Goal
The goal of this legislation is twofold: to create an effective system for environmentally responsible recycling and re-use of consumer electronic products, and to create incentives for electronics producers to design their products to have longer life-spans, increased recyclability, and with fewer toxic chemicals and materials.

Summary of Model Legislation

The CTBC legislative approach requires manufacturers to create, manage, and finance a comprehensive electronics recycling program in the state, as a condition of selling their products in the state. Local governments are not expected to pay for recycling programs and may be eligible to receive reasonable collection reimbursements from the producers. The bill sets standards (performance goals) that the program must meet, but it will be largely left up to industry as to how they will meet these standards. Producers have two options for how they participate in this program:

Producer-Managed System: Producers may institute their own recycling program (individually or in collaboration with other producers), which meets their individual goals and contributes to the overall goals of the program.
Producer-Paid System: Brand owners who do not institute their own programs will make payments into an electronics recycling fund, which is managed by a third party organization (TPO) or the state, to pay for these companies' recycling obligations.

Legislation Components In Detail
Within 24 months following passage of this measure, brand owners, producers, and original equipment manufacturers of electronic equipment will be responsible for implementing a program for financing the environmentally-sound collection, treatment, recovery, and final disposition of discarded and obsolete electronic equipment, including orphan and historic waste.

Scope of Products
The products covered by this legislation are:

• desktop/personal computers - central processing units (CPUs)
• computer monitors, including CRT monitors, and flat panel monitors
• portable computers (laptops)
• combination units (CPUs with monitors)
• desktop printers
• computer peripherals (e.g., mice, keyboard, modem, scanners)
• CRT televisions
• non-CRT-based televisions (including plasma and LCD), or any similar video display device with a screen greater than 4 inches diagonally and that contains a circuit board
• television peripherals (e.g., cable or satellite receiver, VCR, DVD)
• personal electronics - PDAs, personal music players (iPods, MP3s, etc)
• stereos, radios, tape players
• games

The scope of products does not include: automobiles, mobile phones, medical equipment.

Target Ownership Group
It is the intent of this legislation to create a recycling path for products owned by any consumer, small business, or organization whose products are not covered by an asset recovery program, or other end-of-life management program. Products collected in this program must be collected from residents (including small business residents) of the state. It is not the intent of this legislation to accept e-waste brought into the state for disposal.

Sales Prohibition
Manufacturers must comply with all provisions of the legislation - reporting, financing, labeling, etc. - as a condition of their ability to sell their products in the state. Retailers may not sell products from companies not complying with this law.

Labeling Requirement
Manufacturers and brand owners must clearly label all covered products with the brand owner's name and a toll free number for recycling information. This should be on a permanent label, easily visible to anyone handling this product. The label should also state the requirement not to dispose of electronic equipment in landfills, incinerators or any other means not approved as part of the producer's financial responsibility program plan.

Registration and Program Plan
Within 6 months following passage of this measure, producers of electronic equipment sold in this state shall register with the [state environmental agency] and submit for approval a plan designed to meet their responsibilities under this act. In order to be approved, such a plan must, at a minimum, provide for the following:

• A list of all brands of covered products being sold by the company in the state
• A plan for how the company will meet its obligation for the collection, treatment, recovery, re-use, and disposition of its annual share of electronic waste, and of orphan waste, including
  • Description of which recycling system the company intends to use (Producer Managed, or Producer Paid)
  • Description of the collection system, strategies, partnerships, and collection site locations to be used and how these will be easy for consumers to use and will be geographically distributed in the state, in both urban and rural areas.
  • Description of efforts specifically to encourage re-use of equipment returned under this program
  • Description of all parties involved in the producer's product recovery program (including subcontractors), including documentation of these parties' willingness and ability to meet standards for safe and responsible recycling, described below (see Responsible Recycling Requirements)
• Description of the alternative or additional actions that will be implemented by the producer to improve the collection, recovery and recycling systems in the event that the program targets are not met.
• Public education materials to be made available to consumers, as described in this legislation.
• Annual Registration Fee. Each company (or companies who register jointly) will pay an annual registration fee to the state agency, to cover the costs of administration and oversight.
• Annual sales data on the number, type, and weight of covered products. Sales data will be held confidential by the state agency, and used only for the purposes of administering this program.

