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ELECTRONIC WASTE: AN EXAMINATION OF CURRENT ACTIVITY, IMPLICATIONS FOR ENVIRONMENTAL STEWARDSHIP, AND THE PROPER FEDERAL ROLE

HEARINGS

BEFORE THE

SUBCOMMITTEE ON ENVIRONMENT AND

HAZARDOUS MATERIALS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JULY 20 and SEPTEMBER 8, 2005

Serial No. 109–33

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas

MICHAEL BILIRAKIS, Florida

Vice Chairman

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi, Vice Chairman

VITO FOSSELLA, New York

ROY BLUNT, Missouri

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

C.L. ‘‘BUTCH’’ OTTER, Idaho

SUE MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOHN D. DINGELL, Michigan

Ranking Member

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

TOM ALLEN, Maine

JIM DAVIS, Florida

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

BUD ALBRIGHT, Staff Director

DAVID CAVICKE, Deputy Staff Director and General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON ENVIRONMENT AND HAZARDOUS MATERIALS

PAUL E. GILLMOR, Ohio, Chairman

RALPH M. HALL, Texas

NATHAN DEAL, Georgia

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

VITO FOSSELLA, New York

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

LEE TERRY, Nebraska

MIKE ROGERS, Michigan

C.L. ‘‘BUTCH’’ OTTER, Idaho

SUE MYRICK North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

JOE BARTON, Texas,

(Ex Officio)

HILDA L. SOLIS, California

Ranking Member

FRANK PALLONE, Jr., New Jersey

BART STUPAK, Michigan

ALBERT R. WYNN, Maryland

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

JAY INSLEE, Washington

GENE GREEN, Texas

CHARLES A. GONZALEZ, Texas

TAMMMY BALDWIN, Wisconsin

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

C O N T E N T S

Page

Testimony of:

Breen, Barry, Deputy Assistant Administrator, Office of Solid Waste and

Emergency Response, Environmental Protection Agency ......................... 18

Brugge, Parker E., Senior Director and Environmental Counsel, Consumer Electronics Association ..................................................................... 151

Davis, Gerald L., President & CEO, Goodwill Industries of Central Texas,

Inc .................................................................................................................. 162

Denbo, Joel, Chair, Institute of Scrap Recycling Industries, Inc ................. 130

Gallagher, Hon. Dawn R., Commissioner, Maine Department of Environmental Protection .......................................................................................... 46

Largent, Steve, President and CEO, CTIA-The Wireless Association ......... 139

McCurdy, Dave, President and CEO, Electronic Industries Alliance .......... 145

Mule, Hon. Rosalie, Member, California Integrated Waste Management

Board .............................................................................................................. 97

Murray, Mark, Executive Director, Californians Against Waste ................. 168

Philbrick, Hon. Kendl P., Secretary, Maryland Department of the Environment .......................................................................................................... 33

St. Denis, Renee, Director, Americas Product Take Back, Hewlett-Packard Company ................................................................................................. 181

Thompson, David A., Director, Corporate Environmental Department,

Panasonic Corporation of North America ................................................... 154

Vitelli, Michael, Senior Vice President, Best Buy, on behalf of Consumer

Electronic Retailers Coalition ...................................................................... 134

Wu, Benjamin H., Deputy Undersecretary, Office of Technology, Department of Commerce ........................................................................................ 13

Material submitted for the record by:

Brandon, Carolyn, Vice President, Policy, CTIA-The Wireless Association 192

Breen, Barry, Deputy Assistant Administrator, Office of Solid Waste and

Emergency Response, Environmental Protection Agency:

Response for the record ............................................................................. 107

Post follow-up response for the record ..................................................... 244

Brugge, Parker E., Senior Director and Environmental Counsel, Consumer Electronics Association, response for the record ............................. 203

Council of State Governments/Eastern Regional Conference, prepared

statement of ................................................................................................... 274

Davis, Gerald L., President & CEO, Goodwill Industries of Central Texas,

Inc., response for the record ......................................................................... 208

Denbo, Joel, Chair, Institute of Scrap Recycling Industries, Inc., response

for the record ................................................................................................. 213

Gallagher, Hon. Dawn R., Commissioner, Maine Department of Environmental Protection, response for the record ................................................. 118

Largent, Steve, President and CEO, CTIA-The Wireless Association, response for the record ..................................................................................... 218

McCurdy, Dave, President and CEO, Electronic Industries Alliance, response for the record ..................................................................................... 222

Mule, Hon. Rosalie, Member, California Integrated Waste Management

Board, response for the record ..................................................................... 113

Murray, Mark, Executive Director, Californians Against Waste, response

for the record ................................................................................................. 231

Philbrick, Hon. Kendl P., Secretary, Maryland Department of the Environment, response for the record ................................................................. 123

St. Denis, Renee, Director, Americas Product Take Back, Hewlett-Packard Company, letter dated October 6, 2005, enclosing response for

the record ....................................................................................................... 195

Thompson, David A., Director, Corporate Environmental Department,

Panasonic Corporation of North America, response for the record .......... 235

Vitelli, Michael, Senior Vice President, Best Buy, on behalf of Consumer

Electronic Retailers Coalition, response for the record ............................. 240

Wu, Benjamin H., Deputy Undersecretary, Office of Technology, Department of Commerce, response for the record ............................................... 108

(III)

(1)

ELECTRONIC WASTE: AN EXAMINATION OF

CURRENT ACTIVITY, IMPLICATIONS FOR

ENVIRONMENTAL STEWARDSHIP, AND THE

PROPER FEDERAL ROLE

WEDNESDAY, JULY 20, 2005

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

SUBCOMMITTEE ON ENVIRONMENT

AND HAZARDOUS MATERIALS,

Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room

2123 of the Rayburn House Office Building, Hon. Paul E. Gillmor

(chairman) presiding.

Members present: Representatives Gillmor, Bass, Bono, Otter,

Solis, Allen, and Schakowsky.

Staff present: Mark Menezes, chief counsel for energy and the

environment; Tom Hassenboehler, majority counsel; Jerry Couri,

policy coordinator; Peter Kielty, legislative clerk; and Dick

Frandsen, minority senior counsel.

Mr. GILLMOR. The subcommittee will come to order.

We have a somewhat unusual situation. The full Energy and

Commerce Committee is meeting at the same time on a markup

session that was expected to conclude this morning, but is probably

going to go all day. Consultations with the full committee Chairman Barton felt it was important that we go ahead with this hearing. And it is possible, however, because they have a number of

contentious votes expected down there, that we will get a call and

we will have to recess this briefly so that we go down and vote and

then we will come down and reconvene.

We did have a couple of members who have been active in the

e-waste issue who expressed an interest in making a 2-minute

opening statement.

Mrs. Slaughter of New York, if you care to, you can either do

that up here or at the witness table or however you wish.

Ms. SLAUGHTER. Thank you very much, Chairman Gillmor and

Ranking Member Solis, for holding this important hearing and allowing members of the E-Waste Working Group to make the opening statements.

Electronic waste, or e-waste, comes as a broad range of discarded

electronic products, including computers, televisions, cell phones,

and PDAs. In today’s high-tech era, e-waste has become one of the

fastest growing sectors of the countries solid waste stream, with

2

Americans disposing of at least 2 million tons of electronic products

a year.

Management of e-waste products is of concern in part because of

their volume, but more importantly because they contain large

amounts of heavy metals and other toxic substances, such as mercury and cadmium. As we will hear from the EPA, these metals

can be released into the environment, causing irreparable harm to

the air and waterways.

The bipartisan E-Waste Working Group was recently formed to

raise awareness in Congress on the issue of e-waste and to jumpstart talks on the need for a national approach to this problem.

This hearing is a good first step in these efforts.

California, Maine, and Maryland, and a growing number of cities

have passed legislation to mitigate the impacts of e-waste. At least

20 additional State legislatures have followed suit and begun debate on how best to approach e-waste disposal. And the European

Union is set to begin implementation of their e-waste regulations

in August. The United States, to date, has done little to address

the problem of e-waste on the national scale. While retailers and

manufacturers have created voluntary recycling programs, they are

too small in scope to make much of a dent in the e-waste stream.

No one wants a patchwork of different State and local regulations

that make it impossible to deal effectively with e-waste and which

can place our manufacturers and retailers at a competitive disadvantage.

As the saying goes, an ounce of prevention is worth a pound of

cure, and a national policy will create a comprehensive infrastructure for recycling e-waste and protect Americans from the potential

dangers that it poses. Additionally, a uniform plan will help, not

hinder, manufacturers’ and retailers’ competitive edge in the marketplace.

As a member of the E-Waste Working Group, I look forward to

learning more about the EPA’s efforts to craft an e-waste strategy

and hearing the different approaches we can take at the national

level. Thank you very much, Mr. Chairman, Ms. Solis, for holding

this important hearing. I appreciate how busy you are, and we are

very grateful to you for the time.

Thank you.

[The prepared statement of Hon. Louise McIntosh Slaughter follows:]

PREPARED STATEMENT OF HON. LOUISE SLAUGHTER, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW YORK

Thank you, Chairman Gillmor and Ranking Member Solis, for holding this important hearing, and for allowing members of the E-Waste Working Group to make an

opening statement.

Electronic waste, or e-waste, encompasses a broad range of discarded electronic

products, including computers, televisions, cell phones, and PDAs. In today’s hightech era, e-waste has become one of the fastest-growing sectors of the country’s solid

waste stream, with Americans disposing of at least 2 million tons of electronic products a year.

Management of e-waste products is of concern, in part, because of their volume,

but more importantly because they contain large amounts of heavy metals and other

toxic substances such as mercury and cadmium. As we will hear from the EPA,

these metals can be released into the environment causing irreparable harm to the

air and waterways.

3

The bipartisan E-Waste Working Group was recently formed to raise awareness

in Congress on the issue of e-waste, and to jump-start talks on the need for a national approach to the problem. This hearing is a good first step in these efforts.

California, Maine, and Maryland—and a growing number of cities—have passed

legislation to mitigate the impacts of e-waste. At least 20 additional state legislatures have followed-suit and begun debate on how best to approach e-waste disposal.

And the European Union is set to begin implementation of their e-waste regulations

in August.

Yet the U.S. has done little to address the problem of e-waste on a national scale.

While retailers and manufacturers have created voluntary recycling programs, they

are too small in scope to make much of a dent in the e-waste stream.

No one wants a patchwork of different state and local regulations that make it

impossible to deal effectively with e-waste, and which can place our manufacturers

and retailers in a competitive disadvantage.

As the saying goes, an ounce of prevention is worth a pound of cure. A national

policy will create a comprehensive infrastructure for recycling e-waste and protect

Americans from the potential dangers it poses. Additionally, a uniform plan will

help—not hinder—manufacturers and retailer’s competitive edge in the marketplace.

As a member of the E-Waste Working Group, I look forward to learning more

about the EPA’s efforts to craft an e-waste strategy, and hearing the different ewaste approaches we can take at the national level.

Thank you again, Mr. Chairman, for holding this important hearing.

Mr. GILLMOR. Thank you very much. It is good to have you here.

And also, Congressman Thompson is here, so we would be

pleased to recognize you for an opening statement.

Mr. THOMPSON. Mr. Chairman, thank you very much. Ranking

Member Solis, thank you.

I have a statement that I will just submit for the record, if it is

all right, Mr. Chairman. I will just make——

Mr. GILLMOR. No, without objection. Certainly.

Mr. THOMPSON. [continuing] a couple remarks, if I could.

First, I want to thank all of the members of the E-Waste Working Group, and one is your very able committee member, Ms. Bono,

from California.

And I think we all come to this issue with the same thought in

mind. Myself, I have a bill that deals with this, but I want to be

really up-front with you and let you know I am not married to that

solution, that bill. I just want to be able to work collectively to figure out how we are going to deal with this very, very serious problem. Today, the life span of a computer is about 2 years. You already heard Americans are disposing of about 3,000 tons of computers each day. It is a growing problem, and we need to figure out

what we are going to do to address it in a comprehensive manner.

As was mentioned in the earlier testimony, three States have already passed State laws dealing with this. Twenty-six other States

are in the process of looking at State legislation. And all this is

going to do is create a patchwork of solutions across the country.

It is going to make it tough on manufacturers. It is going to make

it tough on retailers and make it tough on consumers. So I think

we have an opportunity from the Federal level to step in and help

put together that comprehensive plan so we can turn e-waste into

e-scrap and solve this problem, or at least take appreciable steps

in solving this problem once and for all.

So I commend you, Mr. Chairman, for holding this hearing and

appreciate the fact that you are looking at the problem, and I look

forward to working with you as our working group continues to do

its work.

4

Thank you.

[The prepared statement of Hon. Mike Thompson follows:]

PREPARED STATEMENT OF HON. MIKE THOMPSON, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Good afternoon and thank you for inviting me here today to comment briefly on

electronic waste—or ‘‘e-waste’’. I appreciate Chairman Gillmor and Ranking Member

Solis allowing me to be a part of the first congressional hearing on the subject of

e-waste, a subject I’ve been involved with since I was first elected to Congress.

Electronic products are becoming smaller and lighter, but they also are creating

an ever-growing environmental and waste disposal problem. That’s because it’s often

cheaper and more convenient to buy a new PC or cell phone than to upgrade an

old one.

Today, the average lifespan of a computer is only two years and Americans are

disposing of 3,000 tons of computers each day. Consumers Union, publisher of Consumer Reports, recently estimated that the typical household could expect to discard

approximately 68 electronic items over the next 20 years including: 20 cell phones,

10 computers, 7 TVs, 7 VCRs or DVD players and several answering machines,

printers and CD players.

While e-waste contains a number of valuable materials that are recoverable—including aluminum, gold, silver and other metals, it also contains a witches’ brew of

toxic material—such as lead, mercury and cadmium. If not properly disposed of

these toxic materials can cause health and environmental problems. For example,

the glass of a typical computer monitor contains six pounds of lead. When this glass

is crushed in a landfill, the lead escapes into the environment. According to the Environmental Protection Agency (EPA), lead becomes hazardous to human health

when one is exposed to only 1.5 ounces of its dust.

There’s a Native American proverb about stewardship, which says: ‘‘We don’t inherit the earth from our ancestors, we borrow it from our children.’’ To give you an

idea of the potential legacy we are leaving future generations, the National Safety

Council has projected that approximately 300 million computers are obsolete. If all

300 million units were discarded, this would involve nearly one billion pounds of

lead, two million pounds of cadmium and 400,000 pounds of mercury.

We’ve done little to address the problem of e-waste on a national scale. Although

some retailers and manufacturers have created voluntary recycling programs, they

are too small in scope to make much of a dent in the e-waste stream. Without a

national recycling infrastructure—collection programs, disassembly facilities and reprocessing plants—consumers and businesses today are left with few choices for getting rid of their old computers, cell phones and other electronic devices. Most people

shove them in a spare closet or corner and wait. When people do try to dispose of

their e-waste responsibly, all too often it is shipped overseas. There, it and its toxins

can land in riverbeds or in the hands of unprotected workers.

The buildup of e-waste on the local and state level has led California, Maine and

Maryland to implement their own e-waste laws—each very different from one another. Twenty-six additional states are also considering e-waste legislation. As

states continue to develop their own approaches the need for a federal solution only

grows. Without federal action both consumers and businesses will have to contend

with an unmanageable patchwork of state laws. This might also put many U.S.

manufacturers at a competitive disadvantage if they have to juggle multiple state

regulations.

My colleagues and I formed the Congressional E-Waste Working Group with the

objective of investigating possible federal e-waste solutions and educating Members

of Congress about the issue. At our first event, a forum entitled, ‘‘E-Waste: Is a National Approach Necessary?’’ we invited all stakeholders, including consumers, manufacturers, retailers, recyclers, environmentalists and nonprofits. All agreed to the

value of a national approach to e-waste.

I thank the subcommittee for bringing much needed attention to this issue and

to allow us to gather expert testimony on the problem of e-waste. I—and other members of the E-Waste Working Group—look forward to working with you to find a

comprehensive way to reduce e-waste in a way that considers the interests of all

stakeholders.

Mr. GILLMOR. Thank you very much.

And we will go a little bit out of order. A member of the E-Waste

Working Group and also a member of this subcommittee is Ms.

Bono of California, so we will move you up to the top of the order

5

as being part of the working group, and I recognize you for any

statement you may wish to make.

Ms. BONO. Thank you, Mr. Chairman.

I would like to thank you very much for calling this hearing

today. I appreciate your willingness to explore all aspects of this

issue. And unfortunately, as you all know, we have a big markup

going on downstairs, so we will be popping up and down, and that

is not an indication of our not caring about the issue. But unfortunately, some demands that didn’t meet with our time. So I would

really like to thank my colleagues for testifying.

Recently, we have come across a wide array of proposed solutions

to the e-waste dilemma, from doing nothing, to enabling the Federal Government to bear the burden, to everything in between. Because this is our first official Federal look at the issue, I believe

that everything should remain on the table. I am also interested

in examining what the actual amount of e-waste is and its implications on the environment. There are varying opinions on its impacts. In order to have a better understanding of what it is we are

dealing with, we need to address these basic questions. Because

many States have either mandated or considering a mandate to recycle, I understand why both manufacturers and retailers are looking for some kind of continuity. It puts our companies at a disadvantage and raises the cost of this equipment on the consumer

if we had a number of different policies nationwide.

Finally, Congress needs to look abroad to see what kinds of policies are employed by other nations that have moved ahead with reducing e-waste. While the United States is not under any obligation to mirror these exact policies, it is in our interest to keep our

high-tech companies remaining competitive in these markets. If by

doing so we also help our environment here at home, all the better.

Mr. Chairman, yesterday, on the floor, I spoke briefly to my colleagues about a recent Washington Times article, which I think

was entirely misleading. And one of my colleagues suggested that

the best way to handle the e-waste problem was to suggest to all

of those trying to dispose of computers and televisions and printers

and stuff to just simply take their e-waste over to the Washington

Times office and leave it there on their doorstep. So it is obvious

that that is not a real option for us, but I look forward to our witnesses to hear what you have to say.

And thank you for being here.

Thank you, Mr. Chairman.

Mr. GILLMOR. Thank you very much.

As we have only two things going on at the same time for all of

us, I am going to request unanimous consent that all members may

have 5 days to enter opening statements into the record. Some can

not be here.

And the chair will recognize himself for the purpose of an opening statement.

Our subcommittee today is making history by holding the firstever Congressional hearing on the subject of what our Nation

should do with the growing amount of electronic devices that will

need to be disposed of or recycled. It is not an issue that is going

to go away any time soon, particularly when you consider that we

are about to make the transition to completely digital television. I

6

believe members need to understand the many facets of this issue

in case there should come a time when our committee may need

to act.

In the past, our subcommittee has spent time looking at waste

disposal issues that have directly called into question the amount

of waste capacity we have in this Nation and whether communities

are able to develop comprehensive waste management plans.

The decision we, as a government and a society, make about the

end-of-use activities of these products is no different. Three States

have acted, because they believe something needs to be done about

e-waste, and 23 other States have this on their radar screens in

some fashion.

If you look at the model of the Solid Waste Disposal Act, which

establishes a national structure and minimum guidelines for the

handling of waste streams, clearly one can see the implications for

electronic waste, from both the solid or hazardous waste perspectives, not to mention Federal laws dealing with recycling and recycled materials. In additional, the Low-Level Radioactive Waste Policy Act gives Congress the role of approving multi-State compacts

that address this type of waste, an interesting thought considering

the actions of some State coalitions.

Any way you look at this issue, though, the time is right for us

to examine the state of electronic recycling in this country and

whether a Federal solution should be considered for electronic

waste.

I am very pleased that the subcommittee has received an overwhelming and a positive response from many quarters about our

desire to have this hearing. And in order to accommodate the

greatest diversity of witnesses as well as use the time we have in

the most efficient way, considering both of the activities on the

House floor and House-Senate conferences on the energy and the

highway bills, we are going to bifurcate this hearing. Today will be

the first part where we will hear from the Federal Government and

the three State governments that have passed e-waste recycling

laws.

Those are important perspectives, because we need to know if

voluntary initiatives or differing State standards are preferable

public policy outcomes, or whether they are economic and environmental disasters waiting to occur.

Our second part of the hearing will be scheduled for when the

House returns in September, and at that time, we will hear from

electronics manufacturers, retailers, associations, recyclers, charitable organizations, and environmental groups who each have important, informed perspectives and many experiences to share from

both the domestic and international activities.

I believe that this hearing should attempt to answer a few simple

questions. They include: How do various parties define electronic

waste? What are these parties doing to address the concerns they

have? What responsibilities do they believe the public and private

sectors share in addressing the e-waste? And what responsibilities

do all the stakeholders, including private citizens have? Is the status quo of voluntary programs or individual State laws adequate or

appropriate? And what role, if any, should the Federal Government

play?

7

I look forward to the testimony of our witnesses and the answers

that they will give us on those questions.

And before I yield to Ranking Member Solis, so she can make an

opening statement, I would like to welcome a few people and thank

others. First, let me thank our distinguished panelists who will testify for the committee today, including Mr. Breen of the EPA and

Mr. Wu from the Department of Commerce, the environmental

heads of Maine and Maryland, as well as a representative from the

California Waste Management Board.

And second, I want to thank the leadership of the Congressional

E-Waste Caucus for their presence today, Mr. Thompson, Mrs.

Slaughter. And I also want to congratulate Mary Bono, a member

of our subcommittee, who has worked very hard on e-waste issues

as a co-chair of the Congressional E-Waste Caucus and has been

very helpful and encouraging to me in putting together this hearing.

I also want to alert the members that we have witnesses who

have made sacrifices to be with us today and are on tight lines due

to travel concerns, and we should try to keep that in mind as we

proceed.

And I am now very pleased to yield 5 minutes to the ranking

member of the committee, Ms. Solis of California.

[The prepared statement of Hon. Paul E. Gillmor follows:]

PREPARED STATEMENT OF HON. PAUL GILLMOR, CHAIRMAN, SUBCOMMITTEE ON

ENVIRONMENT AND HAZARDOUS WASTE

The Subcommittee will now come to order and the Chair will recognize himself

for five minutes for the purposes of making an opening statement.

Today, our Subcommittee makes history by holding the first-ever congressional

hearing on the subject of what our nation should do with the growing amount of

electronic devices that will need to be disposed or recycled. This is not an issue that

is going away any time soon—particularly when you consider that we are about to

make the transition to completely digital television—and I believe Members need to

understand the many facets of this issue in case the time should come where our

Committee may need to act.

In the past, our Subcommittee has spent time looking at waste disposal issues

that have directly called into question the amount of waste capacity we have in this

nation, and whether communities are able to develop comprehensive waste management plans.

The decisions we as government and society make about the end-of-use activities

of these products is no different. Three states have acted because they believe something needs to be done about e-waste and 23 other states also have this issue on

their ‘‘radar screens’’ in some fashion. If you look at the model of the Solid Waste

Disposal Act, which establishes a national structure and minimum guidelines for

the handling of waste streams, clearly one can see implications for electronic

waste—from solid or hazardous waste perspectives—not to mention Federal laws

dealing with recycling and recycled materials. In addition, the Low-Level Radioactive Waste Policy Act gives Congress the role of approving multi-state compacts

that address this type of waste—an interesting thought considering the actions of

some state coalitions. Any way you look at this issue, though, the time ripe for us

to examine the state of electronic recycling in our country, and whether a Federal

solution should be considered for electronic waste.

I am pleased to announce that the Subcommittee has received an overwhelming

and positive response from many quarters about its desire to have this hearing. In

order to accommodate the greatest diversity of witnesses as well as use the time

we have in the most efficient way considering the activities on the House floor and

House-Senate conferences on the energy and highway bills, the Subcommittee will

bifurcate this hearing. Today will be the first part where we will hear from the Federal government and the three state governments that have passed e-waste recycling laws. These are important perspectives because we need to know if voluntary

initiatives or differing state standards are preferable public policy outcomes, or are

8

economic and environmental disasters waiting to occur. Our second part of this

hearing will be scheduled for when the House returns in September. At that time,

we will hear from electronics manufacturers, retailers, associations, recyclers, charitable organizations, and environmental groups who each have important, informed

perspectives and many experiences to share from both domestic and international

activities.

Again, I believe this hearing should attempt to find answers to a few simple questions. These include: How do various parties define electronic waste? What are these

parties doing to address the concerns they see? What responsibilities do they believe

the private and public sector share in addressing e-waste? What responsibilities do

all the stakeholders, including private citizens? Is the status quo of voluntary programs or individual state laws adequate or appropriate? What role, if any should

the Federal government play? I look forward to the testimony of our witnesses and

the answers they will give us on these matters.

Before I yield to the Ranking Member of the Subcommittee, Mrs. Solis, so she can

make her opening statement; I want to welcome a few people and thank others.

First, let me thank our distinguished panelists who will testify for our committee

today, including Mr. Breen from EPA and Mr. Wu from the Department of Commerce, the environmental heads of states of Maine and Maryland, as well as a representative from the California Waste management board. Second, I want to welcome as well as thank the leadership of the Congressional E-Waste Caucus for their

presence today, Mr. Thompson, Mrs. Slaughter, and Mr. Cunningham. Finally, I

want to congratulate Mary Bono, a member of our subcommittee, who has worked

very hard on e-waste issues as a co-chair of the Congressional E-Waste Caucus and

who has been very helpful and encouraging to me in putting together this hearing.

With that, I yield five minutes to Mrs. Solis.

Ms. SOLIS. Good afternoon, and thank you, Chairman Gillmor,

and thank you very much for having this first hearing on electronic

waste.

I also want to thank the previous speakers that came before us

to speak, Representative Slaughter, Representative Thompson, and

Congresswoman Bono.

I would like to also take this opportunity to recognize Rosalie

Mule, who is here from California, who has joined us to serve on

the second panel and also represents the California Integrated

Waste Management Board, and recognize also Carol Mortenson, I

believe, who is also here with her.

I want to thank the chairman for cooperating his staff and ours

in bifurcating this hearing so that we can consider information

from the large number of stakeholders that are involved. And I

hope we can continue to work in this manner. I think it is very uplifting to know that at least on an issue like this we can come together.

These issues include a number of which are discussed in the conference meeting for the energy bill.

Mr. GILLMOR. Excuse me. Excuse me.

We have got a vote on, and if it is all right with you, we will recess very briefly, go vote, come back, and you can finish your statement.

Ms. SOLIS. That is fine.

Mr. GILLMOR. Okay. You don’t get penalized time-wise.

[Brief recess.]

Mr. GILLMOR. The committee will come back to order.

And we will continue with the statement of Ranking Member

Solis.

Ms. SOLIS. Thank you, Mr. Chairman.

And I do want to submit my statement for the record in its full

length, and I realize that we have some witnesses here that may

have to leave a lot sooner, but I do want to state my opinion.

9

And that is that e-waste is the fastest growing portion of our

waste stream, growing almost three times faster than our overall

municipal waste stream. Six million desktop and laptop computers

in the United States will be obsolete. A pile of these obsolete computers would reach a mile high, cover six acres. That is the same

as a 22-story pile of e-waste covering the entire 472 square miles

of the city of Los Angeles. E-waste has become the new hazardous

waste crisis. E-waste contains toxic substances, such as lead, cadmium in circuit boards, lead oxide, cadmium in monitor cathode

ray tubes, and mercury in switches.

So given these facts, we know that there is an urgency for us to

do something, and I am very proud that California has been one

of those leading States on this issue for many, many years, and I

was very pleased to see Congressman Mike Thompson here, who I

served with in the California legislature when we were dealing

with these issues some 7 and 8 years ago.

And I am delighted to have our witnesses here.

I will, with that, just relinquish my time and submit my statement for the record. I request unanimous consent to do that.

Mr. GILLMOR. Without objection.

[The prepared statement of Hon. Hilda L. Solis follows:]

PREPARED STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Good afternoon. I would like to thank Chairman Gillmor for holding this important hearing on electronic waste. I also want to thank our witnesses for coming. I

would like to recognize Rosalie Mule who will join us on the second panel today

from California’s Integrated Waste Management Board and recognize Caroll

Mortensen who has joined her.

I want to thank the Chairman for the cooperation of his staff in bifurcating this

hearing so we can consider information from the large number of stakeholders involved. I hope we can continue to work in this manner to take up the number of

issues important to this Subcommittee, and fall within its jurisdiction.

