(3) There must be a governmental environmental infrastructure with the authority and capability to regulate the recycling activity and to enforce the regulations. We recognize that metals are frequently toxic in some forms and metallurgical processes are capable of causing environmental damage. The potential for harm to the environment and public health is regulated in the US. through a panoply of laws. However, this is not intended to impose identical restrictions on operations in other countries.

(4) Recyclers must register with their Competent Authorities and maintain a status of compliance with their national environmental laws.

(5) Under the oversight of its Competent Authority, and in accordance with its laws, a recycler must comply, at a minimum consistent with environmentally_sound management, with national requirements for storage, process wastewater releases, and process air emissions.

(6) A recycler must properly manage process residues. These residues may be a feedstock for another such procedure to extract still another component. On the other hand, a process residue may be of no value and, therefore, appropriately classified as waste. A process residue may be benign or it may be hazardous. This requirement does not dictate a specific management procedure but does require that process residues be analyzed and managed accordingly. A recycler should be held to the same accountability for the management of its wastes as all other generators. (7) A recycler must create and maintain accurate and timely records. A legitimate recycler must be able to demonstrate through contemporaneous business records the description and quantities of materials received, the processes used, and the description, quantities, and fate of products and residues. Customer and transaction identification for materials received and shipped must be maintained. All records must be available to the competent authority.

(8) At least one product of the process must be returned to commercial use, either as an ultimate product or as a feed material for an industrial process, in a use that does not solely involve application to the land. At least one product must meet commercial specifications for use in commerce as a product or process feed material.

We believe that these eight criteria define environmentally sound management for recycling and reclamation. Hopefully, they will be included in the international criteria to be established. We are confident they will be consistent with whatever criteria the parties to the Basel Convention will establish. The criteria can be included in U.S. implementation legislation and/or subsequent regulations as items to be assured of in bilateral agreements with receiving countries.

An important, but too often overlooked aspect of environmentally sound management is the need for all parties to agree to national treatment. Without this, the requirements of the Convention may have no meaning.

DISCUSSION OF CONGRESSIONAL BILLS PENDING

In accord with the Subcommittee's request, we are pleased to discuss the bills now pending in Congress for the implementation of the Basel Convention.

H.R. 2580: This bill would prohibit the export and import of "any solid waste." Given the definitions of solid waste in the Basel Convention, and in the OECD Decision of May 27, 1988 (to which the U.S. is a party), the approach in H.R. 2580 would impose economically inefficient disposal on industries now exporting to Canada, would similarly affect Canadian industries exporting to the U.S., and would be contrary to the Canada-U.S. Free Trade Agreement. This bill would cease as much as $7 billion in trade (Table 3) and divert as much as 19 million tons of presently recycled materials to disposal (Table 2). H.R. 2580 does not recognize the realities of a world economy and its concomitant benefits to the U.S. economy and employment. H.R. 2358: This bill excludes application to waste paper, glass cullet, metal, or plastic (and other materials as the Administrator may exempt upon application) for recycling, but in no other way recognizes recycling or reclamation. Thus, the bill does not address the needs of the country in maintaining trade in secondary materials.

H.R. 2358 would require that solid waste being exported "will be transported, treated, stored, and disposed of in a manner which is protective of human health and the environment and which is no less strict than that which would be required by this Act if the solid waste were managed in the United States." [Emphasis added.] The bill then goes on to prescribe specific requirements for disposal equivalent to U.S. law and regulation. In this section, 12003(1)(2)(A), these prescriptions must be "equivalent to those required under this Act" (RCRA). Thus, there are two requirements: "no less strict than" and "equivalent." In short, this bill would require receiving countries to adopt RCRA.

The bill is an extraterritorial intrusion on the sovereignty of other nations. Although the disposal provisions would apply right now only to Canada, it is still an intrusion. Implicitly, this bill would impose a ban on waste exports for disposal. Presumably, because the bill does not address exports for recycling (except the few materials named) and reclamation, it would also be a ban on trade in many secondary materials. As such, the bill suffers from the same weaknesses as H.R. 2580.