Program Plans shall be submitted to, reviewed by, and approved by [state environmental agency]. Plans will be evaluated based upon their sufficiency in light of all the required elements and the [state agency] shall develop a means for scoring initial submissions and providing feedback to producers for integration into their final plans.

Collection and Recycling Options
Manufacturers must choose one of the following two options for meeting collection and recycling goals:

Producer-Managed Takeback and Recycling
Under this option, producers have responsibility for the collection, transportation and processing/recycling of covered electronics products, in accordance with their annual goals as established by this legislation. Companies will also be responsible for a proportionate share of "orphan" products. Producers are responsible for providing services at no cost to the consumer at the time of collection/recycling. The service must be available and effective for both urban and rural owners of their products.
Producers can meet their takeback obligations individually, or by working collectively with other brand owners, depending on what business relationships they choose to establish. Some companies may decide to collaborate and create Third Party Organizations (TPOs), for instance, as many are doing in Europe to meet takeback obligations.
Likewise, collection and other needed services may be purchased or established through business arrangements using existing infrastructure such as retail stores, municipal drop-off or home collection programs, charities, haulers, recyclers and others. There are many options for how to set this up and it is up the brand owners to determine what they want to do, who they want to work with, and how to meet their obligations, as long as they make it easy for consumers to use the program, and they provide geographically diverse collection options.

Producer-Paid Takeback and Recycling Option
Companies who do not want to manage their own collection and recycling systems can meet their recycling obligations by making payments into an electronics recycling fund, which will be administered either by a not-for-profit Third Party Organization (TPO) set up to oversee the program, or by a designated state agency. Any company who selected the Producer Managed option but who did not meet their collection and recycling goals will also make payments into this fund, equal to the difference between their goals and their actual performance, based on a reasonable average cost of collection, transportation, and recycling of products. Producers selecting this option will make additional payments into the electronics recycling fund to cover their share of orphan waste.

Performance Standards/Goals
A stated objective of this legislation is to create strong incentives for encouraging consumers to recycle their e-waste. Therefore, this legislation creates goals for how much e-waste should be recycled in the state, and then apportions that goal between the companies selling products in the state. The schedule starts with lower, more easily achievable goals, and then increases them over time. This program sets collection goals in terms of pounds per year per person (residents of the state).

Statewide Collection Goals
Year 1: Total collection in state is 2 pounds per capita each year (2.0 pounds for every resident in the state, according to the most recent census numbers)
Year 3: 3.5 pounds per capita per year
Year 5: 5.0 pounds per capita per year

Note: In the Hennepin County, Minnesota study, which separated (and counted) all collected products by manufacturer, they collected 3.4 pounds per person in 2004 in the county (1,917 tons).

Assigning Companies Pro Rata Shares of Goal
The goals above are total collection goals for the state. These totals must then be apportioned between the companies selling products in the state to establish their share of this total. These company goals will apply both to companies doing Producer Managed systems and Producer Paid systems. Companies are expected to meet these goals each year. Companies doing Producer Managed recycling are expected to recycle at least the amount of products equal to their goal. Any company selecting the Producer Managed recycling option, who falls short of its goal must make a payment into the electronics recycling fund, for the difference between the company's goal and what they actually recycled. Companies selecting the Producer Paid model will simply pay for their share; they will be billed for it by the [state agency or TPO]. The state agency will provide producers with a listing of each company's assigned share of the total goal for the state, and of each company's pro rata share of covered orphan waste.