These issues include a number of which are being discussed in the Conference

meeting for the Energy Bill. The Energy Bill includes provisions on refinery revitalization, LUST, and hydraulic fracturing involving the Safe Drinking Water Act, the

Solid Waste Disposal Act and Superfund. All of these statutes fall within the Subcommittee jurisdiction yet we have not had any hearings or legislative markup. I

think that all members need to have the opportunity to address these issues.

I also understand from my staff that you, Chairman Gillmor, will personally be

speaking to Chairman Barton about scheduling a perchlorate hearing, per previous

commitments. I appreciate that and I look forward to that hearing.

I believe the need for the safe disposal of e-waste is evident. E-waste is the fastest

growing portion of our waste stream—growing almost 3 times faster than our overall municipal waste stream. 600 million desktop and laptop computers in the U.S.

will soon be obsolete. A pile of these obsolete computers would reach a mile high

and cover six acres. That’s the same as a 22-story pile of e-waste covering the entire

472 square miles of the City of Los Angeles.

E-waste has become the new hazardous waste crisis. E-waste contains toxic substances such as lead and cadmium in circuit boards; lead oxide and cadmium in

monitor cathode ray tubes; and mercury in switches and flat screen monitors. Due

to the hazards involved, disposing and recycling of E-waste have serious environmental implications.

When computer waste is sent to the landfill or incinerator, it poses significant

contamination problems. Landfills leach toxins into groundwater and incinerators

emit toxic air pollutants. E-Waste also has occupational implications for workers

who are exposed to the toxic chemical compounds.

The result is a growing challenge for businesses, local governments, and residents,

as they search for ways to reuse, recycle, or properly dispose of E-waste. It is or

should be a challenge to manufacturers to find ways to produce these products without using these dangerous materials.One thing is certain: E-waste is with us to stay.

10

We need to keep these harmful materials from ending up in landfills and ultimately

in our water supplies.

I am happy to see that California is setting an example with one of the nation’s

first electronics recycling law. California enacted the Electronic Waste Recycling Act

in September 2003. Supporters of the California law included environmental groups,

local governments, municipalities, and recyclers.

California’s law requires consumers to pay an advance recycling fee to retailers

on the sale of computer monitors, televisions, and other video devices containing

toxic materials, after January 1, 2005. The fees are to be used to reimburse recyclers for the cost of collecting and recycling the covered video devices. I hope that

Rosalie Mule can provide us information on the implementation of the California

law. I understand that 20 other states are thinking of adopting E-waste legislation.

California’s law could be looked at by these other states as a model.

Unfortunately, E-Waste is also exported overseas to countries that are least able

to deal with them appropriately. Exporting E-Waste pollutes the air, water and soil

in countries that have minimum environmental standards. I believe that it is unjust

and inappropriate to export pollution and contrary to the principles of environmental justice. I am happy to see that the California law restricts the export of covered e-waste to foreign destinations.

I am glad that we are having the first half of this hearing today and look forward

to both this and the second day of this hearing to learn about the role of the federal

government, state governments and regional opportunities for handling E-waste. I

also hope that we can begin hearings on the other issues within this Subcommittee’s

jurisdiction.

Thank you.

Mr. GILLMOR. And thank you.

[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF HON. CHARLES F. BASS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF NEW HAMPSHIRE

Thank you Mr. Chairman. I appreciate you scheduling this important hearing

that affects a wide range of issues—including the environment, waste management,

commerce, and the technology industry. I think it would be hard press for us to find

one individual in this room that does not have some piece of out-dated electronic

equipment sitting in a drawer, closet, attic, or basement in their home or office.

Eventually, this equipment will need to be disposed of and the question is whether

it will end up in our landfills or to be recycled or reused. Even though there are

currently alternatives to landfills, such as donations to charities and recycling locations, most Americans do not have the information or ability to access these other

options for ‘‘end-of-life’’ electronic products. Additionally, there is a lack of infrastructure on the national level to handle the overall demand for these alternatives.

It is critical for our Committee to keep in mind as we move forward in considering

any federal action: how do we encourage households to recycle; how do we create

a market for recycling e-waste, and how do we develop incentives to design more

environmentally friendly products.

This hearing comes at an opportune time since many local communities and

states are currently addressing how to handle their growing e-waste stream. For example, the Northeast Recycling Council and the Council of State Governments-East

Region Conference have been working on a collaborative effort in addressing how

to regionally handle e-waste. Last week, the group released draft legislation from

this effort and will be meeting again on July 25th with stakeholders from all sectors

impacted by e-waste to further discuss the draft. I hope this Committee will make

sure that groups like the Northeast Recycling Council will be consider in future discussions on e-waste.

Additionally, the issue of e-waste is particularly relevant to our Committee as we

move forward to transferring over to digital television and what the possible impacts

that this transition may have on our landfills. Even in absence of a transition, the

continual advances in technology that makes our electronic products out-dated is

also placing pressure on our landfills. There is a growing need for municipalities to

handle increasing amounts of electronic waste at the same time that their landfills

are becoming more and more constraint. Many of our electronic products are bulky,

not biodegradable, and contains hazardous material that if released can be detrimental to the environment. For these reasons, it is imperative that we address this

problem now.

I look forward to hearing from the second panel that represents a wide range of

approaches in handling e-waste. Additionally, each state is implementing very difVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
11

ferent programs ranging from placing the responsibility on producers to shifting the

cost on to consumers at the point-of sale. Each strategy has their own merits and

drawbacks and hopefully our witnesses will discuss theses differences.

Talking to various stakeholders from my state of New Hampshire, there is a consensus that this problem can not be tackled by individual state legislation, but that

for any program to succeed that there needs to be either regional efforts or introduction of a federal program. Currently, in New Hampshire, each municipality handles

their e-waste items individually. Some communities accept e-waste in their municipal landfill, while others set-up periodic donation/recycle collection drives, and even

other communities have set-up e-waste recycling programs that either accepts the

item with or without a fee. For example, in my small town of Peterborough, television sets under 19 inches are accepted without a fee, while the owner is charged

$5.00 for recycling a larger televisions. However, the municipality has no programs

for computers, microwaves, stereos, fax machines, scanners, and other telecommunication equipment.

It is important for this Committee to explore ways to encourage environmentally

conscious behavior throughout the life of the product. There is a critical need to

stimulate the industry to produce more energy, environmentally-friendly products

that can in turn be recycled. But just as important is the need to produce incentives

for consumers to dispose of their products in s environmentally conscious manner,

rather than simply dropping it at their dump. Finally, no effort will be truly successful if we do not consider incentives for the waste management industry by reducing any existing barriers or burdensome cost related to the reduction of e-waste

with recycling and reusing programs.

I like to thank our witnesses for joining us today and I look forward to hearing

their testimony on this important issue to all of us.

PREPARED STATEMENT OF HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY

AND COMMERCE

Thank you, Chairman Gillmor for holding today’s hearing on what I understand

is the first congressional survey regarding electronic waste and the proper federal

role on this important environmental issue. I hope this hearing will not only help

us figure out what to do with all of those old computers, printers, and televisions

that end up getting stored in the basement or closet somewhere, but will also provide valuable insight to what the states and agencies are currently doing to address

this problem.

The Commerce Department states that given the growth and obsolescence rates

of the various categories of consumer electronics, somewhere in the neighborhood of

3 billion units will be scrapped during the rest of the decade—or an average of

about 400 million units a year, including 200 million televisions and 1 billion units

of computer equipment. And with the rise of increased dependency on computers

and other electronic equipment, this problem is only expected to escalate. I look forward to hearing what EPA and the Department of Commerce have been doing on

this matter and I also understand that a few states have already undertaken action,

with many proposals floating in other state legislatures. This creates an interesting

dynamic, and while I don’t feel the time is right for a comprehensive federal solution, I look forward to hearing the current state of things and what types of infrastructure and industry cooperation currently exist among state, local, and federal

waste enforcement officials.

Once again, I thank the Chairman for holding this hearing and I yield back the

balance of my time.

PREPARED STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF CALIFORNIA

Mr. Chairman, thank you for holding this hearing.

The technological revolution brought with it a consumer demand for constant upgrades to newer, faster and more advanced models of older products.

Think about how quickly our technology has changed? Can any of us remember

using an eight-track stereo, a rotary phone, black-and-white television set, or even

a Commodore 64?

The pace of technological innovation continues to offer the American public more

and more choices. But for every I-pod, cell phone, HDTV or laptop computer that

goes home from the store, its outdated predecessor gets moved to the garage or

thrown out with the trash.

12

The lifespan of a computer used to be about five years, it’s now about two. Cell

phones have an average lifespan of less than a year, and in most cases stereo and

television equipment is not even worth repairing anymore.

According to the EPA, U.S. households have an average of two to three unused

computers and televisions in storage. Businesses are estimated to have even more.

The reason is most people simply do not know how to go about disposing or recycling them.

A recent report conducted by the Silicon Valley Toxics Coalition predicted that

500 million computers will become obsolete between 1997 and 2007. These obsolete

computers alone will result in over 6.3 billion pounds of plastic and 1.6 billion

pounds of lead in our landfills and incinerators.

Cell phones can also add up to big problems. According to another recent study,

Americans discard about 130 million cell phones per year. This figure adds up to

be approximately 65,000 tons of trash.

Mr. Chairman, the U.S. led the technological revolution and I think we ought to

lead the way to safely manage computers and other electronic devices at the end

of their life. As we continue to dispose of more and more e-waste each year, finding

a national recycling approach becomes more and more critical.

While some states, including my own state of California, have laws to get recycling programs going, others are just beginning to talk about how to deal with the

accumulation of e-waste.

Without a national program, states will continue to create a patchwork of different programs making it difficult for manufacturers, retailers and consumers to

adhere to.

As a public health nurse, I also believe we have a duty to assure that e-waste

is handled responsibly. Electronics contain toxic metals such as lead, mercury and

other dangerous compounds.

If not handled properly, e-waste can harm people and lead to contamination of

the land, air and water. The health effects of these hazardous toxins are also well

known. They include an increased risk of cancer, as well as harm to the brain, nervous system and kidneys.

E-waste is a growing problem that is not going away. It is my hope that with today’s hearing we will begin to set the groundwork for a useful and intelligent conversation on how best to tackle this rising problem.

Again, I would like to thank the Chairman for holding this hearing and I look

forward to the testimony of the witnesses.

PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS

Good afternoon. I would like to thank Chairman Gillmor and Ranking Member

Solis for holding this hearing on electronic waste.

There is no doubt consumer electronic products have changed our way of life over

the last 15 years.

Computers, cell phones, and other electronic products are a rapidly growing part

of our society and are crucial to our economy.

As technology advances, making new products obsolete within a few short years,

these products have also become a rapidly growing part of our waste, causing concern among states and posing a potential environmental problem.

Electronic equipment is the fastest-growing portion of the municipal solid waste

stream.

Estimates show that nearly 500 million computers will become obsolete between

1997 and 2007.

The environmental liabilities of landfilling computers and electronic equipment include the potential for the release of a variety of toxic substances including mercury,

cadmium, chromium, flame-retardant plastics, and lead.

Each monitor, or cathode-ray tube contains from four to six pounds of lead.

Because of these components, electronic waste has the potential to pollute the air

or groundwater if disposed of in an incinerator or landfill.

Consumer electronic products already account for approximately 40 percent of

lead found in landfills.

In my home state of Texas, an estimated 1.5 million computers are discarded annually, with roughly 162,000 recycled, leaving more than 1.3 million units assumed

to be stored or disposed of in landfills.

A major factor leading to low recycling rates of electronic waste is a lack of education provided to consumers about recycling options available to them.

13

To help address this, the Texas Natural Resources Conservation Commission has

started a campaign to make consumers aware of recycling and donation options

available to them so that electronic waste does not end up in landfills or stored and

unused where it loses its value and its potential to be sold or reused.

Additionally, the Texas Department of Information Resources has developed a

guidance document for evaluating lease and purchase options to reduce electronic

waste in the workplace, and provides consumer with information on where to donate

or recycle used equipment.

While this is a good start to raise awareness, it is clear electronic waste is a growing concern across the nation and needs to be addressed.

I look forward to hearing from Secretary Wu and Secretary Breen for their observations and recommendations on this issue, and I look forward to hearing from the

representatives from California, Maine and Maryland to hear how their respective

states have approached the potential problems posed by electronic waste.

With that, Mr. Chairman, I yield back the balance of my time.

PREPARED STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF WISCONSIN

Thank you Mr. Chairman,

I am very pleased this subcommittee has decided to examine the growing problem

of electronic waste.

From CPUs and keyboards to copier machines and cell phones, Americans are discarding huge amounts of waste in the form of obsolete electronic products every

year—the vast majority of which are not being recycled or disposed of properly.

This is a problem because this is not ordinary waste. These are products that contain highly dangerous materials such as mercury, lead, barium, chromium and a

host of other toxic substances that can pose serious threats to the public’s health

and our environment.

Between 2.2 and 3 million tons of e-waste are tossed into landfills every year.

Less than 10 percent of this waste is being reused or recycled. More than 50 million

computers alone make their way to the trash every year.

As consumers demand more advanced electronic devices, like fancier cell phones

and faster computers, the amount of e-waste seeping into the environment will continue to rise.

Mercury contamination is a particular concern of mine because pregnant mothers

and young infants are highly susceptible to exposure to this toxic element, which

can cause chronic damage to the brain, nervous system, spinal cord, kidneys, and

liver.

Mercury is found in numerous components in electronic devices such as switches,

CPU monitors, and printed wiring boards.

I’m glad states like Maine, California, and Maryland are taking the initiative to

pass legislation that confronts the growing public health threat of e-waste. However,

I do believe it is time for the federal government to adopt some national guidelines.

The lack of national standards has led to a patchwork of state laws that have created confusion for retailers and consumers. Meanwhile, there are few—if any—incentives for manufacturers to help remedy the problem or invest in safer alternatives. Nor are there any repercussions for their failure to act.

I hope today’s hearing will prompt further Congressional action on this important

health and environmental issue.

Thank you Mr. Chairman for holding this hearing today.

Mr. GILLMOR. We will begin with Benjamin Wu, who is the Deputy Undersecretary of the Office of Technology, U.S. Department of

Commerce.

Mr. Wu.

STATEMENTS OF BENJAMIN H. WU, DEPUTY UNDERSECRETARY, OFFICE OF TECHNOLOGY, DEPARTMENT OF COMMERCE; AND BARRY BREEN, DEPUTY ASSISTANT ADMINISTRATOR, OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, ENVIRONMENTAL PROTECTION AGENCY

Mr. WU. Thank you, Mr. Chairman.

14

Chairman Gillmor, Ranking Member Solis, and Congressman

Bono, I appreciate the opportunity to appear before you this afternoon. The growth of the American high technology sector has been

one of the greatest stories of the past 20 years. In part due to the

legislative leadership of this committee, the U.S. technology industry continues to be a driver of economic growth and quality of life

by providing electronics products that can educate us, entertain us,

enthrall us, connect us, and also make us more productive.

These electronic products are now ubiquitous in our society. All

one needs to do is attend this year’s consumer electronics show to

understand that the rapid growth of electronics products is the

wave of our future, and sustaining that innovative growth may

very well determine our Nation’s ability to compete in the global

marketplace.

So the preparation of consumer electronics products is a modern

day reality. And as Americans begin to replace early generation

electronics products that have reached the end of their life cycle or

choose to upgrade to newer models, the issue of electronic waste

disposal, or e-waste, is an issue that lawmakers and policymakers

must confront, especially since it is believed that certain electronics

products, especially in the early generation products, contains toxins that make their disposal potentially hazardous.

I commend you, Mr. Chairman, and your staff for holding the

very first Congressional hearing on electronic waste. The fact that

the Senate is holding a similar hearing next week, coupled with the

establishment of the House E-Waste Working Group this past May,

underscores its importance and the Congressional desire to address

this complex issue.

The Department of Commerce looks forward to working with you

and being of assistance to your subcommittee as you proceed with

future consideration of e-waste policies and legislation. How and

who decides e-waste solutions can dramatically affect the U.S. technology industry’s manufacturing and marketing business models as

well as their competitiveness.

As a portal for the U.S. technology industry, our Technology Administration has heard the concerns from the industry regarding

the need for an industry-led consensus that will give certainty to

the U.S. high-technology sector. Toward that goal, over the past

year, we have worked to complement EPA’s already existing and

outstanding activities to drive and advance a consensus. We met

with effective stakeholders, convened a roundtable, put out a Federal Register notice for comment, and will be issuing an overview

of e-waste policy issues to the subcommittee in order to educate

and inform Congress of relevant issues to be considered.

This overview, which is gleaned from lessons learned from our

Technology Administration activities, is expected to be released by

the time this subcommittee their second part of this hearing in

September. They include which products should be considered for

a—excuse me. The overview will provide a background on the issue

of electronics recycling, including an explanation of the different

components of recycling systems.

Mr. Chairman, electronic waste disposal and recycling is indeed

a multifaceted and an intricate issue, one which has not easily

been drawn into a consensus. While still ongoing, despite several

15

attempts encompassing several years, unanimity and comfortable

consensus have been limited. This is because the issue involves

many stakeholders, and the impacts of the decision any government makes concerning electronics recycling hold implications that

are far-ranging, including environmental impacts, but also extending to the impact upon the health of U.S. businesses and their ability to compete internationally.

It is important that we involve all of the stakeholders who may

be affected by electronics recycling legislation so that we will be

able to fully understand the implications of actions undertaken and

provide the opportunity for all affected parties to provide their

input into shaping the most effective solution.

In the United States, as has been mentioned, several States have

already begun considering a variety of legislative proposals, with

the three States appearing in today’s second panel having passed

distinctively different approaches to manage electronic waste. Accordingly, it is conceivable, at this rate, that within the United

States, there could be as many as 50 different sets of regulations

that could have a significant impact on an important sector of the

U.S. economy. And that is why industry welcomes Congressional

review.

In doing so, Congress will need to examine a range of issues, including but not limited to, establishing financing mechanisms that

have been used for electronics and other product recycling systems

in the United States and other countries around the world, such as

a government-sponsored recycling program, an advanced recovery

fee, a fee paid by the consumer at the time of the purchase that

would offset the cost of eventual recycling of the product, which is

the basis of the 2003 law in California, a producer responsibility

model where each manufacturer will be responsible for its own

products and a certain percentage of orphaned products, a consumer mail-in program, a deposit refund system, and/or several

combinations of the above possibilities.

Congress must also ensure that all stakeholders must be considered in any national plan. And these stakeholders include, but are

not limited to, electronics manufacturers, retailers, recyclers, environmental interests, and consumers. Initially, in the early stages of

trying to find a consensus, the retailers were not included and were

overlooked in this process yet play a very important role, because

of the impact that they could have.

Additionally, Congress must weigh several other issues that

must be taken into consideration when devising a strategy for electronics recycling. They include which products should be considered

for a program and how they should be gradually phased in, how

discarded products should be collected and transported and by

whom, how new products should be classified and sold on the Internet without leaving brick and mortar retailers at a competitive disadvantage due to mandated fees, and how the problem of orphaned

products should be addressed, and how consumers can be encouraged to actively participate in any established recycling program.

In the United States, 408 related to waste management, recycling, and product stewardship that were introduced at the State

level in 2003, 50 more than in 2002. And so we can expect more

legislation to be introduced as other States gain interest in this

16

1Product Stewardship Institute, http://www.productstewardship.us/prodlelectronics.html

issue. Twenty-six States introduced 52 bills related to electronics

disposal. And we have heard industry’s deep concerns that leaving

this issue to the State level becomes problematic because of the

cost of compliance with the patchwork of international and State

laws can be daunting.

E-waste is certainly an issue worthy of Congressional review,

and we applaud this committee for undertaking this important

issue. We are available to help educate and inform the Congress on

this complex debate and ensure that all stakeholders’ interests are

taken into account in crafting a solution.

Thank you, Mr. Chairman, and I would be happy to respond to

any questions you or members of the subcommittee may have.

[The prepared statement of Benjamin H. Wu follows:]

PREPARED STATEMENT OF BENJAMIN H. WU, ASSISTANT SECRETARY FOR

TECHNOLOGY POLICY, U.S. DEPARTMENT OF COMMERCE

Chairman Gillmor, Ranking Member Solis, and members of the subcommittee, I

appreciate the opportunity to testify before your subcommittee in the first Congressional hearing on electronics recycling. I commend you on your leadership to address

this important issue—an issue that can dramatically affect the U.S. technology industry’s manufacturing and marketing business models, as well as their competitiveness.

Mr. Chairman, the growth of the American high-technology sector has been one

of the great stories of the past 20 years because of its contribution to our economic

growth, our standard of living, and the rise of ubiquitous consumer electronics improving the quality of our lives. However, many consumer electronic products contain toxins that make their disposal potentially hazardous. As the early generations

of these technology products have reached or are reaching the end of their life cycle,

it has become increasingly clear that lawmakers and policymakers must deal with

the issue of their disposal.

A recent report from the International Association of Electronics Recyclers

projects that given growth and obsolescence rates of the various categories of consumer electronics, somewhere in the neighborhood of 3 billion units will be scrapped

during the rest of this decade—or an average of about 400 million units a year, including 200 million televisions and 1 billion units of computer equipment.1 E-waste

comprises 1.5 percent of municipal waste across the United States. It is a small but

fast-growing portion. Some researchers estimate that nearly 75 percent of old electronics are in storage as consumers hoard them, feeling they have some value and

uncertain how to dispose of them.

Electronics waste and recycling is an important and complex issue. This issue involves many stakeholders, and efforts to comfortably resolve the issue by consensus

with all stakeholders, while on-going, have had limited success. The impacts of the

decisions the government makes concerning electronics recycling holds implications

that are far-ranging, including environmental impacts, but also extending to the impact upon the health of U.S businesses and their ability to compete in the global

marketplace. It is important that we involve all of the stakeholders who may be affected by electronics recycling legislation so that we will be able to fully understand

the implications of actions undertaken, and provide the opportunity for all affected

parties to provide their input into shaping the most effective solution.

Several characteristics of e-waste—their bulky nature, possibly toxic constituents,

the high cost of properly managing them—combine to warrant special consideration

of its removal. Many of these products, especially televisions and personal computers, are not easily handled with regular trash. Moreover, they take up space that

is already at a premium in landfills. Recycling is generally more expensive than disposal, however, and recycling does not pay for itself. The costs of collecting and dismantling these products may exceed the material value of the recycled equipment

because there is no efficient infrastructure for collecting discarded electronics, nor

were these products originally designed with recycling in mind. About two million

tons per year of electronic waste, 20 to 50 million personal computers a year for example, require disposal management. Internationally, a number of countries have

enacted legislation to manage electronic waste.

17

In the United States, several states are considering a variety of legislative proposals, with three states having passed distinctly different approaches to manage

electronic waste. Accordingly, it is conceivable that, within the United States, there

could be as many as 50 different sets of regulations that could have a significant

impact on an important sector of the U.S. economy.

Various stakeholders have been participating voluntarily in multi-stakeholder dialogues for several years, such as the National Electronics Product Stewardship Initiative (NEPSI), trying to find a national solution. The technology industry has been

an active participant in these discussions and has been working with the Environmental Protection Agency (EPA) on a number of pilot programs.

As the portal for the U.S. high-technology industry, the Department of Commerce’s Technology Administration has worked with industry to complement EPA’s

efforts to drive towards an industry-led consensus that will give certainty to the

U.S. high-technology sector. Towards that goal, over the past year, the Technology

Administration has met with affected stakeholders, convened a roundtable, put out

a Federal Register notice for comment, and will be issuing an overview of e-waste

policy issues to provide Congress with information as you move forward in considering this issue. This overview is expected to be released by the time this subcommittee completes the second part of this hearing in September, and provides

background on the issue of electronics recycling, including an explanation of the different components of a recycling system and commonly used concepts and terminology.

Mr. Chairman, let me discuss with you the components of our overview to help

lay out the policy foundations for possible Congressional consideration. It should be

noted that Technology Administration’s overview does not make any recommendations as to whether the United States should have a national system or whether

one system is better than another. Instead, it is designed to simply report the various options under discussion and the reported advantages and disadvantages of

each.

The overview focuses on the range of financing mechanisms that have been used

for electronics and other product recycling systems in the United States and in other

countries. The financing models considered include: a government sponsored recycling program; an Advance Recovery Fee (ARF), a fee paid by the consumer at the

time of purchase that would offset the cost of the eventual recycling of the product,

which is the basis for the 2003 law passed in California; a producer responsibility

model, where each manufacturer would be responsible for its own products and a

certain percentage of orphaned products (electronic waste produced by a company

that is no longer in business or cannot be identified); a consumer mail-in program;

a deposit refund system; and several combinations of the above possibilities.

The overview also presents stakeholders’ views regarding these various financing

options and the role of government in enabling a national electronics recycling system. The stakeholders that should be considered in any national plan include, but

are not limited to: electronics manufacturers; producers; retailers; recyclers; environmental interests; and consumers. The overview also lists some steps being taken by

some of these interests voluntarily to help promote electronics recycling.

The overview notes several other issues that must be taken into consideration

when devising a strategy for electronics recycling. They include: which products

should be considered for a program, and how they should be gradually phased in;

how discarded products should be collected and transported and by whom; how new

products should be classified and sold on the Internet without leaving brick-andmortar retailers at a competitive disadvantage due to mandated fees; how the problem of orphaned products should be addressed; how worker safety in the recycling

process can be ensured; and how consumers can be encouraged to actively participate in any established recycling program.

The overview examines current and potential future Federal regulations in the

United States that govern the disposal of electronics, and legislation that has been

passed or proposed by the States regarding electronics recycling. In the United

States, 408 bills related to waste management, recycling, and product stewardship

were introduced in state legislatures in 2003, 50 more than in 2002. Twenty-six

states introduced 52 bills related to electronics disposal.

Three states, California, Maine, and Maryland, have passed laws requiring electronics recycling, yet with very different requirements for manufacturers and retailers. California’s legislation is based on an advance recovery fee; Maine has implemented producer-financed collection, recovery, and recycling of electronic waste; and

Maryland is mandating that manufacturers offer a take back program and pay a

fee. Other states have already banned disposal of CRT (Cathode Ray Tube) Monitors

in their landfills, or have commissioned study committees to draft legislation and

are expected to introduce electronics recycling legislation shortly.

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2Group of the eight major industrial nations consisting of Japan, Russia, UK, France, Italy,

Germany, USA, and Canada. 3The cost of recycling unwanted electronics from commercial and institutional sources is a

cost borne directly by those organizations which, generally, are required to meet Federal hazardous waste management requirements if they dispose of large quantities of electronics that

meet the test for hazardous waste. Electronics from household and small quantity generators,

by contrast, are exempt from hazardous waste management requirements.

We have heard deep concerns from industry that solving this issue at the State

level may become problematic because the cost of compliance with a patchwork of

international and state laws can dramatically affect the manufacturing, marketing,

and business models of the U.S. electronics sector and the transaction costs and

business models of our retail sector. Industry believes a national solution is required

to avoid forcing companies to comply with a potentially wide variety of regulations

that will drive up their costs and impede their ability to compete internationally.

Industry is focusing on efforts to create a national system that will achieve the goal

of increasing recycling while not impeding interstate commerce.

The overview also analyzes how other countries have financed national electronics

recycling systems. At least 10 countries have legislation on discarded electronics and

more are developing legislation. The Waste of Electrical and Electronic Equipment

(WEEE) Directive in the European Union (EU) covers the collection and treatment

of electronics, as well as large household appliances and medical devices. The Restriction on Hazardous Substances (RoHS) Directive in the EU bans the use of certain hazardous substances in electronic equipment and was also incorporated into

the California State law. The EU Directives are having a significant effect on U.S.

industry. U.S. businesses selling into the EU market must comply with the WEEE

and RoHS Directives and most are changing their product line worldwide to meet

the new requirements of RoHS. Other countries, including Japan and China, have

taken steps to echo some of these types of requirements within their borders. At the

Sea Island, Georgia Summit of G8 countries 2 in June 2004, Japan proposed the

‘‘3R’s Initiative’’ to reduce waste, reuse, and recycle resources and products to the

extent economically feasible. A 3R’s Ministerial Conference was held in Tokyo in

April 2005, and follow-up work is expected to continue.

Additionally, the overview investigates parallels in other recycling programs, analyzing recycling models from eight different industries within and outside of the

United States with items ranging from batteries to carpets, and seeks to highlight

successes and failures to inform the policy debate surrounding electronics recycling.

