Brief Description: Providing electronic product recycling through manufacturer financed opportunities.

Sponsors: Representatives B. Sullivan, Priest, Pettigrew, Jarrett, Dunshee, Anderson, Kagi, Serben, McCoy, Ericksen, Upthegrove, Tom, Green, Strow, Rodne, Nixon, Chase, Buri, Hunt, Eickmeyer, Darneille, Linville, Morrell, Lantz, Hunter, Appleton, Williams, Hudgins, Wallace, P. Sullivan, Flannigan, Springer, Kenney, O'Brien, Simpson, Clibborn, Sells, Moeller, Ericks, Kilmer and Schual-Berke.

Hearing Date: 1/17/06

Staff: Jeff Olsen (786-7157).

Background:

The Department of Ecology (DOE) estimates that between 2003 and 2010, over 4.5 million computer processing units, 3.5 million cathode ray tube monitors, and 1.5 million flat panel monitors will become obsolete in Washington. These electronic products may contain many different materials, including steel, aluminum, copper, glass, plastic, gold, and lead.

In 2004, the Legislature enacted ESHB 2488 (Chapter 194, Laws of 2004) directing the DOE, in consultation with the Solid Waste Advisory Committee, to research information regarding the collection, recycling, and reuse of covered electronic products (CEPs). CEPs include all computer monitors, personal computers, and televisions sold to consumers for personal use. The DOE report recommends that a system be developed and financed by industry based on product market share. The level of responsibility for each participant would be based on the return share of products being collected. The recommendations include requirements for a license to sell CEPs in Washington, with penalties for noncompliance.

Summary of Bill:

CEPs
Legislative findings conclude that a system financed by manufacturers for the collection, transportation, and recycling of CEPs must be established. CEPs include computer monitors, desktop computers, laptop or portable computers, or televisions. Televisions and computer monitors must have screens with a viewable area greater than four inches when measured diagonally.

Labeling Requirements
No person may sell or offer for sale an electronic product in Washington after July 1, 2006, unless a label with the manufacturer's brand is permanently affixed and readily visible. In-state retailers in possession of unlabeled products on July 1, 2006, may exhaust their stock through sales to the public.

Manufacturers, Collectors, and Transporters Registration
By January 1, 2007, manufacturers offering CEPs for sale in Washington must register with the DOE. Collectors and transporters of CEPs must also register annually with the DOE. When registering with the DOE, manufacturers must provide the DOE with contact information, the brand names of CEPs sold in the state, the methods of sale, and the manufacturer's preference for participating in the standard plan or an independent plan.

Manufacturers include any person who manufactures a CEP for sale in this state under their own brand name, assembles a CEP using parts manufactured by others for sale under the assembler's brand name, resells under its own brand name a CEP produced by other suppliers, imports or exports a CEP that is sold in this state, or manufactures a co-branded product that carries the name of both the manufacturer and a retailer.

Manufacturer Financed Collection and Recycling Plans
Manufacturers of CEPs offered for sale in Washington must participate in plans to implement and finance the collection, transportation, and recycling of their equivalent share of CEPs by January 1, 2009. Manufacturers may participate in the standard plan operated by the Washington Materials Management and Financing Authority (Authority). Manufacturers must pay for all of the program costs. If program costs are passed on to consumers, manufacturers may not charge a fee at the time an unwanted electronic product is delivered or collected for recycling. Any person acquiring a manufacturer has responsibility for the acquired company's CEPs.

Independent Plans and the Standard Plan
A manufacturer that sells a CEP in Washington must participate in the standard plan, unless the manufacturer obtains approval from the DOE to participate in an independent plan. The standard plan is the plan developed by the Authority on behalf of participating manufacturers. An independent plan may be submitted to the DOE by manufacturers or a group of manufacturers, provided that the plan represents at least 5 percent of the return share of CEPs. The manufacturer may not be a new entrant or a white box manufacturer. An authorized party is the manufacturer or the entity designated by a group of manufacturers submitting an independent plan.

Plan Review
All independent plans and the standard plan must be submitted to the DOE by February 1, 2008. The DOE must review the plans within 90 days and notify persons with letters of approval. If a plan is rejected, the DOE must provide reasons for rejecting the plan, and the authority or authorized parties have 60 days to submit a new plan. Plans must be updated at least every five years. If a program fails to meet certain plan requirements, updated plans must be submitted to DOE describing how program adjustments will be made.

Plans submitted to the DOE must contain contact information and a list of participants, a description of the collection system, methods of collection in both rural and urban areas, a description of plan service to covered entities, a description of recycling processes and facilities, processors used in the plan, how progress will be measured, and public education efforts.

Recycling Program Requirements
Programs established to implement recycling plans must provide for convenient collection services for both urban and rural populations. Programs must provide at least one collection site for any city or town with a population greater than 10,000. Collection sites must be staffed and open to the public at a frequency adequate to meet the needs of the area being served. Programs may limit the number of CEPs accepted per customer per day.

Washington Materials Management and Financing Authority
The Authority is established as a public body and an instrument of the State of Washington.
The Authority is governed by a Board of Directors (Board), comprised of 11 members of participating manufacturers. Five board positions are reserved for representatives from the top ten brands by return share of CEPs, and six board positions are reserved for other brands. The board must have representation from both television and computer manufacturers. The board must select a chair and create its own bylaws. The Directors of the Department of Community, Trade and Economic Development; the Director of the Department of Ecology; and the State Treasurer serve as ex-officio members.

The Authority must plan and implement a collection and recycling program for manufacturers participating in the standard plan. The standard plan is responsible for the sum of equivalent shares of participating manufacturers. The Board must adopt a general operating plan of procedures and shall conduct at least one public hearing on the general operating plan.

