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November 4th, 2015 – Assemblyman Gordon and committee members, good afternoon. Thank you for the opportunity to testify before the Committee. My name is Carl Smith and I’m CEO & President of Call2Recycle, Inc., North America’s first product stewardship organization and arguably its most successful.

Since 1994, Call2Recycle, Inc., has collected over 110 million pounds of consumer batteries throughout the US and Canada via 35,000+ publicly accessible collection sites. I also head ReturnMeds LLC, a subsidiary of Call2Recycle, Inc., which recently was approved as the stewardship organization to handle the take-back of unused pharmaceuticals in King County, Washington. After my prepared remarks, I would welcome to answer questions about both our battery program and our expansion in the collection of unused pharmaceuticals.

We were founded by five battery manufacturers as a proactive voluntary program to ensure the proper end-of-life management of nickel cadmium batteries. Since the early 1990’s, we’ve expanded our collections to include all chemistries of rechargeable batteries (under 11 pounds), cellphones and, in selective areas, single-use batteries. As states and provinces began enacting product stewardship laws, we became the stewardship organization appointed by battery and product manufacturers to fulfill their obligations under those laws. Most recently, our plan was approved in the state of Vermont in response to its recently passed legislation requiring stewards to manage and fund the end-of-life disposal of single use batteries, which is the first such law in the nation.

Today, we operate in all 50 US states, 11 Canadian provinces and a handful of territories, sometimes as a mandated program but, more often than not, as a voluntary means to manage battery collection and recycling. Over 300 companies fund us.

Leveraging our almost 22 years’ experience in educating the public, supporting stewards needs and fulfilling the obligations of municipal and state governments, we created a subsidiary devoted to putting together and operating programs to manage the end-of-life disposal of unused pharmaceuticals. The first jurisdiction where we developed and submitted a plan was to King County (Seattle), Washington and we plan to similarly respond to recently passed and emerging regulations by California counties seeking to better manage the disposal of medicines.

Regarding our battery efforts, I’d like to turn your attention to some of the key California statistics which are included as the last page of my testimony. Over the last several years, we’ve collected well in excess of 1 million pounds per year of batteries in the state, generated through municipalities, retailers, businesses and other organizations. We work, for instance, with every major Bay Area municipal government to collect and recycle the batteries that they generate through their municipal hazardous waste programs.

While I would like to think that we’ve develop an expertise in the reverse logistics necessary to run an efficient program, I believe the area where we are most distinguished is our knowledge, commitment and priority given to educating consumers on the importance of battery recycling and the availability of sites to which they can bring their batteries for recycling.  A great collection infrastructure is worthless if you haven’t inspired the public to use it. You’ll see some examples of our efforts on the attached.

One reason why we were founded was that industry feared dealing with a patchwork of state government regulation and that a substantial voluntary effort like ours would mitigate the need for regulation.  For most of our history, we’ve opposed mandatory extended producer responsibility laws  for batteries, challenging whether it was necessary given the success of our efforts.  But our attitude has fundamentally changes.  I’d like to tell you why.

Regarding extended producer responsibility (EPR) and batteries, I’d like to focus on three points:

• the long-term viability of voluntary stewardship programs;
• avoiding the inevitable pressure to grant “carve-outs” to industries and interests so that stewards operate on a level playing field; and,
• the necessity of having flexible state regulatory approaches for overseeing stewardship

We now favor the right type of mandatory extended producer responsibility (EPR) for batteries. Surprised?  While voluntary programs make work for others, we’ve concluded that voluntary stewardship programs – at least in our case — cannot be financially sustained for the long-term, particularly when the byproduct of recycling does not have a net positive impact on a program’s finances. With the proliferation of batteries in the marketplace, we can no longer ensure that battery stewards participate in a voluntary program. In fact, approximately 30% of the waste batteries we receive in our program are from stewards who DON’T participate in our program. More importantly, as we collect increasingly more batteries, it is extremely difficult to gain acceptance of fee increases by stewards when they know that they are not required to pay.

We seek compulsory product stewardship legislation for one reason: to ensure a level playing field for all obligated stewards and to not financially penalize those stewards who are committed to proper battery recycling. Such mandate allows us the greatest opportunity to optimize collections over the long term.

That said, it has been our experience around the country that when we’ve approached legislatures seeking to be regulated under mandatory EPR legislation, there quickly emerges a line of industries, materials and businesses seeking to have their obligations “carved-out” of any requirements. It has happened in California, Washington, Connecticut, Vermont, Minnesota and essentially every other state that has actively considered legislation in this area. For instance, the toy industry often asserts that they batteries sold with their toys shouldn’t be their responsibility and want their obligation “carved-out” of a bill.  This is in spite of the fact that: 1) the toy battery manufacturer is foreign-based, often from     China, where identification and enforcement by authorities is often impossible; and 2) the toy company is responsible for choosing the vendors it uses and putting the toys with batteries into any particularly marketplace. A bill that formalizes exemptions for industries like toys is – for us — much worse than no bill at all; it would perpetuate “free-riders” (non-payers) in our program whose batteries we’d still inevitably see in our collection stream.

Unfortunately, even in those jurisdictions that have adopted mandatory EPR requirements for consumer batteries, we’ve seen a dearth of effort by states to enforce compliance.  It’s at least somewhat understandable – state enforcement actions are not trivial undertakings and there are likely many, many other more pressing files for states to pursue. So we seek legislation that includes giving stewardship organizations the authority to assure compliance from obligated stewards through a very limited  “private right of action”, where stewardship organizations have the legal power to sue non-participating companies if we incur costs from managing their batteries in our program. This would help to ensure that all stewards participate on a level playing field in the marketplace. The state of Vermont included such language in its recently enacted legislation and we’d encourage you to consider the same.

Finally, some states, including California, tend to be very highly prescriptive in their approach to mandatory EPR legislation and regulation.  For instance, some legislative advocates insists on baseless, unrealistic and unnecessary collection rate requirements, and often provides the state agency with an open check book – charged to stewards’ accounts — to monitor regulate program performance. We’ve also seen some regulators feel compelled to use a heavy hand in inspecting voluntary collection sites like retailers, discouraging their participation. While some programs may require this level of oversight, established programs with proven results run by committed sponsors like ours generally do not.

Instead, we would seek the state to redirect its effort to requiring program participation by obligated producers, investing in consumer education and facilitating the commercial arrangements necessary for a successful program.

In summary, we urge you to enact the right type of mandatory product stewardship legislation for consumer batteries with minimal “carve-outs” that also recognizes the flexibility we need to optimize collection and minimize free-riders. We would love to work with the Committee and the Legislature in finding the right balance on all of these issues.

Thank you for your attention. I’m more than happy to answer any questions.