The final chapter examines the financing models considered by NEPSI, a group

convened to find a single national solution to electronics recycling in 2001 by the

EPA, which included industry, state and local governments, recyclers, environmental organizations, and others. NEPSI dealt only with residential electronics recycling for which the management costs fall largely on taxpayers and local government.3 Over time, the NEPSI stakeholders realized that a national law might be

necessary to force otherwise reluctant players to do their parts to make a national

system work.

Conclusion

We applaud the committee for undertaking this important issue. We are available

to help educate and inform the Congress on this complex debate and ensure that

all stakeholder’s interests are taken into account in crafting a solution.

Thank you Mr. Chairman. I would be happy to address any questions you or the

members of the committee may have.

Mr. GILLMOR. Thank you very much, Mr. Wu.

And Mr. Breen, who is the Deputy Assistant Administrator, the

Office of Solid Waste and Emergency Response of the U.S. EPA.

STATEMENT OF BARRY BREEN

Mr. BREEN. Thank you, Mr. Chairman and members of the subcommittee.

EPA is pleased to be here today to address electronics issues, including management, reuse, and recycling. I will summarize my

testimony, however I ask that my entire written statement be submitted for the record.

EPA has been involved with the improvement of electronics design and recovery for more than 8 years now. This involvement was

19

prompted by several EPA concerns, including the increased growth

of electronics waste, the potential for exposure to contaminants

contained in that waste if it is not properly managed, and the lack

of a convenient, affordable electronics reuse or recycling infrastructure.

Electronics waste is an increasing portion of the municipal solid

waste stream, although it contributes less than 2 percent of municipal solid waste. EPA estimates that in 2003 approximately 10 percent of consumer electronics was recycled domestically. The remaining 90 percent of used consumer electronics were stored, disposed of in landfills or incinerators, or exported. Discarded electronic products contain a number of substances that can cause concern if improperly managed, including, for example, lead from cathode ray tubes, and mercury in flat panel displays.

To address a number of these issues, EPA has engaged in a series of partnerships with manufacturers, retailers, recyclers, State

and local governments, non-profits and other organizations, and

other Federal agencies to encourage the improved design of electronic products, develop an infrastructure for the collection and

reuse or recycling of discarded electronics, and encourage the environmentally safe recycling of used electronics. For example, EPA

funded and participated in a process with electronics manufacturers, government technology purchasers, and other organizations to

develop EPEAT, the Electronic Product Environmental Assessment

Tool. EPEAT will help large technology purchasers identify electronic products that are designed in a more environmentally friendly manner.

We are expecting that EPEAT will be operating by late 2005 or

early 2006 when manufacturers that meet EPEAT criteria will be

able to certify their products. The initial products eligible for

EPEAT certification will be desktop computers, laptops, and monitors.

In addition, EPA has entered into a voluntary partnership with

manufacturers, retailers, and State and local governments to develop Plug-In To eCycling to raise public awareness on electronics

recycling and to increase recycling opportunities. In the first 2

years of this initiative, more than 45 million pounds of unwanted

electronics were recycled by Plug-In partners.

Further, EPA launched several pilot programs last year with

manufacturers, retailers, and local governments. The pilots resulted in more than 11 million pounds of used electronics being collected in retail stores. For example, New England area Staples, Seattle area Good Guys, and all Office Depot locations.

EPA has also partnered with the Federal Environmental Executive to launch the Federal Electronics Challenge, the FEC. The

Federal Government is such a large purchaser of information technology products, it is a voluntary partnership of Federal agencies

committed to develop a more sustainable environmental stewardship of electronic products. Twelve agencies have signed a Memorandum of Understanding on electronics management, and together, we represent 83 percent of the government’s information

technology purchasing power.

Finally, EPA continues to work with a wide variety of stakeholders to further the reuse and recycling of electronics products.

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We hosted a National Electronics Meeting attended by representatives from industry, governments, and non-profits to discuss electronics management issues. As a result of the meeting, collaborative strategies are being developed that include the development

of standards for electronics recyclers, a nationwide electronics recycling data repository, and a multi-State pilot program to support

electronics recycling in the Pacific Northwest.

Mr. Chairman, that concludes my summary of some of the efforts

that we are taking to encourage electronics management, reuse,

and recycling.

I will be happy to answer any questions that you or the other

members may have.

[The prepared statement of Barry Breen follows:]

PREPARED STATEMENT OF BARRY BREEN, DEPUTY ASSISTANT ADMINISTRATOR, OFFICE

OF SOLID WASTE AND EMERGENCY RESPONSE, U.S. ENVIRONMENTAL PROTECTION

AGENCY

Mr. Chairman and members of the Subcommittee, I am Barry Breen, Deputy Assistant Administrator for the Office of Solid Waste and Emergency Response at

EPA. Thank you for inviting me to appear today to discuss electronics waste and

EPA’s interest in electronics product design and recycling. Last year, we appeared

before this Subcommittee to tell you about the Resource Conservation Challenge

(RCC). In 2002, we set in motion a plan of action to renew the emphasis on resource

conservation in the Resource Conservation and Recovery Act (RCRA). At least since

1976, RCRA has included among its purposes a goal to reverse the trend of ‘‘millions

of tons of recoverable material which could be used [being] needlessly buried each

year.’’

Today, the RCC has become a national program, challenging all of us to promote

recycling and reuse of materials and to conserve resources and energy. One key area

of focus is electronics.

The use of electronic equipment has grown substantially in recent years. According to the Consumer Electronics Association (CEA), Americans own some 2 billion

electronic products—about 25 products per household. Electronics sales grew by 11%

in 2004, and the same growth is expected again this year.

Why We Care About Electronics at EPA:

EPA has been actively involved in helping to improve the design and recovery of

electronics for more than eight years now. Our interest in electronics stems from

three primary concerns:

1) the rapid growth and change in this product sector, leading to a constant

stream of changing offerings and wide array of obsolete and discarded products

needing an appropriate response;

2) substances of concern present in many products which can cause problematic

exposures during manufacturing, recycling or disposal if not properly managed—the

presence of these constituents has sparked the search for workable substitutes and

development of better management practices; and

3) the desire to help encourage development of a convenient and affordable reuse/

recycling infrastructure for electronics, with an initial emphasis on TVs and PCs.

Here I would like to provide some illustrative facts:

1. Increasing volume of electronic waste: Consumer Electronics—including

TVs and other video equipment, audio equipment and personal computers, printers

and assorted peripherals—make up about 1.5% of the municipal solid waste stream

(2003 Figures). This is a small, but growing percent of the waste stream. Consumer

electronics have increased as a percent of municipal solid waste in each of the last

few years that EPA has compiled data.

2. Recycling is limited: EPA’s latest estimates are that in 2003 approximately

10% of consumer electronics were recycled domestically, up slightly over previous

years. The remaining 90% of used consumer electronics are in storage, disposed of

in landfills or incinerators, or exported for reuse or recycling. EPA is now taking

a closer look at the fate of all electronics waste such that the Agency can better account for the amount of electronic waste stored, disposed, or exported. But anecdotal

information suggests that nontrivial amounts of consumer electronics are in storage

or exported, rather than going to disposal in landfills.

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3. Substances of concern in electronics: While industry is making progress

in making its products with less toxic materials, many products may contain substances of concern such as lead, mercury and/or cadmium. For example, older cathode ray tubes (monitors) in TVs and PCs contain on average 4lbs of lead, although

there are lower amounts of lead in newer CRTs. These constituents do not present

risks to users while the product is in use; indeed, they are there for a good reason.

Lead shields users from electromagnetic fields generated while the monitor is operating. Mercury is used in backlights in flat panel displays to conserve energy. But

the presence of these materials means that some electronic equipment may present

a risk if not properly managed.

What We Are Doing About Electronics:

We are engaged in several broad scale partnerships with manufacturers, retailers,

other Federal agencies, state and local governments, recyclers, non-government organizations (NGOs) and others to encourage and reward greener design of electronic

products, to help develop the infrastructure for collection and reuse/recycling of discarded electronics, and to promote environmentally safe recycling of used electronics. I’d like to give you a little more detail about each of these efforts.

1) Greening Design of Electronics

EPEAT: EPA funded and participated in a multistakeholder and consensus-based

process, involving electronics manufacturers, large government IT purchasers,

NGOs and others, to develop the Electronics Product Environmental Assessment

Tool (EPEAT). It was created to meet growing demand by large institutional purchasers for a means to readily distinguish greener electronic products in the marketplace. EPEAT is modeled on other environmental rating tools like the LEED’s Green

Building Rating system. It is expected to gain wide acceptance in purchases of information technology equipment by federal and state government—and eventually by

other large institutional purchasers of IT equipment.

The EPEAT rating system establishes performance criteria in eight categories of

product performance, including reduction or elimination of environmentally sensitive materials; design for end of life; life cycle extension; energy conservation; and

end of life management.

The multistakeholder team that developed EPEAT has reached agreement on the

main criteria that will be recognized for environmental performance. Now, the tool

is being readied for use; as part of this effort, a third party organization will be selected to host and manage the tool. The aim is to have the EPEAT system up and

running by December 2005 or January 2006—at which time manufacturers will be

able to certify their products to the EPEAT requirements and purchasers will be

able to find EPEAT certified products in the marketplace. The first EPEAT certified

products will be desktop computers, laptops and monitors.

ENERGY STAR: EPA recently made its best known brand, the ENERGY STAR

label, available for external power adapters that meet EPA’s newly established energy efficiency guidelines. Power adapters, also known as external power supplies,

recharge or power many electronic products—cell phones, digital cameras, answering machines, camcorders, personal digital assistants (PDA’s), MP3 players, and a

host of other electronics and appliances. As many as 1.5 billion power adapters are

currently used in the United States—about five for every American.

Total electricity flowing through external and internal power supplies in the US

is about 207 billion kWh/year. This equals about $17 billion a year, or six percent

of the national electric bill. More efficient adapters have the potential to save more

than 5 billion kilowatt hours (kWh) of energy per year in this country and prevent

the release of more than 4 million tons of greenhouse gas emissions. This is the

equivalent of taking 800,000 cars off the road.

On average, ENERGY STARqualified power adapters will be 35 percent more efficient. EPA is promoting the most efficient adapters since they are commonly bundled with so many of today’s most popular consumer electronic and information

technology products.

DESIGN FOR THE ENVIRONMENT (DfE): Over the years, EPA’s DfE program has worked numerous times with the electronics industry to help green the

manufacturing of electronics as well as electronics products themselves. DfE has

worked with the industry on ways to green the manufacture of printed wiring

boards, assessed the life cycle impacts of CRTs and flat panel displays and has also

recently assessed the life cycle impacts of tin-lead and lead-free solders used in electronics.

One important ongoing project in this DfE realm is the joint government industry

search for substitutes for tin-lead solder that have acceptable engineering performance and environmental attributes.

22

The DfE LeadFree Solder Partnership is providing the opportunity to mitigate

current and future risks by assisting the electronics industry to identify alternative

leadfree solders that are less toxic, and that pose the fewest risks over their life

cycle.

The draft final lifecycle assessment report for the tinlead and alternative solders

is available now for public review.

2) Encouraging reuse and recycling, rather than disposal, at product end

of life Plug-In To eCycling: PlugIn To eCycling is a voluntary partnership to increase awareness of the importance of recycling electronics and to increase opportunities to do so in the United States. Through PlugIn, EPA has partnered with 21

manufacturers and retailers of consumer electronics as well as 26 governments to

provide greater access to electronics recycling for Americans. In the first two years,

the Plug In program has seen the recycling of 45.5 million pounds of unwanted electronics by program partners—all of whom have agreed to rely on recyclers who meet

or exceed EPA’s ‘‘Guidelines for Materials Management,’’ EPA’s voluntary guidelines

for safe electronics recycling.

Last year, we launched a number of pilot programs with manufacturers, retailers

and local governments to create more compelling opportunities for consumers to

drop off our old electronics. These pilots succeeded in collecting over 11 million

pounds of used electronics and demonstrating that, when the circumstances are

right, retail collection can be a successful model: • The Staples pilot in New England collected over 115,000 pounds in testing instore collection and ‘‘reverse distribution’’ making use of Staples existing distribution network. In this pilot, trucks dropping off new equipment at Staples stores removed electronics that had been dropped off and took them to Staples distribution

centers rather than leaving the stores with the trucks empty. • The Good Guys pilot in the Seattle area collected over 4,000 TVs—double the

quantity expected—by offering in-store take back and a low fee for drop-off countered by a purchase rebate. • Office Depot and Hewlett-Packard worked together to offer free instore

takeback of consumer electronics in all 850 Office Depot stores for a limited time

period. It resulted in 10.5 million pounds collected, more than 441 tractor trailer

loads.

We believe these and other pilots sponsored by industry, states, and recyclers are

generating critical data which will inform policymaking on electronics recycling.

These pilots have proved crucial to testing out what works, what doesn’t, where collaboration is possible and where it is not, what kinds of opportunities really get the

attention of the consumer and what kind of material the consumer wants to recycle.

And very importantly, what it costs to get electronics from the consumer into responsible recycling.

Federal Electronics Challenge: The Federal Government is a large purchaser

of IT products. To help the Federal government lead by example the Federal Environmental Executive and the EPA launched the Federal Electronics Challenge

(FEC). The FEC is a voluntary partnership program designed to help federal agencies become leaders in promoting sustainable environmental stewardship of their

electronic assets. As FEC Partners, federal agencies agree to set and work toward

goals in one or more of the three electronics lifecycle phases—acquisition & procurement; operations & maintenance; and endoflife management. As of this month, the

FEC has 54 partners representing facilities from 12 Federal agencies. All 12 Federal

agencies are signatories to a national Memorandum of Understanding on Electronics

Management and, in total, represent about 83% of the Federal government’s IT purchasing power.

Recent National Electronics Meeting: Last spring, EPA hosted a National

Electronics Meeting to take stock of where we are with our electronics programs and

talk with stakeholders about what else is needed. The goal of the meeting was to

identify collaborative strategies that will contribute to effective management of used

electronics across the country. Nearly 200 representatives from industry, government, and the nonprofit community participated in this meeting.

A few of the collaborative strategies being developed include the following:

• Developing standards for environmentally safe electronics recyclers and a process for certifying these recyclers. EPA plans to take a leadership role in convening

stakeholders to develop such standards.

• Further development of a centralized data repository for electronics recycling to

collect nationwide market data/share by manufacturers and provide information and

status on national, state and local ewaste initiatives (provides data on waste, geographic summaries and process/implementation data). This effort is being chaired

by the National Center for Electronics Recycling (NCER) in partnership with EPA

and other interested parties.

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• Piloting a private multistate ThirdParty Organization (TPO) to support electronics recycling efforts in the Pacific Northwest. This project will explore how a

multistate TPO could assume responsibilities on behalf of manufacturers, like contracting for recycling services across state lines. This effort is being chaired by the

NCER and the WA Department of Ecology with eight electronics manufacturers.

Even if the key collaborations noted above are implemented, there will remain

some gaps in needed infrastructure. In the course of developing, implementing, and

sharing information related to key infrastructurerelated collaborations, EPA looks

forward to working with stakeholders to identify and plan to address other

infrastructurerelated efforts.

How EPA will Work with Other Organizations Moving Forward:

EPA has been working with a wide range of stakeholders in a variety of fora, both

domestically and, as appropriate, internationally. This approach has worked well,

and we expect to continue to follow it in partnership with other federal agencies

such as the Commerce Department and with the Federal Environmental Executive.

CONCLUSION

I hope that I have given you a sense of EPA’s electronics goals and how we work

with partners throughout the product chain to achieve shared responsibility for a

greener, recovery-oriented product cycle. I look forward to answering any questions

you may have.

Mr. GILLMOR. Thank you very much, Mr. Breen.

Let me begin with a question for you, Mr. Breen.

The predominant Federal law that governs the disposal of solid

and hazardous waste, the Resource Conservation Recovery Act,

sets minimum Federal standards for the States to follow. In your

opinion, should the States be allowed to act on their own with some

sort of Federal guidance? Is that advisable? Or would you rather

see the Federal Government give a national structure to electronic

waste recycling?

Mr. BREEN. We know certain things about the fate of electronics

in landfills. The typical landfill Ph is between 6.8 and 7.0, which

is essentially about neutral. And we know that that consequently

does not lead to large leaching from the metals in the electronics.

We are thankful for that. However, leaching could occur even at

those fairly neutral Ph levels. Of the, approximately, 2,000 landfills

in the United States that take municipal solid waste, most are now

in compliance with the 1991 standards that call for a leachate collection system, so even if there were leachate, that it would typically be collected by the leachate collection system. If the leachate

collection system still missed it, what we find is that the leachate

that would reach ground water would typically be about twice the

drinking water standards, about two times drinking water standards. But since we think the dilution factor would be 10 to 1,000

times, States are in a fairly good situation to make their own decisions on this in terms of what additional standards are needed for

landfills. We understand four States have banned cathode ray

tubes from municipal solid waste in their State landfills. And that

is a decision we respect, but we also respect the decision of other

States that, given those facts that we and they see, that other

means are necessary or adequate to deal with this issue.

Mr. GILLMOR. So basically, the evidence is there that is necessary

at this point.

Mr. BREEN. Well, what I have laid out for you is certainly evidence about landfills. There are concerns about incinerators and

other waste to energy streams, and if certain materials were put

into high temperatures and then incinerated, you could have conVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 22988.TXT HCOM1 PsN: HCOM1
24

cerns that we would have to deal with, not only from an environmental point of view, but just from an operational point of view in

terms of gumming up the operations of the system.

And then there are actually concerns about resource stewardship,

just taking a good common sense approach to take care of valuable

things. And in fact, Congress seems to have called on that as a national policy when it wrote the Resource Conservation and Recovery Act.

So the environmental issues are just one piece of a far larger

and, as Mr. Wu said, more complex issue than just the environmental piece.

Mr. GILLMOR. Let me ask Mr. Wu, and you can, if you wish,

jump in with an answer to this, also, Mr. Breen, but I expect there

will be some discussions about who should bear the greatest responsibilities in an electronic waste and recycling regime. Do you

have an opinion as to where you think the most sense for this to

be placed is? Since individuals have to make the choice to give up

their unused electronic equipment, what responsibility do they

bear? What responsibility should the manufacturer or retailer bear

in this effort? And what role does public education play in the process?

Mr. WU. Well, I think that, obviously, as Congress moves forward, there should be a balanced approach taken. I think that all

of the stakeholders want to see an equitable, a fair and balanced

process, one in which one party is not held harmless over another.

We see this issue being complicated by business models for certain

industries. You know, we have an industry, for example, who are

computer producers in which they are facing global competition. In

order to be as strong as possible economically, they need to have

huge economies of scale and the razor-thin margins that they have

to protect may not be enough to sustain an advanced recovery fee

that would be imposed upon the consumer, especially if the international competitors and manufacturers may not be held to such

a same standard.

The same with the retailers. The retailers, especially smaller

stores, such as RadioShack, don’t have the ability to inventory and

warehouse a number of the disposable equipment that may have

been purchased there, and so that places an inordinate burden on

the brick and mortar stores. And then there is the issue about the

purchase and collection of the fee, should there be one imposed,

and Internet-based systems sellers, such as Dell, Gateway, they

may have an advantage over the Best Buys and others that do sell.

So because of the business models, because of the parochial concerns each of the manufacturers, the retailers, the recyclers, the

consumers may have, the search for a balanced approach is paramount, but also, quite frankly, has been a little elusive.

Mr. GILLMOR. Thank you very much.

Ms. Schakowsky from Illinois.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

I apologize to our witnesses. As you probably heard, we have a

full markup going on in committee, and Ms. Solis, the ranking

member, is, I believe, speaking on the floor. So I appreciate,

though, being able to ask a couple of questions. If they are redundant, again, I apologize for that.

25

I guess this is for you, Mr. Breen. The EPA, does it have current

authority to regulate e-waste?

Mr. BREEN. It is actually a more complex question than it might

at first appear. We have authority over hazardous waste, and we

have not listed any of the typical items that you would think of.

We haven’t listed cathode ray tubes. We haven’t listed cell phones.

We haven’t listed anything like that as listed hazardous waste.

There are some tests that would suggest that some components

would fail the toxicity tests, one of four characteristics of hazardous

waste: toxicity, corrosivity, ignitability, and reactivity. In some

cases, there is some evidence that some components would fail the

toxicity test. But I think a harder question is whether it makes

sense to approach it in that way or to approach it in a far more

collaborative and flexible way, given what that means. And——

Ms. SCHAKOWSKY. Well, let me follow that up. It kind of led into

what I wanted to get at.

In a report by EPA regions four and five, the researchers did find

sufficient evidence that discarded electronic devices with lead has

a potential to be a hazardous waste. And every device, lead concentrations exceeded the concentrations above the threshold in at

least one test, and most devices leached above the threshold in a

majority of cases. So if they are not considered hazardous waste

and you don’t regulate e-waste, then what is the consequence of

having that stuff leaching into our—I mean, don’t we have to do

something?

Mr. BREEN. Okay. Thank you.

It turns out that in the amounts that would typically be produced by households and small businesses, for example, that sort

of volume of electronic waste, so far, we are not finding that if they

went to municipal solid waste landfills that the municipal solid

waste landfills are incapable of taking them. There may be other

reasons to deal with them, but we are not finding that MSW landfills are a problem if the waste goes there, and it has to do with

the Ph of the landfill. It tends to be a Ph that doesn’t trigger leaching in worrisome amounts. It has to do with the leachate collection

systems that are in place, and then with the typical dilution that

would happen at the levels at which the waste would reach groundwater, if it ever did.

Ms. SCHAKOWSKY. Now but we are expecting that there is probably going to be increased quantities of these things, do we not, as

we go forward. So I understand we are at the beginning of a process now to consider what to do, but looking ahead, do you see that

we are going to, fairly quickly, reach beyond that point? I am looking at some of the questions that Hilda had. Her District has three

super fund sites and several operating landfills. How do you anticipate the growing amount of e-waste will impact these sites and

their cleanup?

Mr. BREEN. In fact, it does feel, on this one, like a little bit of

a shooting at a moving target. We are trying to find out more about

a problem, as the problem is evolving.

Ms. SCHAKOWSKY. Sure.

Mr. BREEN. For example, a cathode ray tube several years ago

probably included 4 pounds of lead as shielding. The lead is put in

for very good reasons. It is shielding the cathode rays so that the

26

user isn’t exposed to all of those cathode rays coming at the user,

and the lead is put in for very good reason. Today, cathode ray

tubes probably have about 2 pounds of lead, but what we are seeing is that more and more computers are moving from cathode ray

tubes to LCD displays, liquid crystal displays, in which lead is virtually non-existent except in the solder and similar connections.

But then the issue becomes Mercury.

Ms. SCHAKOWSKY. Right.

Mr. BREEN. A typical LCD display has, say, for example, 8 Mercury-containing devices in it, with each one having about 3.5 to 12

milligrams of Mercury. And to give you a sense, a typical fluorescent light bulb, like the ones in the ceiling of this room, would typically have about 3.5 to 4 milligrams of Mercury in each one. So the

problem is evolving, even as we are trying to research what it is.

Ms. SCHAKOWSKY. Sure.

Mr. BREEN. It makes it really hard to predict.

Ms. SCHAKOWSKY. So you are saying the technology is changing,

so we don’t even know what the component——

Mr. BREEN. The technology is changing, and the consumer demand is changing. So, for example, what we are seeing is convergence where, instead of having three devices, like I walked in today

with a Blackberry in one pocket and a cell phone in another——

Ms. SCHAKOWSKY. Right. Right.

Mr. BREEN. [continuing] what we are seeing is—by the way, I

should turn all of them off, Mr. Chairman, but what we are seeing

is them merging and so that you have one device, and that has

issues.

Finally, the international market seems to be driving some of

this, and people are coming into compliance with requirements that

other governments have already put into place. So it is a little hard

to make predictions.

Ms. SCHAKOWSKY. Thank you.

Mr. WU. Ms. Schakowsky, if I could also add to Mr. Breen’s

statement.

One of the points of consensus in all of our Technology Administration activities in contacting the affected stakeholders was that

product stewardship should be a priority, and product stewardship

in terms of design in trying to have industry voluntarily move toward less toxic materials to reduce the impact to our environment,

our industry is already doing that, and we are seeing great strides

in what they are doing in terms of design and trying to reconfigure

for environmentally friendly materials. EPA has a terrific program

to help incentivize that kind of design function with the E-Star energy efficient coding to make sure the consumers know. So it becomes, really, almost a Federal seal of Good Housekeeping Seal of

Approval that this product is energy efficient, and therefore it becomes more marketable. And so industry is moving forward in trying to do that voluntarily but also with the incentives that EPA is

putting forward, we expect, and hope, and the industry predicts,

that there will be less, even though we see a proliferation of electronics products, we will see less of an impact on the environment.

Ms. SCHAKOWSKY. Thank you.

Mr. GILLMOR. Thank you.

The gentlelady from California.

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Ms. BONO. Thank you, Mr. Chairman.

Mr. Breen, I understand that counsel of State governments has

been working with 10 eastern States and the Northeast Recycling

Council to come up with a regional electronic waste effort.

I was interested in EPA’s efforts to pilot a private, multi-State,

third party organization to support electronics recycling efforts in

the Pacific Northwest. Has EPA worked with the States in the

northeast? And why does EPA consider regional approaches rather

than a national one to be meaningful ways to approach these issues

recognizing the interstate nature of electronic sales and product

take-back and refurbishment programs?

Mr. BREEN. The northeastern project that you are describing is

one that we are interested in finding out more about. I think even

this month there are new reports and new announcements about

that work. I am not entirely sure we know whether regional or national or both.

Mr. GILLMOR. I apologize. We are going to have to recess briefly.

And——

Ms. BONO. Mr. Chairman, if I might, they have been answering

so many of my questions as a member of the working group, and

understanding we are running up and down, I can submit my questions in writing to the witnesses so they don’t have to stick around,

if I am the last questioner.

Mr. GILLMOR. Well, I think we have two more. We have Ms. Solis

and Mr. Otter.

Ms. BONO. Okay. I am sorry for trying to chair the committee.

Mr. GILLMOR. But however you want to do it, but I appreciate

that. But we better go vote.

[Brief recess.]

Mr. GILLMOR. The committee will again come to order, and we

will resume the questioning by the gentlelady from California.

Ms. BONO. Thank you, Mr. Chairman.

I believe Mr. Breen was in the middle of a brilliant answer at

the time we broke.

Mr. BREEN. Thank you.

I understood your question to ask whether regional versus national solutions were preferable.

Ms. BONO. It seemed that the EPA had sort of endorsed regional

ideas before, and I was wondering why that would be different

than a national solution.

Mr. BREEN. Thank you.

I don’t think we intended to endorse one to the exclusion of the

other. We certainly worked with some regional possibilities in some

of our pilots. And there are good reasons to think that regional

might be better, because rural areas might have different ways to

collect than dense urban areas. But I don’t think we are in a position to say the jury is in, that one is necessarily better than the

other.

Ms. BONO. Well, thank you.

Can you comment a little bit on California’s program so far,

then?

Mr. BREEN. Thank you.

I don’t think the jury is in on that one, either. I think we are

thankful that States, including California and Maryland and

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Maine, have stepped forward to try some actual processes, and we

can all benefit from it. And there were good reasons for adopting

each one in each case, even though they are different among them.

But I don’t think we know enough to say that there are enough results that you could make comparisons yet.

Ms. BONO. Okay. Also, I know that some of the data that we are

operating off of is old. It is based on 1999 figures. Is that true? And

if so, what do we need to do to update our information?

Mr. BREEN. I am not sure which 1999 figures I can help you

with.

Ms. BONO. 1999 National Safety Council report, which differs

from the EPA’s 2001 and 2003 Municipal Solid Waste Facts and

Figures report.

Mr. BREEN. We do try to do Municipal Solid Waste reports every

2 years, and the 2003 is actually our newest, because it takes us

that amount of time to assemble. I would be happy to get back to

you on the 1999 National Safety Council report, if there is anything

we can offer on that.

Ms. BONO. Thank you.

Mr. Wu, you mentioned that you are involved in the design and

development of new technologies, specifically, say, cathode ray

versus the LCDs and all. Are there regulations, is there something

here, that Congress ought to be doing to help with that? Or right

now, do you believe we are set with all that you are doing in advising in that role?

Mr. WU. Well, I think that developing incentives in the private

sector through programs that reward environmentally friendly designs, such as EnergyStar, the EPEAT, the Green Suppliers Network, all of those incentive programs at EPA and overseas are very

helpful in pushing industry to develop standards. Mandating design standards generally tend to be difficult, although some States

have done so. The standards development process within the

United States is generally one that is voluntary and market-driven.

