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Export Regulations The EPR Experiment

By Theodore Fischer
In a 1991 report to the Swedish Ministry of the Environment, Thomas Lindhqvist, an associate professor at Lund University (Lund, Sweden), described a regulatory strategy to achieve “decreased total environmental impact from a product, by making the manufacturer of the product responsible for the entire life-cycle of the product and especially for the take-back, recycling, and final disposal of the product.”

He gave this strategy a name: extended producer responsibility. In his 2000 dissertation on EPR, Lindhqvist suggests that without such policies, a manufacturer will not consider a product’s total life-cycle cost because someone else—the consumer or the government—pays for end-of-life collection, recycling, or disposal. EPR policies can meet three environmental goals, he says: They can ensure the covered end-of-life products are collected, increase their recycling, and create incentives to design products with less environmental impact. He also notes an economic goal: “EPR provides a financing solution for a government wanting to improve the waste management and recycling standards in its country [while] not raising taxes and municipal charges.”

Even before it had a name, the EPR approach to product management existed in the design of some bottle deposit systems and voluntary take-back programs. Laws in North America and Europe have applied EPR principles to packaging, batteries, vehicles, tires, and—more recently—electronics. In 2003 the European Union adopted the Waste Electrical and Electronic Equipment directive to make manufacturers responsible for collecting a defined volume of covered electronic products. The latest iteration of WEEE, enacted in 2012, expanded the scope to nearly all electronic products and changed how each country calculates its recycling and reuse goals.

Advocates for an EPR approach to end-of-life electronics in the United States cite the many problems electronics pose in the waste stream. They can contain hazardous materials such as mercury, lead, and cadmium that require proper management to ensure they don’t harm people or the environment. The design and complexity of electronic gadgets make it difficult and costly to separate materials into commodity streams for recycling or disposal of hazards. The costs of proper processing can outweigh the value of the recyclable commodities, which can make it difficult to earn a profit without charging for the service. Further, electronics is one of the fastest-growing U.S. waste streams. U.S. residents disposed of 3.41 million tons of electronics in 2011, according to the most recent EPA report, of which only 25 percent was recycled. The remaining 75 percent wound up in landfills and incinerators.

EPR in the United States

The EPR approach to end-of-life electronics has taken hold in nearly half of the states. Twentythree states have passed laws that require electronics manufacturers to establish and finance programs to collect and recycle electronic products. Two additional states took different approaches: California charges consumers an advance recovery fee when they purchase electronic devices and uses those fees to fund a system that partially subsidizes the collection and recycling of covered electronic products. Utah requires manufacturers to report their collection and recycling programs available to state residents and educate consumers about available recycling options, but it does not require them to finance collection or recycling programs.

State EPR laws outline the responsibilities of both original equipment manufacturers and the recyclers they hire to meet their obligations. In New York, for example, manufacturers of covered electronic devices must establish free and convenient systems for collecting end-of-life electronics from consumers in every county and municipality with a population of 10,000 or more, pay an annual fee, and file an annual report of their recycling. Manufacturers that don’t meet state-mandated recycling goals must pay a surcharge. In-state recyclers must submit a one-time registration form, file annual reports, pay an annual fee, and comply with certain operating requirements. Wisconsin requires manufacturers of covered devices to collect and recycle—or arrange to collect and recycle—a volume of electronics that’s equal to 80 percent (by weight) of what they sold to Wisconsin households or covered schools or pay a shortfall fee. Recyclers must register and submit semiannual reports, maintain liability insurance coverage, and have a written contingency plan for responding to releases of hazardous substances; also, they cannot use prison labor for electronics processing. Minnesota’s law requires only manufacturers of consumer video display devices—monitors or screens that measure more than 9 inches diagonally—to collect and recycle a wide range of consumer electronics as well as to register and pay an annual fee. Electronics collectors and processors in the state don’t pay a fee but must register and report to the state; processors of video display devices must have $1 million in liability insurance and must not use prison labor to process those items.

Each of the 25 state laws for electronics recycling is different, says Scott Cassel, CEO of the Product Stewardship Institute (Boston), a nonprofit that works with governments, manufacturers, retailers, and other stakeholders. “Some are better, and others perform less well.” He considers the laws in Minnesota, Oregon, Washington, Wisconsin, Maine, and Vermont the strongest because they have produced the highest pounds-per-capita annual collection rates. These laws typically require manufacturers to collect a comprehensive scope of products, meet annual collection targets, make programs convenient for all residents, and provide adequate resources for the state agency to enforce the law. “Other programs are in need of refinement, which may mean an adjustment of the regulation or better implementation,” he says.

