The recycling company will implement refrigerant recovery management programs at its 10 facilities and pay a civil penalty.

The U.S. Environmental Protection Agency (EPA) and the Department of Justice (DOJ) have announced a settlement with Derichebourg Recycling USA Inc. of Houston that resolves what the EPA says are Clean Air Act violations at 10 scrap metal recycling facilities in Texas and Oklahoma.  

Derichebourg Recycling USA Inc. is the U.S. subsidiary of Paris-based scrap recycling firm Derichebourg S.A.

The federal complaint filed simultaneously with the consent decree alleges that Derichebourg failed to recover refrigerant from appliances and motor vehicle air conditioners before disposal or to verify with the supplier that the refrigerant had been properly recovered prior to delivery. Under the settlement, Derichebourg will prevent the release of ozone-depleting refrigerants and nonexempt substitutes from refrigerant-containing items during their processing and disposal processes, the EPA says. The company also will pay a civil penalty of $442,500.

“Refrigerants that are not captured properly can be damaging to the earth’s ozone layer and are known to increase greenhouse gases, which leads to climate change,” says Acting Assistant Administrator Larry Starfield for the EPA’s Office of Enforcement and Compliance Assurance.

Assistant Attorney General Todd Kim of the DOJ’s Environment and Natural Resources Division says, “To continue protecting stratospheric ozone, we need companies like Derichebourg to comply with the Clean Air Act when recycling appliances and motor vehicles containing harmful refrigerants.”

The settlement also requires Derichebourg to implement a refrigerant recovery management program at its 10 U.S. facilities; provide notice to its suppliers that all refrigerant, if not being recovered by Derichebourg, must be recovered properly from appliances and motor vehicle air conditioners; reject any appliance or vehicle where there is evidence of unlawful refrigerant venting; and provide an educational handout to its customers on compliant handling of refrigerant-containing items. The company also must complete an environmental mitigation project that involves ensuring the destruction of all R-12 refrigerant that Derichebourg collects at its 10 facilities for the duration of the consent decree. R-12 is one of the most destructive ozone-depleting substances and has a global warming potential greater than 10,000 times the power of carbon dioxide, the EPA says.

The consent decree, lodged in the U.S. District Court for the Southern District of Texas, is subject to a 30-day public comment period and final court approval. 

Canada’s Competition Bureau investigated claims regarding the recyclability of Keurig Canada’s single-use coffee pods.

Keurig Canada Inc. has reached an agreement with Canada’s Competition Bureau to resolve concerns over false or misleading environmental claims made to consumers about the recyclability of its single-use Keurig K-Cup pods. These claims are stated on Keurig Canada’s website, social media and on text and logos on the K-Cup pods and packaging.

As part of the settlement, Keurig Canada has agreed to pay a $3 million penalty and donate $800,000 to a Canadian charitable organization focused on environmental causes. The company also intends to change its recyclable claims and the packaging of the K-Cup pods by publishing corrective notices about the recyclability of its product on its website, social media, news media, on its packaging for all new brewing machines and via an email to its subscribers.

According to a news release from the Competition Bureau, the bureau had investigated Keurig Canada’s claims regarding the recyclability of its single-use coffee pods. Based on that investigation, the bureau reports that the company’s claims are false and misleading in areas where they are not accepted for recycling and outside the provinces of British Columbia and Quebec, K-Cup pods are not widely accepted in municipal recycling programs.

The bureau also reports that Keurig Canada’s claims about the steps involved to prepare the pods for recycling are false or misleading in certain municipalities.

“Keurig Canada’s claims give the impression that consumers can prepare the pods for recycling by peeling the lid off and emptying out the coffee grounds, but some local recycling programs require additional steps to recycle the pods,” the bureau states.

Keurig Canada also has agreed to pay $85,000 to cover the costs of the bureau’s investigation.

“Portraying products or services as having more environmental benefits than they truly have is an illegal practice in Canada,” says Matthew Boswell, commissioner of competition for Canada’s Competition Bureau. “False or misleading claims by businesses to promote ‘greener’ products harm consumers who are unable to make informed purchasing decisions, as well as competition and businesses who actually offer products with a lower environmental impact.”