And so I think that design mandates by Congress could be problematic and may inhibit innovation in the long term.

Ms. BONO. Thank you.

Thank you, Mr. Chairman. I yield back.

Mr. GILLMOR. And the chair recognizes the other gentlelady from

California.

Ms. SOLIS. Thank you. Thank you, Mr. Chairman.

I would like to request unanimous consent to submit two statements by members of our committee, Congresswoman Lois Capps

and Congresswoman Tammy Baldwin.

Mr. GILLMOR. Without objection, so ordered.

Ms. SOLIS. Thank you.

And I would like to ask Mr. Breen a question. This is somewhat

unrelated to this topic, but nevertheless, you might be aware of it.

On June 16, Mr. Bishop and I sent Administrator Johnson a letter requesting communications regarding the CHEERS, a human

exposure study. We did receive a videotape presentation that the

Administration made, but we are still awaiting other communications, written statements that were made. And I wanted to ask

you, we made a formal request for that on June 27 of this year and

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was wondering if you could tell me if we would be able to expect

a full response.

Mr. BREEN. I will have to ask our folks to get back to you on

that. I don’t have that myself.

Ms. SOLIS. Okay. Thank you.

Then I would like to go back to our subject matter here and ask

you, in May 2004, EPA, through the Resource Conservation Challenge, noted that they were failing in their own national recycling

effort. They had set a goal for 35 percent. Where are you at this

stage?

Mr. BREEN. The national recycling goal is 35 percent for municipal solid waste, and we hope to reach that in the next several

years. At the moment, we are in the low 30’s, and actually, there

is a fairly wide variation, as you can imagine. Some communities

are getting much higher than some others. Some communities, for

example, are hitting recycling rates in between 55 and 60 percent,

which is really amazing. But nationally, we are still in the low 30’s.

I honestly don’t know if we are going to be able to hit 35 percent

as a Nation. It turns out that that number is very sensitive to

things that nobody in government has much control over. If the

economy goes down, people tend to hold on to more things and

throw out less, and so the recycling rate actually goes up in bad

times and down in good times. And it is really hard to find yourself

wishing that the economy will go bad in order for my particular

program to hit a higher recycling rate. So it is affected by a lot of

things that we don’t have that much control over.

Ms. SOLIS. And what type of monitoring are you doing to at least

report back to us? I mean, if we are not going to achieve that goal,

then what kinds of measures are you undertaking to do that?

Mr. BREEN. Thank you.

We actually put that measure in our annual report, so we report

to you once a year on what the annual recycling rate is, the most

recent data we have. And we are doing as much as we can think

of, public service announcements. We are trying to make it easier.

We are offering technical assistance. We have wonderful partners

in the States on this. It is often to their advantage, not just good

public policy, but financial advantage to State and local governments. And we try to help them in any way we can.

Ms. SOLIS. In talking about recycling value and, you know, depending on how the economy is, just to get a sense from you, what

would the value be for products like a cell phone when we know,

for example, aluminum cans are 10 cents.

Mr. BREEN. Right.

Ms. SOLIS. A cell phone, a full size computer, a laptop computer,

an average sized telephone?

Mr. BREEN. The numbers I have most confidence in are in the

recycling costs and value of desktop computers. And naturally,

there is a fair amount of regional variation, and it depends on various things. But a good rule of thumb is that to recycle a desktop

computer costs about $15 and that the value of the materials recovered from it are anywhere between $1 and $2.50. And obviously

commodity prices change from time to time on their own, but $1

to $2.50 seems like where they typically stand. So there is that

delta.

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Ms. SOLIS. And does that vary? Given that there are some States

that are already moving in this direction, is there a sense of how

that looks? Can we get information on that?

Mr. BREEN. I will get you whatever we have. I don’t know how

refined the data is to give it to you State by State, but if we have

got something, we will get it to you.

Ms. SOLIS. Okay. Very good.

One of the other questions I had was regarding what EPA is

doing to educate under-served communities about these kinds of

programs that are necessary. Language communities oftentimes

are not fully aware of these programs, and perhaps both of you

could address that, whatever efforts that are being undertaken by

Commerce as well as EPA to reach out to these communities.

Mr. BREEN. We would like to reach them, just like everybody

else, and we often——

Ms. SOLIS. Is there any effort, in particular?

Mr. BREEN. We often work directly with local governments and

State governments, rather than ourselves trying to do anything directly. This is really 53 governments plus us.

Ms. SOLIS. And is there any kind of information, though, that

you could get from them? I mean, that would be a specific question

that you may be able to ask or at least provide us with the information, because I know some States or locales put information out

in different languages.

Mr. BREEN. I will try to follow-up on that.

Mr. WU. The EPA oversees the programs, and so we would be

happy to assist EPA through either a minority business development administration or any other ways to make sure that the word

gets out.

Ms. SOLIS. And I raise that, because in my own District, we have

a very high percentage of Asian pacific islanders who are heavy

users of computer equipment, and I have heard from our constituents that this is a concern and something that they definitely

would like to see addressed.

Mr. GILLMOR. We need to recess once more.

[Brief recess.]

Mr. GILLMOR. The subcommittee will reconvene, and we will resume the questioning by the gentlelady from California.

Ms. SOLIS. Thank you, Mr. Chairman.

Very briefly, I wanted to get a better understanding of the European Union and what they are currently doing in terms of eliminating lead in cell phones by 2006. That is a position that they are

taking. Is EPA looking at any similar type of procedures or rules?

Mr. BREEN. We are definitely watching with great interest, as everyone is, what the European Union is doing. We don’t have any

rulemaking development effort underway on that issue ourselves,

but on its own, that can drive a global market to do things that

it wouldn’t otherwise do, just by having the European Union take

on that work.

Ms. SOLIS. Is that something of serious concern, though, to possibly look at that more closely and——

Mr. BREEN. Well, we are certainly studying it, but in terms of developing a rulemaking on it, I think it would be premature to take

that up.

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Ms. SOLIS. Thank you.

Mr. WU. Congressman, if I could add, related to the EU regulations and rules, the industry has voiced a concern about what California did in adopting wholesale the Ross directive, and the concern

rests in adopting the EU standard, a standard in which American

industry didn’t have an opportunity to have notice, comment, or go

through the process, which our standards development process

does, which is based on a transparency, due process, and openness,

and an interaction in order to draw to a consensus for a standard.

Not to debate the merits of the Ross directive, but the fact that

California adopted wholesale a foreign standard, international

standard has raised concerns within industry.

Ms. SOLIS. So has Congress taken a position on whether or not

to look at these issues regionally, or——

Mr. WU. For a State to adopt a foreign international standard

without an opportunity for American businesses to make comment,

it would be part of the process.

Ms. SOLIS. Well, it is part of the, you know, legislative process

in the State, and I know that. We can hear later from our witness

from California to talk more about that.

Thank you.

Mr. GILLMOR. Very good. Thank you.

And we will now go to the gentleman from Idaho, Mr. Otter, and

then to our second panel.

Mr. Otter.

Mr. OTTER. Thank you very much, Mr. Chairman.

Mr. Breen, under the project Plug-In To eCycling initiative involved several programs that seem to be somewhat successful. I

think you mentioned them in your opening statement, Staples in

New England, and Good Guys in the Pacific Northwest, in a nationwide program that was initiated by Hewlett Packard and Office

Depot. And at least the data that I have seen or has been made

available to me is that these voluntary programs were not only consumer-friendly, but they were fairly successful. Would the Environmental Protection Agency envision a program that had flexibility

for the States or flexibility for the regions? Probably a follow-up

question to the gentlelady from California’s question relative to a

nationwide standard.

Mr. BREEN. It seems as though there is a natural balance that

will need to be struck between flexibility on the one level and at

the same time predictability and some sense of not having 50-some

different regimes at 50-some different places. But how that balance

is struck and where is a hard one to know right now. We are getting success in collaborative efforts, and those collaborative efforts

have had a wide variety of stakeholders joining in on them, and

that seems to have made an important difference.

Mr. OTTER. Hasn’t the EPA been successful? Maybe it is the Department of Commerce. Some Federal Government agency has

been successful in recycling other products that were injurious to

the solid waste disposal facilities? Batteries? Tires? Freon in refrigerators?

Mr. BREEN. Surely, yes. And in fact, one thing that you may be

thinking of is we now have a government contract, a Federal Government contract where various Federal agencies can buy into one

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particular contract to make sure that when they dispose of their

computers, they are doing it safely and properly and so that not

every agency has to replicate that. And we have standards for safe

recycling that we would share with anyone.

Mr. OTTER. But that is a private sector operation.

Mr. BREEN. Actually, the one that we have would be—it is the

private sector who is doing it, but it is a government contract that

would make it available.

Mr. OTTER. Right.

Mr. Wu, are we running toward a conflict of national policy?

Lord knows, we have spent a lot of money trying to get the United

States wired, higher in technology and broadband use than anybody else. We spent a lot of money doing that and a lot of U.S. dollars. And plus, at the same time, we have tried to lessen the tax

burden on the private sector and on the individual user of this high

tech. Do we have national government policies here in conflict if we

are now looking at taxing a new tax in order to diminish whatever

impact the use products may have?

Mr. WU. Well, Congressman Otter, I don’t think anyone is necessarily advocating for a tax, but I understand your point about the

conflict within the policies as we move forward to have an interconnected and a wired Nation. I think that, you know, the President has clearly stated his goal for having the Nation broadband

accessible by 2007, and we are moving forward with those efforts.

We are making great advances in making sure that under-served

populations are part of the 21st century economy and have the

tools in order to provide that.

Mr. OTTER. I think I understand where you are going, and I appreciate that, but I am running out of time here, and I have one

other question that I wanted to ask. And that is, those who benefit

should do the paying, and I am kind of a user pay kind of person.

I think if I pay gasoline tax, it ought to be used to lay asphalt on

the highway. If I use my computer, and I am the person that benefited or if I sold the computer and I am the person that benefited

profit-wise from it, then I ought to have a responsibility for that.

And I am aware now that, for instance, we have got high-definition

television coming at us, and so there is probably going to be an onslaught here in a few years of a lot of old television sets looking

for a place to go to surrender for the rest of eternity. But we also

know that not very many of those, if any of them, are being made

in the United States anymore. In fact, we have got international

commerce initiatives, like the Caribbean Basin Initiative, that says

if you build it down here, you can ship it into the United States

for free. Whenever the cost of this program finally hits the marketplace for disposal, do you envision that having to change our trade

policies or importation policies?

Mr. WU. If the policies are done fairly and everyone is held

harmless——

Mr. OTTER. Well, we are going to argue all day long about fairness. I don’t think there is any fairness in CAFTA at all, or NAFTA

anymore. But what I am saying is many of the trade policies that

we have already established are going to prohibit any kind of

change in the trade that we had established prior to establishing

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a new national policy on disposal of high-tech equipment, wouldn’t

you agree?

Mr. WU. Well, I think that the industry stakeholders and others

would be willing to have a cost share that is equal. But there is

a concern about the competitiveness. If international companies

and manufacturers are able to bring in their product without an

ARF or some sort of fee to help finance, you know, the recycling,

then it becomes difficult, and then it becomes a competitiveness

issue.

Mr. OTTER. Maybe, if I could just get a yes or a no on this, would

you be more in favor of a private sector program to solve this problem or a government program to solve this problem?

Mr. WU. I think that it would be optimal to have a market-driven industry-related process.

Mr. OTTER. Thank you. Thank you. I appreciate that.

Thank you, Mr. Chairman.

Mr. GILLMOR. Thank you.

And that will conclude our first panel. Mr. Breen, Mr. Wu, thank

you very much for that very helpful testimony.

And we will invite our second panel to come to the witness table.

And we would request, Mr. Wu and Mr. Breen, if members of the

committee could submit questions to you in writing and you could

respond, thank you very much.

We have representatives on this panel from the Maryland Department of the Environment and the Maine Department of Environmental Protection as well as the California Integrated Waste

Management Board. And I will start with Kendl, did I pronounce

that right?

Mr. PHILBRICK. Yes, sir.

Mr. GILLMOR. Good, I usually don’t. Kendl Philbrick, who is the

Secretary of the Maryland Department of Environment.

STATEMENTS OF HON. KENDL P. PHILBRICK, SECRETARY,

MARYLAND DEPARTMENT OF THE ENVIRONMENT; HON.

DAWN R. GALLAGHER, COMMISSIONER, MAINE DEPARTMENT OF ENVIRONMENTAL PROTECTION; AND HON. ROSALIE MULE, MEMBER, CALIFORNIA INTEGRATED WASTE MANAGEMENT BOARD

Mr. PHILBRICK. Thank you, Chairman Gillmor and Ranking

Member Solis for this great opportunity to testify before you and

the rest of the committee about Maryland’s approach to dealing

with e-waste.

I would also like to commend you for conducting these hearings.

As Ranking Member Solis had mentioned, this is a rapidly growing

problem in all of the States within the United States.

I am going to be brief in my remarks, but I would like my whole

testimony, if you don’t mind, to be submitted for the record.

Mr. GILLMOR. Without objection, it will all be entered in the

record.

Mr. PHILBRICK. Thank you.

A little background on the status of eCycling in Maryland. Electronics recycling, or eCycling, began in Maryland in October of

2001 with the EPA Region 3 eCycling Pilot Project, which gave

Maryland and the other Region 3 States the funding and other

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share ideas to begin collection and recycling of these valuable materials.

Since the end of the EPA Region 3 project, MDE, the Maryland

Department of the Environment, has continued to provide modest

State cost share support to local governments. In summary, over

3,900 tons of electronics, including televisions, computers, and

other electronics have been collected through a total of 63 one and

2-day events, three curbside events, and seven permanent or ongoing programs.

The legislative history here in Maryland goes as follows. House

Bill 375 entitled ‘‘Environment Statewide Computer Recycling Pilot

Program’’, signed into law by Governor Ehrlich in April of 2005, defines certain terms and requires a manufacturer to register with

MDE and pay a registration fee. The initial registration fee is $5,000, and a manufacturer’s re- newal registration fee will be reduced to $500 in subsequent years

if the manufacturer has implemented a computer take-back program that is acceptable to MDE. These fees will be used to provide

grants to counties and municipalities for implementing computerrecycling programs.

The law requires MDE to study and compare the environmental

and public health impacts of disposing and recycling cathode ray

tubes and review the effectiveness of the pilot program in diverting

computers and computer monitors from disposal in landfills in the

State through a report of its findings to the Maryland General Assembly by December 1, 2008. The law itself is scheduled to sunset

December 31, 2010.

MDE is currently identifying computer manufacturers and drafting regulations to clarify certain language in the new Statewide

Computer Recycling Pilot Program law. Challenges with the implementation of this law include: one, uncertainty regarding the number of computer manufacturers; two, inability to determine if the

registration fees will be sufficient to even fund the pilot program;

three, acceptability of regulations for bill implementation; four,

whether the registration fee will encourage more computer manufacturers to implement computer take-back programs; and five, impacts of other States and Federal legislation initiatives on Maryland’s law; and last, the influence that the focus on computers may

have on collection of other electronics.

The Federal role, as we see it.

MDE sees the need for Federal assistance in the following areas:

a uniform national definition for electronics waste; evaluation of

the economics and the environmental impacts of electronics recycling versus disposal to waive the true costs of electronics waste recycling; useful data on the number and types of stored electronics

to identify the costs of recycling these historic materials and estimating future costs; national outreach and education programs to

increase awareness of the benefits of eCycling; standards for electronics recyclers to protect workers and public from physical and

chemical hazards associated with eCycling; and last, Federal funding for solid waste and recycling programs, which are not currently

supported.

Although the efforts of the National Electronics Product Stewardship Initiative, NEPSI, have been deemed noble, that collaboration

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did not result in a consistent and effective national solution to the

problem of electronics waste management and recycling. The passage of significant electronics waste legislation in California,

Maine, and now Maryland shows that there is a current demand

for government action. Waiting for a national one-size-fits-all approach is inadequate.

As more citizens demand electronics recycling, additional States

will be forced to pass legislation, continuing the hodgepodge, perhaps, of State laws. Electronic industry representatives are

partnering more and more with State governments to find individually legislative solutions suitable to the demands and the challenges of the electronic waste.

Most of us are watching the progression of the European Union’s

requirements related to electronic waste, and some manufacturers

are already responding with new, less hazardous processes and materials.

In conclusion, Maryland’s law is new, and it will take several

years for the State to determine its impact. It is important for

States to stay involved on the national level and share amongst

each other the successes and its challenges. As Governor Ehrlich

is a very strong proponent of recycling, Maryland offers support to

Congress in its efforts to sort out electronics waste and recycling

issues.

Thank you again for the opportunity to address you.

[The prepared statement of Hon. Kendl P. Philbrick follows:]

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Mr. GILLMOR. Thank you, Mr. Philbrick.

And we will go to Dawn Gallagher, who is the Commissioner of

the Maine Department of Environmental Protection.

STATEMENT OF HON. DAWN R. GALLAGHER

Ms. GALLAGHER. Good afternoon, and thank you for having us

today.

I would like to briefly talk about the recycling program Maine is

using. It is based on a market approach without creating a new bureaucracy.

Maine’s approach is as follows. An individual has a TV or they

have a CRT that they want to get rid of. They take it to their town.

The town can either have a once-a-year, once-a-month, or once-aweek pick up. The town then sends the disposal of these items to

a consolidator. The consolidator keeps track of the manufacturers,

and the manufacturers are then billed either for the charge of

transporting the items to the consolidator or for the actual recycling. The manufacturer has an opportunity to either take back the

CRTs or televisions or to have the consolidator have them recycled.

So there is a lot of flexibility that is being done.

We believe that this is kind of a paradigm shift that the government is responsible for all end-of-life management of solid waste

generated by households. It takes on a new approach. Our stakeholder group, over the last year and a half, looked at three different methods and came up with the shared responsibility.

In this shared responsibility, manufacturers are responsible for

either taking back the items or having them recycled through the

consolidator. The individual is responsible for getting the computer

or having the computer picked up as waste at their own residence,

and then the municipality is responsible for getting it to the

consolidator itself.

The advantages are this. From a manufacturer’s standpoint,

there is flexibility. They can either recover their own waste, or they

can consolidate and have the invoice being sent to them. They can

also change their method. Maine’s rules allow for manufacturers to

get credit for recycling programs, such as those that are done at

Staples and other retailers.

If there is a consolidator involved, there is economies of scale, of

shipping, and other issues so that we are minimizing the price to

the manufacturers as well as to individuals. We have a fair distribution of orphan costs. The manufacturers pay orphan costs

based upon the amount of market share that they have in Maine.

And they pay only their fair share. The State limits the costs and

we pick the low bidders for consolidations. And as a matter of fact,

we have consolidators that are waiting in the wings to help us out

with this endeavor.

Municipalities have a flexibility, which is in the collection and

the transportation system. They can either pick up things at roadside, or they can have them done at their landfills or transfer stations, and there are limited costs involved. If municipalities want,

they can have an end-of-life fee.

For the consolidators, there is a limited risk. The State reimburses them for abandoned wastes and also provides new business

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opportunities. And for the State, there is no new bureaucracy, and

we have the safe handling of consumer goods.

So what we have is something that provides an incentive for the

business to embark on a smart production or a cradle-to-cradle philosophy. And it follows the hierarchy that we like to use in Maine

for our waste, which is reduce, reuse, and recycle. It reduces the

landfills and also increases its capacity, and it reduces toxicity.

We believe that there should be Federal standards, as were mentioned. We also believe that Maine’s model may provide the most

optimal method of combining a market-based approach with product stewardship.

Thank you very much.

[The prepared statement of Hon. Dawn R. Gallagher follows:]

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Mr. GILLMOR. Thank you very much.

And we will go to Rosalie Mule of the California Integrated

Waste Management Board.

STATEMENT OF HON. ROSALIE MULE

Ms. MULE. Thank you, Mr. Chairman and Ranking Member

Solis, for inviting me here today to testify on this important issue

of e-recycling. And I do appreciate the opportunity to be here before

this subcommittee.

I am a member of the Integrated Waste Management Board, and

I am here today to discuss California’s e-recycling program. I will

try to be as brief as I can in my remarks, and answer——

Mr. GILLMOR. Before you get started, so that I don’t have to interrupt you in the middle, it appears we are going to have to go

vote, and then we will come right back.

Ms. MULE. Vote? Okay. Thank you.

Mr. GILLMOR. Well, I was looking at the Clerk down at the desk.

He was making motions like we are going to vote. Oh, they passed

another amendment. Nevermind.

Ms. MULE. Okay.

Mr. GILLMOR. Go ahead.

Ms. MULE. In 2001, California clarified that cathode ray tubes

are presumed to be hazardous waste and could not be disposed of

in landfills. In a survey commissioned by the Integrated Waste

Management Board, it was estimated that more than 6 million old

TVs, computer monitors, and other electronic devices were being

stockpiled in California homes alone. This created a management

and disposal issue that had to be addressed.

In response to this dilemma, the Integrated Waste Board, as well

as other State agencies, local jurisdictions, industry representatives, environmental groups, and other stakeholders worked at various levels to seek a solution. Many options and scenarios were explored, including those discussed at the national level. In 2003, the

California State legislature passed Senate Bill 20, the Electronic

Waste Recycling Act. The first of its kind in the Nation, this law

established a funding mechanism to provide proper end-of-life management for certain electronic products from all consumers, including households, businesses, and schools.

The goal was to involve all stakeholders, including industry,

State and local government, and recyclers in the system to remove

the stockpiles and establish an infrastructure, which would provide

a sustainable, convenient management option for these items. The

program has flexibility to add and remove electronic products to

keep up with the rapid growth and change inherent in this industry. It also has provisions to address both the fee paid by consumers as well as the payments made to collectors and recyclers

to account for fund condition and recycling markets.

At the State level, the program is a cooperative effort between

the Waste Board, the California Department of Toxic Substances

Control, and the State Board of Equalization. In short, the Act calls

for a $6, $8, or $10 fee paid by consumers of certain covered electronic devices at the time of purchase. These funds are used to

make payments to authorized collectors and recyclers of covered

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electronic devices and reimburse the net cost of proper material

management.

In the field, the system, which is truly a partnership of stakeholders, provides for financial relief to local jurisdictions who have

borne the burden of management before the passage of the Act,

cost-free recycling opportunities for consumers throughout the

State, reduction and prevention of illegal dumping, and elimination

of the stockpile of waste monitors and TVs.

Our program began on January 1 of this year, and the implementation is proceeding as planned. Our projected revenue for the first

year is $60 million, and our first quarter revenues, which was

through March 31, we collected $15 million, which places us in line

with our projections. We have received over $5 million in recycling

payment claims, and we have paid out over $2.6 million to recyclers.

The first quarter saw more than 13 million pounds of materials

recovered for recycling. These materials are being handled by 260

authorized collectors and 38 authorized recyclers. And they are authorized to ensure that they are handling these materials in the

manner that is protective of public health and safety and the environment. The number of collectors and recyclers will be expected

to grow as the program does increase.

California consumers are the other key component to our program. Thus, the Integrated Waste Board is tasked with providing

outreach and education to California consumers to explain the need

for the Act and the resulting fees that they are paying. To accomplish this, we established an e-recycle.org website. It provides a

one-stop information portal on e-waste in general as well as specific

provisions of the Act. And I believe that we will be sending you,

if we haven’t already, some information on our website.

Many different types of public education materials, including

downloadable point-of-purchase ads and banners have been developed and are available for use by retailers as well as others to promote our program.

Governor Schwarzenegger is supportive of the full implementation of this groundbreaking legislation. He has reaffirmed this commitment in the State of the State Address as well as his continued

support through the budget process. He has tasked us to build a

program that is sustainable and workable for all involved and consistent with his charge to protect the public health and the environment while strengthening California’s business economy.

With this support and the support of the stakeholders, we are

confident that this program will achieve its goals.

With that, I would be happy to answer any questions.

Thank you.

[The prepared statement of Hon. Rosalie Mule follows:]

PREPARED STATEMENT OF ROSALIE MULE, BOARDMEMBER, CALIFORNIA INTEGRATED

WASTE MANAGEMENT BOARD

In 2002 it was determined that more than 6 million old TVs and computer monitors and other electronic devices were being stockpiled in California, in garages,

storage and attics among some of the places. As with many other states, California

prohibits the disposal of these items in landfills.

California, in response to the dilemma at hand, began working with the National

Electronic Product Stewardship Initiative to help find solutions but was unfortunately, unable to reach agreement. Therefore, the California State Legislature

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passed Senate Bill 20 which enacted The Electronic Waste Recycling Act of 2003

which established a funding mechanism to improve the proper end-of-life management of certain electronic products. The goal, to eliminate these items, determined

to be hazardous to public health, from California’s landfills and to provide a easy

and convenient method of proper disposition.

The subsequent program is a cooperative effort between California Integrated

Waste Management Board, the California Department of Toxic Substance Control

and the Board of Equalization. SB 20 calls for a 6 dollar, 8 dollar, or 10 dollar fee,

paid by consumers of covered electronic devices at the time of purchase. Payments

are made to authorized handler/processors of covered electronic waste to reimburse

the net cost of proper material management.

Combined, the collected revenue and the payment system are intended to:

• Provide financial relief to local jurisdictions

• Provide cost-free recycling opportunities for consumers throughout the state

• Reduce/prevent illegal dumping

• Reduce/eliminate the stockpile of waste monitors/TVs

The program began on January 1 of 2005, and we are now into our seventh

month. By the end of the first quarter, California has approved over 260 collectors

and more than 38 approved recyclers.

Our projected revenue for the first year was 60 million dollars. Our first quarter

revenues, January to March, collected 15 million dollars which places us inline with

our annual projections. Over 5 million dollars in recycling payments claims have

been submitted to the State. We are awaiting second quarter revenues that are due

from recyclers by July 31st and expect to be ahead of projected revenues as more

collectors and recyclers are approved and retail sales increase.

The first quarter also saw more than 13 million pounds of materials have been

recovered for recycling. Revenues generated are returned back to recyclers at 48

cents per pound collected in which recyclers payout collectors up to 20 cents per

pound.

The CIWMB was tasked with providing outreach and education to California consumers and in doing so established, in partnership with DTSC and program stakeholders, eRecycle.org to provide a one-stop information portal on e-waste in general

and provisions of the Act in particular. Public education materials including

downloadable point of purchase ads and banners have been developed and are available too.

Governor Schwarzenegger and the State of California have taken a strong stand

to eliminate these hazardous materials from our landfills to protect the health and

safety of our residents and visitors. We have worked with manufactures and retailers to find a system that would best address the issue and find a solution.

We believe the program is successful in that we are accomplishing our goals of

ridding landfills of hazardous materials and illegal dumping of electronic waste.

Considering we have built a 60 million dollar enterprise from the ground up. Californians are accepting and adopting the new fee’s as we have experience with programs such as fees on new tires and oil. While differences exist between that program and our e-waste program, the need for a clean and healthy environment continues to be a top priority for the people of California.

Mr. GILLMOR. Thank you very much.

Let me ask you, Commissioner Gallagher, you mentioned, as I

understand that there is a fee on the manufacturers, and the people who collect the electronics and keep track of it by manufacturer, considering that manufacturers are outside of Maine or outside of the country, I mean, how has that worked in terms of a collection process? Is there a problem?

Ms. GALLAGHER. We actually have not had a problem with that.

We have actually identified about 87 percent of the total manufacturers. And we also have what we would call abandoned waste, and

under the abandoned waste proposal, the State of Maine would be

authorized to go through our Attorney General’s office after the individuals and the companies and propose at least treble damages.

Mr. GILLMOR. You know, if you are buying something that was

made in Taiwan or China, I think it would be pretty hard to. Actually, if you figure out a way to deal with that, maybe you better

100

tell us, because some of the trade laws that Mr. Otter talked about

earlier.

Let me ask the three of you if you are comfortable with the

present involvement by the Federal Government either through

voluntary programs or do you think that we at the Congressional

level ought to be looking at doing something on a national basis

that might help you?

Ms. MULE. I think I will go first.

Actually, in our law, it does provide provisions if, in fact, the national law does come into play, that we would join up with that

law, under certain conditions. So we do have that option to work

with you. There are definitely advantages, at least in my opinion,

to having some type of a national law.

Ms. GALLAGHER. I would echo that. I do think that the Federal

Government needs to provide standards for us and standards for

the manufacturers. I think there has to be some criteria. What we

are lacking, and what you have seen today, is a lack of consistency

among the States on how to deal with these issues. And while

Maine believes that our model is the best, we all do, it still would

be beneficial to have some consistency among the States.