Cassel gives PSI’s evaluation of the first two years of New York’s program as an example. The assessment determined that the program saved local governments millions of dollars, increased the number of collection sites 77 percent, and increased the volume of electronics collected. At the same time, however, it concluded the program still lacked sufficient outreach and education about the law statewide, New York City residents had only limited access to convenient collection, and the state environmental agency did not have adequate resources to implement the program.

ISRI expressed its concerns about some state EPR bills when the board of directors issued an EPR policy statement in 2011. The statement asserts that “many of these extended producer responsibility or product stewardship bills are drafted in such a way that ignores the strength, capabilities, and vibrancy of the existing scrap recycling industry in the United States.” While ISRI favors policy that promotes a competitive, market-based recycling system, the association also supports policy that “allows in certain instances to hold producers financially responsible for costs associated with responsibly recycling certain products, such as used electronics equipment.” It also “supports ending producer responsibility and government-imposed fees as soon as practicable.”

When the first state electronics EPR laws were under development, ISRI expressed concerns about some attempts to limit exports, which would have run counter to the federal role in regulating interstate commerce, explains Eric Harris, ISRI’s associate counsel and director of government and international affairs. ISRI also has worked to keep these laws focused on consumer or household electronics, not those from companies, “because that side of the business is working without financial mechanisms or subsidies,” he says. “We’ve also tried to limit the scope of the materials” the laws address “to those that have a negative cost to recover, such as televisions and monitors.”

The Recyclers’ Perspective

State EPR laws primarily concern themselves with the role of electronics manufacturers, less so with the recyclers who actually process the end-of-life products. Some e-scrap processors have a favorable opinion of the EPR laws in their states, despite the added regulatory burden. “Since the law went into effect, it’s bringing more material out, so that’s definitely a plus,” says Philip Fava, president of e-Green Recycling Management, a subsidiary of PK Metals (Coram, N.Y.). “Regulation is good, but, like everything, there’s always some issues.” For his company, the main challenge was obtaining R2/RIOS™ certification. The New York law does not require certification, but “the customers—the [original equipment manufacturers]—require it,” he says. Otherwise, “they won’t even deal with you.” Implementing a management system that tracks the company’s performance on quality, environmental, and health and safety measures—and then getting that system certified—“can take a year to 18 months,” Fava says. “But it’s worth it—100 percent” because certification improves the industry’s image as well as a company’s image. “Now, when you sit down with a government agency or a major corporation, you have these certifications and it raises us to a more professional level,” he says. “People in the recycling business used to be viewed as mom-and-pop and Sanford and Son—and some people still view us that way. But we’ve come a long way from there.”

Todd Gibson, vice president of marketing at Vintage Tech Recyclers (Romeoville, Ill.), also is relatively bullish on EPR. “I’d be the first one to tell you that not every law is perfect, but … there [have] been some fantastic gains” in EPR states, he says. “We have created hundreds of jobs with the help of the EPR laws and the OEMs that we represent across the country, and we’ve been able to expand our business in part due to the new EPR take-back programs [in which] we have been fortunate to participate.”

Vintage Tech and other recyclers must manage the “unique complexities of each state’s take-back law,” says Gibson, whose company has processing facilities at its headquarters and in Plainfield, Ill.; Philadelphia; Canton, Mich.; Riverside, Mo.; and Rancho Cucamonga, Calif. “Every state has its own unique description” of a covered electronic device, not to mention its own name for that category of devices, he explains, with acronyms that include EED, VDD, and CEE. “Every state defines different forms of reporting and even which entity involved is responsible for the reporting.” For tracking, “some states have 17 categories of accepted devices; some have three,” he says. His company’s facilities track data according to company policy, “then we have to break the data down to [the requirements of] the states that our sites service.” Each state has “hot-button items” it wants to see in a recycling plan, he adds, from permanent collection sites to collectionevent notification to mail-back programs and more. “Those few items, in our o p i n i o n , a r e t h e largest complexities f o r a n e -wa s t e recycler operating across multiple state programs.”

Some of these states have landfill b a n s a n d o t h e r s don’t; Vintage Tech has experience with both environments. “In states that have a landfill ban, you see a higher influx of materials coming in as consumers and businesses cannot use old, traditional disposal methods,” Gibson says. At the same time, however, in these states, “we will receive a disproportionately high volume of [cathode-ray-tube] monitors and televisions. We also will see more of the mixed electronics not covered under the typical state laws.”