S. 1082: This bill imposes controls on the transboundary movement of solid wastes for disposal and recycling. It is more comprehensive than the other two bills and more strict than required by the Basel Convention. S. 1082 defines "additional waste" broadly, perhaps more so than required by the Convention. It excludes certain nonhazardous materials for recycling, even though some of these are not now traded. Other wastes that are excluded are also excluded in the Convention because they are controlled by other international agreements.

Although the bill excludes trade covered by existing bilateral agreements, it is important to point out that the two agreements in force (with Canada and Mexico) have a finite term and can be renegotiated at any time.

A strength of the bill is the requirement of a bilateral agreement before there can be any trade in wastes for disposal or recycling. The provision of Sec. 12003(b)(B)(i) for environmentally sound management is consistent with the Convention. However, as noted below, we suggest this section be expanded.

Sec. 12008(a)(2) is key:

“(2) Such regulations shall include provisions applicable to bilateral or regional agreements on environmentally sound recycling of hazardous and additional waste. In promulgating such provisions, the President shall take into account the need to promote environmentally sound recycling of hazardous and additional waste and the importance of international trade in recyclable materials."

This section is one of the strengths of the bill because it is part of a sound approach to maintaining U.S. trade in secondary materials. Another strength is the requirement for a bilateral agreement for any trade in wastes. The need to have a bilateral agreement, hence the need to petition the State Department to negotiate one if not in place, is insurance beyond the requirements of the Convention that wastes will not be sent to a country, which in the judgement of the U.S. government, is not prepared to manage it in a sound fashion. As an example of this benefit, the OECD is presently developing a multilateral agreement for a notification and classification system for wastes destined for recovery operations. The latest drafts show that for all intents and purposes, hazardous wastes for disposal will not be exported or imported.

A weakness of S. 1082 is that there is no guidance as to what "environmentally sound management" may mean. On the one hand, the Convention requires this be defined by the Contracting Parties at their first meeting. On the other, the U.S. may wish to impose stricter criteria in the bilateral agreements. One way of doing this would be the same as in H.R. 2358, using terms like "as strict as" or "equivalent to." This approach we reject for the reasons stated earlier.

Another way legislation can give guidance as to the meaning of "environmentally sound management" would be to include the criteria for environmentally sound management for recycling and reclamation discussed above. Similar criteria can be written for disposal. In the latter case, we urge that this be in conjunction with Canadian authorities so that the criteria reflect the reality of Canada's strict management system for hazardous wastes.

S. 1082 should be amended to require national treatment in all bilateral agreements and that notification and shipments shall be within the uniform international customs system.

RESPONSES TO THE SUBCOMMITTEE'S QUESTIONS

The Subcommittee, in their letter of invitation to testify, posed six questions. We are pleased to respond.

1. Should the United States export hazardous and other wastes if the receiving_country does not provide protection to human health and the environmental substantially equivalent to or as strict as the protection provided under the laws of the United States?

We believe that any requirement of "substantially equivalent" is subject to such wide interpretation that virtually all determinations of "substantially equivalent" will result in litigation. The likely result is that "substantially equivalent" becomes RCRA itself. For all the reasons explained in regard to H.R. 2358, "as strict as" is not a useful approach. We see no basis for imposing American value judgements and

domestic legislation on other countries, many of whom have other forms of government structures for regulation of waste management. An argument can be made that in some engineering aspects, controlled landfilling in some other countries is superior to ours. In all likelihood, other countries would reject attempts to impose U.S. law and regulation, and end their trade with us.

2. How should the language in S. 1082 that prohibits the export of waste if the waste will not be managed in an environmentally sound manner" be interpreted? The interpretation should be straightforward after the parties to the Convention establish the criteria. No doubt, the international consensus of appropriate criteria will be more encompassing than anything the U.S. can come up with unilaterally. When the parties certify they are in compliance, it will be under the scrutiny of all other parties and the Secretariat. The requirement that the U.S. have a bilateral agreement before trade in wastes is an opportunity to review national laws and the Basel criteria against U.S. criteria.

3. Should the implementing legislation require a bilateral agreement with the importing country in addition to the requirements imposed under the Basel Convention?

