Recycling and Deregulation: Opportunities for Market
Resource Recycling, September 1996
Spurred on in the late 1980s by fears of an impending landfill crisis, state
legislators found a ready remedy in recycling laws. Prompted by these new state
laws, local governments put in place over 7,000 curbside recycling programs that
began collecting tons of bottles, cans, jars, newspapers, and whatnot.
In short order, the legislative refrain moved from "Recycle now" to "We need
markets." Legislators moved to calibrate recycling supply and demand with a
host of proposed regulations: recycled content mandates, manufacturer take-back
requirements, government procurement preferences and various subsidies.
Whatever the reason, deregulation as a way to expand recycling markets was
Current evidence, however, indicates that a great deal of growth in the use of
recycled materials is being hindered by overregulation on the federal, state and
local levels. In many areas, recycling is a relatively new technology, and the
companies that use the technology tend to be fairly small. Many people don't
know about the full range of products made with recycled material, and education
is costly. This is especially the case with plastics.
The basic problem is one that is common to many new technologies -- the world as
we know it came about in an earlier time, before current recycling opportunities
became commonplace. Where recycling technology is relatively new -- like
electricity, cars, and computers before it -- it has to overcome many
institutionalized barriers to change.
Many obvious regulatory barriers have been removed in recent years, but many
still remain, especially on the state and local levels, where governments often
choose what to buy based on "material" and "method" standards, instead of
adopting performance-based standards.
Just as many people read Consumer Reports before buying a consumer
product, so do government agencies and building code officials look to
recognized national standard-setting organizations like the American Society for
Testing and Materials (ASTM) or the American Association of State Highway and
Transportation Officials (AASHTO). Although such groups are useful in creating
uniform product standards, excessive reliance on such groups can discourage the
use of recycled materials.
Take, for instance, plastic lumber. Because there are no established standards,
test methods, or grading systems for plastic lumber, there is no way to reliably
use it in structural applications, such as building construction. Building code
officials are reluctant to approve plastic lumber products, and the products
fail badly in the wrong application.
ASTM is the organization that people expect to establish these testing
standards, but negotiations have been going on within ASTM for over two years,
and there is still no standard.
What's the obstacle? Some have blamed ASTM's slowness in establishing a
standard on the youth, unprofitability, and disorganized nature of the plastic
lumber industry. Others have cited the presence of members of the "wood lobby"
on the relevant committee (the D20.20.01 committee on manufactured recycled
plastic lumber and shapes), claiming that the wood representatives slow the
process down with counterproductive suggestions -- a common allegation with
industry standard-setting groups, although such allegations are generally
unprovable. Nevertheless, one manufacturer says that "It's hard to have a
rational conversation with wood people at public forums."
Or consider HDPE or PVC drainage pipes, which many manufacturers make with
recycled content. Until recently, ASTM had no standard for pipes made with
recycled PVC; even now, the standards (PS 1 and PS 8) are only provisional. The
ASTM specifications for corrugated HDPE pipes -- F 405 and F 667 -- don't
specifically exclude recycled materials, but they require such detailed
information about the characteristics of the resin that they may as well exclude
them. The AASHTO standards -- M 252 and M 294 -- are more explicit, and
actually mandate the use of virgin HDPE. (The ASTM and AASHTO standards do
allow "reworked material," but limit it to material "generated from the
manufacturer's own production.")
The pipe specifications predate the push for using recycled materials, and the
relevant ASTM committee (F17.65) has been in a seven-year deadlock over HDPE
pipe standards. Decisions in ASTM typically require a supermajority to pass, so
delaying is easy. It has been charged that the concrete, steel, and PVC pipe
industries, all of whom would stand to lose market share if recycled HDPE pipe
gained a foothold, are deliberately obstructing the process.
The problem isn't that organizations like ASTM or AASHTO exist; they are useful
groups. But when governments rely on their standards so that the standards
become mandatory, innovation can be deterred. Innovations like plastic lumber,
recycled HDPE drainage pipe or other products with recycled content have been
perceived to involve risk; when given the choice, many governments choose the
path of least risk by falling back on established standards.
Another problem is that governments themselves sometimes enforce restrictive
regulations that shut out recycled materials.
Many building codes were written before widespread recycling; either they
prohibit or limit the use of recycled materials, or they require testing that
becomes so expensive that potential purchasers are scared off and use
conventional materials. Most cities stick to the code set up by the building
code organization in their general area, but all cities can have more stringent
codes, and many do. For instance, in certain small cities, like Amherst, New
York, and in major metropolitan areas, like Chicago, Los Angeles and New York
City, there are additional building codes at the municipal level that supplement
the basic codes.
In many cases, building code officials are very conservative and make it
difficult for innovative building materials to be used in construction. Larger
building departments have more engineering savvy, but are weighed down with more
regulations; California building codes (which are statewide) are fairly
prohibitive. On the other hand, smaller building departments have more
discretion, but they tend to be more resistant to new products, demand more
paperwork before approving something different and, in general, set up
The success of recycled materials depends, in large part, on their price
advantage over virgin materials, and the increased cost of regulation can
whittle away at such a price advantage where it exists.
The fundamental problem is that building codes mandate materials, not
performance. A similar situation exists in highway departments, where highway
construction specifications are wedded to particular materials and technologies.
