Subsidy Or Disposal Service Fee?

Subsidy Or Disposal Service Fee? That Is The Question.
By Daniel Knapp, Ph.D., CEO, Urban Ore, Inc., a Material Recovery Enterprise in Berkeley, California since 1980.

Hello Annie Sciacca and Sophie Mattson:

In response to your July 27, 2016 article in the Mercury News, “Why Are Bay Area Recycling Centers Closing — and Can Anything Save Them?”

I am a professional reuser and recycler with 35 years experience in California. The company I work for and with, Urban Ore, Inc., has survived many market fluctuations. Our primary business is reuse, but we also do lots of recycling. In 2015 we sent just 70 tons to landfill, less than 1% of the materials we accepted, upgraded, and returned to commerce.

Your article throws into sharp relief the extreme underlying unfairness that shackles our industry and prevents it from realizing highest recycling goals that are overwhelmingly popular both with voters and with elected politicians. This unfairness stems from dominance within the materials recovery industry by solid waste management ideology, despite this managerial elite’s having lost as much as 50% market share to recyclers in some areas (like Alameda County) in the last several decades.

“…the system is rigged to make sure wasters get theirs, no matter what. And recyclers are left to beg, or close their doors.”

To see how this unfairness works and is baked into our language, consider this sentence from your article:  “Recycling centers are increasingly dependent on the state’s subsidy program, but critics say the payouts are too slow to arrive and the subsidies aren’t adjusted quickly enough to reflect changing market conditions.”

I recognize that neither you nor your newspaper are responsible for this usage. But here’s the thing:

All recyclers compete with wasting industries for the same supply of materials. Wasting industries are, however, never paid with funds that are called subsidies. Instead, they are paid with funds derived from disposal service fees. What’s the difference?

The difference couldn’t be bigger or more consequential. Subsidies are mere handouts, temporary grants, while disposal service fees are monies paid to pay for the costs of making unwanted things go away, legally, plus a minimum 15% profit. But wasting industries accomplish this task by destroying value and creating pollution. Don’t recyclers make unwanted things go away legally too, and don’t they do it in a way that produces jobs and environmental benefits far beyond what wasters can provide?  Of course they do. Then why call monies paid to recyclers subsidies?  Why not call them disposal service fees instead?

There is no good reason at all for this imbalance, other than inertia, waste industry protectionism, and public confusion.

My dictionary tells me that a subsidy is “money granted to a charity…held to be in the public interest.”  The same dictionary says a fee is “…money regularly paid for continuing services.”  Grants can be withdrawn or at least not adjusted upward when money is tight, and that’s what’s behind all these recycling center closures and all the entrepreneurial pain that your article describes so well. But fees have to be paid and even increased as costs go up, regardless. So the system is rigged to make sure wasters get theirs, no matter what. And recyclers are left to beg, or close their doors. Could anything be more unfair, even dangerous to public health and safety?

With few exceptions, the solid waste profession controls both wasting and recycling all over California at the present time. I believe we need to “feel the Bern” in our field, and create a new management structure for recycling that recognizes that we recyclers are now the centerpiece of the disposal service industry, not an expensive add-on fueled by subsidies, and therefore that we deserve full payment for our work with the coin of the realm, disposal service fees.

Waste management is a sunset industry. The fact is that we recyclers have products to sell, and wasters have only liabilities to give future generations. Enacting this needed change will make the recycling industry even more of a formidable competitor than it has been since we hands-on recyclers started our revolution on or about Earth Day, 1970.

# # #

Murder… Betrayal… Aluminum

A review of Wasted, a new novel about recycling set in Berkeley
By Daniel Knapp, Urban Ore
In John Byrne Barry’s second “Green Noir” mystery Wasted (the first was Bones in the Wash), a recycler in a company called Recycle Berkeley (Re-Be) is found mashed inside an export bale of aluminum cans at Berkeley’s transfer station. The recycler, one of Re-Be’s most passionate defenders, is dead. He didn’t get there by himself. Someone had to operate the baler, put him in it. Was it about Re-Be or was it personal? Who killed him? Who operated the baler?

