The Hopper | February Edition

Breaking News – Important Tax Bill Just Reintroduced
Build Back Better—A Campaign Slogan and More
A Closer Look at the “Coordinated Effort” to Makes Plastic Producers Pay
Putting a Price on Greenhouse Gas Emissions
Here we Go Again: Break Free from Plastics Part 2
Toxics in Packaging Clearinghouse Completes Update to Its Model Legislation

Breaking News – Important Tax Bill Just Reintroduced

Bipartisan legislation (H.R. 1304) to repeal the research and development (R&D) amortization provision has just been reintroduced in the House of Representatives. The amortization provision, enacted in the 2017 Tax Cut and Jobs Act, is set to go into effect in 2022. PLASTICS has been seeking the repeal of the provision since 2018, and this is the last opportunity for repeal before companies will need to begin amortizing their domestic R&D expenses over a five-year period beginning in the next tax year. The same bill was introduced in the last Congress with lead sponsors Rep. John Larson (D-Conn.) and Rep. Ron Estes (R-Kan.). They have sponsored the legislation this year and are joined by Rep. Jimmy Panetta (D-Calif.), Rep. Suzan DelBene (D-Wash.), Darin LaHood (R-Ill.) and Jodey Arrington (R-Tex.). All are members of the House Committee on Ways and Means. Repeal of R&D amortization remains a top legislative priority for PLASTICS. 

Build Back Better—A Campaign Slogan and More

Suzanne Morgan, Senior Director, Government Affairs & Grassroots Advocacy

Every presidential campaign has a slogan. Long ago, there was “Tippecanoe and Tyler Too,” and “A Chicken in Every Pot.” More recently, there was “Yes We Can” and “Make America Great Again.” Joe Biden’s campaign slogan was “Build Back Better.” From what PLASTICS’ Government Affairs staff is hearing and seeing from the new administration and from congressional Democrats, Build Back Better is more than a campaign slogan—it is the bold economic agenda that will consume Washington for the next four years. After one month of Joe Biden’s presidency, so much of this plan is already coming to light in Executive Orders and in legislation being introduced in Congress.

Here are the four areas or “national challenges” addressed in Build Back Better (BBB):

Made in America—Bring supply chains back to the U.S. from foreign suppliers and create millions of new manufacturing and technology union jobs.

Infrastructure and Climate—Invest in sustainable infrastructure and a “clean energy economy” while addressing environmental injustice and, again, create more union jobs.

Build a Caregiving and Education Workforce—As a result of the coronavirus pandemic, offer incentives for affordable and accessible child and elder care to take the burden from working parents and create new jobs in the healthcare field while freeing up caregivers to join the workforce with opportunities for more union jobs.

Advance Racial Equity—Close the racial wealth gap; invest in Black, Latino and Native American entrepreneurs and communities; advance criminal justice reform and provide affordable housing and education.

PLASTICS’ Government Affairs staff is following the introduction of legislation and regulations from the BBB plan for potential impacts to the plastics industry. We will seek opportunities to promote the plastics industry and will push back on initiatives that could target our member companies, their operations and products.

Future issues of The Hopper will examine proposals originating from the spirit of BBB and what they could mean to the plastics industry. With slim Democratic majorities on both sides of the Capitol, it remains to be seen how bold President Biden’s economic agenda will be if Democrats cannot afford to lose votes in support of his initiatives. Expect the more controversial elements of BBB to be considered this year before the off-year elections in 2022 when all House seats are on the ballot and the voters are watching intently. 2021 will be an interesting and busy year.

For more information, please contact Suzanne Morgan.

A Closer Look at the “Coordinated Effort” to Make Plastic Producers Pay

Shannon Crawford, Director, State Government Affairs

State-level packaging extended producer responsibility (EPR) legislation has been having a moment this February. From a glowing feature in The New York Times to an article in POLITICO just this week, EPR has been making headlines. Despite media fawning over the concept of “making plastic producers pay”, many of these EPR bills are much more nuanced in their approach.

Let’s take a closer look at the widely shared press release from the National Caucus for Environmental Legislators that has garnered all this media attention. It begins, “today state legislators from nine states announced a coordinated effort to hold producers responsible for the end-of-life management of plastic packaging.” As a government affairs professional, I can say that “coordinated effort” is a very generous term in this instance. A quick scan of the bills referenced shows a different picture. Washington’s EPR offering, SB 5022, was amended drastically by its own sponsor in January. It no longer includes any EPR language. Hawaii’s HB 1316 was amended to a study bill in its first hearing. Vermont is unlikely to go forward with EPR this year and the bills referenced for NH do not include EPR provisions. Additionally, despite the press release calling out plastic, almost all these bills are multi-material for the simple fact our waste and recycling system is multi-material. Paper and plastics are hauled away in the same trucks and sorted at the same facilities. Only one of the major bills, California’s SB 54, is plastics-only and this bill is not actually EPR.

