BILL REQ. #:  H-3273.3 

Read first time 01/13/2006.   Referred to Committee on Natural Resources, Ecology & Parks.

     AN ACT Relating to creating a covered electronic device recycling program; and adding a new chapter to Title 19 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Department" means the department of ecology.
     (2) "Cathode ray tube" or "CRT" means a vacuum tube or picture tube used to convert an electronic signal into a visual image.
     (3) "Consumer" means a person who purchases a covered electronic device in a transaction that is a sale.
     (4) "Computer" means an electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage function, and may include both a computer central processing unit and a monitor. "Computer" does not include an automated typewriter or typesetter, a portable hand held calculator or device, or other similar device.
     (5)(a) "Covered electronic device" means desktop/personal computers, computer monitors, portable computers, desktop printers, televisions, and video displays.
     (b) "Covered electronic device" does not include:
     (i) A covered electronic device that is a part of a motor vehicle, or any component part of a motor vehicle assembled by, or for, a vehicle manufacturer or franchised dealer, including replacement parts for use in a motor vehicle;
     (ii) A covered electronic device that is contained within, or a part of a piece of industrial, commercial, or medical equipment, including monitoring or control equipment; and
     (iii) A covered electronic device that is contained within a clothes washer, clothes dryer, refrigerator, refrigerator and freezer, microwave oven, conventional oven or range, dishwasher, room air conditioner, dehumidifier, or air purifier.
     (6) "Not-for-profit corporation" or "corporation" means the corporation established under section 6 of this act.
     (7) "Manufacturer" means any person who, on or after the effective date of this act, and irrespective of the selling technique used, including by means of remote sale: (a) Manufactures electronic equipment under its own brand; (b) manufactures electronic equipment without affixing a brand; (c) resells equipment produced by other suppliers under its own brand and label; or (d) imports or exports electronic equipment into the United States.
     (8) "Monitor" means a separate visual display component of a computer, whether sold separately or together with a computer central processing unit/computer box, and includes a cathode ray tube, liquid crystal display, gas plasma, digital light processing, or other image projection technology, greater than nine inches when measured diagonally, its case, interior wires and circuitry, cable to the central processing unit, and power cord.
     (9) "Orphan products" are covered electronic devices for which (a) the manufacturer no longer exists and a successor cannot be identified, or (b) no manufacturer can be identified.
     (10) "Portable computer" means a computer and video display that can be carried on a person.
     (11) "Product category" means computer monitors, portable computers, and televisions.
     (12) "Purchase" means the taking, by sale, of title or of the right to use, in exchange for consideration.
     (13) "Recycling" means any process by which covered electronic devices that would otherwise become solid waste are collected, separated, and processed to be returned to use in the form of raw materials or products.
     (14) "Retailer" means a person who owns or operates a business that sells new covered electronic devices by any means to an end user.
     (15) "Reuse" means any operation by which a covered electronic device changes ownership to be used for the same purpose for which it was originally put on the market without additional processing or remanufacturing.
     (16) "ROHS" means restrictions on hazardous substances directive 2002/95/EC of the European Union, adopted by the European parliament and the council of the European Union on January 27, 2003.
     (17) "Sell" or "sale" means any transfer for consideration of title or of the right to use to a consumer, by lease, donation, or sales contract, including, but not limited to, transactions conducted through sales outlets, catalogs, or the internet, or any other, similar electronic means, and excluding wholesale transactions with distributors or dealers.
     (18) "Television" means a stand-alone display system having a viewable area greater than nine inches when measured diagonally and able to adhere to standard consumer video formats such as PAL, SECAM, NTSC and HDTV and has the capability of selecting different broadcast channels and support sound capability.
     (19) "Video display" means an output surface having a viewable area greater than nine inches when measured diagonally that displays moving graphical images or a visual representation of image sequences or pictures, showing a number of quickly changing images on a screen in fast succession to create the illusion of motion, including, if applicable, a device that is an integral part of the display (and cannot be easily removed from the display by the consumer) that produces the moving image on the screen. Displays typically use a cathode ray tube (CRT), liquid crystal display (LCD), gas plasma, digital light processing, or other image projection technology.
     (20) "Visible fee" means a fee that is added to a new product at the point of purchase and is identified to the consumer separately from the product price.