Dismissal of CEO Rafael Suchan and others appears tied to debt load and bankruptcy case of Chiho’s majority shareholder.

The Hong Kong-based parent company of German scrap firm Scholz Group has conducted a major shakeup of its executive staff and board of directors. The set of moves is raising concerns in Europe and beyond about the future of the Scholz network of scrap facilities.

Listings of board members and senior managers on the website of Chiho Environmental Group, parent firm of Scholz, up until about Jan. 7 included former Chiho CEO Rafael Suchan among that staff, but with the parenthetic note “Suspension of duty with effect from 6 December 2021.”

A source indicates to Recycling Today that Suchan and other executive-level employees dismissed from their roles at Chiho and Scholz have been dispatched with no direct conversation or communication with the majority shareholder who appears to have engineered the purge.

The company’s own financial reports, and a LinkedIn statement from Suchan himself, indicate Suchan’s departure likely was not tied to his performance.

Suchan begins that statement by writing, “Yesterday, the most exciting chapter in my professional life yet has come to a close.” A couple of paragraphs later, he comments, “I would like to thank all employees of Chiho Environmental Group, Scholz Recycling and all of our subsidiaries across the globe for the trust, the dedication and the hard work in the last two years. We can proudly claim to have been one of the best teams in the industry. The result which we have achieved is a clear turnaround of the company from the previous few years’ decline. And last year’s achievements can be probably considered to be the best in the history of the company.”

In its first half of 2021 financial interim report, Chiho indicates more than 85 percent of its revenue stemmed from its European Scholz operations. Regarding profitability, Chiho’s European operations netted HK$530 million ($68 million), compared with just HK$4 million ($513,000) in its Asia operations. The report also lists an HK$106 million ($13.6 million) loss attributed to “unallocated” reasons.

In a written statement within that report, Suchan writes in part, “The European operations continue to remain our core business and have performed consistently well. Leveraging our century-old roots in Europe, the group has maintained good relationships with our established local customer base, and the European subsidiary alone continues to represent more than 80 percent of our global operation.”

Yet two different sources have told Recycling Today that Suchan and several other executives were dismissed suddenly and notified indirectly late last year. In addition to Suchan, Chief Trading Officer Tom Bird and China region Chief Operating Officer Daniel Huang reportedly have been dismissed, and Chiho Chief Financial Officer Martin Simon has resigned at least one of his positions, those sources say.

On the Chiho board, along with the dismissal of Suchan, former independent nonexecutive board members Jimmy Loke and Frankie Ko have resigned. Per a Jan. 7 statement posted to the Chiho website, the board now consists of majority shareholder Tu Jianhua; Li Linhui (chairman); Yu Miao; Yao Jietian; and Li Zhiguo, who is described as an independent nonexecutive director from Tu’s home city of Chongqing, China, with a background in ferrous metallurgy.

Sources tell Recycling Today Li Linhui is majority shareholder Tu’s personal legal counsel and Yao is Tu’s brother-in-law. Yu’s biography points to a financial background, and he currently serves as president of USUM Investment Group Ltd., another company controlled by Tu.

On the management front, Suchan, Bird and Huang have thus far been replaced by Yulin Liu, who the sources indicate is majority shareholder Tu’s wife. Also being brought back to Chiho is Henry Qin, who served with Chiho in an executive capacity several years earlier.

Veteran metals trader Michael Lion, who served on the Chiho board of directors in the early 2010s, describes the sudden changes as “really one of the most appalling breaches of corporate governance and common sense that I have ever seen.”

Both Lion and another source, who prefers to remain anonymous, say the sudden moves are tied to a massive debt load and recent bankruptcy case involving Tu’s other holdings, known as the Loncin Group and USUM Investment Group.

The anonymous source says the moves are “all driven by Tu’s financial problems with Loncin and USUM. Such a pity, because Scholz and Chiho performed really well.”

Loncin, on the other hand, is in the midst of a restructuring agreement awaiting final approval from the Chongqing (China) Intermediate Court.

An online posting on China’s Baidu website attributed to the AI Finance and Economics Society puts the Loncin debt load at some 33.6 billion Chinese yuan ($5.27 billion). Another online report indicates the debt is tied to investments in China’s beleaguered property sector. A late December 2021 news item from the Finance.Sina website says “the overdue amount of debts of Loncin Holdings” is 14.5 billion yuan ($2.27 billion), with nearly half that amount already being sought through lawsuits.