Mr. PHILBRICK. I agree.

Mr. GILLMOR. You know, the Council of State Governments has

released draft legislation that would propose a regional electronic

waste plan for several northeastern States, and I understand that

there are legislators from Maine that are participating in those discussions. I guess how do you view that draft legislation? And can

your State law and that coexist peacefully, I guess would be the

question?

Ms. GALLAGHER. Well, certainly when Maine went about doing

its e-waste law, based on what the stakeholders said and what

some of the very progressive companies said, we elected not to use

an advanced recovery fee, which is what the draft legislation uses.

And we believe that we also needed to have some shared responsibility. In fact, our legislation stated that we had to have a shared

responsibility. I guess that is a question that we will have to take

a look at, given that we have gone through the process and what

our State believes it should be doing.

Mr. GILLMOR. Well, yes, sir, Mr. Philbrick.

Mr. PHILBRICK. Although we are not participating in the State

program that you have mentioned, my feeling about the regional

approach is that it should be taken a look at. I think the key to

all of this is that we should make it as convenient as possible to

the consumer, a walk in the park, if you will, for them to be able

to return these kinds of materials to the proper place where they

can be disposed of and recovered properly. And anything that

would, in any way, frustrate the consumer in terms of their ability

to return these things to recycling is going to end up with these

things over along the side of the road, in landfills where we would

not want them, or otherwise they would just continue to buildup

in their basements someplace. I think a regional approach might

be effective economically. I think, as Ms. Gallagher has indicated,

I think we need to take a look at that. There may be some cost benefit in doing that. I think the devil would be in the details, certainly.

101

Mr. GILLMOR. Let me follow-up here. I am running out of time,

Mr. Philbrick, but you gave credit in your testimony to the EPA for

giving Maryland a ‘‘shot in the arm’’ to begin the successful journey

to the electronic waste law. And you singled out their eCycling

Pilot Project. Could you explain what EPA did and why it was important?

Mr. PHILBRICK. I would love to, Mr. Chairman, but in 2001, I

was not the Secretary of the Department of the Environment. But

I will get back to you with an answer to that.

Mr. GILLMOR. Okay. Well, I would appreciate that.

Mr. PHILBRICK. Yes, sir. I will give you that.

Mr. GILLMOR. And my time has expired.

Let me go to the gentlelady from California.

Ms. SOLIS. Okay. Thank you, Mr. Chairman.

And I really am pleased to hear the testimony from our witnesses, and I wanted to go back to California. We heard earlier

from the first panel from the Commerce representative that California somehow created legislation without really thoroughly

speaking to all of the stakeholders regarding how fees were set.

Could you address that and give us a little indication of how that

all happened?

Ms. MULE. I think if you were to talk to the folks in California,

they would beg to differ. I think there was an extensive stakeholder process throughout the development of this legislation.

There was some legislation that was passed a year or 2 before, but

it was vetoed by then-Governor Davis. So again, the stakeholders

did work together to come up with what we now know as SB-20.

So there was extensive stakeholder input into the development of

the program that we now have in California.

Ms. SOLIS. How would California feel if, for example, the Federal

Government EPA did set a standard and their standard was a lot

less restrictive? What would California want?

Ms. MULE. Well, California, as you know, Congresswoman, sets

their own standards. And there are a number of instances where,

particularly in the solid waste field, where California’s standards

are higher than that of Federal standards. And so I believe that

the States would have the option to set higher standards and——

Ms. SOLIS. May not be penalized then, perhaps, or, you know,

have that ability in terms of States’ rights to——

Ms. MULE. Right.

Ms. SOLIS. [continuing] be able to kind of direct what fits them

best——

Ms. MULE. Right.

Ms. SOLIS. [continuing] because California, obviously, is very different from Maine——

Ms. MULE. Right.

Ms. SOLIS. [continuing] which is my next question.

Maine, how do you deal with imported products that come from,

say, countries that don’t meet our current, say, standards that

would be acceptable that would have lower levels of contaminants?

How do you address that without getting caught up in trade agreements here that might cite some red flags or create some red flags?

Ms. GALLAGHER. Well, our law does not actually look at what is

in the computer. It just requires recycling of any computer that we

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have. And we have to have certification from the recyclers that, in

fact, they are using strict environmental State and Federal regulations in the recycling of the matters.

Ms. SOLIS. So I am still not quite understanding. Is there, for example, few larger manufacturers that are out of, I guess, the

United States that kind of meet the standards? And what happens

if there is, say, Korean, just to throw that out, products that are

brought in? I mean, how are you actually really able to get information that the equipment is not——

Ms. GALLAGHER. The manufacturer files a report with us. As a

matter of fact, that is what we are doing right now is compiling all

of the reports that have come into manufacturers. We took a look

at several other States, Florida and Minnesota, that had done extensive work on finding manufacturers. And we used that basic list

as a premise for ours and a baseline for ours. And so what we have

done is identified the manufacturers and have written them and

have gotten back their plan for what they plan to do with the ewaste.

Ms. SOLIS. And that is with manufacturers that are representatives of outside the United States?

Ms. GALLAGHER. That is correct.

Ms. SOLIS. Really? Wow. That is interesting.

My question next is for Mr. Philbrick. Thank you for coming and

sharing what Maryland is doing.

How do you see our role in terms of what EPA can offer? You

did make some mention earlier in your testimony regarding EPA’s

involvement, or somewhat involvement. Can you elaborate a little

bit more on that? What would be ideal?

Mr. PHILBRICK. Thank you.

I think some consistency in defining exactly what is e-waste.

What are we going to be tackling? Is it just televisions and radios?

Or are we going to start talking about PDAs? Are we going to be

talking about video cameras? What are we going to be dealing with

here?

I think in order to be sure that waste is removed from the waste

stream, I think we need to be talking about recycling and not just

what do we do with waste. I think we need to get this stuff. There

is value to be mined in this. I heard some testimony from, I guess,

EPA that said it would cost $15 per laptop with only $2 worth of

value. I asked my staff about that, and we are looking at somewhere between 10 to 23 cents a pound in cost, and we don’t know,

right now, what the value is to be mined from that. So I think

those kinds of studies would be helpful on a national level so that

we get a broad spectrum of what is going on here. Otherwise, I

think we are going to end up with potentially 50 disparate things

going on here, and that may be great for that State, but that may

not be good for a region, or it may not be good for the whole country.

Ms. SOLIS. Thank you.

One last question just for all of you. You can think about this.

I am very concerned about recycled cell phones or software,

whatever, not software in particular, but computers that are then

resold to other countries where they still may have a high level of

contaminants there and people who handle that as well as those

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individuals that are on the receiving end in terms of recycling to

being exposed to that material and how well we are actually providing assistance so that employees are aware and safety measures

are put into place. And maybe that is something that you can respond to.

Mr. PHILBRICK. I have toured several what I will call recyclers

within the State of Maryland and looked at how they handle this.

On the one hand, it is great, because the people that they are using

to do this, the people who aren’t necessarily highly educated or

whatever, you know, it is a very labor-intensive effort. But I wondered the same thing that you just asked. And that is I didn’t see

a whole lot of protection going on for these folks who were pulling

these things apart, and I wondered if there is an accident, like if

they break in two or they open something and we have got mercury

running along the top, you know, so I think that that is something

else that needs to be carefully evaluated. I don’t know if that is

EPA’s responsibility or not, but it is something I think that we

have to look at.

These operators are operating very cautiously. They are professional. They are doing the right thing, but I think there are a lack

of standards, if you will, or a lack of process in how this stuff is

supposed to be handled. And then where does it go? What are we

doing with the things that they are collecting? My staff may know

the answer to that. I don’t personally know, but I could get something back to you on that as well.

Ms. SOLIS. If you could give us that information, I would greatly

appreciate it.

Ms. MULE. I can forward that to you. The Department of Toxic

Substance Control in California does have authorization. They do

authorize the collectors and recyclers to ensure the very environmental protections that you are speaking of, and they do go out

and conduct inspections and ensure that the workers are operating

in a safe manner. So I will be happy to share all of that information with you and the committee.

Ms. GALLAGHER. Maine’s recycling group and the consolidators

receive a bid from the State, and so therefore, we have between

five and ten consolidators. And those companies have to self-certify,

plus they are inspected. And we can take enforcement against

them.

Ms. SOLIS. Okay. Thank you.

Mr. GILLMOR. Thank you.

The gentlelady from California.

Ms. BONO. Thank you, Mr. Chairman.

And thank you all, again, so much for being here today.

Ms. Mule, one of the bigger challenges facing meaningful environment protection is that government set up taxes or other fees

to generate revenue for a specific pollution problem, but then only

spend a fraction of the raised revenue to address the problem. In

your testimony, you say that we in California, our first quarter revenues were $15 million, but our State only received $5 million in

recycling payment claims, roughly 33 percent payout of revenues.

What is happening with that additional $10 million for the first

quarter? Where is that extra $10 million? And this is going to be

a problem in the future where in California we are so cash

104

strapped. Is this going to be a fund that is dipped into for other

purposes?

Ms. MULE. That is an excellent question.

And as I mentioned, the program started January 1 of this year,

so really we have completed just the first payment cycle of this program. And we were all wondering the same thing. You know, we

had estimates of what we thought we would collect in terms of the

fees, and we just weren’t sure what the payment request would be.

And what we are seeing, the trend in California, at least, is that

when someone buys a new television, they don’t necessarily get rid

of their old one. They hold on to it. So it is not a one for one exchange there. And our law does have provisions where the Waste

Board does review those fees on an annual basis, and we can adjust them accordingly, because if we are taking in more money

than we need, you know, we don’t want to do that, but we don’t

want to take in too little money at the same time. So the fees can

and will be adjusted accordingly.

Ms. BONO. Thank you.

Ms. MULE. Thank you.

Ms. BONO. Also, I, like most Americans, have got an extra piece

of electronics. The first place I go is to my local charity. And I understand they are, once again, getting back into the business of collecting and dealing with this. And I think that goes back to Mr.

Philbrick’s comment. Instead of calling this e-waste, if you call it

e-scrap, I think there would be, perhaps, a different understanding

of the problem. But are not-profits benefiting under the California

law?

Ms. MULE. Yes, they are. Just to mention one off the top of my

head, Goodwill is an authorized recycler and collector in certain

areas of California, so yes. They are very actively involved in this

program.

Ms. BONO. Thank you.

And then last, in the Washington Times article, I don’t know how

many of you have seen it, but I think maybe, perhaps, Mr.

Philbrick might have seen it close by, but the writer closes with a

comment about Congress has a responsibility to uncover the facts

and not to look for baseless assumptions and misinformations

spread by agenda-driven pressure groups, which of course it goes

through everything we do in Congress. But do you believe the policies that each of your States have adopted have been driven by

baseless assumptions or misinformation spread by agenda-driven

pressure groups?

Mr. PHILBRICK. Thank you.

Not at all. As I had indicated in my testimony, last fall, based

on an earlier piece of legislation, the Governor populated a work

group study with industry, with consumers, with local government,

and a whole host of stakeholders to study the problem. And in fact,

at the end of the day, when that committee got done, there was not

consensus. And so we advised that we should not have legislation.

But some of the legislators who served on that work group thought

otherwise and put legislation in. And all of those stakeholders

worked very closely together in this to craft the legislation, the

pilot program that Maryland has right now.

105

So I would like to say that it has broad input and representation.

But again, the proof is in the pudding, and we are just now beginning. We are beginning to draft regulations which we hope will be

in place by October the 1st, and we are going to have to see how

it goes. That is why the report is due in 2008.

Ms. BONO. Thank you.

Do the other two care to—you both shook your head no, but I

know the stenographer is probably looking for an audible answer,

if you could.

Ms. GALLAGHER. No.

Ms. BONO. Thank you.

Ms. MULE. No, not at all. As a matter of fact, the Waste Board

did commission a survey where that is how we found out that there

were 6 million electronic devices in people’s homes, just in people’s

homes alone.

Ms. BONO. Well, thank you.

And Mr. Chairman, I also just want to close and qualify the

Working Group’s intentions are we are not behind any one bill. We

just really wanted to bring the problem to Congress and raise the

awareness and certainly think about all of these answers that everybody has talked about and move forward.

So I think we have heard a lot of great ideas and I look forward

to working with all of you moving forward.

And certainly your leadership, Mr. Chairman, is greatly appreciated.

And I yield back.

Mr. GILLMOR. Thank you very much.

And the chair recognizes the gentleman from Maine.

Mr. ALLEN. Thank you, Mr. Chairman.

Welcome to all of you. Thank you, particularly, Commissioner

Gallagher, for being here.

Mr. Chairman, Maine is a small State, but we are very proud

that in a series of areas, whether it is education, healthcare, or environmental protection, we feel like we are on the cutting edge, and

your presence here is affirmation of what you have been able to

achieve in your position and what Maine has done in the past.

Some of the prior questions have a lot to do with it, and how can

this possibly work. And I wanted to give you an example, on a larger scale, but not a large scale, from Europe. And the size of the European market is really pretty interesting. They have been able to

dictate the components of products made around the world, because

they have a unified market. But back in 2001, the Dutch by themselves decided that they simply weren’t going to have cadmium in

higher levels than those permitted by local law. And they turned

away a whole shipment of Sony Playstations because the video

game’s cadmium was too high under their law. Sony lost about

$100 million worth of sales, but today, all of its Playstations have

a lot less cadmium, and they are back in the Dutch market.

I think I heard you, Commissioner Gallagher, this is really a

question, it seems to me that the Maine system is working because

it turns out that manufacturers who want to do business in Maine

or continuing to do business in Maine are readily identifiable and

can be located and that the program, as a whole, is not so burdensome to them that they won’t cooperate with the State government

106

and with municipal governments or with consolidators when that

is appropriate. Is that a fair statement?

Ms. GALLAGHER. That is a fair statement.

We had initial legislation in 2004. We had to get some clarifying

legislation this past year, and all of the major manufacturers came

and supported the bill.

Mr. ALLEN. Maine is still a very small State.

Ms. GALLAGHER. We think big, though.

Mr. ALLEN. We do think big. But are there particular challenges,

any particular challenges in trying to enforce this law, because we

are only 1.3 million people?

Ms. GALLAGHER. I think the challenge comes from companies

wanting to have some consistency and perhaps wanting to not take

part. And so they look at Maine and say, ‘‘You are not a very big

market, so we are not sure we have to play.’’ But I think once we

get into regional organizations and also if we are the first to jump

off the cliff, then I think there is kind of a notice to them. I believe

that probably the biggest problem that we will have will be on establishing, kind of, orphaned and abandoned waste.

Mr. ALLEN. Yes. In your testimony, you say that a program

should not be more costly for the consumer. And do you think

Maine’s approach, which holds manufacturers responsible for their

products from, as you said, cradle to cradle, will cost less for consumers than an up-front fee, and if so, why?

Ms. GALLAGHER. I believe that it is much less than an advanced

recovery fee, and one of the reasons is that several progressive

companies, like HP, are already taking back a lot of the computers

and CRTs. And so for them, they have found that they wouldn’t be

doing it if it weren’t economically viable. And so therefore, we have

got a program in place and will shortly begin that program, which

will have the consolidators getting a price per ton. But because we

are collecting them not individually and it is not an individual consumer, there are economies of scale with that.

Mr. ALLEN. I see. When the bill was passed in the Maine legislature, some members of the legislature felt that this would actually

create jobs in Maine, in addition to sort of diminishing the waste

stream, but it would create jobs. Can you speak to that issue and

how that has worked out?

Ms. GALLAGHER. With the consolidators coming on, it is several

small businesses, and as you know, Congressman, Maine depends

a lot on small businesses. And this will allow individuals and

smaller companies to put in a bid and to compete for the five to

ten different consolidators for the various e-waste coming in.

Mr. ALLEN. Okay. Good.

Thank you.

Mr. GILLMOR. I want to thank our panel for testifying. It was

very helpful. And as we work through this process, we appreciate

your contribution. I might ask if you would be willing to respond

to written questions from members of the committee.

Ms. GALLAGHER. Yes.

Mr. GILLMOR. Thank you very much.

Ms. MULE. Thank you.

Mr. GILLMOR. And we stand adjourned.

[Whereupon, at 4:15 p.m., the subcommittee was adjourned.]

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[Additional material submitted for the record follows:]

RESPONSE FOR THE RECORD BY BARRY BREEN, DEPUTY ASSISTANT ADMINISTRATOR, OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, ENVIRONMENTAL PROTEC- TION AGENCY, TO QUESTIONS OF HON. HILDA SOLIS

Question 1. How do the 1999 National Safety Council Report facts and figures differ from EPA’s 2001 and 2003 Municipal Solid Waste Report’s facts and figures?

Answer: There are some important differences in the way that the electronics

waste calculations were made in the National Safety Council (NSC) report, Electronic Product Recovery and Recycling Baseline Report (1999) and EPA’s periodic reports entitled Municipal Solid Waste In the United States (hereafter referred to as

the MSW Characterization Report).

The NSC report focused exclusively on discarded electronics. It used sales data

from 1992 through 1998 and projected sales for 1999 through 2003 to predict the

number of units that would become obsolete after their first use. At the time the

NSC made their projections, computer sales were very high and therefore the sales

projections in their analysis were much larger than the actual sales that took place

in subsequent years.

The MSW Characterization Report is a report periodically issued by EPA that

looks at the entire municipal solid waste stream. In 2001, EPA added a specific new

category of consumer electronics to its usual methodology. In doing so, it examined

actual sales data through 2001 and did not project sales. Another difference is that

the NSC report reported information in terms of units, as was its normal approach

with other wastes, while the MSW Characterization report reported consumer electronics in terms of tons of material.

Furthermore, the MSW Characterization Report developed estimates for several

categories of consumer electronic products, including the information product category comprised of computers, printers, modems, word processors, fax machines, answering machines, telephones, and cell phones. The NSC report examined only personal computers (laptops, CPUs, and monitors).

Therefore the numbers from these two sources differ because: (1) the two studies

are working with different timeframes, and the NSC sales projections were overestimates for the years in which data may overlap; (2) the NSC report reported information in terms of units and the MSW Characterization report reported numbers

in terms of tons; and (3) the Characterization Report estimated figures for a broader

range of products.

Question 2: Please provide information on the value of materials recovered from

recycled electronics products.

Answer: According to the 2003 IAER Electronics Recycling Industry Report:

• Commodity (e.g., copper, aluminum, steel) recovery values range from $1.50 to

$2.00 • Parts (e.g., printed circuit boards, connectors) recovery can be as high as $100 for

a relatively new machine to nearly $0 for a machine more than 10 years old. • Machine resale value varies greatly depending on the age and type of machine

(laptops can have double the value of a desktop).

Question 3: What is EPA doing to get the recycling message out to minority and

under-served communities?

Answer: On the subject of recycling in general, EPA is very active in working with

minority and under-served communities to get the word out on recycling. Some examples include:

EPA has an active Hispanic program in the Office of Solid Waste (OSW). Nearly

everything published by OSW is published in Spanish and English. (We are also beginning to publish selected documents in Chinese and Korean as well). EPA also

supports and attends a number of Hispanic-oriented conferences throughout the

year, namely LULAC and NABE and has assisted in the development of the Agency’s Hispanic Portal. EPA is working with two Hispanic, woman-owned contractors

to ensure that our outreach materials and efforts are appropriate and targeted for

the Hispanic community. EPA’s used oil campaign materials were the first of their

kind; i.e., specifically designed for Hispanic owners and operators and employees of

the automotive industry and the Hispanic general population. EPA aired a recycling

PSA on Hispanic radio stations across the country that was narrated by the actor

Erik Estrada.

EPA is in the planning stages of a major outreach event at Miami Dade College

(Kendall Campus). Scheduled for November 2005, it will include a number of training workshops and interactive activities for all ages, focusing on solid waste management (reduce, reuse and recycle). EPA is also in the beginning stages of developing a household hazardous waste (HHW) campaign for the Hispanic community;

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it will be field tested at a national conference in Tacoma, Washington in September

2005 and the final stages of developing an ‘‘English as a Second Language’’ curriculum based on the environment. This product will be launched at the international TSOL conference in March 2006. The Immigration and Naturalization

Service (INS) has expressed an interest in supporting this effort.

EPA has also developed targeted recycling outreach materials for the AfricanAmerican community, including radio PSA’s with Usher and other recording artists.

We also have targeted outreach efforts for the ‘‘aging’’ population and have designed

a number of outreach materials that focus on this population’s changing life styles

and habits and their potential effects on the environment. We work with the Agency’s aging program on this initiative and also support and attend conferences specific to this audience (e.g., AARP and NCOA). Our EPA regional offices in California

are also focusing on getting the recycling message out to Tribal governments and

to the outer Pacific Islands, two undeserved groups in EPA Region 9. EPA Region

9 has funded household hazardous waste collection programs on Tribal lands and

a Regional Recycling Initiative for two outer Pacific Islands focused on scrap metals

and plastic.

With respect to electronics, EPA is just starting a group to focus on increasing

opportunities to reuse working electronics. This group will be partnering with nonprofits such as the National Cristina Foundation and Compumentor who specialize

in job training in underserved communities and in making available affordable used

information technology equipment to help bridge the ‘‘digital divide’’. The Federal

Electronics Challenge is also encouraging federal facilities to use GSA’s ‘‘Computers

for the Learning’’ program as a way to donate excess computers. This program

makes an effort to provide computers for empowerment zones and enterprise communities.

RESPONSE FOR THE RECORD BY BENJAMIN H. WU, DEPUTY UNDERSECRETARY, OFFICE

OF TECHNOLOGY, DEPARTMENT OF COMMERCE

The Honorable Paul E. Gillmor

Question 1. Are you comfortable with the present involvement by the Federal government—either through voluntary programs or existing regulations—or do you

think that Congress needs to rethink the role of the Federal government in this

area?

Response. Congress has an opportunity to take on a leadership role that will benefit our nation’s technology competitiveness and benefit our environment. I believe

that a national solution will require statutory and legislative initiatives; therefore,

Congress must play a significant role in the e-waste debate and any actions taken.

We stand ready to work with Congress to inform and help shape the debate towards

a constructive resolution. If each state continues to develop a patchwork of legislation, industry will be overburdened. It is imperative that the federal government

mobilize to fully consider options for the crafting of a national solution.

Question 2. Where do you think it makes the most sense to place the greater responsibilities in any electronic waste and recycling regime? Since individual persons

have to make the choice to give up their unused electronic equipment, what responsibilities do you think they should bear? What role does public education have in

this effort and have you seen any successes with public education efforts in these

or other recycling programs?

Response. A consensus-based, equitable, fair, and balanced approach that is not

overly burdensome is the ideal. Consumer awareness is certainly a key component.

Without the consumer properly handling and disposing of e-waste, a national system will not flourish. There has been success in some voluntary programs. For example, HP and Office Depot ran a nationwide program in the summer of 2004 for

seven weeks and consumer awareness was certainly a key to the success of this program. Consumers could drop off one piece of electronic equipment a day for free at

an Office Depot for recycling by HP. Through this program HP received 10.2 million

pounds or 425,000 items. However, other programs that placed a significant burden

on consumers have not faired as well. For instance, HP and Dell customers may fill

out a form online describing the product they wish to mail back and agree to pay

a fee. The company sends packing materials and a label to the consumer and arranges for pick up from the residence. The volume of product collected in this program was dwarfed by the success of the HP and Office Depot program where consumers simply had to drop off e-waste for free.

Question 3. Some have argued that making products easier to recycle reduces the

costs of recycling and ultimately makes these commodity products more affordable

for using in future products. Manufacturers argue that cost internalization is the

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only true incentive that effectively encourages design changes. If you believe this

to be the case, how does an Advanced Recycling Fee (or ARF) or the registration

fee, like in Maryland, encourage or promote manufacturers to design their products

for recycling?

Response. A national plan should incentivize technology manufacturers to design

products for ease of recycling and thereby reduce their costs. A system of shared

responsibility is best to make sure each party has an incentive to properly dispose

of the e-waste.

Question 4. As you know, our world is becoming a more global marketplace with

goods and services easily moved among countries. In addition, many countries have

varying standards concerning how these materials should be handled or disposed.

What lessons have you learned from activities either in other states or countries

about how our country can deal with this issue? What do we know about how these

activities are affecting our own domestic manufacturing, retailing, and recycled

products industry?

Response. Working collaboratively with and learning from foreign partners will be

key in a successful e-waste policy. Similar and related efforts, such as the 3R’s initiative (Reduce, Reuse, and Recycle) have proven that international collaboration is

central, beneficial, and necessary. It is certainly true that materials can easily move

across state and international borders, and therefore a policy one state or country

makes will have effects on the surrounding area. Decisions such as classification of

materials will also be important in determining how materials are treated across

borders. E-waste can fall in an ambiguous middle ground. Some groups may reuse

and remanufacture the e-waste, some may consider it normal waste, while others

may consider it hazardous waste, with each group having disparate transportation

regulations which could hamper a wide spread solution and disadvantage certain

groups or areas. In addition, the regulations in one area can affect the competitiveness of companies forced to comply with regional rules as well as affect widespread

manufacturing processes and therefore the types of products all markets receive.

What is important to remember is that we need to involve all groups in the decision making process. While Europe has acted on legislation and has a national ewaste policy in place we must be careful when adapting lessons learned in Europe

to the American market, especially if we are adopting wholesale EU standards

which did not have the benefit of U.S. input, notice, comment, and consideration.

Question 5. What work have you done with other international countries and

stakeholders regarding electronic waste and recycling?

Response. We have touched upon the e-waste issue at the Tokyo April 2005 G8

Ministerial Conference on the 3R’s initiative (Reduce, Reuse, and Recycle).

Question 6. Some of the State laws or bills put forward suggest the need for collectors and recyclers to be ‘‘certified’’ by a set of regulatory guidelines. Do you believe

these regulations undermine the contracts that businesses currently enjoy? Do you

believe these regulations unnecessarily burden the current commercial-to-commercial relationships that are governed by company due diligence and contractual obligations? Do you believe that this presents Commerce Clause issues about a restriction on the free and fair trade of these commodities?

Response. In establishing an e-waste policy, certain criteria must be met to ensure

that companies are complying with required practices and operating on a level playing field. While ideally the private sector would be self-regulating, it may become

necessary to have oversight into the recycling process to ensure certain standards

are kept. The government should work with the industry to find a solution that ensures e-waste is handled properly without unnecessary burdens while allowing them

to remain competitive in the global marketplace.

Question 7. I think you were quite kind in your assessment that ‘‘efforts to comfortably resolve the issue [electronic waste] by consensus with all stakeholders,

while on-going, have had limited success. Could you please provide the Subcommittee with your own experiences about how difficult bridging the gap of agreement can be?

Response. I have had the opportunity to engage affected e-waste stakeholders on

this issue over the past several years, coupled with the industry-led efforts and

EPA’s leadership; I recognize that consensus is being held up by each stakeholder’s

insistence on their parochial and preferred business model. The ability to craft a national solution lies in the leadership necessary to force a consensus among the

stakeholders. Having Congress play a significant role in that regard is key.

Question 8. Obviously, you think there is an environmental issue here because

you claimed: ‘‘Recycling is generally more expensive than disposal and recycling

does not pay for itself. The costs of collecting and dismantling these products may

exceed the material value of the recycled equipment because there is no efficient infrastructure for collecting discarded electronics, nor were these products originally

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designed with recycling in mind.’’ Since this is the case, why is the Commerce Department trying to push a consensus plan on recycling of these materials?

Response. Electronics recycling is an issue that is only going to increase in significance in the coming years. A recent report from the International Association of

Electronics Recyclers projects that given growth and obsolescence rates of the various categories of consumer electronics, approximately 3 billion units will be

scrapped during the remainder of this decade. We are currently seeing the states

take up this issue, and several have passed legislation or are on the cusp of doing

so, thus it appears that without federal government action, it is inevitable that the

states will legislate heavily in this area. A national solution is preferable for several

reasons, including: the economies of scale and cost savings of having a larger national infrastructure; the benefit to companies to not be forced to comply with a

patchwork of legislation; the inefficiency and waste of tax dollars in having this debate conducted hundreds of times at the state and local level; and the inability of

all affected parties to have their interests represented if this debate is conducted

hundreds of times at the state and local level. Therefore, the e-waste issue is important for the Department of Commerce not only because of the merits of the issue

and the environmental impact of the growing volumes of electronic waste, but because state legislation is developing significant concerns affecting U.S. industry and

competitiveness.