Calculating Goals and Rates (Two Options)
There are two ways to determine both collection/recycling goals for the companies and therefore their financial obligation. (The legislation would use only one.)

Method 1: Return Share. Each company will be assigned a pro rata share of the products that are returned in the state. This is calculated by analyzing what is being returned (through both the Producer Managed and Producer Paid methods), and determining each company's percentage of that total. (Return share can be based on periodic sampling, rather than fulltime, ongoing accounting for products by producer, as this is expensive.) The state agency will have responsibility for oversight of this periodic sampling and reporting. This number will be updated annually, as return rates will change over time. So for example, if products returned showed that Apple computer accounted for 5% of the products returned, then they will be responsible for recycling (or paying to recycle) 5% of the overall goal for the state. [This is the method used in the legislation currently supported by Hewlett-Packard.]

Method 2: Market Share. Each company will have goals based on their current market share. For those selecting the Producer Paid option, this means they will make payments into the recycling fund based on a specified payment for covered device sold. This is not a fee system established by legislation, but an internal rate structure for use by the companies. Companies will pay these amounts either to the state agency, or to a Third Party Organization (TPO) which will manage the fund. Sales data will be provided to the State, to be kept confidential, and to be used for rate calculations only. [This is the similar to the financing method used in the legislation supported by NERC - the Northeast Recycling Coalition (www.nerc.org).]

Equity Between Calculation Methods
Each of these two methods burdens certain producers more than others. The return share methodology will mean higher goals for well-established companies who have been in the market for more than 10 years, whose products are being returned now in significant numbers. But newer companies, or companies who only recently entered the U.S. market, may be selling a lot now, but they likely have very low (if any) returns. So under this return share model, they would have a very low goal and pay almost nothing. Our concern is that some of these companies might be making big sales today of the "orphan waste" of tomorrow - if they go out of business. This is a particular concern about "white box" companies, often small or start-up companies that assemble electronics from off-the-shelf products.

The market share model does the reverse. It puts the most responsibility on the companies who are selling a lot of products now, even if not many are coming back for recycling yet. It allows companies to pay for their share of the problem at the time they are selling their products, when they are in the best position to pay for it. But this method removes responsibility from the older companies like IBM, whose sales used to be high, but now are low (since they sold their PC division to Lenovo), and they still have high rates of products being returned.

Parity Payments
One option would be for the state agency to make a "parity calculation" for some companies, to remove the imbalanced burden from choosing one or the other method. States using the Return Share method will bill companies who have high current sales, but low returns for an additional "Parity Payment" amount to be made along with their annual registration fee, to be used to help pay for orphan waste, since this is really a hedge against future orphan waste. Using the Market Share method, companies with low sales but high returns will pay an additional amount as a "Parity Payment" with their annual registration fee, to be used to help pay for orphan waste.

Orphan Waste
Some amount of products will be collected from brand owners who are no longer in business (and whose brand name was not absorbed by any other company). Other products that will be returned will have no label or other markings to identify any brand owner. These products are considered "orphan waste." The producers currently selling products in the state will be responsible for paying for their share of the orphan waste collected each year. First, costs of orphan waste will be paid out of the "Parity Payments" collected annually with the registration fees. Then, the costs remaining (after spending the Parity money) will be divided by the companies registered to sell products in the state, on a Pro Rata Share basis. Their pro rata share will be determined using "return share" calculations (see section above on Return Share).

Collection Sites and Options
As part of their registration with the State, companies must indicate their intended collection strategies, sites, partnerships with other collection entities, etc. The goal of the overall program is to provide and promote convenient, strategically located, fixed collection sites to serve urban and rural populations throughout the state. Collection sites may include electronics recyclers and repair shops, recyclers of other commodities, reuse organizations, municipal recycling centers, retailers, or other suitable locations. Partnerships with these entities will require the producers to pay reasonable collection incentive payments to cover their costs of collection and consolidation. Rural areas without commercial centers, or areas with widely dispersed populations, may be served by collections at the nearest commercial centers where electronics are sold or by mail-back systems. In reviewing these plans, the State must evaluate how well the combined plans of all companies results in geographic coverage, and if areas are underrepresented, request that producers modify their plans for collection sites.