As stated earlier, this requirement is a strength of S. 1082 as an additional check to provide for sound environmental management. Also, it places the U.S. in a leadership position by making our implementation stricter than required by the Convention.

4. Does the Basel Convention provide necessary and appropriate exclusions for materials exported for recycling?

Regarding the Convention itself, the point is moot because the Convention is already written. As discussed above, the Convention does address recycling. Each individual party can decide that substances or objects destined for recycling or reclamation are not wastes, but rather articles of commerce. Within the Convention, U.S. bilateral agreements can go further, as provided for in S. 1082. Again we point out the excellent progress being made within the OECD for notification and classification of wastes destined for recovery operations, where the U.S. is a participant. The OECD framework may well become the model for the entire Convention. Achieving this should be an objective of U.S. policy, which would assure the necessary management of wastes for recycling and reclamation—not just exclusions.

5. What impact would legislation implementing the Basel Convention have on businesses in the United States?

The answer to this question depends on how the Convention is implemented. If S. 1082 is enacted (as is or with the modifications proposed here), and with the requirement that bilateral agreements assure national treatment, the effect on business will be positive. Economically and environmentally sound trade with Canada for disposal will continue. Similarly, the huge trade in materials for recycling and reclamation will continue. This is the optimistic scenario.

Pessimistically, if either of the two House bills discussed here were passed, trade would stop. Conceivably, even the trade with Canada for disposal would terminate. Industries' costs would escalate, reclaimable materials would accumulate as wastes, and U.S. employment would decrease. Similar effects will occur if the United States does not ratify and implement the Convention soon. If 20 parties ratify the Convention, and the United States is not among them, then they must cease trade with us unless we mutually go through a lengthy negotiation and establish bilateral agreements.

We have been informed that at least two companies (perhaps no more) are campaigning that the United States not ratify the Basel Convention, contrary to the President's commitment to do so. On the surface, their argument is for the prohibition of the export of hazardous materials. However, they seek to keep one commodity, lead-acid storage batteries, in the U.S. as a means of increasing the domestic supply of secondary lead and driving down the price. Supplies could also exceed domestic smelting capacity, hence the batteries would accumulate as waste. Their protectionist arguments are without substance, but illustrate a possible effect if the Convention is not ratified and implemented.

6. In the Chamber's opinion, what would be the ideal waste export scheme for the United States to implement?

The Chamber supports S. 1082, especially as modified by the suggestions made here. Further, the ideal system would include a classification and notification scheme of the sort seemingly being developed by OECD. S. 1082 would permit inclusion of such a scheme by regulation. This bill, and a regime similar to what is evolv

ing in OECD, would provide strong controls on imports and exports, would protect the health and environment of countries, would be consistent with our international obligations under the Basel Convention, and would be consistent with the objectives of RCRA.

CONCLUSIONS

The Basel Convention defines wastes more broadly than under common usage; both disposal and recycling are included. This must be kept in mind when examining statistics of "waste" exports and when drafting implementing legislation.

Ratification and implementation of the Basel agreement will permit the small U.S.-Canadian trade in wastes for disposal to continue beyond the term of the present bilateral agreement. Ratification and implementation also will permit the U.S. worldwide trade in secondary materials and its positive balance of $4.8 billion to continue.

The United States has to proceed quickly so that it is among the parties to the Convention and is able to participate in international discussions to define environmentally sound management and to participate in discussions to establish regimes for liability, insurance, and other requirements of the Convention.

If the United States does not ratify promptly, and its trading partners do, U.S. trade in materials for recycling and reclamation with parties to the Convention must cease.

Of the several bills introduced, only S. 1082 provides a framework for continuing trade and the promotion of recycling. Its requirement of bilateral agreements provides stricter controls than required by the Convention and would permit inclusion of notification and waste classification regimes such as now being concluded by the OECD. Objections that S. 1082 does not sufficiently define "environmentally sound management" are easily overcome by stipulating management criteria to be included in the bilateral agreements. The framework anticipates the forthcoming international criteria for environmentally sound management required by the Basel Convention. S. 1082 also should be modified to require that all bilateral agreements insist upon national treatment for trade in wastes and that existing international uniform customs practices be followed.