Question 9. I was wondering if I could get you to be a bit more specific about a

few areas of the report that you mentioned in your testimony? Specifically, which

products should be considered for a program, how should discarded products be collected and transported and by whom; how should new products should be classified

and sold on the Internet without leaving brick-and-mortar retailers at a competitive

disadvantage due to mandated fees; how should the problem of orphaned products

be addressed; how can worker safety in the recycling process can be ensured; and

how should consumers can be encouraged to actively participate in any established

recycling program? Does the report specify potential, future Federal regulation of

electronic waste?

Response. These are all the central questions that must by answered in establishing an electronics recycling program. Our soon-to-be-released report does outline

the interest of the various parties in relation to all of these questions, and it provides the pros and cons of each solution that has been proposed by the major groups

looking into this issue. The report does not specify potential future regulations, but

seeks to educate lawmakers concerning the complexities of this issue and the interests of the stakeholders.

Question 10 Your testimony notes that you have ‘‘have heard deep concerns from

industry that solving this issue at the State level may become problematic because

the cost of compliance with a patchwork of international and state laws can dramatically affect the manufacturing, marketing, and business models of the U.S. electronics sector and the transaction costs and business models of our retail sector.’’

This would lead to a national solution. Do industries arguments have merit, especially if you layer on any international obligations? Why?

Response. While international obligations remain an important factor in U.S.

business models, the U.S. market remains the strongest in the world and having

a single set of regulations to comply with will greatly ease the burden that electronics recycling legislation will put on industry. While the extent of the burden of

a patchwork of legislation would have on industry is still unknown, reviewing the

differences between the current laws and the diversity of proposed solutions elsewhere, it appears that the state solutions are divergent enough to create a major

hindrance to U.S. competitiveness, and would hinder the sale of electronics in the

United States. Compounding the difficulties facing companies are the layers of any

international obligations, especially if their business models rely on international

exports. Industry would then be faced with disparate domestic requirements coupled

with even more disparate international requirements.

Question 11. Your testimony states that: ‘‘Over time, the NEPSI stakeholders realized that a national law might be necessary to force otherwise reluctant players

to do their parts to make a national system work.’’ Do you agree with this assessment?

Response. Ideally, voluntary participation by all the stakeholders would be sufficient to solve the electronics waste issue. The incentives may not be in place, however, to make sure all responsible parties are willing to voluntarily participate in

a solution. A national solution may be necessary to ensure that all key participants

in the life of an electronic product, from the manufacturers to the retailers to the

consumers to the recyclers, play an appropriate role in its proper disposal.

Question 12. You mentioned that the impact of governmental decisions on electronics recycling can have far-ranging implications, both environmental and on the

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health of U.S businesses and their ability to compete in the global marketplace.

Could you please discuss the importance the European Union’s directives on electronic waste and how they operate? In your opinion, what does WEEE and RoHS

mean for the U.S. electronics manufacturers and consumers and what impact they

will have on our country and its trade balance? I am especially interested in your

perspective about certain states adopting parts of these other country’s regulatory

regimes while some states do not.

Response. While the U.S. can benefit from the work done with WEEE and RoHS

in Europe, it is important that we create our own standards in the U.S. and involve

the U.S. stakeholders in the process of creating these regulations. It is troubling

that states would wholesale adopt European standards, which U.S. industry have

not had a chance to be an active member of its consideration and adoption. When

states endorse adopt international standards which are adopted without active U.S.

participation, it becomes very problematic.

Question 13. Subtitle E of the Solid Waste Disposal Act (42 U.S.C. 6951 et. seq.)

specifies the ‘‘Duties of the Secretary of Commerce in Resource and Recovery’’. Is

the Commerce Department using these authorities to compile its data on electronic

waste? If not, which statute is the Department using to obtain this data?

Response. EPA is the agency which collects information and data on electronic

waste.

Question 14. Is the Commerce Department tracking other recycling data, not related specifically to electronic waste, under Subtitle E of the Solid Waste Disposal

Act or another Federal statute? If so, what?

Response. No, not to my understanding.

The Honorable Charles F. Bass

Question 1. In talking with stakeholders in my state of New Hampshire, one concern is in regards to importers and their obligation to our e-waste. Some have suggested a possible ‘‘dock tax’’ collected by the federal government on units entering

the US for recycle programs. Could you talk about the feasibility of such a program

and any problems with such a program under any of our existing trade agreements?

Response. The question of a balance of equities, especially those international

companies which export to the U.S. may not be held to the same requirements as

U.S.-based companies is a valid issue. A so-called ‘‘dock tax’’ could have repercussions for trade and may be problematic if it is considered a barrier to trade. Additionally, there would be a logistics question regarding the tax requirements and who

would be subject to its implementation.

Question 2. Could you expand on the obstacles to interstate commerce that could

possibly arise if the federal government does not implement a national program and

allows each state to create their own standards? What affect would this have on the

industry and the ability for consumers to have access to products?

Response. Companies that have to conform to a number of disparate state regulations would unduly burden the ability of that company to effectively engage in interstate commerce. The currently established business models for manufacturing, distribution, and marketing would have to be entirely revisited. These disruptions

would have great adverse impacts on a U.S. technology company’s ability to conduct

interstate commerce.

Question 3. What barriers to interstate commerce do you see if individual states

are allowed to implement their own programs of charging a fee at the point of sale?

Do you see any barriers with sales over the Internet? Additionally, could you discuss

the feasibility with such a program due to the fact that many electronic products

are bought in one state and disposed of in another locality?

Response. The effects of a patchwork of legislation could have a significant effect

on interstate commerce, especially near the state borders. For instance, in the DC

metro area, if Maryland passed a state law that included an ARF similar to California’s state law, consumers could easily go to the District or Virginia to purchase

electronic goods and avoid the ARF, which could have had an immediate and significant effect on retailers in Southern Maryland. Additionally, if disposal requirements

are eased in one state, they will likely become flooded with electronic waste from

neighboring states with stricter legislation.

If each state decides to come up with their own solution, the state will have an

incentive to legislate not only towards the best solution for all affected parties, but

also may consider the affects on interstate commerce which could skew the decision

making process. Thus the affect that interstate commerce could have on an individual state’s legislative considerations speaks towards the need for a national solution. Internet sales will also need to be addressed and ensure that these retailers

operate on a level playing field.

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Question 4. From the Department of Commerce’s standpoint, do you see any problems with implementing a national program in relation to any of our existing international agreements or treaties concerning trade or foreign waste?

Response. We need to be mindful of our international agreements and treaties but

I do not believe there are any current impediments towards the development of a

national solution.

Question 5. What difficulties would arise by implementing a program that focuses

on manufacturers’ responsibility with foreign companies that are not located in the

United States? How would we ensure these companies accept their responsibility

and that they are properly handling their electronic waste? For example, I would

especially like you to address a case in which a company accepts their end-of-life

product and exports it to another country where there are no safeguards to ensure

that the hazardous materials are being handled properly.

Response. Any electronics waste policy will have to be coupled with agreements

with any foreign entity that may be involved in disposing of electronic waste. We

will have to establish a mechanism to ensure that all parties are complying with

our regulations. We should work with the recycling industry to develop the best

means to accomplish this oversight and regulation that will ensure all recyclers are

operating on a level playing field in competing for the business that will be generated by national electronics recycling legislation.

The Honorable Hilda L. Solis

Question 1. I understand that the Department of Commerce will be submitting to

Congress an electronics recycling report that is based on meetings with a group of

stakeholders. There is a diverse group of stakeholders interested in this issue—from

state and local government agencies, manufacturers, retailers, recyclers, environmental organizations to name a few. Please provide detailed information on which

stakeholders were involved with the Department of Commerce and how they were

chosen? Did all stakeholders participate? What was the process for the stakeholder

involvement? Was this process open to the public?

Question 2. Can you also provide more information about the Roundtable meeting

that Department of Commerce held September 21, 2004 on E-waste?

Response. On September 21, 2004, the Department of Commerce’s Technology Administration held a roundtable to examine some of the major issues still outstanding

between stakeholders. There were representatives from affected stakeholders, including retailers who had not been heard from before. Panelists included representatives of electronics manufacturers, retailers, recyclers, and environmental groups.

The discussion focused on what products should be included in electronics recycling,

collection and funding mechanisms, and the role of government in electronics recycling. The Technology Administration then solicited comments from the public in the

Federal Register on October 20, 2004, on the same four areas which the Roundtable

focused: which products should be included in an electronics recycling program;

methods for collection, transportation and recycling; financing a recycling program;

and the role of the government in a recycling program. The soon-to-be-released

Technology Administration report is an outgrowth of the Roundtable and response

to the Federal Register notice. It includes views expressed by the panelists from the

Roundtable, comments submitted by organizations in response to the Federal Register notice, and information gathered especially for this report. The purpose of the

report is to provide policymakers with background on the issue of electronics recycling; including state, Federal, and international regulations and activities, models

of recycling efforts in other industries, and an analysis of some of the most commonly discussed financing models.

Question 3. What type of process do you think would best enable stakeholders to

reach a national consensus on electronics legislation?

Response. A national solution that is equitable, balanced, and takes into account

all stakeholder responsibilities is the ideal. Therefore, to achieve that goal, a

participatory process that allows for all stakeholders to voice their concerns and its

impact would be the best process.

Question 4. What roles can EPA and Commerce play that will encourage agreement on national legislation?

Response. With the potential of its impact on our nation’s competitiveness, Commerce has the unique role of representing the interests of industry within the federal government. The Commerce Department, as well as the EPA, has already

helped convene affected parties to understand their various interests to help drive

a consensus towards a national solution. The report the DOC will soon release will

outline the interests of several of the stakeholders and articulate their concerns. By

facilitating a dialogue between affected stakeholders the DOC can help EPA foster

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an agreement on national legislation. EPA has the regulatory and program jurisdiction to be the lead federal agency in any national e-waste solution.

Questionb 5. Which electronics financing model do you think might work best in

the United States, and why?

Response. Should Congress determine that a financing model is necessary; a

model that ensures all stakeholders bear a responsibility in the proper disposal of

e-waste and that all is done throughout the lifespan of electronics products to ensure that the process is an efficient one would be preferred.

RESPONSE FOR THE RECORD BY HON. ROSALIE MULE, MEMBER, CALIFORNIA

INTEGRATED WASTE MANAGEMENT BOARD

The Honorable Hilda L. Solis

Question 1. Under the California law, consumers pay a $6-10 advanced recycling

fee at the time of the sale for a covered electronic product. The fees are collected

by the state and deposited into an E-Waste account. The state then pays the collectors and recyclers out this fund. Can you tell me what would California do if the

demand for recycling funds from collectors and recyclers exceeds what you have collected? What happens if you have not collected enough money in fees to pay the collectors and recyclers?

Response: California’s Electronic Waste Recycling Act of 2003 (Act) requires the

State to occasionally review the fee level to ensure that there are sufficient funds

in the account to operate the program.

California Public Resources Code Section 42464(f) states, in part, ‘‘On or before

August 1, 2005, and, thereafter, no more frequently than annually, and no less frequently than biennially, the board, in collaboration with the department, shall review, at a public hearing, the covered electronic waste recycling fee and shall make

any adjustments to the fee to ensure that there are sufficient revenues in the account to fund the covered electronic waste recycling program established pursuant

to this chapter . . . ’’

The program has operated for less than one year. The State has not adjusted the

fee from the original $6, $8, and $10 level because there is not yet sufficient data

to demonstrate trends in revenue or costs, though presently revenue is outpacing

costs while the recycling infrastructure is still developing.

Question 2. Has your program set accountable goals for how many products

should be collected? If there are no goals, how does your program encourage more

electronics to be recycled?

Response: California’s Electronic Waste Recycling Act of 2003 (Act) requires the

State to establish recycling goals. Specifically, the California Public Resources Code

Section 42475.4 (a) states, in part, ‘‘The board shall annually establish, and update

as necessary, statewide recycling goals for covered electronic waste. In implementing

this section, the board shall do all of the following:

(1) Post on its Web site information on the amount of covered electronic devices sold

in the state in the previous year as reported to the board.

(2) Post on its Web site information on the amount of covered electronic waste recycled in the state in the previous year as reported to the board.

(3) Develop and adopt recycling goals, with input from manufacturers, retailers, covered electronic waste recyclers, and collectors, that reflect projections of covered

electronic device sales, rates of obsolescence, and stockpiles.’’

At this time, as the recycling infrastructure is still being developed, the State has

not set specific goals and has focused on expanding access to recycling opportunities

and increasing public awareness. The overarching goal, established by the Act is to

eliminate current stockpiles of unwanted and obsolete covered electronic waste, estimated at approximately six million units in residences alone, by the end of 2007.

Question 3. Does your program have a system to track the amount of E-waste that

will be collected and recycled? Do you have any statistics that show that more products are being recycled as a result of your program?

Response: California has established a data system to track the amount of covered

electronic waste (CEW) processed and claimed for payment. As of September 1,

2005, after eight months of operation, the program has received claims for over 20

million pounds of CEWs processed, representing activities by program participants

conducted through June.

While this represents a significant amount of material, there is currently no way

to compare or contrast this volume with what was processed before tracking began,

or to evaluate the amount of material diverted through means outside of the system,

such as asset recovery for continued use or wholesale export. However, it is firmly

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believed that more CEW is being recovered for processing in California now that the

program exists.

In addition to the data which the State collects as part of the documentation submitted for recycling payments and manufacturer annual reports, handlers of hazardous electronic waste in California are required to submit an annual report identifying the amount of waste handled and its disposition. A database is being developed to house annual report data and facilitate analyzing it (including year-to-year

comparisons of recycling volumes). The Electronic Waste Recycling Act has only

been in effect since January 1, 2005 and annual reports for calendar year 2005 are

not due until February of 2006. While data on the affect of the new law on recycling

rates is not yet available, the State is putting the tools in place to evaluate the effectiveness of the law once the annual reports are submitted.

Question 4. What has been your experience to date of the electronics law operating in your state? Does your state have enough experience in implementing this

law to suggest what you might change about it?

Response: As noted above, the program has received claims for over 20 million

pounds of CEWs processed, representing activities by program participants conducted through June. All indications are that the system is fostering the recovery

and recycling of CEW, however it is too early to tell what specific changes should

be made to improve the system. The State will be engaged in final rulemaking over

the coming year to evaluate existing emergency regulations and to adopt permanent

regulations.

Question 5. What is your advice for how to craft national legislation that would

take into consideration the different state legislation already enacted? What aspects

of your state legislation would make it most difficult to incorporate into national legislation?

Response: The goal of a federal bill should be a national program that includes

all states in order to prevent a patchwork of programs across the country and is

mindful of states’ ability to establish management criteria. Such legislation should

make clear what types of electronic waste are and are not covered. (The basis for

making this determination could be something other than whether the waste meets

the criteria for classification as hazardous waste.) It is also important that any national legislation to promote recycling of electronic waste does not impair states’

ability to establish their own criteria for hazardous waste classification and management that are more stringent than those of RCRA. National electronic waste legislation should also address the exportation of discarded electronic equipment and residual materials generated from the treatment of such equipment. The establishment of export requirements and their implementation, tracking, and enforcement

would be most efficiently accomplished on a national scale, rather than a state-bystate basis.

Inclusion of the following aspects in federal legislation would satisfy the current

requirements in statute necessary to supersede California law; PRC 42485 (a)):

• The establishment of a program for the collection, recycling, and proper disposal

of covered electronic waste necessary for the effective administration of a national Advanced Recycling Fee that is applicable to all cathode ray tubes devices

sold in the United States.

• Is capable of providing adequate revenue to the state to support the collection, recycling, and proper disposal of covered electronic waste, in an amount that is

equal to, or greater than, the revenues that would be generated by the fee currently imposed under California law (PRC 42464).

• Require covered electronic device manufacturers, retailers, handlers, processors,

and recyclers to dispose of such devices in a manner that is in compliance with

all applicable federal, state, and local laws, regulations, and ordinances, and

prohibits the devices from being exported for disposal in a manner that poses

a significant risk to the public health or the environment.

The following are additional aspects that could be considered in the course of national program development:

• A product stewardship element that would require the entities that design, make,

sell, or use a product takes responsibility for minimizing its environmental impact. This responsibility would span the product’s life cycle—from selection of

raw materials, to design and production processes, to its use and disposal.

• Encourage manufacturers to create products with recycling in mind. This would

include reducing the amount of hazardous chemicals currently used in the production process of electronic devices. In addition, since all manufacturers will

need to comply with the EU’s RoHS Directive by July 2006 (banning the use

of some hazardous substances) a component requiring manufacturers to sell

RoHS compliant products in the U.S. market should also be considered.

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The Honorable Charles F. Bass

Question 1. This Committee in the past has often discussed interstate solid municipal waste. I would like to hear each of your thoughts on what implications would

result if all fifty states created their own programs and standards in how to handle

e-waste? What complications would you see as a result of this on the flow of interstate waste?

Response: The concept of all fifty states choosing to address the electronic waste

issue in their own separate way is actually the reality of the situation even today.

For instance, while some states such as California, Maryland, and Maine have implemented state-wide programs, others have decided to address the problem at the

local level or not at all.

Impacts of these programs on waste flow are dependent on the program structure.

California requires documentation to ensure that the materials originated in California, in order to provide payments. This type of system effects waste flow differently than a system that accepts interstate waste.

In the absence of a national framework for dealing with the problem, a patchwork

of potentially conflicting solutions will continue to emerge. For instance, manufacturers in one state may have an advance recovery fee placed on their products,

while the same manufacturers may have to take back their products and pay for

recycling in another. Not only could this patchwork create interstate commerce

problems, but it also has the potential to place a substantial burden on recyclers,

refurbishers, and other stakeholders.

Question 2a. In talking with the New Hampshire Department of Environmental

Services, one of their concerns has been with the mobility of items: where an item

is sold is not necessarily the place where it is disposed. Could you address the problems with charging a fee at the point of sale for products bought over the Internet

if a national program is not implemented?

Response: While the concern is not without merit, this issue can be addressed

during the development stage of a state’s program. For instance, due to the resilient

design of the California program, we have the ability to accommodate e-waste products that were not originally assessed a fee, such as ‘‘legacy’’ waste and products

that may have been bought over the Internet. The State believes that the vast majority of Internet and catalogue retailers are participating in the California Electronic Waste Recycling Program.

Question 2b. Additionally, could you discuss the problem with individuals buying

an electronic product from one state and disposing of it in another? How would that

affect the success of your program and how have you addressed this problem in your

own strategies?

Response: California’s legislation, in establishing the fee, contemplated that some

devices, for which a fee was not charged would enter California by being used by

a consumer then discarded in this state. It was further contemplated that ‘‘legacy’’

waste, which met its end of useful life before the fee program was enacted, would

also enter the funded recycling system. The program is intended to be designed to

be strong enough to accommodate these types of e-waste for which fees were not

collected. California, however, has established rules which allow only e-waste generated by California consumers to enter the funded recycling system, by requiring

documentation of the source of all e-waste for which funding is claimed.

Question 3. Would you agree that if a national fee was imposed with pro rata payments made to the states that this would be the most efficient way to pay for such

electronic waste programs?

Response: California believes that a national fee system with pro rata payments

made to the states would be effective. Nonetheless, how a ‘‘pro-rata’’ disbursement

would be designed raises critical questions. One concern, specifically for larger

states, would be the ability of such a payment system to ensure that the state’s

costs would be covered, given the size and volume of devices disposed of in some

states compared to others. An initial pro-rata design based on population could require a financial analysis after a period of time to determine costs, usage, recycling

frequency and rates, etc.

The Honorable Paul E. Gillmor

Question 1. Could you please tell me how you define ‘‘electronic waste’’ and do you

consider recycling these products more important in order to avoid an environmental hazard or because you are worried about preserving landfill capacity?

Response: Many types of electronic products that are widely used in workplaces

and homes contain hazardous substances like lead and mercury. Products that reach

the end of their useful lives or become obsolete and contain enough hazardous substances are considered hazardous waste.

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Any electronic device that becomes a waste and fails California’s hazardous waste

toxicity criteria is a hazardous waste which may be managed as a ‘‘universal waste’’.

California’s universal waste management requirements are consistent with the Federal Universal Waste Rule requirements.

California’s Electronic Waste Recycling Act of 2003 (Act) addresses a specific portion of the electronic waste universe: video display devices. The definition of ‘‘electronic waste’’ for purposes of the system established by the Act only applies to video

display devices which California determines are hazardous waste when discarded.

Specifically, these are currently:

a. Cathode ray tube (CRT) devices (including televisions and computer monitors);

b. LCD desktop monitors;

c. Laptop computers with LCD displays;

d. LCD televisions; and

e. Plasma televisions

California plans to test additional video display devices in the future to determine

which additional items, if any, should be covered by the EWRA.

Preventing threats to human health and the environment, preserving landfill capacity, and conserving valuable natural resources are all important factors in why

recycling of hazardous, electronic wastes should be promoted.

Question 2. Since individual persons have to make the choice to give up their unused electronic equipment, what responsibilities do you think they should bear?

What role does public education have in this effort and have you seen any successes

with public education efforts in your states on these or other recycling programs?

Response: Since California has established a system that requires convenient and

cost free recycling opportunities and that these types of waste can no longer go in

to the landfill, the State has identified that it is the individual’s responsibility to

avail themselves of these recycling opportunities.

Public education about the proper handling of obsolete electronics is key to the

success of state e-waste recycling efforts. California’s primary consumer awareness

effort is through www.eRecycle.org (www.eRecicle.org in Spanish), and the State has

promoted this website through point-of-purchase information at electronic retail outlets as well as radio and television public service announcements. Although it is premature to gauge the success of this effort—it was initiated prior to the collection

of revenues from the retail fee on covered electronic products—public response has

been very positive. For the most part, public concern seems to be focused on available recycling opportunities rather than on costs (e.g., ‘‘Yes, I know about the fee.

What I need to know is where to take my old stuff.’’)

Question 3. In 1980, Congress enacted the Low-level Radioactive Waste Policy Act.

Under this law, a state is given the responsibility to select disposal sites for lowlevel radioactive waste—a type of waste that generally consists of low concentrations of relatively short-lived hazardous waste. What intrigues me most though is

that several states have banded together to address this serious waste concern. In

fact, most states have set up and joined congressionally approved interstate compacts to handle low-level waste disposal, while others are developing single-state

disposal sites. Recognizing the interstate nature of electronics sales and product

take-back and refurbishment programs, is this model something that makes sense

to you or your state?

Response: A national system establishing a funding and/or take-back program has

merit, to avoid the impact of potentially disparate state requirements on the manufacture and sales of electronic devices. Different state requirements impact interstate commerce. While this impact may be lawful, the market for electronic devices

is not only national, but global. Uniformity of requirements affecting this market

is desirable. Commercial, manufacturing, and funding concerns are and would not

be addressed by a regional approach. Only a national approach would cure the impact caused by the diversity of state-by-state or region-by-region programs.

Moreover, an additional concern emerges when regional or national solutions are

considered. The importance of maintaining hazardous waste management standards

is of distinct interest to California, due to the fact that the state has more stringent

hazardous waste management standards than federal standards and those of many

other states. California feels strongly that its hazardous waste management standards, and ability to enforce those standards, should not be affected or lessened in

the course of multi-state or national recycling program development.

Question 4. California has been the first state in our country to step forward with

its own law on electronic waste. Being the first one to act, especially because of the

size of your state and the amount of goods sold and the potential opportunities for

recycling, means that you have gleaned some important lessons. What do you think

it is important for us to know about electronic waste and recycling programs that

either is not reflected in your testimony or is not easily apparent? What kind of inVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00120 Fmt 6633 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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vestment, financial or otherwise, do governments need to make in order to get viable programs operating?

Response: It is critical that any program establish clear objectives from the start

and specifically identify who is the intended beneficiary. The Act assesses an advanced recycling fee on the sale of all covered electronic devices (CEDs) regardless

of consumer type (residents, businesses, institutions, government, etc) and currently

does not delineate the generator sectors from which discarded material is eligible.

The net effect is that all covered electronic waste (CEW) generated in the state is

eligible to be part of the program, whether or not the CEW from certain generator

sectors historically required financial support to be effectively recovered and recycled.

The Act actually covers only a limited segment of a far larger electronic waste

stream. At this time, CEDs are limited to video displays greater than four inches,

such as televisions and computer monitors. The primary reasoning behind this is

that cathode ray tubes (CRTs) are considered a hazardous waste when disposed in

California. CRTs may be managed as a universal waste if recycled, but may not be

disposed in municipal landfills. This ‘‘ban’’ on disposal created a significant cost burden on local governments to divert residentially generated CRT devices. The Act

was intended to relive this burden.

Other consumer electronic products, such as computer CPUs, printers, phones and

fax machines, also likely exhibit the characteristics of a hazardous waste when disposed, and can be managed as a universal waste if diverted for recycling. These

items currently are allowed a household generator exemption with regards to disposal. While this may present some confusion in the minds of consumers regarding

what the Act covers, the funding available for what is covered provides for the later

expansion of a collection infrastructure for other electronic wastes that are not currently part of the program.

California has attempted to tap market forces to develop the network of collection

opportunities intended by the Act. Instead of requiring local government to provide

services, the Act allows for, even encourages, private investment, innovation and initiative to grow the system, along with services that can and may be provided by

local government. Often these services are provided in concert between private enterprise and local government.

In addition to administering the funding to develop the recycling system, one of

the most important investments government can make is in information and public

education; specifically making sure that the community knows what opportunities

and services are available and what is expected of the public in return.

Question 5. There appears to be widespread cooperation by Internet sellers to

comply with the California law by collecting the fee on covered products. Is your

Board satisfied that it is capturing the fee on a majority of sales via the Internet?

If not, can you recommend how Federal legislation should address this issue?

Response: To date, we are satisfied with the revenues we are receiving from a majority of sales via the Internet and have received no complaints from instate retailers. The healthy revenue is largely attributable to fact that all of the major retailers

in the State are participating in the program. Although we do not know its extent,

there is some traffic in unbranded electronics sold by businesses located out of State

or out of the country.

National legislation could impose a national advanced recycling fee. This would

eliminate the problem of a state’s authority to impose its fee on out-of-state retailers. If national legislation enacted a requirement that producers take back discarded

electronics, then fee collection would not be an issue. If national legislation authorized separate state programs, then specific provisions requiring compliance with

state fee requirements and allowing the ‘‘burden’’ on interstate commerce should be

included.

Question 6. Your state’s recycling law requires manufacturers to notify retailers

of covered products—for which manufacturers have complained that the internal

costs of complying with these administrative and other paperwork requirements can

be quite high—in order to receive reimbursement. Has California calculated the

costs of these requirements on companies? If so, does the disincentive of paperwork

costs negate the fee the state reimburses?

Response: This question appears to conflate two or more aspects of California’s

Electronic Waste Recycling Act of 2003 (Act). Under the Act, manufacturers do have

an obligation to notify retailers of what products are covered by the law and to update this notification annually as new devices are brought into the system. Manufacturers are also required to report to the State annually regarding covered electronic

device (CED) sales data, retailer notification efforts, CED hazardous material content, CED recyclability, design for recycling efforts, and consumer information acVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00121 Fmt 6633 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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tivities. However, there are no reimbursements available for fulfilling these basic

obligations.

The Act does contain a provision for CED manufacturers to receive payments if

they engage in recycling activities that remove devices from the state. The amount

of payment currently available is equal to the advanced recycling fee that would be

paid by a consumer for that type of device. Generally this manufacturer payment

is much less than the recovery and recycling payments available through the covered electronic waste (CEW) payment system and no manufacturers are currently

registered to participate in the manufacturer payment system. Some manufacturers

have partnered with recycling enterprises in California to offer services through the

CEW payment system.

The CEW payment system does require a certain level of documentation to ensure

that only California sourced CEWs are processed and claimed for payment. Since

the program is less than a year old, the cost of complying with this ‘‘paperwork’’

is presently an unknown component of the overall cost of participating in the program. Participants are required to file ‘‘net cost reports’’ with the state annually,

and from those it is expected that more can be learned of the administrative burden.

However, in response to some initial concerns by a major retailer that the notification requirements were too complex and expensive, California adopted regulations

which clarified and streamlined some of the requirements on manufacturers pertaining notification to retailers.

Question 7. Your state’s law imposes a uniform tax on each category of covered display sold in the state, and the state has established a payment schedule of $0.48

(48 cents) per pound that the state presumably pays to recyclers. The law, understandably, allows the fee to be increased if there are insufficient funds to pay recyclers. Since the law does not speak to the lowering of the tax, and a steady rate

of return is guaranteed, what incentives do you see to improve the system over

time?

