Electronic Trash

When the Washington state Senate passed a bill in February establishing a system for recycling electronics such as computers and televisions, it charted a new course in e-waste regulation. If it becomes law, the bill will require manufacturers selling electronic products in the state to either develop their own e-recycling plans or participate in a state-sponsored recycling program.

The bill has garnered support because it achieves a balance between the interests of companies that prefer to minimize their involvement in recycling processes and those that already have a recycling program in place. At the same time, however, the bill adds yet another novel regulatory approach to an increasingly discordant national e-waste policy landscape.

"The compliance issues are complex, and the field is changing rapidly," says Edward L. Strohbehn Jr., a partner at Bingham McCutcheon. "Companies have a broad array of liabilities under federal, state and local waste-management laws."

This state of uncertainty poses legal and operational challenges for electronics manufacturers, as well as their corporate customers.

Digital Dumping

The average PC today becomes obsolete in about three years. Wireless phones are outdated even sooner. The result is a growing mountain of discarded electronic products. Junked PCs alone contribute 300 million pounds of lead to the waste stream each year.

Given these facts, recycling is the logical and increasingly popular method for managing e-waste. The Resource Conservation and Recovery Act enjoins large-scale generators from throwing out e-waste, and an increasing number of state and local authorities require individuals and small businesses to recycle e-waste. However, ensuring your company's recycling practices comply with those regulations isn't easy.

"It is a highly problematic area," says Sarah Westervelt, e-waste project coordinator at the Basel Action Network (BAN), a Seattle-based advocacy group. "Companies have a hard time identifying responsible recyclers, and there are problems all along the line."

For example, BAN and others have drawn attention to public-health hazards at unregulated recycling centers in China and Nigeria. And the Silicon Valley Toxics Coalition alleges that prison officials are forcing federal inmates to dismantle recycled computer equipment in "primitive" ways. As a result, Dell Computer Corp. canceled its contract with UNICOR, a federal government-owned corporation that provides services using prison labor.

Such examples demonstrate that even if vendor agreements appear to provide legal coverage, inadequate diligence in verifying and monitoring recycling practices might leave companies exposed to risk.

"If hazardous substances end up in a site that requires some type of remediation, there's a Superfund-type liability that can flow all the way back to the company that discarded the equipment," says Paul Hagen, a director with Beveridge & Diamond.

Moving Targets

Staying abreast of e-waste requirements isn't easy, given the changing state of policies. And unfortunately, disagreements among major stakeholders about the most effective approaches are slowing progress toward more uniformity.

"There are a lot of different perspectives in play, and different business models," says Parker Brugge, senior director and environmental counsel with the Consumer Electronics Association in Virginia. "A computer manufacturer can develop a recycling operation into its business model, but it doesn't necessarily work for televisions. Our members don't want to be forced to become recyclers."

As a result of disagreements among stakeholders, efforts to create national e-waste policies have largely run aground. The EPA has rejected calls for it to promulgate federal standards, and Congressional legislative efforts remain fairly nascent. As a result, many U.S. states are moving forward on their own. Nine U.S. states enacted e-waste laws in 2005, with California, Maine and Maryland establishing formal e-waste recycling programs. And 38 other states have e-waste legislation pending.

"You can see the momentum building," Hagen says. "Lawmakers are paying increasing attention to this issue, and the rules will tighten over time."

What those rules will look like is difficult to predict. Each of the new state policies is unique. The prevailing regulatory trends, moreover, are not coming from within the U.S., but from Europe.

This year the EU is implementing hazardous-waste directives it enacted in 2003. Namely, the Waste Electric and Electronic Equipment Directive requires member states to establish systems for managing e-waste materials, and specifically mandates that electronics retailers take back used equipment free of charge. And the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directive (RoHS Directive) prohibits European sales of electronic products containing certain toxic substances.

To avoid creating multiple production lines to serve different markets, manufacturers likely will redesign their global product lines to meet European e-waste standards. Further, many jurisdictions outside of Europe--including Japan, China and various U.S. states--seem to be following Europe's lead. An amendment to California's 2003 e-waste legislation, for example, directs the state to prohibit the sale of electronic devices containing materials listed in the RoHS Directive. Meanwhile Maine adopted a European-style extended producer responsibility (EPR) model, requiring manufacturers to arrange for their products to be collected for recycling from one of several consolidation points in the state.

At the same time, however, some states are developing different regulatory approaches. California's system uses the advanced recycling fee model, which assesses fees on electronic products when they are sold, and uses the proceeds to pay e-waste collectors and recyclers a per-pound rate for their services. Maryland took a different approach, requiring computer manufacturers that sell more than 1,000 units in the state to pay an annual fee to finance local computer recycling programs.

Further complicating the picture, state-specific regulatory approaches don't address concerns about exporting electronic waste to developing countries, largely because export policies are a federal matter.

Sorting Out The Mess

Reconciling inconsistencies in state and international policies is a rising priority among electronics manufacturers and retailers. As more jurisdictions adopt varying approaches, companies will face increasing costs and complexities in trying to comply with these laws.

"There is an emerging patchwork of laws now, and that is not the best way to go," says David Isaacs, director of government and public policy for Hewlett-Packard Co. "A more harmonized system would be more efficient and would be the preferred approach."

For its part, HP has embraced the EPR model. "Whether we like it or not, the notion of extended producer responsibility is being adopted around the world," Isaacs says. "Given that reality, we are trying to do what is most effective for us."

U.S. policies might continue evolving in that direction, or they might gravitate toward California's up-front-fee approach. In any case, the e-waste policy landscape likely will become more cluttered before it gets better.

"With the law changing so quickly, trying to just comply with regulations is an inefficient way to manage e-waste policies," Strohbehn says. "It is wiser to look to the future, and put in place contractual arrangements that proactively manage these issues and keep companies ahead of the law."

Editor-at-Large

Michael T. Burr

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