Suchan, in his LinkedIn post, writes in part, “Due to the big debt load and without the apparent ability to serve due debt payments, it has become increasingly difficult in the last quarter of 2021 to balance the major shareholder’s interests with the fiduciary duties of a professional management towards the company, minority shareholders, financing partners and other stakeholders. On various occasions, it has become a great challenge for us as a professional management team to operate upholding the interests of the company by adhering to proper corporate governance.”

The future of the Scholz assets in Europe likely will be watched by metals recyclers, with Lion referring to the business unit as “a solid capable company with good staffing, a good commercial reputation and a good network.” The Scholz website currently lists 70 locations.

One possible outcome involves the potential sale of the Scholz assets. Such a move could be structured to raise cash for Tu, but it would leave Chiho with very little left in its own portfolio.

Whether minority investors have a path to challenge the sudden changes enacted by majority shareholder Tu remains a question.

“I am stunned as of yet there is no known investigation on the part of HKEX,” says Lion, referring to the Hong Kong stock exchange, where Chiho stock is listed and currently trading at about 15 cents (U.S.) per share. “When I was part of Chiho, they were rigorous in their requests about all sorts of things,” Lion says of HKEX.

The veteran trader concludes, “This seems to me to be an egregious use of corporate governance tools by Mr. Tu. I hope they have started an investigation. Do the people making these decisions not grasp corporate governance obligations? It is not their own [private] company, but they operate as if it is.”

Toward the end of his LinkedIn post, Suchan comments, “People also asked whether Hong Kong, as the world’s biggest stock market, may have improvement potential with regards to the independent oversight of corporate boards.”

Chiho has not replied to a Recycling Today request for a statement on the reasons for Suchan’s removal from its board of directors.

The money will go toward commercializing waste and recycling initiatives, such as environmental monitoring and ocean plastic cleanup.

The U.S. Environmental Protection Agency (EPA) has awarded $3,599,571 in funding for nine small businesses to develop technologies to protect the environment and public health. Four of the recipients named are working on technologies focused on issues such as per- and polyfluorinated substances (PFAS) destruction, ethylene oxide monitoring and ocean plastics cleanup.

According to a news release from the EPA, the businesses are receiving Phase II funding of up to $400,000 from the EPA’s Small Business Innovation Research (SBIR) program. The companies were previously awarded Phase I contracts of $100,000 to develop environmental technologies and are now receiving Phase II awards to further advance and commercialize the technology. 

“I commend our nation’s small businesses for being at the forefront of addressing these environmental problems,” says Wayne Cascio, acting principal deputy assistant administrator in EPA’s Office of Research and Development. “This funding will allow these small businesses to take the next steps in developing their technologies and bringing them to the marketplace.”

This year’s SBIR Phase II recipients receiving funding for waste and recycling initiatives include:

The remaining five recipients were awarded money for wastewater applications, disinfectant coatings and alternative construction materials.

Gov. Kathy Hochul claims the program will encourage producers to reduce waste, invest in recycling infrastructure.

New York Gov. Kathy Hochul has proposed introducing an extended producer responsibility (EPR) program in an effort to address increasing amounts of recyclable products ending up in state landfills.

In her 2022 State of the State address, Hochel claims the solid waste industry accounts for 12 percent of New York’s greenhouse gas emissions. In addition, she says the state has been recycling less each year since 2021, while seven million tons of paper and packaging waste are produced each year.

Under the proposed EPR program, manufacturers will be responsible for managing their products and packaging at the end of their useful lives—meaning taxpayers wouldn’t pay for recycling anymore.

Hochel also notes that EPR will encourage producers to “reduce waste, invest in recycling infrastructure, make products that are easier to recycle and support a circular economy,” reports News10 ABC. In doing so, this could help struggling municipalities that can’t afford the costs of recycling, she adds.

As of now, only two states have successfully passed EPR legislation. Oregon became the second state to pass a law establishing EPR for packaging Aug. 6, 2021, just behind Maine, which passed similar legislation July 12, 2021.