Response: To clarify, the state imposes a fee, not a tax, on the sale of a covered

electronic device sold in California. Unlike a tax that is deposited into the General

Fund, the main purpose of this specific fee is to mitigate the cost of handling California-generated electronic waste.

According to PRC 42464 (e), at least every two years, the State must review the

covered electronic waste recycling fee and make any adjustments to the fee necessary to ensure that there is sufficient revenue in the fund to support Electronic

Waste Recycling Program. Based on our interpretation of the statute, the State not

only has the authority to increase the fee should the need arise, but can also decrease fee if need be.

The IWMB shall base the adjustment of the fee on both of the following factors:

1. The sufficiency, and any surplus, of revenues in the account to fund the collection,

consolidation, and recycling of covered electronic waste that is projected to be

recycled in the State.

2. The sufficiency of revenues in the account for the State to administer, enforce,

and promote the Electronic Waste Recycling Program, plus a prudent reserve

not to exceed 5 percent of the amount in the account.

Question 8. Since the California law took effect this past January, I understand

that some local retailers have been acting as collectors for end-of-life electronics

products. Some argue that this provides the retailers an apparent benefit from the

program because it brings potential customers back into their stores to turn in

older, obsolete products. Can you speak to any evidence that your Board has that

retailers in California, under the new law, can both divert products from the electronics from the waste stream and also promote sales of new products?

Response: Based on the information that we have received from a variety of stakeholders, a majority of retailers in California have not been acting as handlers of

electronic waste. However, it may be possible that some retailers have either

partnered with approved collectors or have collected the devices themselves for the

purpose of monetary gain. Many retailers’ businesses cannot physically accommodate the collection and storage of electronic wastes. Although, once retailers evaluate the potential economic benefit of acting as an e-waste collector, they may design

new stores for this function.

RESPONSE FOR THE RECORD BY HON. DAWN R. GALLAGHER, COMMISSIONER, MAINE

DEPARTMENT OF ENVIRONMENTAL PROTECTION

The Honorable Paul E. Gillmor

Question 1. The issue of electronic waste and recycling can be looked at from several different perspectives. Could you please tell me how you define ‘‘electronic

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waste’’ and do you consider recycling these products more important in order to

avoid an environmental hazard or because you are worried about preserving landfill

capacity?

A. Maine law does not contain a definition for electronic waste. It does, however,

define ‘‘covered electronic device’’ and specifies that those devices are subject to the

provisions of the law. Recycling electronic products is critical to avoid emissions of

toxics from incineration, to preserve landfill capacity, and most importantly to recoup the commodity resources contained in the products and avoid the environmental costs associated with mining and production of virgin commodities.

Question 2. Since individual persons have to make the choice to give up their unused electronic equipment, what responsibilities do you think they should bear?

What role does public education have in this effort and have you seen any successes

with public education efforts in your states on these or other recycling programs?

A. All electronics function for a finite time. Consumers may be encouraged to give

up electronic devices prior to the end of useful life by new developments in technology, or by planned obsolescence or marketing by manufacturers. From a public

policy perspective, consumers historically have borne some responsibility for ensuring that the waste they generate appropriately enters the waste management system, either through personal delivery to a drop off point or through collections funded by taxes. Public education is critical for informing consumers how to get their

electronic wastes into the recycling system. In Maine, we have had great success

educating the public in where to deliver their mercury-added products for recycling

by providing workshops and educational materials to local jurisdictions.

Question 1. In 1980, Congress enacted the Low-level Radioactive Waste Policy Act.

Under this law, a state is given the responsibility to select disposal sites for lowlevel radioactive waste—a type of waste that generally consists of low concentrations of relatively short-lived hazardous waste. What intrigues me most though is

that several states have banded together to address this serious waste concern. In

fact, most states have set up and joined congressionally approved interstate compacts to handle low-level waste disposal, while others are developing single-state

disposal sites. Recognizing the interstate nature of electronics sales and product

take-back and refurbishment programs, is this model something that makes sense

to you or your state?

A. There are a number of examples of waste management situations in which potentially significant advantages in pursuing regional solutions, and important disincentives to implementing single state approaches, exist. The siting of a low-level

radioactive waste disposal facility is such an example. Sharing the cost and regulatory burden of a disposal site makes sense when each state does not necessarily

require its own facility and a single site can be shared. The situation with electronic

waste management is somewhat different and, we believe, can be effectively addressed by a single state to meet that state’s needs. Maine chose to move ahead

with comprehensive e-waste management legislation when it did because it was an

element critical to achievement of the state’s broader toxics reduction and waste

management goals. That is not to say, of course, that implementation of a consistent

e-waste management program by multiple states (or all states) might not be desirable. From Maine’s perspective it would, however, be important that such a program

be cost effective for states, be efficient, and employ the principles of product stewardship.

States have taken a variety of different positions with respect to e-waste management programs and, to date, there has not been broad agreement concerning a uniform management model that might best serve the national interest. The majority

of states have not yet made legislative proposals concerning e-waste management

systems. Although Maine has been a participant in national and regional discussions concerning e-waste management, it chose to implement a single state program

at this time because it believes the program can be efficient and effective, and will

contribute toward the achievement of the state’s environmental goals.

Question 2. The system that you described in your testimony provides that local

governments have responsibility to collect products from households in Maine. It is

also my understanding that the law allows for manufacturers to get a credit toward

their obligation for setting up their own recycling programs. Is this correct and can

you explain the benefit that the state sees in allowing this opportunity?

A. Maine’s e-waste law does not preclude manufacturers from setting up their

own recycling program, and it gives the Department responsibility to determine

each manufacturer’s pro rata share of the orphan waste stream. The Department

is currently engaged in rule-making to implement the law, and as part of that rule

we have proposed to credit manufacturers for units they collect from Maine households as part of a manufacturer take-back program. This eliminates any disincentive manufacturers may perceive for conducting manufacturer take-back programs,

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and provides an incentive for manufacturers to engage directly the consumers directly in take back. Manufacturers that do this have direct control on the costs of

recycling those units they take back, thus providing a mechanism through which

manufacturers can minimize their financial obligations in the Maine collection and

recycling system. The more directly involved manufacturers are in end-of-life management of their products, the more incentive exists to apply private sector innovation to develop a product that has maximum commodity value at the end of life.

Question 3. Under the framework of your state law, collected products will need

to be sorted out by brand names in order for individual manufacturing to be billed.

Could you please help our subcommittee understand the expenses that are involved

in the sorting of these products. What do you recommend be done to keep costs such

as these under control?

A. Under Maine’s law, consolidators must create an accounting by manufacturer

of collected products; a physical sort by manufacturer is not required. We do not yet

have cost estimates from consolidators on the expected costs of performing this accounting as units are received, although some have indicated to DEP staff in anecdotal conversations that they expect a minor increase in record-keeping and billing

costs. To keep costs under control, in the draft rule the Department is proposing

to approve consolidators to participate in the collection and recycling system in part

based upon their costs; consolidators will need to control costs to receive Departmental approval.

Question 4. On the issue of ‘‘orphan’’ waste—or waste which a company that is

no longer in business made. Please explain the reasons for the choices made by

Maine to handle the recycling of older products whose manufacturer is now defunct.

What would you recommend be done at the Federal level, if anything, to ensure that

such issues do not create problems for long-time electronics manufacturers?

A. Under Maine’s law, the costs for consolidation and recycling of orphan wastes

is shared by existing manufacturers proportional to the percentage of their products

in the waste stream. After much discussion with a variety of stakeholders, this was

perceived to be the fairest way to distribute costs due to the unavailability of statespecific sales figures. Allocation of orphan waste costs proportional to sales may be

possible in a national system, and would avoid the problem of creating financial impacts disproportional to current revenues on existing manufacturers.

Question 5. Your testimony states: ‘‘Maine’s ‘shared responsibility’ electronic

waste program should be allowed to prove itself during several years of implementation. If a national program were established, it should not be more costly to the consumer. Such a program should correctly assign end-of life product responsibility to

the manufacturers and should reward ‘green design’ and environmentally sustainable production processes. It should not create a new layer of bureaucracy in the

name of gaining environmental and public health benefits.’’ Does this mean that you

would oppose any national solution unless it exempted your State?

A. We may oppose a national solution if it is more costly to Maine consumers and

taxpayers and does not provide manufacturers with incentives to maximize the commodity value of electronics at the end-of-life, thus minimizing environmental degradation caused by the mining of virgin materials.

Question 6. Your testimony states that your state ‘‘law requires manufacturers

recognize the environmental impacts of their products. Not only should manufacturers be responsible for ensuring the ‘‘proper handling, recycling and disposal of discarded products’’, but they should also ‘‘reduce, and to the extent feasible, ultimately

phase out the use of hazardous materials in these products.’’ Most Federal environmental law does not get into the details of regulating manufacturing, but rather

deals with the outputs. You statement seems to suggest that environmental law

should govern manufacturing processes. Is this correct? In addition, this statement

suggests that the manufacturer should be liable for every action by the retailer and

consumer as long as they are in possession of the electronics item. Is this reasonable? Why?

Good environmental law sets standards that are protective of public health and

the environment and that promote environmental stewardship while leaving it up

to the private sector how best to achieve these standards. In order to achieve protection of public health and the environment, it can be appropriate to pass laws that

restrict the use of hazardous materials. These laws only preclude manufacturing

processes that utilize materials that pose an unacceptable risk to public health and

the environment. They also serve a public policy goal of encouraging private sector

entities to adopt a sustainable business model that considers cradle-to-cradle product lifecycle minimizing long-term liability for the manufacturer.

My statement as quoted above was not meant to imply that the manufacturer

should be liable for every action by the retailer and consumer as long as they are

in possession of the electronics item. However, through green design manufacturers

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have the ability to minimize any potential harm from their products no matter who

is in possession of them.

Question 7. Your testimony claims that Maine’s e-waste law is not an expansion

of bureaucracy. I would agree with you that there are few requirements placed on

the state or its municipalities. How do you respond, though, to arguments that the

Maine law co-opts the private sector and its infrastructure? Do electronics manufacturers and retailers who operate in Maine consider the Maine law to be ‘‘business

friendly’’?

A. We are not aware of any claims that the Maine law co-opts the private sector

and its infrastructure. On the contrary, we expect that implementation of the law

will likely provide opportunity for private sector expansion, since the demand for

household generated e-waste handling services is expected to increase. There are no

electronics manufacturers operating in Maine. Retailers, however, through the Consumer Electronics Retailers Coalition (representing retail businesses in all 50 states

and including businesses such as Best Buy, Target, Circuit City, Radio Shack and

Walmart) have expressed strong support for Maine’s program, in part because the

program does not rely on a point-of-sale advance recycling fee.

The Honorable Charles F. Bass

Question 1. This Committee in the past has often discussed interstate solid municipal waste. I would like to hear each of your thoughts on what implications would

result if all fifty states created their own programs and standards in how to handle

e-waste? What complications would you see as a result of this on the flow of interstate waste?

A. From a state perspective, there are two major complications that would result

from fifty different state systems. The first is confusion on the part of the regulated

community as to which requirements apply in which states, increasing the amount

of state resources that may be needed for compliance assistance and enforcement.

The second potential unintended consequence is that different state systems could

encourage the cross-border shipment and misidentification of the state of generation

of specific e-waste units by persons looking to scam states that may provide greater

payment for recycling.

Question 2a. In talking with the New Hampshire Department of Environmental

Services, one of their concerns has been with the mobility of items: where an item

is sold is not necessarily the place where it is disposed. Could you address the problems with charging a fee at the point of sale for products bought over the Internet

if a national program is not implemented?

A. This is not an issue for Maine as we do not charge a fee at the point of sale.

Question 2b. Additionally, could you discuss the problem with individuals buying

an electronic product from one state and disposing of it in another? How would that

affect the success of your program and how have you addressed this problem in your

own strategies?

A. The purchase of an electronic product in another state does not affect the viability of Maine’s program. Maine’s law requires manufacturers to share responsibility for ensuring recycling of their products when generated as waste by Maine

households. Manufacturers pay directly for their share of the costs; Maine’s system

does not impose and collect a fee from any party to finance the system.

Question 3. Would you agree that if a national fee was imposed with pro rata payments made to the states that this would be the most efficient way to pay for such

electronic waste programs?

A. The imposition of a national fee may create some efficiency by standardizing

the source of funding. However, providing pro rata payments to the states will require all states to establish systems for managing the funds, maintaining the status

quo of divergent management systems with the potential to create inefficiencies and

increase costs. The greatest efficiency can be gained through the creation of a national system managed by a third party organization and that does not impose management requirements on individual states.

Question 4. Do you see any significant differences in your state’s strategy with the

other states represented on the panel that better encourages and builds incentives

for both the consumer and the industry toward a recycling approach to their ewaste?

A. Yes. Maine’s system requires manufacturers to be responsible for ensuring the

recycling of their products once collected and consolidated by consumers and local

governments. This builds incentives for manufacturers to design their products to

recapture the most value at the end of life, and for recyclers to develop efficiencies

in recycling systems to maximize net revenues.

Maine law also prohibits the disposal of cathode ray tubes beginning in July 2006,

and of mercury-added products (including flat panel displays) as of January 2005.

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Along with no or minimal end-of-life fees, these disposal bans encourage consumers

to ensure their electronics are delivered in to the recycling system.

Question 5. Could you talk about any specifics problems that Maine, as a state

with more rural municipalities, faces in implementing an e-waste program that

might be different than larger and more populated states like California? How did

you approach those problems with your legislation?

A. As a shared responsibility system, the most perplexing problem in implementing Maine’s law is how to fairly apportion costs of transportation from rural

collection points to centralized consolidation points between manufacturers and

rural municipalities. The Maine law holds manufacturers responsible for transportation costs commensurate with a minimum amount of waste materials consolidated, yet it also requires manufacturers to provide geographically convenient consolidation in all areas of the state. Maine law holds municipalities responsible for

ensuring that their residents’ waste televisions and computer monitors are delivered

to consolidation points based on the understanding that the costs of collection and

transportation to consolidation would be very limited. We are currently in process

of making a final determination on this issue through our rule-making process.

The Honorable Hilda L. Solis

Question 1. Has your program set accountable goals for how many products

should be collected? If there are no goals, how does your program encourage more

electronics to be recycled?

A. Maine law prohibits the disposal of mercury-added products (including flat

panel displays) as of January 2005 and of cathode ray tubes as of July 2006, effectively banning the disposal of all televisions and computer monitors. In effect, this

disposal ban sets a goal of recycling 100% of televisions and computer monitors at

the end of life. The state encourages recycling of electronics by making grants available to local communities to develop collection infrastructure and through targeted

educational efforts to consumers through their municipal recycling and solid waste

facilities.

Question 2. Does your program have a system to track the amount of E-waste that

will be collected and recycled? Do you have any statistics that show that more products are being recycled as a result of your program?

A. Maine’s e-waste law requires annual reporting of actual units recycled. We will

perform our first evaluation of how well the system is working once Maine’s e-waste

law and disposal bans come into full effect and the first round of annual reports

is received early in 2007. We have current data from municipalities that have already done some voluntary collection and recycling of televisions and computer monitors that will be used as a baseline for evaluating any increases in recycling that

can be attributed to full implementation of Maine’s e-waste law in 2006.

Question 3. What has been your experience to date of the electronics law operating in your state? Does your state have enough experience in implementing this

law to suggest what you might change about it?

A. To date, the law has required manufacturers of televisions and computer monitors to submit plans for compliance with the manufacturer responsibility provisions

of the law. The vast majority of manufacturers are in compliance with the requirement to submit a plan, and the Department is working with manufacturers to have

them address any provisions of their plans that are not in conformance with Maine’s

requirements. The manufacturer responsibility for recycling provisions do not come

into effect until January 2006, so we do not yet have experience from a fully operational system. There is some minor streamlining of manufacturer plan and reporting requirements that we would suggest to anyone interested in using Maine’s law

as a model.

Question 4. What is your advice for how to craft national legislation that would

take into consideration the different state legislation already enacted? What aspects

of your state legislation would make it most difficult to incorporate into national legislation?

A. National legislation should allow for state electronics waste legislation that is

at least as effective and less costly to consumers and taxpayers. That said, if an effective national system is instituted that implements the principles of product stewardship (see attached ECOS resolution), there will be great incentive for states to

sunset their programs in favor of a uniform national system.

We recommend that a federal law impose a disposal ban uniformly across the

country to prevent states without disposal bans from becoming dumping grounds for

e-waste and to maximize the recapturing of the commodity resources in e-waste.

Like the Maine law, any national legislation should include provisions that clearly

assign some direct responsibility to manufacturers for their products at the end of

life.

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There are fewer barriers to creating an efficient national system that is truly protective of public health and the environment than there are to creating a state system that accomplishes the same levels of protection. A federal system can include

a uniform set of environmentally sound management standards and a single auditing system to which all recyclers would be subject equally; a federal system will not

create inequities in manufacturer and/or consumer costs across state borders; and

the federal government has authority to control the flow of goods into the country

from foreign manufacturers that do not comply with a federal e-waste law.

MARYLAND DEPARTMENT OF THE ENVIRONMENT

BALTIMORE MD 21230

September 7, 2005

The Honorable PAUL E. GILLMOR

U.S. House of Representatives

Committee on Energy and Commerce

Environment and Hazardous Materials Subcommittee

2323 Rayburn House Office Building

Washington, DC 20515

DEAR CONGRESSMAN GILLMOR: Thank you for the opportunity to address the Environment and Hazardous Materials Subcommittee on July 20, 2005 regarding current activities, environmental stewardship, and the proper federal role related to

electronics waste. The Maryland Department of the Environment (MDE) appreciates

your interest in the views of the states that are currently implementing legislation

on electronics recycling systems and federal agencies that are assisting with determining a solution to the issues of electronics waste and recycling. Our responses to

additional questions by Subcommittee members in your letter of August 23, 2005

are enclosed.

I mentioned during my testimony that the US Environmental Protection Agency

(EPA) Region 3 eCycling Pilot Project (Project) gave Maryland the shared resources

needed to begin electronics recycling in the State and I would like to share additional details regarding the Project and how it has influenced our current eCycling

efforts. The Project kickoff was held in Harford County, Maryland in October 2001.

The Project’s goal was to develop an economically and environmentally sustainable

collection, reuse, and recycling system for electronics based on the principle of

shared responsibility among business (electronics manufacturers and retailers), government, and consumers. Project partners included:

• EPA Region 3;

• EPA Region 3 state (Delaware, Virginia, West Virginia, District of Columbia, and

Maryland) environmental protection agencies; and

• Sony, Panasonic, Sharp, Envirocycle, Inc., Waste Management Asset Recovery

Group, Elemental, Inc., Electronic Industries Alliance (EIA), and Polymer Alliance Zone of West Virginia.

EIA, a national trade organization and one of the partners, contributed $50,000

to the Project to help fund transportation and recycling of electronic wastes. Contributing members of EIA included Canon, Hewlett-Packard, JVC, Kodak, Nokia,

Panasonic, Philips Consumer Electronics North America, Sharp, Sony, and Thomson

Multimedia.

In response to concerns raised by participating electronics manufacturers and recyclers regarding consistent enforcement of hazardous waste regulations in the Region during the life of the Project, EPA and the Region 3 states determined that

a new regional regulation should be developed to exclude from hazardous waste requirements those electronics from the Project that were destined for recycling and

reuse. A Memorandum Of Understanding between EPA Region 3 and Region 3 environmental protection agencies was signed in 2001 to manage end-of-life electronics

as a solid waste through the Mid-Atlantic States. On December 26, 2002, EPA

issued a final rule exempting CRT’s and CRT glass destined for recycling and reuse

from regulation as a hazardous waste. This enabled those involved in the generation, transportation, collection, accumulation, storage, and dismantling of end-of-life

electronics to feel more secure in participating in the Project.

During the Project, over 2,700 tons of electronics were diverted from the waste

stream through a total of 58 collection events and nine (9) permanent collection programs in the Region 3 states. Maryland held 21 one-day and two (2) two-day collection events and established one permanent collection facility (Wicomico County) as

part of the project, collecting over 250 tons of electronics. This was a remarkable

response for a small state and resulted in a significant increase in public awareness

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of electronics recycling and demand for these activities. Overall Project costs were

approximately $1.1 million or an average of 20 cents per pound.

The Project was successful because it created a partnering environment and a

common vision amongst government and industry. The idea brainstorming, combined funding, consistent advertising message, and shared lessons learned were invaluable to the Region 3 states as they struggled to move toward developing longterm electronics waste recycling systems. Although EPA Region 3 continues to support its states through monthly conference calls, there is no longer the coordinated

effort regionally to manage electronics wastes. However, Maryland has continued to

establish electronics recycling mechanisms and has collected over 3,905 tons of electronics since eCycling began in 2001.

I hope this additional information has been helpful to you. We will continue to

monitor your Subcommittee’s activities and national activities related to electronic

wastes and remain ready to assist you as necessary. If you have additional questions, please feel free to contact me or Mr. Horacio Tablada, Director, Waste Management Administration, at 410-537-3304, toll-free at 800-633-6101 or via email at

htablada@mde.state.md.us if we may be of additional assistance.

Very truly yours,

KENDL P. PHILBRICK

Secretary

Enclosures

cc: The Honorable Hilda L. Solis, Ranking Member

Subcommittee on Environment and Hazardous Materials

Mr. Donald Welsh, Region 3 Administrator, U.S. Environmental Protection

Agency

The Honorable Paul E. Gillmor

Question 1. The issue of electronic waste and recycling can be looked at from several different perspectives. Could you please tell me how you define ‘‘electronic

waste’’ and do you consider recycling these products more important in order to

avoid an environmental hazard or because you are worried about preserving landfill

capacity?

Response. The Maryland Department of the Environment’s working definition of

‘‘electronic waste’’ is ‘‘unwanted consumer electronics, such as computers, monitors,

keyboards, televisions, audio equipment, printers, cellular phones, and other home

electronic devices.’’ Although electronic waste contains toxic materials, such as lead,

mercury, and cadmium that can be hazardous to public health and the environment

if not properly managed, electronic equipment also contains valuable resources, such

as precious metals, engineered plastics, glass and other materials, all of which require energy to extract, refine, manufacture, and transport. Therefore, it is important not only to protect the environment and preserve landfill capacity, but also to

encourage energy efficiency through the recovery of valuable materials.

Question 2. Since individual persons have to make the choice to give up their unused electronic equipment, what responsibilities do you think they should bear?

What role does public education have in this effort and have you seen any successes

with public education efforts in your states on these or other recycling programs?

Response. Many consumers are aware of both the hazards associated with the improper management of used electronics and the valuable resources contained in

these products. However, we have seen that many consumers are not aware of the

ways that used electronics can be refurbished, reused, and recycled. Through our

efforts during the EPA Region 3 eCycling Pilot Project and our work with the counties in Maryland, we have seen that public education plays a crucial role in the success of our eCycling programs. Counties that invest time and money in advertising

their events through flyers in schools, mailings, radio spots, posters, and other outlets, witness higher participation rates and volumes of material collected than counties that do not advertise their collection events and facilities well. Although we

know that advertising is important, many Maryland counties simply cannot afford

to spend a lot of money on advertising electronics collection activities. Maryland

would welcome federal assistance in this area.

In Maryland, as is being witnessed around the country, recycling rates seem to

have reached a plateau. Recycling is no longer a hot topic and has become routine

for many of our citizens. EPA has recognized this problem and is working toward

developing a plan for increasing the national recycling rate. Undoubtedly, public

education regarding the benefits of recycling will play a significant role in these efforts. A national education and outreach campaign, with a consistent message, could

be beneficial.

Question 3. In 1980, Congress enacted the Low-level Radioactive Waste Policy Act.

Under this law, a state is given the responsibility to select disposal sites for lowVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00128 Fmt 6633 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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level radioactive waste—a type of waste that generally consists of low concentrations of relatively short-lived hazardous waste. What intrigues me most though is

that several states have banded together to address this serious waste concern. In

fact, most states have set up and joined congressionally approved interstate compacts to handle low-level waste disposal, while others are developing single-state

disposal sites. Recognizing the interstate nature of electronics sales and product

take-back and refurbishment programs, is this model something that makes sense

to you or your state?

Response. Low-level radioactive waste is classified as a hazardous waste throughout the country, requiring careful monitoring, handling, tracking, transportation,

and disposal. Many states, including Maryland, have chosen to join with other

states to identify disposal sites for these hazardous wastes for economic reasons, as

facilities to manage low-level radioactive waste are quite expensive. Although used

electronics may contain some toxic materials such as lead, mercury and cadmium,

they are not, in their whole state, classified as hazardous waste in all states. It may

be useful to work with other states in the same geographic regions on projects involving electronics waste. However, there would be difficulties in managing these

materials regionally as definitions of electronic waste differ and not all states regulate electronics waste the same way, if at all.

Question 4. The law that Maryland recently passed allows manufacturers a choice

in how to meet the state requirements—either establishing a take back program or

paying the state a fee. This seems like an interesting approach that may help to

provide different options to residents in Maryland—Was that one of the goals of the

legislation?

Response. Maryland’s Statewide Computer Recycling Pilot Program law requires

a manufacturer of an average of more than 1,000 computers over the preceding

three-year period to pay an initial $5,000 registration fee, regardless of whether the

manufacturer has implemented a computer take-back program, if the manufacturer

wishes to sell its computers in Maryland on or after January 1, 2006. In subsequent

years, if a manufacturer has implemented a take back program acceptable to the

Department, the registration fee will be reduced to $500. Those manufacturers that

have not implemented take back programs after 2006, are required to pay $5,000

each year if they wish to continue to sell their computers in Maryland. We do not

expect that the manufacturer’s choice to establish a take back program or continue

to pay Maryland the $5,000 annual fee would have any significant impact on the

consumer. Question 5. Currently the Maryland law only focuses on computer products. This

subcommittee has heard testimony that the U.S. EPA has concerns with all types

of cathode ray tubes (CRTs), including computer monitors and televisions. Does your

Department plan on expanding the scope of products to include televisions?

Response. The Maryland Department of the Environment has no plans at this

time to propose legislation regarding electronics recycling during the 2006 legislative session that begins in January. Electronics recycling in Maryland currently includes many types of electronics, including computers, monitors, keyboards, mice,

printers, televisions, cellular phones, etc.

Question 6. Of the three states that have enacted an electronic waste law, Maryland chose, arguably, the most minimal approach to address electronic waste

streams and recycling. Was this decision made consciously because of concerns

about regional or Federal actions or was it simply the political reality that all the

State legislative branch could support was your five-year registration and take-back

program?

Response. The Maryland Department of the Environment had input on fashioning

some provisions of the Statewide Computer Recycling Pilot Program law that became effective July 1, 2005, but it was a bill that was introduced and sponsored by

several delegates. As stated in the response to the previous question, the Department has no plans at this time to seek changes to the current law.

Question 7. Your testimony refers to the importance of the private recycling market. Could you please expound on your testimony’s reference to Maryland electronics

recyclers who ‘‘have often responded to demand for electronics waste reuse, refurbishment, and recycling by negotiating mutually beneficial contracts with local governments for collection and recycling activities,’’ thus allowing many local governments to increase their electronic waste collection activities?

Response. Several major recyclers in Maryland have been very active in seeking

contracts with local governments to manage electronics waste collected through permanent county facilities and one-day events. In an effort to make these collection

activities economically feasible for both parties, these recyclers have kept the costs

to the local governments low in order to receive a consistent quantity and quality

of electronics to support their recycling business. For example, one recycler is curVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00129 Fmt 6633 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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rently charging a metropolitan county two cents per pound for electronics collected

at the county’s permanent collection facility. This relatively affluent county has been

shown to collect rather high-end electronics products that have reuse and refurbishment potential and can be resold at a profit to the recycler. This not only benefits

the recycler but benefits the county by managing its electronics waste and preventing disposal, which helps increase disposal capacity.

Materials generated through the recycling of electronics in Maryland have several

destinations. Some electronics recyclers are very efficient at recycling nearly 100%

of the materials they collect and dismantle. They have been able to find markets

for all the materials generated from shredding or dismantling, including the plastics

and varied ferrous and non-ferrous metals. Other electronics recyclers are more involved in refurbishing electronics for reuse and have found local and overseas markets for these items. As Maryland does not specifically regulate electronics recyclers

nor require reporting on their activities, we rely on self-disclosure by these companies regarding their markets and the destinations for these materials.