Existing Municipal or County Recycling Programs
It is the intent of this legislation to relieve the cities and counties of financial burden for electronic recycling programs. The TPO or companies who are managing their own programs could contract with the local collection programs, assuming these programs meet the standards established by this legislation or any additional standards established by the producers or TPO. If the local collection programs cost more than the collection payments offered by the TPO or individual companies, the local governments would, of course, have the option of continuing their programs by funding (with their own resources) the difference between their actual costs and the collection reimbursement payments.

Spending the Recycling Funds
Under the Producer Paid model, the electronics recycling fund will be used to pay for collection, transportation, reuse and recycling of covered electronic devices that are not covered by a Producer Managed recycling system. Payments can be made to an authorized or approved entity (complying with standards established below). The TPO (or state agency) may contract with existing municipal or county collection programs or other commercial or non-profit arrangements for collecting products, offering a reasonable collection incentive payments. While the TPO (or state agency) will create the system for selecting vendors, establishing contracts, making payments, etc., their system must include provisions to require that:
- Collected products are from residents of the state, and not from out of state. The collection, transportation, reuse or recycling of the product was conducted in accordance with all local, state, and federal laws, including the requirements created by this legislation and its associated regulations
- Entities did not charge consumers a recycling fee at point-of-sale or end-of-life

Enforcement
Enforcement of the provisions of this bill will be the responsibility of the designated state agency. Penalties include:
- A civil liability in an amount of up to two thousand five hundred dollars ($2,500) per offense (per item sold) for failing to make required payments into the recycling fund

- Civil liability in an amount of up to twenty-five thousand dollars ($25,000) per offense for manufacturers who don't to comply with this Act

Responsible Recycling Requirements
It is the goal of this legislation to include high standards for the recycling processes of this system. There is currently no existing recycler certification process that adequately reflects these important standards. So this legislation must establish the standards until such a certification process is developed and implemented.

As part of its registration application with the State, each producer or Third Party Organization (TPO) who is managing the product takeback programs must agree to use recycling and reuse processes and providers (including sub-contractors) that meet the standards below. Authorized recyclers must be audited and authorized by the producers or TPO's, and authorized by the State, to ensure that they are adhering to the strictest of standards and best practices for responsible recycling.

Recycling and processing standards include:

• Recyclers must have and maintain necessary and appropriate authorizations consistent with federal, state and local environmental laws, as well as with laws in recipient countries for any exports
• Recyclers must sort, process, and/or technically assess materials to ensure that only tested working equipment (as opposed to waste) is sent into the reuse market globally. (See section on Reuse, below)
• Recyclers must perform due diligence and have documentation regarding downstream facilities and end-use markets, ensuring compliance with local, state, national and international laws, and other restrictions below:

  o Hazardous components in end-of-life electronics will not be taken by recycler or any of its intermediaries to solid waste landfills, incinerators, waste-to-energy incinerators, and/or prison recycling operations
  o Documented tracking of all downstream materials
  o Documentation and/or restriction of exports, especially hazardous, in compliance with international laws and definitions pertaining to hazardous waste
  o Wherever export is involved: Recycler must have copies of import permits for facilities receiving specific electronic waste from the US recycler, (i.e. import permits provided by governments in recipient countries for importing specific items from the US. These are different from operational permits and licenses.)
  o List of material end-markets, including all hazardous materials (as defined by Basel Convention)
  o Documentation that final disposition (e.g. smelting) of hazardous components, occurs in OECD/EU (developed) countries only
  o Copies of manifests for all exported materials
  o Evidence of end-market audits
  o Detailed process descriptions