At the beginning of the story, out and about on Berkeley’s gritty flatland streets at 5am, Brian Hunter temporarily escapes his boring day job as a contract bookkeeper to become a freelance reporter. His friend Doug, who drives a collection truck for Re-Be, has told him a small army of people are out every night stealing aluminum cans from Re-Be’s curbside routes. The financial impact is large. To follow the story, Brian decides to become a poacher himself. Doug gives him a route map so he can go in ahead of the collection trucks.

The first poacher he meets is unfriendly one moment, violent the next. Thinking Brian is a liar threatening his stash of cans, the poacher whacks the would-be reporter with a board. Brian howls in pain but doesn’t fight back. The two men take a break from these exertions for some talk over a couple of cans of warm beer the poacher has scored. Brian learns that poachers must have “sponsors.” This poacher offers to sponsor Brian. Brian accepts.

From then on, we’re in a strangely fictionalized but recognizable hall of mirrors that is the lot of people who actually do the work of collecting and processing all those cans and bottles. The author knows his stuff; he used to be on the board of directors of the nonprofit that does Berkeley’s curbside collection, although another nonprofit company processes the materials. In Wasted, they are merged.

Structural conflicts abound both in the novel and in real life. Poachers take the valuable aluminum and leave the rest for Re-Be. Income-deprived, Re-Be is sliding toward bankruptcy. Brian learns that Re-Be has fallen behind three months in rent to the City. He finds the politicians embarrassed and scared because Re-Be holds an exclusive City contract for curbside collection services. But City staff haven’t paid Re-Be’s service fees for months. A City Council member wants to hand Re-Be’s contract to another company. Re-Be’s managers and board battle desperately to keep the nonprofit afloat. Supporters, some armed with dubious tactics, flock to Re-Be’s defense in a press event and later in a big demonstration.

Consolidated Scavenger, a multinational waste company with a transfer station in a city to the south of Berkeley, is a big presence, willing and able to take over Re-Be’s contract. Consolidated, or “Con,” has friends in Berkeley’s high places but not so many on the street.

Just before Brian discovers the body of his friend Doug, he tells his editor how his story about poaching has morphed into something much bigger: “One power struggle mirrors another. At stake, a million-dollar…contract, the city council majority, and…the soul of Berkeley. Add sex and stir.” She says, “That’s not the story you turned in [yesterday].” Brian replies, “That’s right. But it’s the one you’ll get in two hours.”

Doug creates an upset by crashing and ruining a big celebration intended to help Re-Be. What he does leaves everyone embarrassed, confused and hating him. The unrest makes headlines around the world. As Brian tells it, “The media loves to trivialize Berkeley….many of the embryonic movements and trends nurtured here – from free speech to recycling to divestment from South Africa – have become mainstream, but the ‘only in Berkeley’ gibe never seems to go out of style.”

Besides losing the aluminum to poachers, Re-Be is losing some of its best workers to Con. Con pays better, but that’s not all. Some staff are fed up with the “kitchen-table collective” culture of Re-Be, so there are divided loyalties even before Doug’s death. The murder cleaves these loyalties into ever smaller bits.

Brian keeps following leads and trying to protect his sources while cooperating with the police, and we are carried along at a gallop. He loses lots of sleep staying just ahead of other writers who flock to the story. He falls in love with one of the female suspects and reflects on the proper relations between observer and observed. Cool detachment is impossible. He’s inside the story and outside it at the same time.

When the City tries to evict Re-Be, and when Re-Be refuses to go, the City breaks into its site at night and disables its baler. That break-in is one of the events that actually happened in Berkeley’s history. Moreover, a woman whose name begins with “K” (Kathy Evans in reality; in the novel she’s Kisa) finds a replacement part during the night, and the baler is up and running defiantly the very next day.

For fun, I made a list of all the direct parallels to the real story of Berkeley’s recycling. So far there are more than 20.

Which leads to a caution: beyond property damage, Berkeley’s recycling has never been marked by murderous violence. The skeleton of facts that Wasted assembles have been taken out of their actual context, rearranged, renamed, tilted and jumbled to serve the needs of the mystery, not history.