This is not to say that we do not have our work cut out for us in the states this year. Many, many bills remain active and a significant threat to our industry, including the New York and California bills. However, significant press coverage is propping up multiple bills that are DOA and their failure will likely be attributed to industry opposition. The truth, however, is that EPR is an incredibly complicated system that will have significant far-reaching implications on businesses, consumers and local governments. The sponsors pushing these bills are finding that legislating these systems brings out opposition from all sides, even groups that are historically in favor of more liberal policies.

PLASTICS’ members have made it clear that our industry has a role to play in the funding of recycling infrastructure. If the systems are fair and equitable with appropriate safeguards along the way, our industry can get on board. It is crucial that any producer-funded system reinvest money into the recycling infrastructure by improving sortation capabilities and developing end markets. Additionally, these EPR systems must allow for a free and open market for materials. PLASTICS remains engaged in all states where EPR bills are active. Below are the latest updates on active EPR bills:

- California – SB 54 remains a placeholder bill without specific language.
- Hawaii – HB 1316 is now an EPR study bill and resides in the House Committee on Consumer Protection and Commerce.
- Maryland – HB 36 was significantly improved by sponsor amendments but remains in committee with no vote scheduled.
- Maine – Language is still not available for LR 1269 and LR 1620.
- New York – SB 1185.A remains on the senate floor after passing out of committee. The bill sponsor still expresses a strong desire to have this legislation included in the senate budget bill. We are working with a broad coalition to determine a more amenable solution.
- Oregon – The broad Department of Environmental Quality EPR bill was heard in committee this week. PLASTICS testified in opposition. Despite department backing, any EPR bill has a massive hill to climb this year and will likely not pass.
- Vermont – No EPR legislation has been introduced.
- Washington – SB 5022 was amended to an EPS ban and recycled content for plastic bottles. This bill is likely to pass this year.

For more information contact Shannon Crawford.

Putting a Price on Greenhouse Gas Emissions

Marie Gargas, Senior Technical Director, Regulatory Affairs

What is the impact of one ton of greenhouse gas (GHG) emissions on the environment and human health, and how do you determine an associated cost? One element of the executive order to tackle the climate crisis (E.O. 13990) reported on last month involves agencies accurately capturing the costs of GHG emissions and factoring them into decision-making. This includes setting values for the social cost of carbon (SCC), social cost of nitrous oxide (SCN) and social cost of methane (SCM), described as “estimates of the monetized damages associated with incremental increases in greenhouse gas emissions.”

The E.O. requires the Interagency Working Group on the Social Cost of Greenhouse Gases (“Working Group”) to reconvene and publish an interim SCC, SCN and SCM within 30 days. The Working Group is to then recommend where these values should be applied in federal government decision-making, budgeting and procurement, with final a SCC, SCN and SCM to be published by January.

Determining a SCC, relating it to any potential carbon tax, or tying values to emissions permits are complicated discussions. The most frequently used SCC value under the Obama administration was around $42 per ton and dropped below $8 under the Trump administration; a working paper released last month made a case for an SCC as high as $125 per ton. Industry groups called last week for opportunities for public and stakeholder input. Separately, an analysis on carbon tax in the context of budget reconciliation was released, looking at incentivizing economy-wide GHG reductions and briefly noting potential implications for the Environmental Protection Agency’s (EPA’s) regulation of GHGs (whose authority to do so under the Clean Air Act was its own challenge).

Meanwhile, there is a steady drumbeat of negative sentiment towards plastics, including GHG emissions during production, that does not always consider environmental benefits or acknowledge where substitutes would result in a larger carbon footprint. Last month, we noted that plastics facilities make up a very small fraction of emissions reported through EPA’s Greenhouse Gas Reporting Program (GHGRP). The entire program captures 85% or more of U.S. GHG emissions, with direct emitters accounting for about half.

For plastic production, GHG emissions decreased by 18.4% between 2011 and 2019. Current emissions represent less than one percent of direct emissions reported to EPA and less than 0.5% of all U.S. GHG emissions. Acknowledging this is but a part of a plastic lifecycle, we can point to an industry trend in decreased energy consumption, significant reductions in power plant emissions upstream, company sustainability goals and other positive factors to consider. In contrast, some critics continue to call for no new virgin plastics facilities to be built for three years, as in the Break Free from Plastic Pollution Act, likely to be reintroduced.