• Recyclers must implement programs to safeguard occupational and environmental health and safety, including:
  o Environmental Management System (EMS) or environmental risk management plan, including staff and manager training, regular audits, emergency preparedness plan
  o Hazardous materials management plan
  o Meet OSHA requirements
  o Performing routine industrial hygiene monitoring and quarterly reporting for all facilities for all hazardous materials of concern, including but not limited to monitoring for airborne lead and bromine, chlorine, and mercury compounds;
  o Performing routine human health monitoring and quarterly reporting (in accordance with all applicable privacy protections) for all workers and contractors, including but not limited to blood testing for exposure to lead and bromine, chlorine, and mercury compounds.
• Recyclers must have security and data security systems in place
• Recyclers must have appropriate mechanisms to ensure proper closing of the facility consistent with environmental standards.
  o Environmental Impairment Insurance
  o General Liability Insurance
  o Other Insurances
  o Closure and after-care plan
  o Financial assurance

RoHS Compliance (Hazardous Materials Reduction)
Companies selling their products in the state must make their products compliant with Reduction of Hazardous Substances (RoHS) Directive by July 2006.

Recycling and Reuse Information for Consumers
The TPO or state agency will create information sheets and websites for consumers to learn about the importance of recycling electronics and where they can take their products for recycling or reuse. This must be in English plus other relevant languages for the region. Retailers will be required to distribute this information with the sale of any electronic product in their stores. Local governments will also have some responsibility for distributing this information.

Disposal Ban
For states where there is not already a disposal ban, this legislation calls for a ban on disposing covered products in landfills within one year of the legislation is passed.

State Procurement Requirement
Within 6 months following passage of this act, the state and each of its units, departments, and agencies shall establish purchasing and procurement policies requiring vendors of electronic equipment sold or leased to the state to take back electronic waste when the equipment becomes obsolete, is discarded or is otherwise taken out of service. State purchasing and procurement policies shall also establish a preference for electronic equipment that meets specified environmental performance standards relating to the reduction or elimination of hazardous materials.

Public Education
As part of an approved program Plan, a producer selling electronic equipment in this state must take appropriate steps to implement a consumer education plan that is designed to ensure that consumers and users of electronic equipment understand:

• the prohibition on disposal of electronic waste by any means not included as part of the producer's approved program Plan
• the electronic waste return and collection systems available to them
• the potential effects on the environment and human health as a result of the presence of hazardous substances contained in electronic equipment and the dangers of improper disposal
• the consumers' and/or users' roles in contributing to the re-use, recycling, and other forms of electronic waste recovery.

Oversight and Enforcement
The State agency will have responsibility for oversight and enforcement of this program and may create necessary regulations to do so.

Reporting Requirement

Reports detailing performance of the producer's financial responsibility program and detailing compliance with all the requirements set forth above must be submitted annually to the [state environmental agency]. All such reports are to be reviewed within six months of their submission and notices of deficiency or non-compliance provided by [the state agency] to producers by the end of the following quarter.

The annual report will also include:

• The number of covered electronic devices sold by the manufacturer in the State during the previous Fiscal Year.
• Updates to plans submitted as part of the company's registration with the state, including the list of brand names sold
• A baseline or set of baselines that show the total estimated amount of recyclable materials contained in covered electronic devices sold by the manufacturer in that year and the increase in the use of those recyclable materials from the previous year.
• A baseline or a set of baselines that describe any efforts to design covered electronic devices for recycling and goals and plans for further increasing design for recycling.
• A description of the manufacturer's programs and efforts, and the amount of funds spent on those programs and efforts, to promote the reuse of covered electronic devices, including such programs as the remanufacture and sale of its own brand in the current and previous years.
• A description of the manufacturer's programs and efforts, and the amount of funds spent on those programs and efforts, to educate consumers about the need to reuse or recycle covered electronic devices, in the current and previous years.

Annual reports required under this section and all other reports outlining the results of producer's program for the current year and two prior years must be made available to the general public through the internet.