Frank Hurd

By Frank Hurd
Back in February, California assemblyman (now speaker) John Perez introduced carpet stewardship legislation, AB 2398. While created with the utmost of good intentions, the original bill needed modification to be in a form not just for the carpet industry to accept but in a way that created a winning scenario for everyone—consumers, industry and government.

Instead of fighting the legislation, the carpet industry took the approach of engaging Perez and working with him in a proactive manner to remake the legislation into something that would be acceptable to the speaker and the industry.

Six revisions later, the California Legislature passed a version of AB 2398 that not only accomplished speaker Perez’ aims but also achieved widespread support as demonstrated by over 200 letters from environmental groups, recyclers, cities and municipalities across California, and the carpet industry.

The final bill, signed into law on Sept. 30 by Gov. Arnold Schwarzenegger, is a win-win-win for government, industry and consumers.

How could this happen? The process that resulted in the final bill is a superb example of a public/private partnership to find solutions to a vexing problem, in this case carpet going to the landfill.

This concept of working together to find solutions that work for everyone is not really unique for the carpet industry. In 2002, for example, the Carpet America Recovery Effort ( CARE) was formed to find market based-solutions to divert postconsumer carpet from America’s landfills.

AB 2398 is a natural extension of CARE’s mission. It combines a voluntary, market-based approach to landfill diversion and recycling of postconsumer carpet while incentivizing the diversion, recycling and market growth of secondary products made from post-consumer carpet.

Unlike other extended producer responsibility legislation for things such as rechargeable batteries, this legislation does not try to fund the cost of recycling and diversion. Instead, it is designed to incentivize the growth of existing programs.

What are the objectives of this legislation? They are to entice, motivate and encourage the recycling of postconsumer carpet, the diversion of postconsumer carpet from landfills, the recyclability of carpet and, most importantly, the market growth of secondary products made from postconsumer carpet.

The Modesto Bee noted in a Sept. 12 article AB 2398 could annually divert 1.3 million tons of old carpet from California’s landfills, which represents approximately 3% of what consumers dump into landfills each year.

These goals will be accomplished by involving carpet mills, wholesalers, dealers, recyclers and processors of postconsumer carpet, with the California Department of Resources, Recycling and Recovery (CalRecycle) providing oversight. CARE has been designated as the industry stewardship organization charged with implementation of the legislation’s goals. There is a provision allowing individual manufacturers to deal directly with CalRecycle if they so desire.

The bill provides for a 5-cent stewardship fee on every square yard of carpet sold in the state of California. This fee is required by law to be visible and is an after-tax item on all invoices for carpet sold in California, regardless of whether the product was produced in California or shipped in from outside of the state by a manufacturer, wholesaler or retailer, including those who do business solely on the Internet.

This fee must be used to incentivize the growth of the recycling and diversion of postconsumer carpet discarded in California. It is the industry’s responsibility to determine how to best utilize the money in order to grow recycling and diversion programs. The industry will do this by keeping in mind its responsibility to demonstrate to CalRecycle that it is using the funds effectively to achieve continuous, meaningful improvement in the rates of recycling and diversion of postconsumer carpet.

This means the industry will be included in a Stewardship Plan submitted by CARE and approved by CalRecycle with annual reports to the department on what it has accomplished. The plan will also include any recommendations by the industry to adjust the stewardship fee to better accomplish the intent of the legislation.

Timing for implementation also does not follow traditional order. The fee will actually start 90 days before the Stewardship Plan is submitted and 210 days before the plan is required to be approved (In order to be in compliance, the Stewardship Plan must be approved by March 31, 2012).

This actually will allow the industry to start early to find the best ways to implement the program and provides a vehicle to start incentivizing growth while administrative issues are being addressed.

Instead of waiting until April 1, 2012 after approval of a Stewardship Plan to start collecting the fee, and late 2012 to start disbursing funds, the industry will start collecting the fee July 1, 2011 and start disbursing funds no later than the first part of 2012.

CARE, whose mission is to find market-based solutions to the diversion of post-consumer carpet from America’s landfills, has a very busy schedule over the next few months prior to the implementation of AB 2398. Working with carpet industry senior executives, CARE must articulate early in the process for receiving incentive funding, its outreach efforts and the methods for educating retailers and engaging them in a way that will not disrupt their businesses.

CARE must also show how best to manage the funds, ID a third party to ensure compliance with the legislation and, finally, put in place adequate fraud protection controls. If it seems as if there is a great deal to do to make AB 2398 work properly, there is. Consider that California accounts for approximately 10% of all carpet sold in the U.S. Based on this and other data, it is estimated the fee will generate around $5 million per year.

While completing all this will be a daunting task, CARE is up to the challenge. Since its inception, CARE has grown its network of collector/processors from five to 78 all across the U.S. During its eight years of existence, the CARE network has diverted over 1.6 billion pounds of carpet from America’s landfills and this legislation will be the next significant step in growing that number.

Exciting times are ahead and everyone associated with CARE is preparing to tackle the challenges provided by this bill. AB 2398 clearly is unique in its approach to extended producer responsibility, bringing for the first time market-based solutions that engage everyone in the chain from the manufacturer to the consumer.

While California is the first state to enact such legislation, it will not be alone. Other states have already been closely watching and monitoring the bill’s progress. Now they will be examining how it is implemented so we can expect that similar laws will be cropping up around the country in the coming years.

For more on AB 2398 or CARE, visit carpetrecovery.org.

(Editor’s note: As Floor Covering News was going to press with this Green Guide, California voters, passed Prop 26, which could have sweeping impacts on state legislation. As such, CARE released the following: “Prop 26...may have an impact on the implementation of AB 2398 but those consequences are yet unknown. [We] are closely working with California to determine if any modifications to our intended implementation of the law needs to be made. As of now we are assuming we will be able to implement the law as written. If there are changes to be made, [we] will issue press releases outlining any new requirements.”)

Frank Hurd is chairman of the Carpet America Recovery Effort (CARE)