Wheeling and dealing: states approach scrap tire management and end market development in a number of ways

Recycling Today, Oct, 2005 by Deanne Toto

Many states have established fees and programs to manage scrap tire generation and to abate stockpiles within their borders. While the fees are generally levied on the sale of new tires, the percentage of the fee that is allocated to scrap tire management programs can vary. Additionally, states use their collected funds in different ways, with some choosing to subsidize end markets, others choosing to provide grants and still others focusing on offering technical assistance.

In recent years, scrap tire management has been less of an issue for state governments, largely because state legislators believe illegal tire piles and the threats they pose are a thing of the past. In some cases, this has led to the diversion of funds derived from the sale of new tires to other areas that are deemed more pressing.

NOT WHAT IT USED TO BE. "The scrap tire problem is not what it used to be," Michael Blumenthal, senior technical director of the Rubber Manufacturers Association, Washington, says. "Legislators believe the problem has been solved," he says, because abatement efforts have been largely successful. However, Blumenthal finds this to be a short-term view. "You need constant management and enforcement or your'e going to have the same problems, eventually."

While he says no state has discounted the fees it charges on new tire sales, he says some states are increasing their fees and diverting a portion into other waste management areas or into their general funds. Blumenthal finds this "troubling."

By way of example, he cites Alaska, which he says put a $2.50 fee on new tire sales, all of which goes into the state's general fund.

In states where the fees on new tires are still going, at least in part, toward scrap tire management, Blumenthal says successful programs need to cover three key areas: abatement, market development and enforcement.

NEED FOR FUNDING. Fees on new tire sales can help to fund a state's regulatory program and should be retained even if markets are well established in the area, Blumenthal says. "Even when a market has been created and can consume all the tires, we are now saying a fee is still necessary," though he suggests that states that have successfully abated former stockpiles might consider reducing their fees on new tires.

Blumenthal cautions that end markets for scrap tires can shift, adding that manufacturers of high-end products made from crumb rubber are going offshore. "Markets can go away over night. The loss is sudden and profound."

Therefore, the best long-term approach, Blumenthal says, is not to concentrate on a single market for the scrap tires generated in a state, but to cultivate a variety of markets. "You need ongoing market development projects."

States take a variety of approaches when it comes to scrap tire management and market development programs. Below, Recycling Today highlights three states that have effectively managed their scrap tire programs in slightly different ways: Virginia, South Carolina and Florida.

SUBSIDIZING MARKETS. Virginia has been charging a 50-cent fee on each new tire sold in the state since 1989. The fee was increased to $1 in 2003 in response to a tire fire in the state and will go back down to 50 cents in July 2006.

During the program's 15 years, $40 million has been collected, with only $1 million having been diverted from scrap tire management programs, Allan Lassiter, manager of waste tire and recycling programs for the Virginia Department of Environmental Quality (DEQ), says.

The Virginia Department of Taxation collects the fee, which it deposits into a trust fund that the DEQ controls. Payments of $22.50 per ton are made to end users of the scrap tires on a monthly or quarterly basis using a manifest system. Lassiter performs yearly audits of the scrap tire consumers, reviewing manifests to be certain everything adds up.

The Rubber Manufacturers Association has criticized the Virginia program because it subsidizes end markets. Lassiter readily admits that this is the case, but he says grants are also a type of subsidy.

Lassiter says his department has no intention of stopping its reimbursement program. "Industry counts on it. It will be there as long as the market needs it. It would be phased out over a period of years if we have to get rid of it," he says, adding that this will give consumers of the material time to adjust to the new market dynamics.

He suggests that states considering this approach view it as a long-term system. "You really should stick with it for at least 10 years to give the market some thing to count on." he says.

According to Lassiter's figures, Virginia beneficially uses 100 percent of the scrap tires it generates yearly, with 74 percent of the tires going to civil engineering applications. He also says Virginia has efficient processing capacity for scrap tires generated within the state.

Virginia also demands financial assurance of $1 per tire to protect against abandoned sites. Lassiter says this helps to provide the state with the financial means for cleaning up a site should the owner walk away.