HB1226: A Legislative Victory for Recycling in Indiana

Impact of HB1226

As of March 4, 2022, House Bill 1226 passed (78 to 8) via full vote in the Indiana House and heads to the Governor’s desk for signature! Circular Indiana was excited to play a key role in drafting portions of this bill and supporting it during the 2022 Indiana legislative session. Our efforts helped unlock an additional $4M for recycling infrastructure investments in Marion County for the upcoming year and raised awareness in the legislature of the needs and opportunities for investing in the circular economy in Indiana.

Note that this overview is limited to the sections of HB1226 related to the Central Indiana Waste Diversion Pilot Project; it does not cover the other parts of the bill related to the definition of solid waste, adoption of federal rules by the Environmental Rules Board, or the regulation of coal combustion residuals

Why Invest in Recycling in Indiana?

Indiana is a manufacturing state, and many of Indiana’s manufacturers rely on recycled commodity materials as inputs into their processes for making new goods. Indiana’s recycling rate lags behind most other states at 20%; the national average is 35%. As a result, many of Indiana’s manufacturers struggle to procure enough recycled materials locally to supply their needs and therefore, must pay to import them from other states and as far away as Canada. Meanwhile, the recyclable materials from Indiana’s households and businesses go to landfills and incinerators. This is more than simply frustrating; it’s wasteful, costly, and, lucky for us, fixable.

Our efforts helped unlock an additional $4M for recycling infrastructure investments.

As a matter of public policy, Indiana has declared that recycling our materials is preferred to sending them a landfill or incinerator. The state even has a goal of getting our recycling rate to 50%. Although there is no timeline for achieving this goal, the state has taken some modest steps to support it. One such step is the establishment of the Recycling Promotion Assistance Fund, which dedicates a small portion of landfill tipping fees collected by final disposal facilities in the state to the investment in recycling infrastructure through a grant program. The Indiana Department of Environmental Management (IDEM) has oversight over this fund (and the grant program created to administer the fund) via the Recycling Market Development Program (RMDP).

To understand the need for investment in Indiana’s recycling infrastructure, how we compare to similar states, and the opportunity for investment, take these facts into consideration:

1. Neighboring states are outcompeting us when it comes to investing in critical infrastructure to support the recycling industry, which generates $1.7B annually in Indiana. The State of Michigan spends approximately $15M per year in a similar grant program for the same general purpose, according to Michigan’s Department of Environment, Great Lakes, and Energy or EGLE.

2. Currently, the state’s biannual budget directs IDEM to spend $2M/year for the RMDP grants to support recycling infrastructure projects. Although this allocation increased from $1M/year to $2M/year in recent years, it is insufficient to support the investment needs of the state. In 2021, applicants to this fund requested a total of $4.7M to create a total investment of $22.9M in recycling infrastructure projects, according to IDEM.

3. The average annual fund balance of Indiana’s Recycling Promotion Assistance Fund was $13.4 M between FY 2018 and FY 2021, according to the Fiscal Impact Statement for HB1226. This means that the fund has accumulated a significant surplus and is currently not being fully utilized to benefit our recycling industry and support our manufacturing sector.

All these factors motivated the idea of a pilot project that would quickly realize an increase in the spending of these funds in a non-budget legislative session.

Circular Indiana’s Role in HB1226

During our Full Circle event in the fall of 2021, we heard a common refrain from several companies engaged in the recycling supply chain in Indiana: we need help capturing more recyclable materials from Hoosiers to supply our manufacturing needs. Manufacturers are reliant upon several other actors ahead of them in the process to capture and utilize recyclable materials. From material processors, materials recovery facilities (the sorters of your recyclables), recycling service providers (the company who picks up your recyclables), municipalities, retailers, to individual households and event venues, the recovery chain has many links. Beyond the interdependence of all these actors functioning effectively, several economic and policy factors weigh heavily on the system and can create bottlenecks and even disincentives, thwarting the good actions and intentions of everyone else upstream or downstream.