NEW SECTION.  Sec. 2   Beginning July 1, 2008, a covered electronic device recycling fee is hereby imposed upon every sale in the state of a new covered electronic device. The fee amount is established under this section and may not exceed eight dollars.
     (1) Every retailer that sells a new covered electronic device shall collect at the time of sale the fee imposed under this section for each new covered electronic device sold to an end user in this state.
     (2) Each retailer shall transmit all fees collected under this section, minus three percent of total fee revenues which may be retained by the retailer for administrative costs associated with collecting the fee, to the corporation on or before the last day of the month following each quarter, accompanied by any forms prescribed by the department. If a covered electronic device for which the fee has been paid is returned to a retailer under warranty, the fee may be refunded, and the retailer may deduct the amount of returned fee from their remittance to the corporation.
     (3) Funds collected by the corporation shall be used solely for the purpose of funding collection, transportation, and recycling of covered electronic devices, including the discretionary use of funds by the corporation to promote the collection and recycling of covered electronic devices and market development. Collected funds may not be used to pay for activities associated with refurbishment or reuse of covered electronic devices.
     (4) The department shall establish separate fees for different categories of products based on the estimated costs of collection, transportation, and recycling for similar products. Fees collected on one category of product shall not be used to subsidize the collection, transportation, and recycling of different categories of covered electronic devices.
     (5) The fee imposed under this section shall be a visible fee at the point of sale, and imposed after any state, local, or federal sales tax.
     (6) The corporation shall submit a plan to the department for approval. The plan shall provide a funding methodology for collectors and recyclers that utilizes competitive bidding to set reimbursement rates. The development of the funding methodology shall be by rule and must include at least two public hearings in different geographical regions of the state.

NEW SECTION.  Sec. 3   The corporation shall do the following:
     (1) Establish procedures for the imposition of the visible fee on covered electronic devices sold in this state;
     (2) Beginning January 1, 2008, report to the legislature on an annual basis. The purpose of the report is to update the legislature regarding the progress on the implementation of this chapter, including recommendations for changes to this chapter that will ensure the most effective collection of electronic product recycling fees and whether the cap on the fee imposed under section 3 of this act should be adjusted;
     (3) Working with the department, publish the schedule of fees for covered electronic products based on product category by January 1, 2007, and every two years thereafter, taking into consideration the following factors: (a) Current collection, transportation, and recycling costs of covered electronic devices; (b) projected sales of covered electronic devices; (c) projected volume of returns of covered electronic devices to meet performance measures; and (d) actual collection rates during the previous twelve-month period plus a yearly growth projection. The corporation and the department may also take into consideration any surplus funds carried forward and reduce the fee when making fee amount determinations. Any changes in fee levels take effect January 1st of the following year, provided the department publishes the new schedule at least thirty days in advance;
     (4) Organize and coordinate public outreach using existing funds and resources appropriated to the corporation. The corporation shall utilize local and/or regional authorities to reach local residents and determine appropriate methods for education; and
     (5) Achieve the mandated performance goals. The corporation must establish the first year baseline performance goal as a measure of pounds collected per capita, and project the performance goal for subsequent years to meet the performance goals.

NEW SECTION.  Sec. 4   Any party receiving funding under this chapter is prohibited from charging fees for collecting and/or recycling covered electronic devices, except under specified situations to be addressed by the corporation in the development of its plan. Such a situation may include when funding from the corporation does not fully cover the net cost of collection and/or recycling of the covered electronic devices. This chapter does not impact end-of-life fees in effect for products not covered by the chapter.

NEW SECTION.  Sec. 5   A not-for-profit corporation or corporation is hereby established as a 501(c)(3) organization to administer collected fee proceeds from the retail sale of covered electronic devices under this chapter. The purpose of the corporation is to collect fee proceeds from retailers, distribute fee proceeds, work with the department in development and approval of an electronics collection and recycling plan, provide reports on the program to the department and the legislature, and make recommendations regarding the improvement of the collection system. The corporation must submit a budget annually to the department and utilize for administrative expenses no more than five percent of the total funds collected.