Recyclers have often had to defend their contracts and businesses. To resolve issues they have rarely resorted to demonstrations. Instead, they have written recycling-friendly laws and regulations that voters or City Council have strongly approved. For example, the first citizens’ initiative of three that were written all or in part by Berkeley recyclers stopped procurement on a garbage-burning power plant that City Council had already approved in concept unanimously. This citizens’ victory over their own electeds and the solid waste profession put Berkeley at the forefront of city or county burn-plant rejections that eventually totaled seven in our region alone, and hundreds around the USA. It also started a real-life multi-year no-holds-barred local political struggle. But no humans were mortally harmed.

For those already familiar with Berkeley’s tangled relations with its recyclers, Wasted can be an eerie and unsettling read. Others will enjoy learning a lot about recycling’s dark side while our hero reasons and guesses his way along a twisted trail to find the culprit.

# # #

Knapp: Trashy Opinions Again From John Tierney

By Daniel Knapp, CEO of Urban Ore, Inc., a Materials Recovery Facility now celebrating its 35th year in Berkeley, California,

To the Editor:

I’ve been a full-time operator of a well-known reuse and recycling business for 34 years now. Lots of people have been at it longer.

Some years back, your paper featured my company as an environmental success story. We’re open 360 days a year, still doing fine, thank you. All around us are others who are doing quite well, too. Our biggest problem is keeping up with the ever-growing demand for our services and products.

It’s easy to see why John Tierney gets this all wrong in his October 6 piece “The Reign of Recycling.” He didn’t talk to any of us.

Instead, he talked with the head of Waste Management, which last year landfilled over 90 million tons of resources it says couldn’t be recycled. It’s a little hard not to feel sorry for this CEO. His company owns nearly 200 landfills, and landfills compete with recycling for supply. This builds in a kind of corporate schizophrenia. Gains in recycling mean losses in landfilling. What a conundrum! Adding to the big waste companies’ problem is the fact that they have made bad investments in recycling technology, which require poor countries to accept mixed-up machine-sorted trash. Then the poorest people hand-sort it. But the biggest of these countries, China, put up a “green fence” two years ago that excluded these dirty products. Bales backed up in US warehouses. Stuff processed as resources now had to be wasted. No wonder costs for recycling went out of control!

Too bad for him. That market contraction didn’t happen to smaller and more nimble companies that produce high-quality feedstocks.

He doesn’t mention that as of 2004, there were 56,000 individual materials recovery businesses in the USA generating over $220 billion in income. We’re more numerous now, and we compete with big waste companies for supply. Likewise, he doesn’t mention that where I live, surrounded by more than 7 million people in more than 75 cities, recycling rates of 75% and better are commonplace. The supply of resources going to landfill is drying up.

How do we do this and stay solvent? Good question. But you won’t get any answers from Mr. Tierney. He says we have to be “subsidized,” whereas wasting receives service fees. There is no difference, except that we are cheaper. Our formula for success is: service fees + product sales = solvency.

Waste Management Admits Failure At Recycling

So Waste Management Admits Failure At Recycling, But Who’s Really To Blame?

A Critical Review of the Aaron Davis’ June 20 Washington Post Attack on Environmentalists and Real RecyclersAmerican Recycling Is Stalling And The Big Blue Bin Is One Reason Why
By Daniel Knapp, CEO of Urban Ore, Inc., a Materials Recovery Facility now celebrating its 35th year in Berkeley, California, 7/7/15
Forty-five years after the first Earth Day jump-started recycling, companies like mine, Urban Ore, are one big reason why publicly traded wasting companies like Waste Management are losing market share and profitability. Our secret: we’re small, we’re nimble, and we focus on handling the disposal functions by producing quality resources from the municipal discard supply. In short, we’re just the opposite of the flawed recycling systems that are bringing down giants like Waste Management, Inc. When last counted, in 2004, there were about 56,000 of us, chipping away at the big waste companies’ market share. Eleven years later, there are probably more of us, and we’ve grown.

Meanwhile, the wasting giants have made some big bad bets, then pursued them with bullheaded efficiency, egged on by their corporate boardrooms. Big money is the driver in these transactions, not recycling markets. They bet that throwing investor money at highly automated but extremely dirty collection and sorting systems would best allow them to pursue their dreams of market domination. It worked for a while, but now we’re told it wasn’t sustainable. Aaron Davis of the Washington Post reports that at the highest levels of Waste Management, they appear to be giving up. He likes to reduce their key technology to “the big blue box,” but more experienced people know it as “single-stream.”