This is where the role of policy and strategic investment can make a huge difference in supporting Indiana’s manufacturers, achieving the state’s recycling goal, and realizing the public policy ideal of maintaining the value of our materials for the benefit of our state. And it’s where Circular Indiana plays a key role in collaborating with our members to understand their needs, the barriers that exist, and the opportunities beyond the status quo. Through the synthesis of all this information and partnerships with key organizations, we champion solutions to support Indiana’s recycling industry and strengthen the circular economy.

Circular Indiana elevated these issues with state legislators and helped author HB1226.

Our goal was to demonstrate the importance of strategic investment in recycling infrastructure, increase the amount of funds spent, leverage the state’s investment with increased private investment in infrastructure, and ultimately, help the state get closer to achieving its 50% recycling goal.

The focus on central Indiana was motivated by the recycling rate in the City of Indianapolis. The largest city in the state, Indianapolis’ 7% recycling rate lags far behind the state and the national average, as mentioned above. Through Circular Indiana’s leadership of the Indianapolis Circular Economy Initiative, we have raised awareness about the opportunity in Indianapolis and elevated the City of Indianapolis’ Thrive commitment to achieve a 40% community-wide waste diversion rate by 2030. In between goals and reality lies a need to invest in infrastructure and public education, and HB1226 takes an important first step in that direction.

Throughout our involvement with the bill, we championed the notion that the pilot project should be organization-inclusive and materials-agnostic. We felt it was important to not put barriers around who could apply or what type of material is eligible in the pilot project; the most effective strategy to employ the funds for maximum waste diversion and domestic manufacturing reuse/recycling should receive the investment.

Breaking It Down: The Details of HB1226

The following summary utilizes portions of the aforementioned Fiscal Impact Statement for HB1226.

Sections 1 and 8 of House Enrolled Act 1226 establishes and implements the Central Indiana Waste Diversion Pilot Project for the purposes of determining the most practical and effective means of diverting recyclable materials from waste streams for the purpose of commercial reuses. Here are some key points:

• The original bill included Marion and surrounding counties, but it was amended in the Senate Environmental Affairs Committee to limit the pilot project to Marion County;

• The duration of the pilot project may not exceed two years after the date that the pilot project commences;

• The bill requires the Recycling Market Development Board to consider the type and amount of waste that is proposed to be diverted during the pilot project;

• It requires the board to prioritize applications based on the largest amount of waste diversion potential throughout the pilot project; and

• The board shall not award not more than $4M in total to applicants chosen to participate in the pilot project based on the recommendations of the IDEM.

The legislation also requires IDEM to:

1. develop pilot project application forms;

2. make the forms available on or before July 1, 2022;

3. accept applications through October 1, 2022; and

4. provide recommendations to the Indiana Recycling Market Development Board (board) on or before December 1, 2022.

What Comes Next?

Now that the bill has become law, IDEM staff are tasked with developing the pilot project on a very quick timeline, as noted above. Organizations interested in applying for these funds should pay close attention to the timeline above and start developing potential proposal ideas.

Circular Indiana looks forward to continuing our collaboration with IDEM as the pilot project application process develops and sharing this funding opportunity with our members.

We hope to ensure IDEM has the difficult – but, in a good way - task of selecting the most worthy proposal(s) from among many excellent proposals. We look forward to quickly seeing the impact of this increased investment that will surely benefit Marion County, Central Indiana, and the entire state for years to come. Finally, we continue to work with our members to identify our next state-level policy objective and strategy that advances our mission of strengthening the circular economy in Indiana.

We are grateful to our partners and members who collaborated with us and supported us in this effort. As the only statewide organization working to strengthen the circular economy in Indiana, your support enables us to advance our mission and deliver meaningful impact. If your organization is interested in becoming a Circular Indiana member or sponsor, please contact Circular Indiana Executive Director Allyson Mitchell.