New State E-Scrap

Programs: A Business

Opportunity Or A Business Bust For Processors?

Jason

Linnell

E-SCRAP 2007E-SCRAP 2007

Overview• NCER Overview• State Laws• Comparison of Key Elements

– Reporting/Registration Requirements– Financial/Operational Requirements –

Who Pays?– ESM Guidelines– Timelines

• Key Considerations

1) The coordination of initiatives targeting the recycling of used electronics

2) Participation in pilot projects to advance and encourage electronics recycling

3) The development of programs that reduce the burden of government through private management of electronics recycling systems

• Non-profit 501c3• Located in Parkersburg, WV area

• MARCEE Project, NERIC• NCER’s Mission: Dedicated to the development and enhancement of a national infrastructure for the recycling of used electronics in the U.S. through:

About Us

States with Mandated Programs

• California (2003)• Maine (2004)• Maryland (2005)• Washington State (2006)• Minnesota (2007)• Oregon (2007)• Texas (2007)• North Carolina (2007)

Key Elements Comparison

REG

ISTR

ATIO

N

• CA: Yes, need to become registered collector,

recycler or both• CT: Yes, need to be approved recycler• ME: Yes, consolidator approval process, or work as consolidator’s recycler• MD: No• MN: Yes, registration form for collectors and recyclers

Registration Requirements

• NC: No, but may be included in manufacturer plans• OR: No• WA: Yes for collectors and processors,

must be “in compliance”• TX: No

Registration Requirements

Key Elements Comparison

ES

M R

EQ

UIR

EM

EN

TS

• CA: Yes, need to follow DTSC UW handler regs• CT: TBD by DEP, EPA Plug-In is baseline• ME: Yes, must give sworn statement• MD: No• MN: No, but must certify downstream follows applicable law

Specific ESM Guidelines

•OR: Yes•NC: No, but must be described only in manufacturer plans•TX: Yes, DEQ to adopt ISRI or other standards•WA: Yes

Specific ESM Guidelines

Key Elements Comparison

FIN

AN

CIA

L

• CA: State pays $.20/lb collection, $.28/lb processing, extensive documentation• CT: must bill each manufacturer actual count, rates approved by state• ME: must bill each manufacturer actual count + orphan*, rates approved by state

2006: 115 manufacturers received bills from 3 consolidators

• MN: must get manufacturer/s contract, rates set in contract or via bid

Who Pays & Other Financials

• NC: Unclear, “collectors” to have costs covered• OR: State DEQ via “contractor program” or individual/joint manufacturer plans,; rates via bids• WA: Authority board or its designee; or independent plan, rates via bid• TX: manufacturer pay chosen recyclers via contractual agreement or bids

Who Pays & Other Financials

Key Elements Comparison

REC

YC

LIN

GR

ES

TR

ICTIO

NS

Restrictions•CA: “cancellation” in state, export

notifications•CT: Follow Plug-in at minimum, no export for disposal

•ME: no energy recovery/combustion, export documentation as part of ESM requirements

•MN: no incineration, no prison labor

• NC: none• OR: no incineration/energy recovery (smelting allowed)

•WA: no incineration/energy recovery (smelting allowed), no prison

labor•TX: none, indirect prison labor ban

Restrictions

Timelines/ Deadlines

• July 1, 2007: Pounds “recycled” in MN can count toward manufacturer yearly goal

• January 1, 2008: Manufacturers (including TV manufacturers) must pay registration fee in MD

• January 1, 2008: Manufacturers must declare standard or independent plan participation status in WA

• January 1, 2008: Standard and Independent Plans due in WA

Timelines/Deadlines

• June 30, 2007: Pounds recycled in MN after this date do not count on FY 07-08 manufacturer

• September 1, 2008: Manufacturers file 07-08 registration forms, including penalty for not meeting goal

• September 1, 2008: TX requirements can be enforced

• And the BIG Deadline ….

Timelines/Deadlines

January 1, 2009• Plans must be fully operational in WA• Plans must be fully operational in OR• Manufacturers start paying for CT

returns• Manufacturer start paying collectors in

NC

Impact & Considerations

E-Scrap News Survey: 90-100 recyclers surveyed• 29.16% of respondents currently operate in CA or ME• 54.08% of respondents say they have plans to operate in one or more of the states that have passed e-scrap legislation.

Buyer Beware: • Some registered CA recyclers have dropped out,• In ME only 3 of 6 consolidators were operational in 2006 (with one taking over 95%)• In MN, existing contracts with locals do not guarantee payment/contracts from manufacturers

Jumping In?

Producer Managed or Just Paid?

• Exception is CA: ARF system managed by state gov’t• Producer Paid: ME and CT, possibly NC• Manufacturers don’t direct collection flows or choose recyclers• Producer Managed: MN, OR, TX, and WA• Manufacturers can choose collectors/recyclers and their volume, set prices via bid

• A driving consideration in producer-managed systems like Minnesota, Washington• Less of an issue in systems where prices are set or regulated by the state like California, Maine, Connecticut

Processing Price Pressure

•  Prepare for significant float on invoices!• CA currently down to 26 days to approve claim• ME delays in getting approved vendor status with manufacturer accounting departments• With desktops, CT adds numerous new manufacturers to receive and unknown number of recyclers to send bills• Should be less concern with direct manufacturer/ group contracts

Get Out Your Oars!

The Collector Squeeze• Collectors in CA are becoming more sophisticated in making

arrangements w/ recyclers Drive among recyclers is getting supply, and

collectors control much of the supply in California

• Concern about collection costs is driving manufacturers to make direct arrangements with collectors in Minnesota, Washington

State-based Limitations• California’s “cancellation” requirement

means recyclers have to be in stateAllows State Gov’t audits

• In general, states can’t audit out of state entityWorkarounds to require certification from

manufacturer/plan• No similar requirements in any other states

WA encourages use of local infrastructureInterstate commerce Clause issues

• Export management options limited

• Price pressures are strong on recyclers and collectors

• Recyclers must be auditable and have transparent operations

• Probably facilitates recycler consolidationManufacturers say “the smaller the recycler

the bigger my auditing costs”Smaller recyclers will not be on most

manufacturer radar screens for systems like Texas, North Carolina

Characteristics of Producer Managed Systems

• A new niche service industry is developing rapidly to service manufacturers subject to these new mandates

• Is *not* developing as non-profit, trade assn model• Roles in new industry overlap, trajectory still

unclearManufacturer owned and operated?

Electronic Manufacturers Recycling Management Company, LLC (Panasonic, Toshiba, Sharp)

Managed by traditional processor?Sony/Waste Management initiative

Managed by specialty service provider?Product Ecology LLC (Alcorn Consulting, Strategic Counsel LLC,

NCER)

Characteristics of Producer Managed Systems (cont)

Characteristics of All State Legislated Systems• Reuse is an uncomfortable fit in state-

mandated recycling systemsDesired and encouraged, but not paid for

• Non-covered devices will be there, what to do?Within guidelines, do you accept or reject?

• Trend is toward making producers pay, if not giving operational responsibility

• Requirements are different in every state

Thank You!

Jason Linnell, NCERPhone: (304) 699-1008jlinnell@electronicsrecycling.org

Visit us on the web: www.ncerwv.org& www.ecyclingresource.org