds.

On the House side, the Ways and Means Committee, chaired by Charlie Rangle (D-NY), has passed a tax package and the Energy and Commerce and other committees have passed substantive provisions, with all the parts having been voted on, and passed by the House.

“Before the House floor can vote on a bill, it needs to go to the Rules Committee, which decides under what conditions a bill will be brought to the floor,” says Reiter. “With regard to the House Energy Bill, the rule was a ‘modified open rule,’ meaning that only certain provisions could be brought up as amendments to the Energy Bill. They did not agree to allow the Rise provision, which was to be offered as an amendment by Melissa Bean (D-IL).”

The Senate, says Reiter, is expected to bring forward the energy tax portion in September.

“It is anticipated that the Finance Committee will make the changes allowing the bill to come up on the floor without a filibuster,” he said. “Senator Snowe will then offer the modified Rise provision as an amendment to the energy tax package.”

Because the provision will be in one of the two Energy bills if the RISE provision is included in the Senate’s energy tax package, it would have to be considered by the joint House/Senate Conference Committee.

The annual cost of the modified provision to the treasury, according to the Joint Committee on Taxation, is $162 million. The cost will be covered on a pay-as-you-go basis.

“There is no estimate of how much in taxes may be generated as a result of increased recycling,” says Reiter, who notes that in addition to increasing jobs and revenue in the recycling sector, indirect benefits for the environment and the economy should also be factored in.

“That is the original intent of RISE,” he adds. “Many of these materials that are lost in the recycling stream, for a variety of reasons, would now make it through. So even if new materials don’t get into the marketplace, you would have more product to process - therefore greater yield and more revenues and increased energy savings, and additional taxes paid to the Treasury.”

ISRI is urging recycling associations and companies to pitch in to secure the RISE provision by contacting their senators - Democratic and Republican alike.

“Talk to them about the RISE provision and ask them to specifically co-sponsor Senator Snowe’s legislation,” says Reiter. “If they need more information on RISE or help on how to speak with senators, contact ISRI.”

“For all I know, and I do not know, Senator Snowe’s and Senator Carper’s people might modify the bill to include American made equipment,” says Reiter. “Under the previous accelerated depreciation law that expired in 2005, equipment manufacturers sold a lot more equipment than they would have in the absence of an accelerated depreciation allowance.

“There is no question that this type of legislation will accelerate purchases of new equipment,” he adds, “which means the recycling rates will grow faster than they otherwise would have and that equipment manufacturers would be thinking about pushing the edge of the technology envelope to take advantage of this window.”

If the RISE provision is not passed, Reiter says it is just more of the status quo.

“Companies will continue to implement their current business plans and it will take time before we get where we would have gotten if RISE had been passed,” says Reiter.