8-15-04

Questions:

We believe the goal of a scrap tire program should be to achieve "A Total Solution". Some say this is impossible and settle for programs that address less than 100% of the problem. Since the problem is the same in each state and because the players are the same in each state, if a program provides sufficient funding and controls all the players, it will produce "a total solution".

Questions:

The first consideration when putting together a tire-recycling program is "FUNDING". Tire recycling is expensive and cannot be accomplished without proper funding. Most problems with scrap tires can be tracked to the lack of funding, control of funding already in the system or the funds collected to solve the scrap tire problem go to support everything except solving the scrap tire problem. The only program that offers a total solution is a fee-based program.

Questions:

In every state, the tire consumer pays for tire recycling, "one way or the other". The problem is, in almost all the states that collect fees from the consumer for tire recycling, the money does not get to the players who handle the tires. No money should exchange hands until the tires have been handled by the proper entity. The amount of fees collected from the consumer should be determined by what the program is expected to accomplish. At a minimum, it should be enough to pay or provide benefit to each player who participates in the program.

Tire Dealer Gets free tire recycling.

Agency Pay agency to administer program.

Questions:

The most cost effective place to handle a scrap tire is when it is removed from a tire dealer’s retail store, not after it has been thrown in a ditch. A program that allows the tire dealer to give money and scrap tires to a person to dispose of those tires gives that person total control over what to do with the money and tires. We believe this is where most of the problems with scrap tires start. This person has to make a decision; to pay a processor most of the money he received from the tire dealer for proper recycling or dump the tires and keep all the money. Enforcement will control some of these people, but we believe that a program built on this concept will not be a program that can achieve a total solution.

We do not believe a total solution can be achieved by enforcement.

Questions:

How should an agency determine the success of a tire-recycling program? We believe a tire-recycling program should be judged by how effective it deals with current generated scrap tires. Most states judge their program by how many illegal tire dumps it cleans up each year. If current generated tires are handled properly, no illegal dumps will be created. We believe the agency should handle the money between the tire dealer and the processor. Money collected should be enough to support all aspects of the program such as funds to administer the program, clean up illegal dumps, pay processors so they can create and supply end markets and pay transporters who deliver tires to its facility, etc.

Questions:

Tire Dealers do not mind collecting fees required in a fee-based program, if the fees are used to deal directly with scrap tires they generate each day. Their support is lost when those fees are sent to the state and used to deal with everything except scrap tires. In a fee based program the tire dealer no longer has to negotiate a price with the transporter to have their tires removed. The tire dealer sends the fees to the state and the dealer’s tires are removed at no charge by transporters permitted in the program.

Questions:

Scrap tire processor must be paid a reasonable up front fee based on scrap tires processed. (Not on tires collected) Processors are the largest investors, by far and are the only ones in any program able to provide a total solution. A processor can only offer a total solution if the state the processor operates in gives them support by approving diverse markets. A processor can only offer an on going total solution if they have diverse markets available each day.

Scrap tire processors only ask that a level playing field be created in the market place. A processor who invest millions of dollars to deal with a scrap tire properly, can not compete with unscrupulous people who invest a few thousand dollars to buy a pick up truck, paid by tire dealers to carry off their tires and care less where the scrap tires end up, usually somewhere in a ditch.

A fee-based program also addresses the problem with processors who build up stockpiles of scrap tires and shredded tire material and go out of business. In most programs, this causes the need for substantial bonding and/or financial assurance so the agency will have the money to clean up the mess. In a fee based program that does not pay money out of the fund until the processed tires are delivered to a market, when a processor leaves scrap tires or processed scrap tire material to be cleaned up by the agency, the agency still has the money, paid by the consumer, in the fund because those tires or tire material did not make it to a market.

Questions:

Transporters have to be controlled, and we believe the only way they can be controlled is by controlling the money they are paid for the services they perform. If a transporter wants to dump illegally, they will find a way. We believe 50 years of experience tells us enforcement cannot control a transporter. If you want to create a total solution, pay a transporter only when they deliver tires to the proper recycling facility. No program needs to eliminate the independent transporters. They have been a part of this process for a long time. Controlling money between the transporters and the tire dealer is the only way to achieve a total solution.