NEW SECTION.  Sec. 6   (1) The corporation plan submitted must incorporate, to the extent feasible, a geographic scope to serve all consumers who are subject to the fee. The plan must also rely primarily on existing collection and consolidation infrastructure available for handling covered electronic devices.
     (2) The corporation is hereby established to receive funds collected by the retailers, provide a funding methodology for reimbursement of collectors and recyclers, and to create a recycling system that results in the environmentally sound and cost-efficient collection, transportation, and recycling of covered electronic devices.
     (3)(a) The corporation shall utilize the funding for the sole purpose of carrying out the duties of this chapter. In the event that expenses from collection, transportation, and recycling activities exceed revenues, the corporation is authorized to borrow up to ten percent of the projected annual net fee funds from outside sources. Borrowed funds must be repaid within two years.
     (b) By April 1, 2007, the corporation shall submit a plan to the department describing the details of the program. The plan shall be resubmitted to the department every two years, and presumed approved if the plan includes all of the following:
     (i) An estimate of the weight of covered electronic devices expected to be recycled to meet the performance measures;
     (ii) Details on the funding methodology to be used to fund the system;
     (iii) Details on how the state's existing solid waste and recycling collection infrastructure will be used to maximize product collection activities;
     (iv) A demonstration that the collection system will provide collection opportunities across the state, covering all areas where products are sold; and
     (v) Procedures for monitoring the performance of product recyclers, including periodic audits, to meet the environmentally sound management requirements. Corporation activities may not interfere with or supersede existing roles and responsibilities of applicable state regulatory agencies.
     (c)(i) Once the corporation plan has been submitted to and approved by the department, the corporation may begin to disburse the funds and implement the plan. If the department, upon review of the plan, finds that it fails to meet any of the requirements, or that the plan cannot reasonably be expected to achieve the performance measures, then the department has the authority to suspend fee collection until the plan has been modified and the modifications are approved by the department.
     (ii) Once per calendar year, the corporation shall file a report with the department that describes the implementation of the system during the year. The report shall identify the total weight of covered electronic devices received during the preceding year by product category, together with the total weight of products recycled in each product category. The report shall also include a list of all parties participating in the system.
     (d) The corporation must have a board of directors consisting of eleven members appointed by the department. The board members are appointed for two-year terms, except that for the initial term, three members are appointed to one-year terms and four members are appointed to two-year terms. The department shall appoint a replacement if any vacancy occurs. The board must consist of representatives of the following:
     (i) Five manufacturers of covered electronic devices;
     (ii) Two retailers of covered electronic devices;
     (iii) One recycler of covered electronic devices;
     (iv) One environmental not-for-profit organization with experience in the recycling of covered electronic devices; and
     (v) Two government representatives, including one from local government.
     (e) The board shall select the chief executive officer along with the officers of the corporation. The chief executive officer and officers run the day-to-day operations of the corporation and report to the board at least once a year.
     (4) The corporation shall encourage collectors, transporters, and recyclers to coordinate their efforts in order to minimize costs. All contracts issued by the corporation for recyclers must be competitively bid and the contracts may not prohibit or affect any contract, franchise, permit, or other arrangement regarding the collection or recycling of other solid or household hazardous waste.

NEW SECTION.  Sec. 7   (1) The corporation may not disburse funds unless the plan demonstrates that the covered electronic devices collected by the applicant will be recycled, refurbished, or disposed in a manner that is in compliance with all applicable federal, state, and local laws, regulations, and ordinances, and that the devices will not be exported for disposal in a manner that poses a significant risk to the public health or the environment.
     (2) The department shall establish performance requirements for recyclers eligible to receive funds from the corporation. The department shall require recycling vendors, at a minimum, to demonstrate compliance with the United States environmental protection agency's guidance on environmentally sound management of electronic products in addition to any other requirements mandated by state law.
     (3) The department shall keep on file and update a list of recyclers approved to recycle the covered electronic devices. A copy of the list, including all changes to the list since the previous year, shall be sent to the corporation annually for use in fulfilling its requirements under section 6 of this act.
     (4) The department shall immediately remove from the list any recycler who, as the result of an audit by the corporation or the department, has failed to meet the criteria established under subsection (1) of this section, or who has been convicted of violating any federal, state, or local statute related to the collection, transport, or processing of covered electronic products.
     (5) The corporation and its board are not financially liable for any violation of a federal, state, or local law, by a recycler appearing on the list created and updated by the department.

NEW SECTION.  Sec. 8   (1) Beginning July 1, 2007, a manufacturer may not offer for sale in this state a covered electronic device unless a visible, permanent label clearly identifying the brand or manufacturer of that device is affixed to it.
     (2) By April 1, 2007, manufacturers of covered electronic devices must notify retailers or distributors that the covered electronic device is subject to the advance recovery fee.
     (3) Beginning July 1, 2007, whichever is later, it is unlawful for a retailer to sell a covered electronic device in the state unless a visible fee is collected and remitted back to the corporation.
     (4) In the event that a company is found in violation of this section, a civil penalty of twenty-five dollars per violation will be assessed by the department. Penalty amounts and violations will be calculated based on the number of individual units sold.
     (5) Any fine collected under this chapter must be transferred to the department. The money collected and distributed must be used to offset enforcement expenses.
     (6) Manufacturers and retailers, upon providing a sixty-day notice to the attorney general and to a manufacturer or retailer who is not collecting and remitting the fee, have the right to sue that manufacturer or retailer for failure to collect and/or remit the fee to the corporation. During the sixty-day notice period, if the attorney general initiates action against the manufacturer or retailer, then the ability of the manufacturer to sue is extinguished. Manufacturers and retailers who successfully challenge a noncompliant manufacturer shall be entitled to receive their litigation costs as well as double the penalties assessed under this chapter.