Single-stream’s essence is to combine all residential recyclables, mix them thoroughly, then try to separate them using automated systems developed for simpler feedstocks by the mining industry. Single-stream is notorious among real recyclers and perceptive environmentalists alike, many of whom not only saw through the industrial strategy from the first, but correctly forecast the outcomes now coming to pass.

Despite overwhelming evidence to the contrary, Aaron Davis blames environmentalists in general, and California environmentalists in particular, for Waste Management’s failures to make single-stream recycling profitable. He appears to have gotten most of his ideas from the Waste Management people he interviewed. But he didn’t talk to the competition at all, so what did he expect to hear but the backpedaling and evasiveness that he got? And why did the editorial staff of The Washington Post let him get this misinformation and disinformation into print?

The following quotes about single-stream’s failures show that Mr. Davis was wrong to blame environmentalists for the collapse of Waste Management’s recycling businesses. I’m indebted to environmentalist Lynne Pledger of Massachusetts Clean Water Action for most of these quotes, which she put out four years ago, in 2011 in a paper entitled
Concerns With Single Stream Recycling Collection (pdf).

Also, all bolds are mine. If you want to get to the gist of this refutation, read only the boldface in what follows.

Since Mr. Davis singles out California in his hit piece, let’s start with California environmentalist and recycling activist Portia Sinnott. She’s currently Editor of the monthly newsletter of the Northern California Recycling Association. She has been a NCRA Director for decades and served as its President for several years. More recently she has presided over a series of meetings called The Zero Waste Brain Trust that drew working recyclers from all over the state. One big takeaway from these meetings, Portia said two years ago, was that “…a growing number of waste professionals think the current design of MRFs — Material Recovery Facilities — are creating more garbage rather than less.”

The critique of single-stream goes back many years. As early as 2002, St. Paul, Minnesota’s Eureka Recycling study of competing collection and processing methods said that single-stream systems, “with high residual rates, expensive processing, and the lower quality in materials, …presents concerns…. The cost advantages and efficiencies of single-stream…disappear the more closely one looks at the later stages of the recycling process.” This was printed thirteen years ago in Resource Recycling, November 2002, one of several magazines that cover the recycling industry.

Just two weeks ago, Tim Brownell and Bryan Ukena, the current co-managers of Eureka Recycling, posted the following response to Mr. Davis’ thesis that waste companies are not to blame for their failed systems: How dare WMI, Republic (formerly BFI) and the other largest garbage/landfilling companies in North America play victim to Single Stream recycling (?) Almost 15 years ago they began the steady march away from collecting recycling in separated streams, which allowed for the highest value and most environmental benefit from the materials. They claimed Single Stream systems were the future to recovering the most materials and to being the most efficient and environmentally effective programs possible for communities all across the country. It also happened to work well in their compacting garbage trucks. In Minnesota, due to these companies’ “vision” and influence, over 80% of all materials are now collected and processed in this manner. And NOW they have the gall to say the system is broken. ‘Not enough Profits’ is their mantra.” “Looking back 15 years ago we heard a very similar story from the multinational garbage companies as they purchased all of the local recycling companies, stating that recycling wasn’t working, and that they needed to raise fees for services by 40%.”

The big waste companies’ preference for single-stream undercut the finances of the companies that use recycled feedstocks. Clarissa Morawski wrote an influential report on single-stream for the Container Recycling Institute in 2009 that concluded “...the cost savings for a municipality from single-stream collection show up as cost increases for the processors and remanufacturers. The contaminants are thrown away by the paper mills. So, an item such as a plastic bottle that was recyclable when it was placed at the curb becomes trash by the time it is sorted out as a contaminant by the paper mill.”

In the same vein, Sacia and Simmons, writing in the TAPPI Journal, stated that “…Increased equipment wear, due primarily to glass and other abrasive contaminants, has increased maintenance costs (for paper makers) more than 300%. Pulper rejects, which are landfilled and consist primarily of plastics, tin, glass, and aluminum, have increased 800%. Other fiber-related costs have increased by 740%.”