We appreciate the opportunity to share our views with the Subcommittee and offer whatever assistance we may render for the ratification and implementation of the Basel Convention along the lines discussed in this testimony.

PREPARED STATEMENT OF SWEP DAVIS

Mr. Chairman, members of the Environmental Protection Subcommittee, my name is Swep Davis and I am President and Chief Executive Officer of Concord Resources Group, Inc. I would like to thank you for the opportunity to testify this morning on legislation regarding the export of hazardous wastes, and in particular on S. 1082, which seeks to implement the Basel Convention.

Having served at the EPA from 1972 through 1980, where, among other activities, I coordinated the final year of the Administration's efforts to enact CERCLA (the Superfund law), I appreciate the complexities of environmental policy making. And as a U.S. delegate to the Organization of Economic Cooperation and Development (OECD), where I was chairman of a committee on the cost of industrial pollution control, I gained a first-hand insight to the added complexities of protecting the environment in an international context. I have tried to draw on those experiences in preparing my testimony.

Before responding to the specific questions that the Committee has posed about implementation of the Basel Convention, I would like to describe our company's waste treatment operations in the U.S. and Canada. Concord Resources Group was formed in April 1989 with offices in Pittsburgh and Princeton. We are a joint venture between Consolidated Rail Corporation (Conrail) and OHM Corporation. With revenues in excess of $3.3 billion, Conrail is the largest freight transportation company in the northeast. OHM is one of the most experienced and reputable environmental services companies in the United States and Canada, specializing in the onsite remediation of hazardous waste.

Building on the solid financial and technical foundation of our venture partners, we at Concord set out in 1989 to create a new company based on high quality environmentally protective waste treatment and disposal facilities. Earlier this year Concord acquired Stablex Canada, a hazardous waste management company in Blainville, Quebec, which operates one of the most environmentally sound treatment and disposal facilities in North America. Just one week ago we completed the purchase of Highway 36 Land Development Company, a newly permitted hazardous waste treatment and disposal facility in Colorado. A February 1987 EPA press release described the Highway 36 site as "the best designed land disposal site in the Nation." In addition, Concord is developing a fully integrated, state-of-the-art hazardous waste management facility in western Pennsylvania. Each of these facilities underscores our commitment to sound environmental protection.

Because of its location in southern Quebec, Stablex receives significant amounts of hazardous waste for treatment and disposal from New England generators. Thus Concord has a vital interest in the legislation being discussed here today.

As you know, the 1989 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal evolved from the United Nations Environment Programme, with the primary goal of protecting underdeveloped nations from becoming dumping grounds for the waste of wealthier industrialized countries. We at Concord strongly support this goal and in particular any legislation designed to halt the export of waste to countries who lack the technology and resources to provide sound management of that waste.

We believe S. 1082 is the right vehicle for meeting the overall goal of the Basel Convention. Unfortunately, while the more restrictive waste export bills, H.R.2580 and H.R.2358, also accomplish this goal, they have the needlessly detrimental effect of disrupting normal and environmentally prudent waste shipment patterns along the 3000-mile U.S./Canadian border.

At the outset I wish to stress that the movement of hazardous waste between the U.S. and Canada goes both ways, and indeed waste shipments between the two countries are in basic equilibrium. This pattern reflects an important principle of waste management: disposal of waste should occur at the nearest environmentally secure and licensed facility, regardless of political boundaries. The 1986 U.S./ Canada agreement on hazardous waste shipments embodies this principle. And through this agreement the two nations have gained confidence in the soundness of their respective hazardous waste management controls. We thus believe that the U.S. and Canadian governments should continue to work uninterrupted as equal partners in developing sound hazardous waste management policies. This would, moreover, embrace the important objective of cooperative development of compatible technical standards for goods, processes and production methods set forth in Article VI of the U.S./Canada Free Trade Agreement.

In 1990 about 67 percent of all U.S. hazardous waste exports went to Canada or other OECD countries, according to recent EPA data. According to the same data, in