NEW SECTION.  Sec. 9   (1) The department, upon review of the second annual report of the corporation, has the authority to ban the disposal of covered electronic products in the state. When making that determination, the department must find that the program has sufficient infrastructure in place to handle the collection and processing of all covered electronic products generated annually in the state. The department must also take into account market development for uses of the recycled materials, both within and outside the state, and other factors prior to proposing a disposal ban.
     (2) If the department does institute such a ban, the department has the authority to fine anyone who knowingly disposes of a covered product in violation of the ban twenty-five dollars per unauthorized unit of product plus the cost of recycling that product.

NEW SECTION.  Sec. 10   The corporation shall establish a market development program to enhance existing, or develop new, end markets for remanufactured products and recycled materials. No more than one percent of the funds may be spent on this program.

NEW SECTION.  Sec. 11   (1) Any state department or local government that purchases or leases equipment, materials, or supplies shall require each prospective bidder, to certify that it, and its agents, subsidiaries, partners, joint ventures, and subcontractors for the procurement, are in compliance with this chapter. Failure to provide the certification renders the prospective bidder and its agents, subsidiaries, partners, joint ventures, and subcontractors ineligible to bid on the procurement.
     (2) Any person awarded a contract by a state department or local government that is found to be in violation of this chapter is subject to the following sanctions:
     (a) The contract must be voided by the entity to which the equipment, materials, or supplies were provided;
     (b) The contractor is ineligible to bid on any contract for a period of three years; and
     (c) If the attorney general establishes that a contractor as a result of violating this chapter obtained any money, property, or benefit, the court may, in addition to any other remedy, order the disgorgement of the unlawfully obtained money, property, or benefit in the interest of justice.

NEW SECTION.  Sec. 12   (1) The fifth year collection goal is one and three-quarters pounds per capita of covered electronic devices. After the fifth year or upon achievement of this collection goal, the department, working with the corporation, will establish the performance goals as measure of pounds collected per capita for future years.
     (2) In establishing annual performance goals for the first five years, the corporation shall take into consideration the time required for ramping up the required infrastructure for such a system. If at any point following enactment of this chapter the corporation concludes that the one and three-quarters pounds per capita goal is not practicable, the corporation shall report such a finding to the department and the legislature and recommend that the goal be adjusted.
     (3) The corporation is responsible for achieving the collection goal.

NEW SECTION.  Sec. 13   (1) Manufacturers are responsible for all of the following:
     (a) Collecting and remitting the advanced recycling fee on all direct sales to final customers in the state, including telephone, catalogue, and internet sales;
     (b) Making information available to consumers describing where and how to return, recycle, and dispose of the covered electronic products, through the use of product operation manuals, industry or manufacturer web sites, product labels, packaging inserts, or toll-free telephone numbers;
     (c) Providing recyclers with information on the type and location of hazardous substances in the covered products.
     (2) Beginning July 1, 2007, and annually thereafter, manufacturers must submit a report to the department on their environmental improvements. As a minimum, the report shall contain the following:
     (a) The estimated sale of the covered products within the state in the past year;
     (b) A baseline, or set of baselines that shows the total estimated amounts of lead, mercury, hexavalent chrome, and cadmium utilized in ROHS exempt applications in products sold within the state in the previous year;
     (c) A baseline, or set of baselines that shows the total estimated amounts of recyclable materials contained in covered electronic products sold within the state in the previous year, and increases the use of those materials over previous years; and
     (d) A baseline, or set of baselines that describes any efforts to design covered electronic products for recycling and goals or plans for further increasing design for recycling.
     (3) In lieu of an individual report, manufacturers may submit the information in a collated report submitted via a trade association provided that information about an individual company can be made available to the state upon written request by the department. The department can only make such a request for auditing purposes and not more than once during a five-year period. The state may not make public any confidential business information claimed by the manufacturer in the report.
     (4) A report submitted to another state or to the federal government that contains the same information as required in this section may be accepted by the department in lieu of a separate report for the state.

NEW SECTION.  Sec. 14   The department may adopt rules for the purpose of administering this chapter.

NEW SECTION.  Sec. 15   During 2014, the department shall convene a stakeholder group to evaluate the program and make recommendations to the legislature by January 1, 2015, as to whether to:
     (1) Continue the advanced recycling fee;
     (2) Implement another financing alternative; or
     (3) Determine that no outside financing mechanism is required to ensure that the system is financially solvent.

NEW SECTION.  Sec. 16   Sections 1 through 15 of this act constitute a new chapter in Title 19 RCW.