Global Overview: Legislative & Regulatory Environment Global Overview: Legislative & Regulatory Environment. Scrap Tyre Management in the United States and the EU Michael Blumenthal Marshay, Inc. Scrap Tyre Summit, Auckland, New Zealand, June 2, 2015

Scrap Tyre Management in the USA Pre-1985 no state or Federal legislation or regulations on scrap tyres Accepted management practices were to landfill or stockpile tyres No activity on market development 1985: Minnesota enacts legislation and develops regulations on scrap tyres By 1990, 48 states have enacted legislation & regulations on scrap tyres EPA conducts research on air emissions (TDF) and water quality (1990 – 1992) EPA market report estimates there are 2-3 billion tyres in stockpiles in the USA US Congress takes an interest in scrap tyres: considering fee on tire manufacturing and/or a mandate on the use of rubber modified asphalt New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Scrap Tyre Legislation & Regulation Scrap tyres considered the most significant solid waste/recycling problem in the USA (1990-95) 48 states, 48 sets of regulations (1990) In 2000, 50 sets of regulations In general, consistency in regulating who can transport tyres, where tyres can be taken, storage requirements 44 states had scrap tires fees, but not all were dedicated fees Most state scrap tyre programs focused on market development and stockpile clean up Patchwork of regulations caused non-logical flow of tyres to occur Markets responded to incentives and adapted to regulations Off road (non DOT) tires not regulated New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Understanding US Solid Waste/Recycling Policy The Environmental Protection Agency (EPA) sets minimum standards which states must comply with on air quality, water quality, landfill construction and hazardous waste management States are responsible for developing their own program, using EPA regulations as a minimum but can make their regulation more stringent that EPA’s minimum standards EPA has no standards or minimum requirements for solid waste management (other than landfill construction) or recycling Development of solid waste & recycling programs are a state issue Overall approach to waste management is command and control Free market conditions apply for all solid waste/recycling industries (as long as they comply with the legislation and regulations) New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Industry Approach to Scrap Tire Management Tyre manufacturers supported a “shared responsibility” model: all who have responsibility must do their part. Tire Manufacturers created Scrap Tire Management Council to assist industry and coordinate efforts (1990) Tire manufacturers, tire retailers, state regulatory agencies, transporters, processors, end users and the public EPA, Federal and state government did not oppose this approach Not everyone agreed or accepted their assumed responsibility US system worked relative well End use markets increased from 11% in 1990 to 55% in 1995 to 92% in 2013 Tires in stockpiles decreased from 1 billion, in 1994 to 70 million (2014) (never were 2-3 billion in piles) Tire dumping probably less than 5% of generation New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Scrap Tyre Management in the EU Each country responsible for creating their own ELT program All EU members developed nationwide ELT program: tyre manufacturers involved 3 general types of programs: Extended producer responsibility; ELT program selects a market; free market All programs have fees, either internalized or fee based Funds generally used for collection and paying end users Not all programs are similar or effective Counties which selected end use markets (Sweden, Finland) are less expensive programs & manage all ELTs New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. EU Scrap Tire Programs Programs with sufficient markets: Germany, Sweden, Denmark, Finland, Belgium, Netherlands Country programs vary: Germany: TDF & recycled products Sweden: TDF Finland: TDA Belgium & Netherlands: Recycled rubber products Denmark: Recycled rubber products & TDF New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. U.S. Scrap Tire Trends 2005 - 2013 New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. U.S. Scrap Tire Disposition 2013 (percent of total tons generated annually) Numbers may not add due to rounding. New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

US Ground Rubber Markets 2009* 2011* 2013* 2014 estimates** 2015 estimates** Sport Fields 520 MM lbs. 277 mm lbs. 225 mm lbs. Asphalt 240 mm lbs. 220 mm lbs. 90 mm lbs. 90-100 mm lbs. Automotive 115 mm lbs. 60 mm lbs. 75 mm lbs. 50 mm lbs. Playground & Mulch 282 mm lbs. 230 mm lbs. 400 mm lbs. 400 mm lbs. 420-440 mm lbs. Molded Extruded 440 mm lbs. 373 mm lbs. 430 mm lbs. 450 mm lbs. 475 mm lbs. Exported 45 mm lbs. 80 mm lbs. 25 mm lbs. Total 1,702 mm lbs. 1,205 mm lbs. 1,300 mm lbs. 1,240 mm lbs. 1,285-1,315 mm lbs. * Source: RMA **Marshay, Inc. New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

U.S. Stockpiled Scrap Tires 1990 - 2011 New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. Scrap Tire Fees Since 1985, 44 states have enacted laws placing a user fee on scrap tires Fees are placed onto tires at: Sale of a new tire (30) Auto registration (4) At wholesaler (3) Fees range from $0.25 to $2.50 for passenger/light truck tires & up to $10 for heavy truck tires No fee on retreaded tires, agricultural, bicycle tires or off-road tires New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. Fee Programs Fees on tires are not a tax When fee accessed at retail level most states allow retailers to keep a percentage Most state programs allow retailers to charge their own fee 4 states do not allow tire retailers to charge any additional fees Fees are not taxed Most state programs send a percentage to state finance agency for their assistance Fees used to fund stockpile abatement (1 billion in 1990: less than 100 million in 2014) Fees are usually fixed termed & need to be legislatively continued New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Uses for Scrap Tire Fees Market Development Research Grants/loans Incentives Stockpile abatement Pile abatement & amnesty days Staffing & Enforcement of scrap tire regulations New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Conclusions on Scrap Tyre Fees Fees on scrap tires made stockpile abatement possible Scrap tire funds were the original growth engine for end use markets States w/o fees or diverted fees have very limited scrap tire programs No state has initiated a fee since late 1990’s (Delaware & Alaska were last 2) Fees are usually continued Tire fees, when used for the scrap tire programs, can be an effective tool New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

Quick History of the Scrap Tire Industry US scrap tyre industry is a function of state legislation & regulations Industry began as a series of small, local companies Companies have grown into large-scale, regional players Industry is driven by government policies End use markets have developed over time: TDF (1979); TDA (1992) ground rubber (1992); terminal blend asphalt (2002) infill (2005); playground cover (2005); warm mix asphalt (2013) Different markets in different regions results in varying economic success for companies 1990 500 companies: 2015: 50 companies New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

What has worked: What has not worked What Hasn’t Worked ? Tire fees used for abatement, market development No fees or Raided fees Development of regulations Variations between state regulations Diversity of end use markets Regional differences State agency involvement Reduced state agency involvement Enforcement of the regulations Not enforcing the regulations State programs that focus on creating demand State programs that pay to process tires Removing institutional obstacles Mandates Free market Subsidies Tyre industry involvement Rejection of information provided by tyre manufacturers New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. Conclusions US scrap tyre management approach is a free-market, command/control system Industry has taken a “shared responsibility” approach Tire manufactures were involved, but not financially (to the industry) States have responsibility for legislation, regulations, fees and enforcement Overall, scrap tyres are one of the most recovered materials in the USA Overall system is not perfect: some serious limitations (off road) Industry continues to evolve The management system used is only as effective as the level of markets obtained New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.

New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc. Contact Information Michael Blumenthal Marshay, Inc. A Scrap Tire Consulting Company marshayinc@gmail.com 845-642-3130 www.scraptireexpert.com New Zealand Scrap Tyre Summit, June 2, 2015 Marshay, Inc.