According to the National Cooperative Highway Research Program (NCHRP), true
- are based on properties of the finished product, not on the processes used
to produce it
- consider the variability inherent in the finished product and in the testing
- are based on attributes that have been related to the actual performance of
the product through validated quantitative models
- incorporate sampling and testing procedures whose combined costs are
consistent with the importance of the quality benefit being sought
- make the contractor's payment dependent on how close the product comes to
the level of acceptable quality.
State highway departments are moving toward performance-related standards, but,
at present, only New Jersey uses them, and only for portland cement concrete and
pavement. According to the NCHRP, "while the research community involved in the
development of [performance-related specifications] is well versed in both its
theory and practice, awareness within the highway construction community at
large seems quite low. [Performance-related specification] development to date
has been advanced almost exclusively by a small number of university and
We certainly don't want to use recycled materials for their own sake, especially
in areas like highway or building construction, where failure can actually kill
people. But if the appropriate performance standards are put into place,
materials usage will take care of itself, with recycled materials being used
where they are truly worthwhile.
The deregulation of government procurement practices could significantly
increase the use of recycled materials.
Currently, procurement guidelines are rife with regulations, many of which may
have been well-intentioned, that prevent the best product from being used. Some
regulations require that a supplier fill out large amounts of paperwork; others
may give preference to companies without regard to whether they provide the best
product; still others may insist that the government agency deal with a
contractor that carries the entire range of products -- office supplies, for
example -- that the agency needs. Many of these regulations favor large
businesses over small businesses, and since recycled-content manufacturers tend
to be small businesses, they are disproportionately hurt by such rules.
The most harmful sorts of procurement guidelines, again, are those that mandate
that products be made out of a certain material or have characteristics
unrelated to performance that may subtly discriminate against the use of
recycled materials. Color requirements -- like the Lansing, Michigan
requirement that trash bags be a light mint green -- can exclude recycled
materials because recycled commingled plastic is difficult to color. Brightness
requirements for paper, or maximum thickness requirements for trash can liners
or shower partitions, can also discriminate against recycled materials.
In short, for the recycling advocate, there is ample room for government
procurement reform. Not that private industry's procurement processes are
flawless; they're not. But there are valid reasons for closely scrutinizing the
government procurement process. First, waste in private industry is somewhat
less likely than waste in government, because private industry tends to be more
fixated on the bottom line. Second, waste in private industry is a private
matter to be sorted out between those who do the procuring and those who pay the
bills -- while waste in government is everyone's business, since we all pay the
government's bills. Third, the public-sector procurement process is notoriously
costly and rule-bound.
One way of reforming such a system is by removing some of the rules that govern
procurement. Many of these changes will have to be done on a case-by-case
basis, though some changes can also be done wholesale, like the removal of a
number of restrictions on federal purchases below $100,000 and the radical
deregulation of purchases under $2,500 in 1994.
Adopting performance standards
Of course, we need standards, both in our private lives and to guide governments
in their procurement process. But does this mean that any standard will do?
Surely not. Not all standard setting-processes are rational; sometimes, as in
the case of the ASTM or AASHTO, politics can get in the way of sound decision-
making; at other times, standards can end up merely embodying the way we've
always done it. As Spanish poet Josť Ortega y Gasset put it, "Half our
standards come from our first masters, and the other half from our first loves."
Our first masters and our first loves do not, in general, have a monopoly on
sound procurement practice. The answer, though, is not to bend over backwards
and reject old ways of doing things wholesale -- in favor of, say, minimum
recycled content requirements.
In the past, minimum recycled content requirements may have increased the use of
recycled materials and made the paper industry come up with performance
standards that had previously been lacking. But, in the end, such standards are
just as misguided as the old "method" and "material" standards. They don't
allow for assessment of cost, performance and the cluster of other variables
that determine product quality. Just how much recycled content makes sense in
each case depends on the "devilish details" involved in producing and using
The true answer is to adopt performance standards -- to care about what a
product can do and not where it comes from. As long as our roadways perform
properly, why should we care whether they're made with asphalt, concrete, fly
ash, scrap tires, or orange-flavored Jell-O? More specifically:
- Governments shouldn't always rely on industry standards. In areas like
plastic lumber or drainage pipe, when the ASTM or AASHTO don't have standards
for a possibly good product, it may make sense for governments to draw up their
own performance standards, allowing companies to submit performance data from
approved testing labs.
- Local building code offices, highway departments and similar agencies should
establish clearer and more predictable approval procedures that are more open to
innovative technologies. They should rely less on material and method
specifications and use performance standards whenever possible.
- Government procurement agencies should scrutinize their procurement
specifications to see whether they're using irrational or non-performance-
related criteria to buy the products they need.
Recycled materials aren't appropriate all the time, and neither are virgin
materials. Most importantly, we can't even know which is appropriate at what
time without adopting performance standards. Governments are in the business of
providing certain services, and they should stick to providing these services
with as much quality for the dollar as possible. Only such an approach can
treat both virgin materials and recycled materials fairly.
Alexander Volokh is an assistant policy analyst at the Reason Foundation, a
public policy think tank in Los Angeles. He is the author of Recycling and
Deregulation: Opportunities for Market Development, a series of policy
studies from the Reason Foundation. This article is based on the most recent
study in the series, How Government Building Codes and Construction Standards
Discourage Recycling. Other studies in the series include The FDA vs.
Recycling: Has Food Packaging Law Gone Too Far? and Recycling Hazardous
Waste: How RCRA Has Recyclers Running Around in CERCLAs.
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