Annex K. Electronics EPR in the United States1

Cassel Scott
, Product Stewardship Institute

SUMMARY BOX

Cost allocation

  • Registration fees paid by manufacturers; usually used to cover states’ oversight functions.

  • In most cases, manufacturers pay a portion or all of the collection and recycling costs based on market share or return share; though some states lack specificity in assigning costs and responsibilities.

Cost coverage

Manufacturers pay partial or total costs: in certain states, manufacturers pay for collection and recycling; in some states local governments share costs; and in some states there’s no specificity in now costs are allocated.

Role of government

  • State agencies oversee the programs.

  • 20 states require manufacturers to register and report on sales and collection data.

  • 11 states requires manufacturers to submit a stewardship plan for review and approval.

  • 21 states can impose penalties on manufacturers and retailers for non-compliance.

  • 4 states provide a centralized collection and recycling program.

Environmental performance

  • Between 0.3 and 7 pounds per capita of e-waste collected annually

DfE incentive

  • Some states include compliance requirements with the EU RoHS Directive.

  • Some states include green procurement requirements for state agencies.

  • Some states promote a green electronic equipment database to influence purchasers.

Cost efficiency

  • Estimated costs of 19 programs was USD 90 million in 2010.

  • Cost effectiveness: manufacturers’ fee covers a large portion of costs (but cost effectiveness probably undermined as costs are not tracked in most states).

1. Description of EPR set-up

  1. Legal context

Since 2003, twenty-five states in the US have passed legislation related to scrap electronics (e-scrap) recycling; of which 23 are considered EPR as per the US definition (i.e. mandatory scheme) and two are considered product stewardship. 19 of the 25 programs were implemented between 2009 and 2011. In addition, sixteen of the 25 states have enacted some form of disposal ban on electronics in order to support the programs. Most e-scrap laws in the US drew concepts from a process convened by the US Environmental Protection Agency (EPA) from 2001 to 2003, the National Electronics Product Stewardship Initiative (NEPSI), which consisted of a series of national stakeholder meetings focused on developing a product stewardship system to increase electronics recycling. These meetings disbanded without an agreement but they did help shape state electronics EPR laws. In contrast, action on e-scrap issues at the federal level has been limited.

  1. Governance and Enforcement

State agencies or departments responsible for environmental quality or public health oversee e-scrap stewardship programs and some or all of their costs are covered by manufacturers’ registration fees or penalties in most cases. Twenty of the programs require manufacturers of “covered electronic devices” (CEDs) to register with the state as a prerequisite to selling their products, and then to report sales and collection data. Eleven states require manufacturers to submit a stewardship plan to the state environmental agency for review and approval. All states forbid retailers from selling CEDs from manufacturers that are not registered or are otherwise out of compliance with the program. Twenty-one of the 25 state laws include penalty provisions imposed on manufacturers that do not register with the state or that fail to meet financial obligations or collection requirements. State enforcement penalties may also be imposed on retailers that sell a non-registered manufacturer’s CEDs.

  1. Allocation of responsibilities (distribution of roles, financial flows)

Manufacturers of CEDs are responsible for registering with the state oversight agency. They can organize either individually or collectively through PROs. In order to meet their performance goals, manufacturers can use CEDs generated by other entities (e.g. residents, schools, small businesses) in the state and brought back by consumers to collection points. In addition to registration fees, in some states manufacturers have to assume financial responsibility for collection and/or recycling costs, generally calculated either through the market share or actual sales of CEDs either through the return share (when used, typically for IT manufacturers). In the second case, equipment weight shall be delineated by brand and often by type. Only two states assign municipalities responsibility for ensuring convenient collection locations that will arrange for material pick-up by state-approved consolidators or recyclers (only four states require that recyclers be certified by third-party certification organizations). Those entities then obtain payment from manufacturers to cover the cost of transportation, consolidation, and recycling. Four states offer manufacturers a central collection and recycling program. In these states, a contractor or designated quasi-governmental entity serves as the PRO, managing the recycling infrastructure and in some cases collecting fees from manufacturers to cover the costs. Various entities (manufacturers, municipalities, or retailers) are responsible under the laws for educating consumers about the EPR law.