These are business-busting numbers, and they came out nine years ago. But Waste Management and the other big wasting companies went ahead with single-stream anyway. Ideology triumphed over practicality.

What’s a self-respecting government to do? The Department of Ecology (pdf) of the State of Washington recommended in 2010 that local governments “switch the focus from collection to recovery…. Diverting materials from the garbage can to the point of collection when those materials end up disposed at a processor or remanufacturer…is not recycling or diversion,” they said. Many other governments agreed.

Manufacturers complained, too. In 2011, the Environmental Paper Network (pdf) asked its member companies to devote more time and energy to “…resolving the challenges created by single-stream collection programs that drive up the cost of recovered paper fiber and increase contamination.

That same year, Lynne Pledger of Massachusetts Clean Water Action (pdf) wrote that single-stream was distorting markets worldwide. “Paper collected in a single-stream system is marketed to low-value uses like paperboard, much of which goes to overseas mills, rather than high-quality uses like fine printing and writing paper. This is having an adverse effect on domestic (paper) mills…and making it harder for those who want to purchase recycled paper to find it. (Also), …the container stream is contaminated with paper…. Overseas markets will accept contaminated material more readily than domestic markets, so that when world markets are robust there is less concern in the US about high-quality recyclables. But when markets go down which happens cyclically, it is the cleanest materials that find a home. Single-stream materials are excluded or marketed at a significant loss.

Single-stream is only one of several wasting industry technologies now causing trouble for big waste companies’ sunk assets. In 2010, I wrote in a piece for the newsletter of the Northern California Recycling Association (NCRA) about…a sad list of waste company versions of “recycling” such as garbage composting, dirty MRFing, single-stream collection, and Alternative Daily Cover, or ADC, that systematically waste materials that could easily be conserved and used. From an operations perspective, they all look like greenwashing to my jaundiced but experienced eye. Garbage in, garbage out.”

NCRA is on the worldwide web, along with several other big recycling-related NGOs such as the Berkeley Ecology Center and Eureka Recycling. Mr. Davis could have found a veritable symphony of these kinds of statements among real, feet on the ground recyclers had he bothered to look. But he didn’t, instead only quoting Patty Moore, a respected California consultant (and long-time NCRA member) closely associated with the plastics industry. Why would only Patty Moore get to stand in for tens of thousands of recyclers and environmentalists?

Maybe because plastics are so hard to recycle effectively. In their July 2015 newsletter, The Container Recycling Institute reproduced an interesting article from the Winona, Minnesota Daily News about a study being done there by longtime recycling and environmental activist Ann Morse. The study was designed to find out just what people are mistakenly putting into the big blue bins in that rural county. More than 200 large samples were collected, their contents sorted and weighed. It turns out that the biggest Blue Bin contaminant by weight (and certainly by volume as well) is….unrecyclable plastics! Here’s the quote: “Nonrecyclable plastic was by far the largest contributor to the garbage bin, which slowly filled with things like pencil cases, plastic cups, chip bags, newspaper bags and grocery bags. While some bags are made of recyclable plastic, ordinary recycling facilities can’t handle them, Morse explained, so they should only be recycled in special collection areas in stores. Whenever recyclables are placed in a plastic bag, the whole bag is discarded as waste, which defeats the purpose of recycling in the first place. Paper bags, on the other hand, can be recycled along with their recyclable contents.

So I would say Waste Management has itself, and to some extent the plastics industry, to blame for its recycling failures. Not consumers. Not environmentalists. Not working recyclers. Just them.

For residents of Washington DC, I’d say you’re getting half-truths at best from your beloved local newspaper, at least when it comes to recycling.

For those of us working to make that Zero Waste future happen – no burn, no bury, WMI’s failure is clearly an opportunity. That’s because we perform the same task of legal disposal for unwanted goods, but we do it better and more profitably because we focus on quality production from start to finish.

We don’t like to mix unlikes. We like order better than disorder when it comes to materials handling. We think that system designs that degrade materials unnecessarily should be replaced by systems designed by people who understand how to use source separation to produce high quality resources and jobs.

This transition to a true Zero Waste future is job #1 for the new millennium, in my opinion.