As initiatives on the social cost of carbon and GHG emissions advance, we will see how they may affect relevant regulations, issues like “co-benefits” and facility construction and permitting.

For more information, please contact Marie Gargas.

Here We Go Again: Break Free from Plastics Part 2

John Grant, Director, Government Affairs

As mentioned in the previous edition of The Hopper, Senator Jeff Merkley (D-Ore.) and Representative Alan Lowenthal (D-Calif.) will reintroduce a new version of the Break Free from Plastic Pollution Act this Congress. We now know that they are looking at introduction in March and that the language will be similar to what was proposed last year. As a reminder, Break Free from Plastic Pollution would, among other things, ban many single-use plastics, impose a three-year moratorium on new plastics facilities, impose a national extended producer responsibility program, establish recycled content requirements, and impose a nationwide plastic bag fee. The bill had no Republican sponsors last year. PLASTICS is having conversation with influential leaders and committee members in Congress to describe the significant and harmful impact that they policies would have on our industry.

Additionally, backers of the Break Free from Plastic Pollution Act have publicly urged the new Biden administration to take a series of executive actions to “solve the plastic pollution crisis.” Five hundred and fifty groups released their “Presidential Plastics Action Plan” in December laying out the actions the incoming administrations should take, many of which will be again included in Break Free. For example, the group calls for a similar moratorium on plastics facilities asking for the administration to deny permits for “plastic production facilities, associated infrastructure projects, and exports.” The plan goes on to demand the administration increase regulations on plastics facilities and use the purchasing power of the federal government to stop using single use plastics at federal facilities and locations. At this point, the Biden administration has taken no action on any plastics-specific regulation, but we fully anticipate that they will in the coming months.

Last year the original sponsor of Break Free from Plastics Pollution Act, Senator Tom Udall (D-N.Mex), who has since retired from the Senate, broke up the bill and introduced individual sections to try and get movement within committees but was unsuccessful. This year, however, is different. With control of Congress and the administration solely in Democrat’s hands the likelihood for success using the same strategy of getting individual sections included in other “must pass” legislation has certainly increased. Additionally, with single party control legislators can use a process known as budget reconciliation where they can move large spending bills without some of the usual process hurdles. That could be another avenue where we see this Congress take action on elements of Break Free from Plastic Pollution.

We will continue you to keep you up to date as this or other similar proposals take shape.

For more information, please contact John Grant.

Toxics in Packaging Clearinghouse Completes Update to Its Model Legislation

Brennan Georgianni, Manager, State Government Affairs

This month, the Toxics in Packaging Clearinghouse (TPCH) released the 2021 update to the Model Toxics in Packaging Legislation. This model, first established in 1992, is now enacted in 19 states. Subsequent public discourse led the TPCH to consider updates to its model legislation and begin seeking input from the public in June 2020. What has now been released is new model legislation that states may look to for guidance on how to update their own existing state regulations. The TPCH also released its responses to a number of topics that were addressed in the comments that it received in regard to its proposed draft. PLASTICS, through its Food, Drug and Cosmetic Packaging Materials Committee (FDCPMC), submitted comments to the proposed changes.

If you are unfamiliar with the TPCH, it is the forum for states to share information regarding policies that impact the use of certain chemicals in packaging. The organization was formed to facilitate and harmonize the introduction of such legislation. By developing this model legislation, legislators are free to draw on the information, language and research developed by the forum to pass their own toxics-in-packaging legislation.

The model, as it existed, prohibited the intentional use of cadmium, lead, mercury and hexavalent chromium in any finished package or packaging component and limited the total incidental concentration of these metals. Some of revisions that TPCH proposed were to add a definition of post-consumer recycled material, prohibit the use of PFAS, subject ortho-phthalates to a detection limit, remove certain exemptions, add criteria for new toxic chemicals and add process options to phase out new toxic chemicals.

PLASTICS took the opportunity to provide comments on these revisions. Our remarks addressed our concerns that, 1) the definition of PFAS is overly broad, 2) a PFAS impurity threshold is needed, 3) ortho-phthalates may be safely used in specific applications, 4) the definition of “package” is overly broad, 5) a correction to some inconsistent language regarding intentional introduction, 6) the acceptance of sound science and risk assessment principles when identifying a packaging chemical of high concern.

The publication of the revised model legislation includes several helpful resources. We encourage our member companies that manufacture packaging materials to review the TPCH update. Furthermore, PLASTICS in addition to the FDCPMC, will continue to monitor the impact that this model will have on existing state packaging regulations and those to come.

Resources:

- 2021 Toxics in Packaging Clearinghouse Model Legislation
- Comments submitted
- TPCH Response to comments
- Call for comments, background materials and draft update

Contact Brennan Georgianni if you have any questions.