2. Environmental effectiveness

  1. Collection and recycling rates

A recent report concluded that e-scrap recyclers in the  US generate up to 3% residue and a small amount of potentially hazardous materials, while the majority of outputs go on to commodity markets.2 While no hard data exist, most stakeholders report that the environmental performance of the e-scrap recycling sector has improved in recent years. Thirteen of the 25 state laws either set goals in statute or confer authority for setting collection performance goals to the responsible state entity. Because all material collected must be recycled or refurbished for reuse, collection goals are synonymous to recycling goals. Since annual generation of e-scrap is difficult to assess (given varying product life spans and people’s tendency to store some materials), per-capita collection rates are typically used to track program performance.

Tables K.1and K.2 compare state programs based on key policy elements and per-capita collection rates. Table K.1 presents the highest performing states and Table K.2 the lowest performing ones. Most of the programs with the highest per-capita collection rate offer a centralized collection and recycling program and set strong convenience standards (i.e. standards that define the extent of collection network required to ensure consumer convenience), which led to the creation of robust infrastructure with year-round financial support regardless of the volumes collected. Clear financial responsibility, whatever the method used (market share, return share or a hybrid system), is also a key indicator of high performers. The relationship of performance goals to program performance is however inconclusive, as while they have clearly been effective in some instances, in other cases they have capped collection levels when manufacturers meet their performance goals or when they are allowed to trade credits. Similarly, the scope of products covered has limited influence on a program’s performance. Public education and outreach is an important element impacting performance, but is much more difficult to assess and measure.

Table K.1. Program Performance and Program Design in High Performing States, 2012

State (implementation date)

Pounds per capita 2012*

Program financing

Performance Goals

Convenience Requirements

Product Scope

Disposal Ban

Centralized program

Covered Entities

Vermont (2011)

7.7

Market share

Yes

Geographic

Average

Yes

Yes

Average

Oregon (2009)

6.8

Hybrid

Yes1

Geographic

Average

Yes

Yes

Average

Wisconsin (2010)

6.8

Market share

Yes

Rural convenience

Comprehensive

Yes

No

Limited

Minnesota (2007)

6.5

Market share

Yes

Rural convenience

Comprehensive

Yes

No

Limited

Washington (2009)

6.4

Hybrid

No

Geographic

Average

No

Yes

Comprehensive

1. Oregon has a program goal for all manufacturers, but only manufacturers who do not participate in the centralized program are penalized if their opt-out program fails to meet a performance goal.

Source: Product Stewardship Institute (2014), Electronics EPR: A Case Study of State Programs in the United States, Case study prepared for the OECD, www.oecd.org/env/waste/gfenv-extendedproducerresponsibility-june2014.htm.

Table K.2. Program performance and program design in low performing States, 2012

State (implementation date)

Pounds per capita 2012*

Program financing

Performance Goals

Convenience Requirements

Product Scope

Disposal Ban

Centralized Program

Covered Entities

South Carolina (2011)

0.7

Market Share

Yes

Limited

Average

Yes

No

Limited

Oklahoma (2009)

0.6

Funding Obligation Mechanism Not Specified

No

Limited

Limited

No

No

Limited

Virginia (2009)

0.4

Not Specified

No

Limited

Limited

No

No

Limited

Missouri (2010)

0.3

Not Specified

No

Limited

Limited (No TVs)

No

No

Limited

Source: Product Stewardship Institute (2014), Electronics EPR: A Case Study of State Programs in the United States, Case study prepared for the OECD, www.oecd.org/env/waste/gfenv-extendedproducerresponsibility-june2014.htm.

  1. Design for Environment (DfE)

Though many states implement EPR programs in the hopes of encouraging DfE, it is not necessarily an explicit objective of state legislation. However, seven of the 25 state programs require that manufacturers’ products be compliant with the EU Directive on the Restriction of Hazardous Substances (RoHS), or that they notify the state if any of their products exceed these levels. Certain states do also provide for procurement requirements imposed on state agencies to purchase electronic devices containing recycled materials, designed with environmental attributes that consider the product lifecycle, or incorporating DfE elements. Another national program that has significantly impacted the design of electronic equipment is the Electronic Product Environmental Assessment Tool (EPEAT), which serves as an independent environmental rating system that helps purchasers identify greener electronic equipment listed on the database.

3. Economic efficiency

  1. Cost efficiency

According to a 2010 report, the estimated total cost (including program and registration fees) for the 19 EPR programs in operation at that time was USD 90 million, including:3

  • USD 71 million for collection, transportation, and recycling

  • USD 14 million for internal compliance costs

  • USD 4.5 million for government-incurred administrative costs.