In states with no landfill ban, Gibson says, “it leaves open to interpretation what is the responsible path, socially and financially, for the residents and businesses. … E-waste doesn’t necessarily end up in the recycling stream.” These states typically have lower recycling rates per capita than states with landfill bans, he adds, but he points out that “each state has its own challenges … from infrastructure and even the political environment in the state,” which affect its decision. Thus, Vintage Tech does not take a position on the subject of landfill bans.

Some recyclers say state EPR laws have been beneficial, but they still don’t like them. EPR “has created some opportunities in certain scenarios, and we have customers and suppliers with eligible CEDs,” says Jim Levine, president of Regency Technologies (Twinsburg, Ohio). Even so, “I am not a proponent of the programs in general,” he says, because they have “created a lot of artificial economic factors in the marketplace that probably shouldn’t be there.” Levine gives this hypothetical example: A state requires an original equipment manufacturer to collect a million pounds of CEDs a year. When the recycler that was contracted by the OEM to collect the material fulfills the contract in three months, the OEM “turns off the spigot” and refuses to subsidize any more collection or processing. The recycler can no longer afford to process negative-value materials for free, so for the rest of the year it charges a fee to accept items such as CRTs. “It can create a negative perception in the consumer marketplace toward the recycler,” Levine says, “because the recycler is the face of the program producers financially responsible for costs associated with responsibly recycling certain products, such as used electronics equipment.” It also “supports ending producer responsibility and government-imposed fees as soon as practicable.”

When the first state electronics EPR laws were under development, ISRI expressed concerns about some attempts to limit exports, which would have run counter to the federal role in regulating interstate commerce, explains Eric Harris, ISRI’s associate counsel and director of government and international affairs. ISRI also has worked to keep these laws focused on consumer or household electronics, not those from companies, “because that side of the business is working without financial mechanisms or subsidies,” he says. “We’ve also tried to limit the scope of the materials” the laws address “to those that have a negative cost to recover, such as televisions and monitors.”

The Recyclers’ Perspective

State EPR laws primarily concern themselves with the role of electronics manufacturers, less so with the recyclers who actually process the end-of-life products. Some e-scrap processors have a favorable opinion of the EPR laws in their states, despite the added regulatory burden. “Since the law went into effect, it’s bringing more material out, so that’s definitely a plus,” says Philip Fava, president of e-Green Recycling Management, a subsidiary of PK Metals (Coram, N.Y.). “Regulation is good, but, like everything, there’s always some issues.” For his company, the main challenge was obtaining R2/RIOS™ certification. The New York law does not require certification, but “the customers—the [original equipment manufacturers]—require it,” he says. Otherwise, “they won’t even deal with you.” Implementing a management system that tracks the company’s performance on quality, environmental, and health and safety measures—and then getting that system certified—“can take a year to 18 months,” Fava says. “But it’s worth it—100 percent” because certification improves the industry’s image as well as a company’s image. “Now, when you sit down with a government agency or a major corporation, you have these certifications and it raises us to a more professional level,” he says. “People in the recycling business used to be viewed as mom-and-pop and Sanford and Son—and some people still view us that way. But we’ve come a long way from there.” Todd Gibson, vice president of marketing at Vintage Tech Recyclers (Romeoville, Ill.), also is relatively bullish on EPR. “I’d be the first one to tell you that not every law is perfect, but … there [have] been some fantastic gains” in EPR states, he says. “We have created hundreds of jobs with the help of the EPR laws and the OEMs that we represent across the country, and we’ve been able to expand our business in part due to the new EPR take-back programs [in which] we have been fortunate to participate.”

Vintage Tech and other recyclers must manage the “unique complexities of each state’s take-back law,” says Gibson, whose company has processing facilities at its headquarters and in Plainfield, Ill.; Philadelphia; Canton, Mich.; Riverside, Mo.; and Rancho Cucamonga, Calif. “Every state has its own unique description” of a covered electronic device, not to mention its own name for that category of devices, he explains, with acronyms that include EED, VDD, and CEE. “Every state defines different forms of reporting and even which who one day is collecting a CRT monitor for free, or maybe even paying for the material, and now says, ‘I have to charge to process the same material.’”

He believes market forces that affect supply and demand—without state interference—would lead to better e-scrap c o l l e c t i o n a n d processing. There mi g h t b e “ g o o d intent up front, but p e o p l e [ a r e ] n o t necessarily thinking about the unintended consequences that s ome t ime s c ome along” with these laws, he says. He does support landfill bans or other laws that prevent the dumping of CRT glass in the United States or “anywhere in the world,” he says, but “the EPR programs do not accomplish that goal, in my opinion.” Still others agree with Cassel that state EPR l aws c o u l d use some tweaking. Willie Cade, CEO of PC Rebuilders & Recyclers (Chicago), holds up the Illinois law, for which he advocated, as a good example of how to create a system with incentives for reuse. In that state, “if an item is collected and it’s reused … then you count it for twice as many pounds,” Cade says. “That obviously promotes reuse, which is a better environmental outcome.” No other state laws have that provision, he says.

