New State E-Scrap Programs: A Business Opportunity Or A Business Bust For Processors?

1. New State E-Scrap Programs: A Business Opportunity Or A Business Bust For Processors? Jason Linnell E-SCRAP 2007

2. NCER Overview State Laws Comparison of Key Elements Reporting/Registration Requirements Financial/Operational Requirements – Who Pays? ESM Guidelines Timelines Key Considerations Overview

3. The coordination of initiatives targeting the recycling of used electronics Participation in pilot projects to advance and encourage electronics recycling 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

4. California(2003) Maine (2004) Maryland (2005) Washington State (2006) Minnesota (2007) Oregon (2007) Texas (2007) North Carolina (2007) States with Mandated Programs

5. REGISTRATION Key Elements Comparison

6. 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

7. 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

8. ESM REQUIREMENTS Key Elements Comparison

9. 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

10. 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

11. FINANCIAL Key Elements Comparison

12. 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

13. 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

14. RECYCLINGRESTRICTIONS Key Elements Comparison

15. 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 Restrictions

16. 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

17. 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

18. 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

19. 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 Timelines/Deadlines

20. Impact & Considerations

21. 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?

22. 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 Producer Managed or Just Paid?

23. 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

24.   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!

25. 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 The Collector Squeeze

26. California’s “cancellation” requirement means recyclers have to be in state Allows State Gov’t audits In general, states can’t audit out of state entity Workarounds to require certification from manufacturer/plan No similar requirements in any other states WA encourages use of local infrastructure Interstate commerce Clause issues Export management options limited State-based Limitations

27. Price pressures are strong on recyclers and collectors Recyclers must be auditable and have transparent operations Probably facilitates recycler consolidation Manufacturers 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

28. 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 unclear Manufacturer 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)

29. Reuse is an uncomfortable fit in state-mandated recycling systems Desired 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 Characteristics of All State Legislated Systems

30. Jason Linnell, NCER Phone: (304) 699-1008 jlinnell@electronicsrecycling.org Visit us on the web: www.ncerwv.org & www.ecyclingresource.org Thank You!