These are the people who pick up scrap tires, sometime for fees 50 to 75% cheaper than a legal transporter. Cheap fees usually mean the tires will go to the ditch. Enough tire dealers will do business with these people; it will affect the price and the flow of tires in an entire market. These prices and lack of flow remove all possibility of the stability needed to make a scrap tire program successful.

Again, we do not believe enforcement or permitting alone will produce a program that provides a total solution. We believe there is 50 years of experience that prove this conclusion. A program might achieve 80 to 90% success thru enforcement but in a state like Texas, a 90% success rate would still allow 2.5 million tires to be dumped illegally. Some states live in a fantasy world when evaluating their scrap tire program. As an example, one can look at Indiana (See article below). These problems did not happen over night. With 30 waste tire processors serving a population of a little over 6 million people, six of the processors were found to have illegal storage of large volumes of waste tires and shredded tires. Indiana has had a waste tire management program in place since 1991, 13 years. When this program was implemented, there were 10 to 12 million scrap tires in stockpiles around the state. The report dated 8-04-04, says they still have 5 million scrap tires in stockpiles and 6.5 waiting to be processed. It does not appear to us they have made much headway in 13 years. It is similar to most scrap tire programs around the country built on enforcement and reporting required on a yearly basis, from numbers supplied by either processors or transporters. It is the basic program recommended by RMA. It is not a program that will control scrap tires and it will not create an atmosphere in which legitimate scrap tire processors can operate profitably.

After 20 years in this business, we believe markets cannot be forced, but have to evolve. RMA continues to recommend money collected to deal with scrap tires be spent to create markets or give the money away thru grants and loans. Most of the time, agencies pursue the creation of markets that use small size product. (TDF, crumb rubber, playgrounds, etc.) Not all processors have the ability to produce small product. RMA also encourages grants and loans from these same funds. In regards to grants and loans from a state agency, we believe viable projects can find money in the private sector. A large percentage of grant money in the past has gone to the wrong people and is lost when the recipient was not able to perform in this tough industry and went out of business.

Processors know what product their equipment will produce. Money in the system should be directed to processor so that a processor can identify the markets they can supply with the product we produce.

In states where markets are approved by the controlling agency, it is imperative that a variety of markets are approved so the processor can have diversity in its customer base. Some states only want to approve one or two markets in order to force tire material into single markets such as TDF. This practice is self-defeating and limits a processor to produce one product sometime limited to one customer. An example of how this can adversely affect a processor would be what happened in South Carolina when a processor had one market, a cement kiln. The cement kiln after several years decides to discontinue burning scrap tires in favor of hazardous waste and plastic. That processor is now scrambling to find a place for the thousands of tires he collects each day. After spending years and thousands of dollars to create this flow, he could end up being one of those processors who stacks tires hoping to find markets before the controlling agency shows up and closes his business. This is the reason a processor should have at least 5 markets to insure its ability to deliver product without interruption.

We need the EPA or a nationally recognized entity to recommend markets that can be approved by each state around the country. We need standard markets approved nationally. If a market works in Texas, it will work in Maine or any other state.

                                     What is the most important aspect of any program?

The most important aspect in any program is "STABILITY". Proper scrap tire recycling requires an investment of millions of dollars. Stability is needed to encourage a processor to make that investment. Stability from regulators, funding, tire flow, market approval and a level playing field for all who participate in the program.

Any program needs the support of all who deal with scrap tires. It is important that all parties are involved during the process of structuring and implementation of a program. Every program will have its problems. The best way to deal with those problems is to consult all the players in the program for information on how any changes will affect them. Tire recycling looks simple but can be made to look very complicated.

The comments above are made from observations of 20 years in the tire recycling industry. All comments are up for discussion and we will be glad answer any question in regards to those comments.

We believe ISRI has an unprecedented opportunity with state agencies around the country if our members can put a comprehensive program that offers a total solution together.