Harris agrees that EPR laws seem to have a positive effect on recycling volumes, pointing out that volumes in those states continued to increase during the recession. But ISRI members have expressed concerns about certain aspects of state EPR programs, he says, such as inaccurate reporting of collection and recycling, inconsistent enforcement of certain provisions, and underpayment: To get recycling contracts with manufacturers, companies are underbidding their competitors, and the payments “are not reflecting the true cost of recovering the more problematic materials, such as the [CRT] glass.”

Also, in more general terms, Harris says, members worry about how giving manufacturers control over the supply of used household electronics means “fewer and fewer recyclers have the opportunity to win contracts” to process that material. As a result, he says, many companies are choosing to focus on recycling electronics from the business sector rather than household streams.

States of Satisfaction

Program directors in states that have passed electronics EPR laws seem, for the most part, pleased with the results, but they also see how the laws could be improved. In Minnesota, “from a purely weight-based perspective—and from an environmental perspective in terms of the amount of material collected—it’s been stunning,” says Garth Hickle, product stewardship team leader for the Minnesota Pollution Control Agency (Duluth, Minn.). “We’ve had a dramatic increase in the amount of material that has been collected and recycled [since the law was enacted]—we’ve averaged a little over 6 pounds per capita each year of the program.” He says the law benefits the state’s 55 registered electronics recyclers, too. Subsequently, “several recyclers have expanded operations or sited new facilities in the state,” he says. On his wish list, however, are an increase in the scope of products the law addresses and additional collection facilities in rural areas.

Maryland has made some changes to the electronics EPR law it enacted in 2005, which requires manufacturers to establish take-back programs for the CEDs they produce and meet certain goals or pay a higher annual registration fee. (Maryland imposes no requirements on recyclers.) “Several [Consumer Electronics Association] members who were very small manufacturers were concerned about the cost of the initial registration, which was $10,000 for everybody, no matter [the company’s] size or how many items it sold in Maryland,” says Hilary Miller, who manages the waste diversion and utilization program at the Maryland Department of the Environment (Baltimore). “We worked with CEA to get the registration fees adjusted based on [a company’s] sales in Maryland. Quite a number of small manufacturers that we could not get to register under the old law have now registered, so that’s a good thing.” Maryland also expanded the law to cover televisions in addition to computers and monitors.

Will the EPR trend take hold in the other half of the country? Cassel says about a half-dozen states, including Massachusetts and Nebraska, are introducing similar laws, but the rush to legislate a solution to the end-of-life electronics problem has slowed. Many of the remaining states—most of them in the West and South—have no legislative proposals on the books, “because they prefer a voluntary approach,” he says. “Even if industry is supportive, it takes an awful lot to get any legislation passed” in such states. Cade agrees that the trend to pass new electronics EPR laws has already peaked. “If you look at the number of states that have added legislation over the last couple of years, it’s been pretty much nil,” he says. “There’s been some additions, or tweaking of existing bills, but I don’t think there’s going to be a whole lot of change in the next three years.” Harris points out that “most of the U.S. population centers are covered by existing laws,” which creates less motivation for the development of laws in the remaining states.

Sources say a coherent national electronics EPR law is unlikely in today’s Congress, but more uniform state legislation outlining the roles of manufacturers, recyclers, and government could be in the cards. “As stakeholders, we need to come together to develop a good national model that can be adjusted slightly based on unique state characteristics, so that there are not the 25 different laws in 25 different states, which we have now,” says PSI’s Cassel. “It’s very inefficient, it creates confusion and unnecessary costs, so we would like to see these programs harmonized. My hope is that in a few years it will happen.”

Harmonization is not necessarily what Harris sees ahead, however. He refers back to ISRI’s policy statement, which supports ending producer responsibility and government-imposed fees “as soon as practicable.” What circumstances would make that possible? A significant reduction in the CRT glass supply, Harris says, as it’s the material that’s most costly and difficult for recyclers to manage. The supply seems to be tapering off, though people have been saying CRTs will be gone “in five years for 10 years now,” he says.

“ISRI has said it will support these mechanisms until the market can sustain itself,” Harris says. “Many in the electronics sector are now starting to ask… Is that time now?”

Theodore Fischer is a writer based in Silver Spring, MD. This article originally appeared in the November/December 2013 issue of Scrap magazine (www.scrap. org). Reprinted with permission.

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