Typically, program costs are evaluated on a cents-per-pound collected basis. They generally do not include education and outreach activities. Costs vary widely among state programs; in 2010 they were reported to be between USD 0.20 and USD 0.30 per pound. Certain states approve the costs that recyclers charge manufacturers for transportation, consolidation and recycling, which currently range from USD 0.28 to USD 0.34 per pound. Certain products such as cathode ray tube (CRT) glass are costly to handle, while IT equipment can be a revenue generator. As the volume of CRTs goes down over time and the proportional volume of IT equipment increases, program costs are expected to decline.

  1. Leakages and free riders

Free-riding problems are minimized in the e-scrap laws thanks to the registration requirements and the penalties imposed on manufacturers or retailers that do not respect the conditions (see 1.b). Some leakages of valuable waste is however noticed in certain states as IT equipment can be resold outside of the EPR programs to brokers or scrap dealers at a high price, leaving the program to manage negative value items such as CRTs.

  1. Trade and competition

Since EPR significantly increases the amount of material available for recycling, and some scrap electronics have good value, new recyclers have entered the market in many states and created more competition. The competitive environment for recyclers varies significantly from state to state based on certain program parameters and policy choices. For example, states like Pennsylvania, New York, and Minnesota allow manufacturers flexibility in meeting their recycling obligations, fostering unfettered competition among recyclers. In other states, like Washington, and Vermont, the state or its designated/contracted entity approves the recyclers, thereby managing competition among recyclers through competitive bidding or state approval processes. States with a more competitive environment tend to drive down costs for manufacturers, but may also trim profit margins for recyclers. In addition, it is sometimes difficult for recyclers to increase revenue as equipment that contains high-value materials (laptops and desktop computers) represent a small fraction of the e-scrap stream managed in most state programs, while high-cost CRT TVs and monitors dominate the stream in most states. In order to help recyclers, certain states authorize the landfilling of CRT glass, thereby discouraging investment in CRT recycling.

At external trade level, the export of e-scrap, particularly to under-regulated developing countries, has historically been a contentious issue in the US In 2003, the US International Trade Commission (USITC) issued a report that found that 7% of the sales from US e-scrap recyclers in 2011 went to foreign markets, especially to Mexico, India, Hong Kong, China, China, and other Asia-Pacific countries. However, state e-waste programs are unable to regulate export, as only the US Congress can regulate commerce between countries. The US Congress introduced the Responsible Electronics Recycling Act of 2013 that would make it illegal to send scrap electronics from the US to developing nations. To date, this legislation is still pending.

4. Key issues and possible reforms

The greatest challenge in moving forward is harmonizing the varying approaches used at the state level and expanding them to cover the remaining 45% of the US population. The patchwork of state approaches leads to widely varying program performance, fosters inefficiency, and inflates program costs. The broad disparity in state requirements also drives up manufacturers’ internal compliance costs. Until greater harmonization across states occurs, organizations like the Electronics Recycling Co-ordination Clearinghouse reduce administrative overlap between state agencies/departments through inter-state collaboration on key issues and centralized reporting systems.

A national model program would ideally include the following program best practices:

  • broad scope of accepted CEDs (which can increase collection efficiency, apportion financial responsibility more fairly, capture more electronic materials, and simplify public messaging)

  • comprehensive range of covered entities

  • manufacturer funded and led recycling program, including a strong public education and outreach component

  • compliance enforcement to ensure a level playing field among manufacturers

  • performance requirements with high goals that ensure continuous collection

  • strong convenience requirements, and

  • minimum standards for processing and recycling e-scrap collected in the program, such as third- party certification programs.

Notes

← 1. Full source available at: Product Stewardship Institute (2014), Electronics EPR: A Case Study of State Programs in the United States, Case study prepared for the OECD, www.oecd.org/env/waste/gfenv-extendedproducerresponsibility-june2014.htm.

← 2. Used Electronic Products: An Examination of U.S. Exports, US International Trade Commission, February 2013.

← 3. Source: National Electronics Recycling Infrastructure Clearinghouse, “Updated Manufacturer E‐Waste Compliance Study”, March 29, 2009. Internet archive web.archive.org/web/20130913045004/http://www.ecyclingresource.org/ContentPage.aspx?Pageid=34&ParentID=0, accessed 4 April 2014.