Participating manufacturers shall pay the Authority to cover the administrative and collection costs to operate the standard program. The initial fee collected by the Authority must be determined by the Board and may be not less than $4 and not more than $10 per unit of CEP sold in the state for the first year of operation. After the first year, the Authority shall set annual fees and other charges to fund the standard program.

Return Share and Equivalent Share
The DOE must determine return share based on the percentage of CEPs by weight identified for an individual manufacturer. For the first program year, the DOE must establish the return share based on best available information from other states. In subsequent years, the return share must be based on the most recent sampling of CEPs. Manufacturers may challenge the preliminary return share by written petition to the DOE.

The DOE must determine the equivalent share for each manufacturer by comparing the return share to the total weight in pounds of CEPs collected for that program year. By June 1 of each year, the DOE must notify each manufacturer of their equivalent share for the previous year, and shall bill the authority or any authorized party that has not attained its equivalent share. By September 1 of each year, the DOE shall pay the authority or any authorized party that exceeds its equivalent share. Plans using nonprofit organizations for collection services are given a 5 percent credit to be applied towards a plan's equivalent share for pounds that are received for recycling from those organizations.

If a plan collects less than its equivalent share, the Authority or authorized party must pay the DOE an amount to cover the costs of handling those CEPs, plus an administrative fee. Moneys collected by the DOE are deposited in the newly created Electronic Products Recycling Account. If a plan collects more than its equivalent share, the DOE must pay an amount to compensate for the collection of the surplus CEPs.

Plans must finance an auditable, statistically significant sampling of the CEPs entering its program every year. The information collected must include the brand names, product types, weight by brand name, and any additional information needed to assign return share.

Processors, Processing Standards, and Export Reporting Requirements
The Authority or each authorized party must ensure processors remain in compliance with processor standards, reporting requirements, and other requirements as determined by the DOE. Processors of CEPs must document the chain of custody of certain electronic products and components. No plan or program may use federal or state prison labor for processing a CEP.

The DOE shall establish by rule performance standards for environmentally sound management of processors. These standards must include financial assurances to ensure proper closure of a facility that is consistent with environmental standards. The DOE must establish by rule the allowable percent of non-recycled residual that may be properly disposed after CEPs have been processed. The DOE may audit processors used to fulfill the requirement of a plan.

Shipments of certain equipment from processors must comply with all applicable laws. Whenever export occurs, processors must have copies of import permits provided to facilities in recipient countries by their governments, including consent required under international laws and agreements. Any electronic product exported into a reuse market must be tested, certified, and labeled as fully functional or needing minor repairs.

Annual Reporting
By March 1 of the second program year and annually thereafter, the Authority and authorized parties must submit annual reports to the DOE. Annual reports must include the total weight of CEPs recycled by county, collection services by county, the weight of CEPs processed by each processor, documentation of compliance with processing standards, educational and promotional efforts, sampling results, and any other information deemed necessary by the DOE. The Authority's annual report must provide a list of participating manufacturers that have paid their equivalent share to the Authority. Nonprofit organizations that collect CEPs must report by each plan they participate in the weight of CEPs recycled during the previous program year. Financial and proprietary information submitted to or obtained by the DOE is exempt from public records disclosure requirements.

Education and Outreach Requirements
Plans must inform consumers about where and how to reuse and recycle their CEPs, including web site information or a toll-free telephone number. The DOE shall promote CEP recycling by posting information on its web site, providing a toll-free telephone number, or other activities. Local governments must promote recycling through existing educational methods. Retailers must provide information to consumers describing how to recycle CEPs.

State Purchasing Policies
The Department of General Administration (GA) must adopt purchasing polices that establish a preference for electronic products that meet environmental performance standards relating to the reduction or elimination of hazardous materials. The GA must ensure that certain surplus electronic products are managed only by registered transporters and processors. The GA must ensure that their surplus electronic products are directed to legal secondary material markets by requiring a chain of custody record.

Registration, Plan Review, and Other Fees
The DOE shall establish by rule annual registration and plan review fees to fully recover the costs incurred by the DOE in implementing the program. Fees must be based on factors relating to administering the collection and recycling program and be based on a sliding scale representative of annual sales of CEPs in the state. Fees collected by the DOE must be deposited in the Electronic Products Recycling Account to be used to fulfill their duties in administering the program.

Penalties
Manufacturers may not sell or offer for sale a CEP in Washington unless they register with the DOE and they are participating in an approved plan to recycle their CEPs. The DOE must send written warnings to manufacturers that do not have an approved plan giving them notice to participate in an approved plan within 90 days. If manufacturers do not comply, they must be assessed a penalty of up to $10,000. After an additional 90 days, a manufacturer not in compliance is prohibited from offering for sale an electronic product in the state.

If the Authority or an authorized party fails to implement an approved plan, the DOE must assess a penalty of up to $5,000 upon first infraction. After 90 days, the Authority or authorized parties must be assessed a penalty up to $10,000 if they still fail to implement their plans.

Persons not complying with manufacturer registration, education and outreach, reporting, labeling, retailer responsibilities, collector and transporter registration, or processing standards must first receive a written warning. After 90 days, a person must be assessed up to $1,000 for the first citation and $2,000 for subsequent citations.

Legislative Report
By December 31, 2012, the DOE must provide a report to the Legislature containing the following information: the weight of CEPs recycled by plan, by county, and in total; the performance of each plan; a description of the collection programs; an evaluation of how the program compares to other states; comments from local governments; and, recommendations on how to improve the program.

Appropriation: None.

Fiscal Note: Requested on 1/11/06.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.