Question 8. In the section of your testimony that talks to Maryland’s decision

about its financing mechanism, you mention that your state was uncomfortable pursuing plans that had been adopted in either California or Maine. In fact, you state:

‘‘Because many Workgroup members voiced differing opinions on key components of

an eCycling system (a definition for electronic waste, a funding mechanism, or

whether to ban disposal of electronic waste in landfills and incinerators), they felt

that decisions regarding funding and a system for electronics collection and recycling in Maryland should be delayed to allow for the development of a national electronics waste management system.’’ Does this mean you want a Federal electronic

waste program to make this financing decision for you?

Response. During the Workgroup discussions, it was decided that it would be best

for Maryland to take a ‘‘wait and see’’ approach, in part because there were efforts

nationally to develop a system for managing electronic wastes. However, with the

enactment of Maryland’s legislation, we will now focus our efforts on implementing

and evaluating the provisions of this new law without regard to potential federal

action.

Question 9. You mention in your testimony that you are unsure how many companies your state law covers, which makes it impossible to know how much money

your registration fee will raise. When do you expect to have a full understanding

of how many companies are involved in your state and how much money you should

generate? What will the State do if it does not generate enough money under the

registration fees to pay the costs of its program?

Response. The Department has mailed approximately 250 letters to companies

identified as potentially subject to the requirements of the new computer recycling

law. The Department is also following up with companies that have questions about

the law. It is expected that by early fall, there will be reliable information about

the number of computer manufacturers that will be required to register with and

pay the registration fee to the Department by January 1, 2006. By mid to late January, the Department should discern the amount of funding that will be available to

support the Pilot Program the first year. Since the registration fee will be reduced

in future years of the pilot if a manufacturer implements a take-back program, it

will take at least until January 2007 to determine the amount of money that will

be available to support the Program through 2010.

Since 1) electronics recycling is voluntary, 2) there are no accurate figures regarding how much electronic waste is being stored or generated, 3) the program will

have only been in place for four years this fall, and 4) eCycling is still growing in

Maryland, there is no reliable data at this time regarding the exact costs for providing recycling services for all computers in the state. In addition, the Program is

a pilot that will expire December 31, 2010 if no further action is taken by the legislature on computer recycling.

Question 10. Your state law allows a reduced registration fee if a computer manufacturer has a ‘‘take-back’’ program. Since the registration fee drives the local recycling programs, what do you see as the trade off and what do you estimate to be

the decrease in revenue? If a company has a ‘‘take-back’’ program, but it does not

apply to other maker’s products or there is a fee involved, how does your law handle

this? Do you think this creates more or less of an incentive under your state law

to adopt a state sanctioned ‘‘take-back’’ program?

Response. Several counties in Maryland are currently maintaining their own electronics recycling activities without State financial support. The registration fees

that will be received from computer manufacturers are not expected to do any more

than supplement or reimburse for some of these activities. More fees will obviously

allow more activity, but if annual fee collection decreases, then assistance to local

jurisdictions will correspondingly decrease. With no past data to guide our projecVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00130 Fmt 6633 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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tions, we have no way to reliably estimate revenues for this program. If a company

implements a take back program, it will continue to pay a $500 annual fee to the

State. Maryland’s law already provides that a take back program must be ‘‘acceptable’’ to the Department, so we, in effect, ‘‘sanction’’ each program while allowing

manufacturers the flexibility to design and implement whatever makes the best

business sense for them. .

The Honorable Charles F. Bass

Question 1. This Committee in the past has often discussed interstate solid municipal waste. I would like to hear each of your thoughts on what implications would

result if all fifty states created their own programs and standards in how to handle

e-waste? What complications would you see as a result of this on the flow of interstate waste?

Response. Maryland addressed the issues of siting landfills and transporting solid

waste between jurisdictions through the efforts of the Solid Waste Management

Task Force in 1998. The recommendations of the Task Force included encouraging

regionalization and public-private partnerships, increasing recycling, collecting better information about waste generation, transportation, and disposal within and outside the region, and increasing funding for recycling, source reduction, and education. The full text of the report can be found on the Department’s website at:

http://www.mde.state.md.us/assets/document/waste/SW—TaskForce98.pdf.

Question 2a. In talking with the New Hampshire Department of Environmental

Services, one of their concerns has been with the mobility of items: where an item

is sold is not necessarily the place where it is disposed. Could you address the problems with charging a fee at the point of sale for products bought over the internet

if a national program is not implemented?

Response. The Electronics Recycling Workgroup studied the funding and implementation of a system for collection and recycling of waste electronics in the fall of

2004. The members of the Workgroup expressed concerns regarding the use of an

advanced recovery fee for the reasons you mentioned. The recommendations of the

Workgroup can be found on the Department’s website at: http://www.mde.

state.md.us/assets/document/Electronics%20Workgroup%20Report.pdf.

Question 2b. Additionally, could you discuss the problem with individuals buying

an electronic product from one state and disposing of it in another? How would that

affect the success of your program and how have you addressed this problem in your

own strategies?

Response. At this time, it is not anticipated that the problem you mention will

impact the success of the Statewide Computer Recycling Pilot Program in Maryland.

The new law requires manufacturers of computers sold in Maryland to register and

pay a fee to the Department. These registration fees will be used to provide grants

to local governments and municipalities to support their computer recycling programs and for the Department’s Office of Recycling. The law does not address disposal of computers in Maryland.

Question 3. Would you agree that if a national fee was imposed with pro rata payments made to the states that this would be the most efficient way to pay for such

electronic waste programs?

Response. The Department has no data that attempt to rank the efficiency of different models of program design and/or funding.

The Honorable Hilda L. Solis

Question 1. Has your program set accountable goals for how many products

should be collected? If there are no goals, how does your program encourage more

electronics to be recycled?

Response. The Department has not set specific goals related to electronics recycling; however, the Department does have an objective related to increasing the

Statewide recycling rate as part of Maryland’s State agency Managing Maryland

For Results tracking. The objective is to ‘‘Increase the statewide voluntary waste diversion rate to 40% by the end of calendar year 2005.’’ Electronics are a recyclable

material that counts toward each county’s annual waste diversion rate (determined

by adding the county’s recycling rate and the county’s source reduction credit, if applicable). Therefore, electronics recycling is a factor in the statewide waste diversion

rate, even though it is not counted separately.

Question 2. Does your program have a system to track the amount of E-waste that

will be collected and recycled? Do you have any statistics that show that more products are being recycled as a result of your program?

Response. Maryland’s Statewide Computer Recycling Pilot Program just became

effective July 1, 2005 and the Department is in the process of implementing the law.

Although we do not have any statistics at this time regarding the program, we have

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been tracking electronics collection activities since October 2001, when eCycling activities began in Maryland. Our most current collection data is enclosed for your information.

Question 3. What has been your experience to date of the electronics law operating in your state? Does your state have enough experience in implementing this

law to suggest what you might change about it?

Response. The Statewide Computer Recycling Pilot Program law became effective

July 1, 2005. Computer manufacturers are required to register and pay a registration fee to the Department by January 1, 2006 or they will no longer be able to sell

their computers in Maryland. The Department does not have any experience to report at this time.

Question 4. What is your advice for how to craft national legislation that would

take into consideration the different state legislation already enacted? What aspects

of your state legislation would make it most difficult to incorporate into national legislation?

Response. Again, as we are just beginning the implementation of our new law,

the Department does not have any advice at this time.

(129)

ELECTRONIC WASTE: AN EXAMINATION OF

CURRENT ACTIVITY, IMPLICATIONS FOR

ENVIRONMENTAL STEWARDSHIP AND THE

PROPER FEDERAL ROLE

THURSDAY, SEPTEMBER 8, 2005

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

SUBCOMMITTEE ON ENVIRONMENT AND

HAZARDOUS MATERIALS,

Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room

2322, Rayburn House Office Building, Hon Paul E. Gillmor (chairman) presiding.

Members present: Representatives Gillmor, Bono, Otter, Solis,

and Inslee.

Staff present: Mark Menezes, chief counsel for energy and environment; Jerry Couri, policy coordinator; Tom Hassenboehler, majority counsel; Peter Kielty, legislative clerk; and Dick Frandsen,

minority senior counsel.

Mr. GILLMOR. We will call the subcommittee to order. And we did

have two panels consisting of nine members, but we thought it

might be a better idea if we consolidated those two panels into one

panel of nine members. So we will ask all of the panelists, both on

panel one and panel two, if they could come forward and take a

seat at the witness table.

And we had name tags for everybody, Jerry. So we can get the

name tags and get the seating?

We will start. Once again, I apologize to this panel. Two of the

members of the panel are distinguished former colleagues of ours,

so they are used to all of this confusion, Steve and Dave. But let

us proceed, and we are waiving opening statements for this hearing

so that we can facilitate the witnesses. And I would propose that

we go in the order that our panelists were originally listed.

The first would be Joel Denbo of the Institute of Scrap Recycling

Industries. We normally have 5 minutes, and we would ask if you

would stay within that. And, of course, your complete statements

will become part of the record.

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STATEMENTS OF JOEL DENBO, CHAIR, INSTITUTE OF SCRAP

RECYCLING INDUSTRIES, INC.; MICHAEL VITELLI, SENIOR

VICE PRESIDENT, BEST BUY, ON BEHALF OF CONSUMER

ELECTRONIC RETAILERS COALITION; STEVE LARGENT,

PRESIDENT AND CEO, CTIA-THE WIRELESS ASSOCIATION;

DAVE MCCURDY, PRESIDENT AND CEO, ELECTRONIC INDUSTRIES ALLIANCE; PARKER E. BRUGGE, SENIOR DIRECTOR

AND ENVIRONMENTAL COUNSEL, CONSUMER ELECTRONICS

ASSOCIATION; DAVID A. THOMPSON, DIRECTOR, CORPORATE ENVIRONMENTAL DEPARTMENT, PANASONIC CORPORATION OF NORTH AMERICA; GERALD L. DAVIS, PRESIDENT & CEO, GOODWILL INDUSTRIES OF CENTRAL TEXAS,

INC.; MARK MURRAY, EXECUTIVE DIRECTOR, CALIFORNIANS

AGAINST WASTE; AND RENEE ST. DENIS, DIRECTOR, AMERICAS PRODUCT TAKE BACK, HEWLETT-PACKARD COMPANY

Mr. DENBO. Mr. Chairman and members of the subcommittee I

am Joel Denbo of the Institute of Scrap Recycling Industries. ISRI

is the trade association that represents 1,260 private for-profit companies that process, broker and industrially consume scrap commodities including metals, paper, plastics, glass, textiles, rubber,

and electronics at nearly 3,000 facilities worldwide. Electronics

scrap is nothing more than a complex combination of these items.

I am also the third generation of my family to own and operate

Tennessee Valley Recycling, a company that began small, struggled

for years, and will celebrate a century of recycling in 2007, with

plants in Alabama and Tennessee.

The recycling industry is made up of entrepreneurs whose businesses, large and small, collectively process over 130 million tons

of recyclables each year, worth upwards of $30 billion. ISRI member companies have been recycling electronics for decades. In 2002,

recognizing the ever-growing number of obsolete personal computers and peripherals and other electronics materials entering

into the recycling stream, ISRI formed an Electronics Council to

address the issues unique to this segment of the scrap recycling industry’s activities.

The recycling of electronics—as entrepreneurs, I can assure you

that we would not be here today if we did not recognize the value

of this market. The explosive growth of electronics has presented

challenges that need to be addressed. Scrap is not waste. Recycling

is not disposing. These are two simple concepts that are often misunderstood. Scrap is a valuable raw material used in manufacturing. In contrast, waste has no value and generally ends up in

landfill.

Defining obsolete electronics as waste undermines and overlooks

the value that these electronics retain if properly recycled. When

properly handled, the recycling of electronics poses little to no environmental risk, though ISRI is implementing a comprehensive integrated quality environmental health and safety management system. We call this Recycling Industry Operating Standards, or

RIOS. Few industries have attempted such a huge step, but we believe that it is valuable to promote worker safety and manufacture

of high quality raw material feed stocks.

The third issue involves the scope of the challenge. In the short

form, our country needs to deal with the amount of electronics that

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are stored in closets, basements, and warehouses. Some of these

materials may have a value once calculated, sorted, transported,

and recycled. There seems to be general agreement that our country needs some sort of short term, and I reiterate short term, funding mechanism to cover these costs, but there is less agreement on

how it should be funded.

ISRI’s Electronics Council is taking a look at this issue and comparing the two propositions most often discussed: cost internalization by the responsible manufacturers, and an advanced recycling

fee administered by the government. We believe if funding is needed, cost internalization is the better of these alternatives. It is

cheaper for consumers and taxpayers and provides a strong incentive for manufacturers to design their products to make them easier to recycle. Design for Recycling is a concept that ISRI developed

20 years ago. It calls on manufacturers to design products that can

be easily recycled, minimizing the risk. Unfortunately, few manufacturers have voluntarily adopted the Design For Recycling philosophy. Electronics manufacturers are better than most, and we appreciate that. But there is still a significant room for improvement.

There is one more challenge that we must undertake in the longterm market. We must work together to develop markets. As the

market grows, demand grows, the value of the commodity grows,

and the need to subsidize electronic recycling falls. Hence, we suggest including funding for research.

In the end, our country should be encouraged to recycle. We must

ensure that scrap electronics that come out of the basements, closets, and warehouses are handled properly, recycled, and not disposed of in a landfill. We should address this issue in a way that

is not overburdened with regulation, that encourages a marketplace economy, and protects America’s environment.

Thank you, Mr. Chairman and members of the subcommittee, for

addressing this timely issue. I welcome any questions you may

have.

[The prepared statement of Joel Denbo follows:]

PREPARED STATEMENT OF JOEL DENBO, CHAIR, INSTITUTE OF SCRAP RECYCLING

INDUSTRIES

Mr. Chairman and Members of the Sub-committee, my name is Joel Denbo. I am

here as Chair of the Institute of Scrap Recycling Industries (ISRI). ISRI is the trade

association that represents 1,260 private, for-profit companies that process, broker

and industrially consume scrap commodities including metals, paper, plastics, glass,

textiles, rubber and electronics at nearly 3,000 facilities worldwide—over 80% of

those facilities are located in the United States. Approximately 300 of our 1,260

members handle electronics, either exclusively, or as an aspect of their other recycling activities. I am also the third generation leader of Tennessee Valley Recycling,

a company my family began in 1907 that currently has plants located in Alabama

and Tennessee.

In the minds of many, recycling in the United States is a phenomenon that began

in the 1970’s following the original Earth Day celebration. For others, awareness

dates to the late 1980’s following the infamous voyage of the ‘‘garbage barge’’ and

the ensuing fears that landfill capacity had reached a crisis stage. It may interest

the Committee to know that—the scrap recycling industry actually dates back to the

beginnings of our nation, when a statue of King George III was toppled in NYC and

its metal was used to make bullets for the Continental Army. Our members are in

the business of recycling, and have formed the basis of the established recycling infrastructure that exists in this country today.

Today, the processing of scrap commodities is an integral part of the U.S. economy

and its domestic manufacturing industries. Scrap commodities are collected for beneficial reuse, conserving impressive amounts of energy and natural resources in the

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recycling process. For example, according to the Environmental Protection Agency

recycled aluminum saves the nation 95 percent of the energy that would have been

needed to make new aluminum from virgin ores. Recycled iron and steel result in

energy savings of 74 percent; recycled copper, 85 percent; recycled paper, 64 percent;

and recycled plastic, more than 80 percent. Collectively, ISRI members process over

130 million tons of recyclables each year, worth upwards of $30 billion and contribute more than $2 billion annually to the US balance of trade.

ISRI’s member companies are family owned businesses that have stood by, and

with, the same towns and cities throughout America for the past century, creating

the backbone of the recycling infrastructure you see in this country today. In fact,

in two years my company will celebrate the one hundredth anniversary of its founding by my immigrant grandfather and his brother. ISRI members have provided stable, good-paying jobs in this country during the boom years, the lean years, and in

war time. Understandably, we are known as America’s ‘‘Original Recyclers’’ and

proudly wear the badge of the Voice of the Recycling Industry.

ISRI members have been recycling electronics for decades as an integral part of

their recycling operations. Indeed, early computers—mainframes as they were

known, were highly sought after commodities in our industry. In 2002, recognizing

the ever-growing number of obsolete personal computers and peripherals, and other

electronics materials entering the recycling stream, ISRI formed an Electronics

Council to address the issues unique to this segment of the scrap recycling industry’s activities. Sensing an opportunity, as good businessmen and entrepreneurs

generally do, many of our member companies are investing significant capital to expand their businesses to recycle more electronics. Yet, while they have acted on

their ‘‘recycling know-how’’ and sense of opportunity, they also know that before

electronics recycling can stand on its own, a number of challenges familiar to the

traditional scrap recycling industry need to be addressed.

The challenges include, among other things, the need: to distinguish between

scrap and waste, to develop end-use markets for the materials recovered from scrap

electronics, to promote manufacturer design improvements to make electronics easier to recycle and to avoid the use of hazardous materials in the manufacture of electronics products, and to promote the benefits of environmental management systems, such as ISRI’s Recycling Industry Operating Standard (RIOS) as the proper

means to address environmental concerns. Consequently, ISRI’s Board of Directors

last month adopted a policy resolution outlining how best to address these challenges.

As businessmen who know how to recycle, our views are derived from years of

practical experience. In order to assist this Committee’s efforts to understand how

best to ensure that electronics are recycled properly, and not disposed of in landfills

or elsewhere, I would like to highlight some of the key issues within our policy.

We need to avoid creating unnecessary impediments to recycling. Thus, it is very

important to distinguish the difference between scrap and waste. Electronics scrap,

like scrap paper, glass, plastic, metal, textiles, and rubber, is not waste. Scrap is

the opposite of waste. Processed scrap materials are commodities that have a value

on domestic and international markets, whereas waste materials have no value and

are typically buried in a landfill. Electronics recyclers make their living by providing

de-manufacturing services, such as scrubbing and reselling hard drives, by reselling

cell phones, monitors and CPUs that are in good working order, and by using machinery and equipment to shred or otherwise process electronics to extract the various commodities that are in electronics like steel, aluminum, gold, silver, titanium,

copper, nickel, plastic and glass.

Defining obsolete electronics as waste undermines and overlooks the value that

these electronics retain if properly recycled. Saddling them with the moniker of

waste imposes a whole host of unwarranted regulatory burdens that will undermine

the ability to make the system work. For these reasons, it is eminently important

that we avoid confusing these valuable commodities with wastes.

Another key aspect underlying our policy is the concept of free and fair trade. We

have been in the recycling business a long time and understand that scrap commodities are some of the best examples of basic supply and demand economics. These

materials are traded in the global marketplace, supplying America’s basic manufacturing industries with valuable raw material feed stocks that are used in place of

virgin materials, and contributing significantly to the United States’ balance of

trade with other nations. Hence, our industry has generally opposed efforts to interfere with commodity markets and create artificial distortions. However, being the

pragmatic businessmen that we are, we recognized that the electronics market has

grown explosively in such a short period of time that, for the short term, it might

take some sort of financial mechanism to ensure that the costs of recycling elecVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00136 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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tronics—which sometimes have a ‘‘negative intrinsic value’’—do not deter recycling

from taking place.

Allow me to explain. Right now, under current market conditions, if a citizen, a

governmental entity, a commercial or retail establishment wants to do the right

thing and recycle their electronics, recyclers must charge that citizen or other entity

a fee in order to justify the costs of recycling certain obsolete electronics components, such as older computer monitors and TV’s with cathode ray tubes (CRTs).

That’s because the costs of recycling these items are more than the value of the component materials that can be extracted from them. This is due in large part to the

lack of markets for the recycled glass and plastics in these units. Creating a long

term, sustainable recycling infrastructure for the recycling of electronics will require

that the electronics are both economically and technologically feasible to recycle. As

a result, ISRI decided to support a financial mechanism to cover the negative value

of the material.

In looking at the issue, our Electronics Council determined that the best financial

mechanism would be for manufacturer’s to take some responsibility for the cost of

recycling their products, by internalizing the cost of collecting, sorting, transporting

and recycling of a defined set of electronics for two primary reasons. First, we recognized that producer responsibility provides a greater incentive to encourage manufacturers to adopt Design For Recycling, a concept that ISRI has been advocating

since the early 1980s. Second, we believe that internalization will be cheaper for the

consumer/taxpayer. We did not come to this conclusion lightly. In fact, it was a gut

wrenching decision as our industry has long argued that the markets should be allowed to operate freely.

Essentially, Design for Recycling calls upon manufacturers to design their products to be easily recycled at the end of their useful lives, without using hazardous

or toxic constituents that can hinder the recycling of those products, and to be manufactured using recycled materials. Design for Recycling contemplates cooperative

efforts between manufacturers, recyclers and the government, in research and development efforts, in defining and understanding the challenges faced at every stage

of a product’s life cycle, and in mutual efforts to develop better ideas. To date, voluntary calls by the recycling industry to motivate manufacturers to adopt a Design

for Recycling philosophy have met with only a tepid response. We do recognize that

electronics manufacturers have taken some steps towards designing for recycling;

however, there is room for improvement. It is important to understand that greater

Design for Recycling can increase recycling productivity that will only ensure a

stronger more sustainable infrastructure.

We believe, as successful businessmen, that if given the flexibility and opportunity

to internalize the costs, that manufactures can create a model that will be less bureaucratic and burdensome and cheaper for the tax payer. However, certain manufacturers insist that a consumer tax in the form of an Advance Recycling Fee (ARF),

implemented, governed and administered by state governments, will be cheaper

than manufacturers internalizing the costs. We disagree with this logic. We are

aware that there is a fierce and sometimes spirited debate occurring among and between manufacturers and retailers about this issue. This is as it should be. Ultimately, being neither an electronics manufacturer nor a retailer, ISRI’s Electronics

Council felt it necessary to take an objective look at this issue, as the outcome of

the debate will ultimately affect the electronics recyclers.

We acknowledge that some manufacturers have had an unkind, if not visceral, reaction to our position on this issue. They have even questioned our right to have

an opinion on the matter of cost internalization versus ARFs. However, while we

would not fall on our sword whichever way the Congress or state legislatures decides the cost internalization versus ARF matter, we have specific reasons for holding our preference.

While ISRI will ultimately defer to the wisdom of the Congress or the states to

decide which financial mechanism is most apt to spur electronic markets, we strongly encourage the Congress and the states to end any financial mechanism as soon

as markets for recyclable electronics become economically viable. We are not an industry that looks lightly on government subsidy, and we believe markets must ultimately stand on their own based on solid business principles. That said, whatever

financial mechanism the Congress and the states might decide to put forward in

order to sustain this market, ISRI suggests that a portion should be applied to the

research and development of end use markets for the materials recovered from electronics products.

Two of the greatest challenges of electronics recycling are the difficulties of sorting the different resins of plastic and recycling chemically coated glass. Targeting

funds to further technology in these two fields would have a tremendous impact on

making end-use consumer markets more economically viable, which would, over

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time, ensure these markets could stand on their own without subsidy. In fact, we

believe it would be wholly appropriate for the Congress to support research efforts

aimed toward the development of technologies for utilizing these materials in the

manufacturing process.

Mr. Chairman, I briefly alluded to RIOS early in my remarks. RIOS is an integrated environmental, health and safety, and quality management system standard

that ISRI has developed over the past 18 months. Few industries worldwide have

endeavored to undertake such a huge step, but the recycling industry in the United

States has always been, and intends to remain, the global leader in recycling technology, environmental protection, worker safety and the production of high quality

materials. RIOS is a tool for us to accomplish those goals and will help assure that

ISRI members who recycle scrap electronics will do so in a manner that is best for

our country, and the world in which we live.

In closing, I want to remind the Committee what this is all about, and that is

recycling. At the end of the day when you have done your jobs and the money issue

is sorted out, and folks start pulling electronics from closets and basements, it will

be the electronics recyclers that end up with electronics on their doorsteps, and that

is exactly what we want. What we do not want is an over-regulated system that

makes it impossible to do our job. Our job is to make sure electronics are properly

recycled in order to protect America’s environment and support our global economy.

I want to thank you Mr. Chairman and Members of the Committee for addressing

this timely issue and welcome any questions you may have.

Mr. GILLMOR. Thank you very much, Mr. Denbo, and we will go

to Michael Vitelli, Senior Vice President of BestBuy, who is testifying on behalf of the Consumer Electronic Retailers Coalition.

Mr. Vitelli.

STATEMENT OF MICHAEL VITELLI

Mr. VITELLI. Thank you Chairman Gillmor, Ranking Member

Solis, and members of the subcommittee. I am Michael Vitelli, Senior Vice President of Consumer Electronics of BestBuy, and I am

here today to testify on behalf of the consumer electronics retailers

coalition, or CERC.

CERC is a national coalition representing consumer electronics

retail businesses and associations that operate in all 50 States and

worldwide. Joining BestBuy in CERC are Circuit City, Radio

Shack, Wal-Mart, Target, North American Retail Dealers Association, and the Retail Industry Leaders Association.

BestBuy is the country’s leading consumer electronics retailer

with close to 700 stores in 49 of the 50 States and nearly 100,000

employees. The company started in 1966 with a single store in

Saint Paul, Minnesota, and we continue to operate our headquarters in the Twin Cities.

BestBuy is actively concerned with the issue of electronic waste.

In 2001, we launched a series of recycling events. Through these

events, BestBuy has helped consumers nationwide recycle over 2.5

million pounds of electronics in an environmentally responsible

way since the program began. We also offer the ability to recycle

cell phones, ink cartridges and rechargeable batteries year round

in all our U.S. stores.

CERC members and other consumer electronics retailers and

manufacturers have participated in such EPA programs as the

Plug-in to e-Cycling outreach campaign. Partners in this EPA program have included manufacturers like Panasonic, Sharp, Sony

JVC, Lexmark, Dell, and Intel, retailers like BestBuy, Staples, and

Office Depot, and approximately 2 dozen State and local governments. More than 26.4 million pounds of electronics were collected

in the first 10 months of this national program alone.

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Given our industry’s history on recycling programs and events,

CERC has some observations regarding public policy solution to

this issue.

There are three central points I want to make regarding the electronics recycling:

One, a Federal solution is far preferable to 50 differing State solutions. This issue needs Federal leadership. Of course, I believe

this because it simplifies our participation. I also think a Federal

solution is required because it will simplify the process for consumers and will ensure that no State is either disadvantaged by a

system, or left with a large amount of the waste. The Federal Government needs to actively study this issue, thereby providing assurance to States that a Federal solution may be found and potentially reducing the number of individual State actions. Many States

are acting only because they do not see a Federal action.

Two, this issue is complicated. There is the waste that is currently waiting to be recycled. There are the products that are still

in use, but will need recycling in the near future. Neither of these

two categories of products—historic waste—were produced with the

understanding that they would have to be recycled. And then there

are the products that will be produced in the future—future waste.

It may be helpful in finding a solution to think about these two categories of waste separately.

Three, in any scenario, the public will pay for the recycling of

electronic waste. If the government provides the solution, consumers pay in the form of additional taxes. If the government mandates a fee, the consumer pays. If the manufacturer must include

recycling in their product costs, the consumer pays. But it is only

in this last solution, where the costs of recycling are part of the

cost of the products, that there is an inherent incentive to reduce

both the need to recycle and the long-term costs of recycling. Given

the reality that the consumer will pay under any scenario, it seems

best to find the solution that will drive efficiencies and reduce costs

over time.

It is the combination of point two, that there may need to be a

couple of solutions, and point three, that the best solution in the

future is one that drives to least cost and efficiency, that drives

CERC to support the concepts of the Talent-Wyden approach. This

tax incentive program could go a long way to provide an immediate

incentive to deal with the historic waste over the next few years.

If coupled with a program of manufacturers’ responsibility for future products, the end result could be a total solution that drives

to least cost and maximum efficiency over time and provides the

right, limited incentive to jump start and capitalize recycling programs in the near term.

We very much appreciate the holding of this hearing and encourage Congress and the committee to continue to work toward a national solution to electronics waste management. We pledge to

work with you in arriving at a fair, viable, and effective approach.

Thank you.

[The prepared statement of Michael Vitelli follows:]

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PREPARED STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT, BEST BUY ON

BEHALF OF THE CONSUMER ELECTRONICS RETAILERS COALITION (CERC)

Chairman Gillmor, Ranking Member Solis and members of the Committee, I am

Michael Vitelli, Senior Vice President of Consumer Electronics of Best Buy and am

here today on behalf of the Consumer Electronics Retailers Coalition (CERC) to provide the views of CERC’s membership on the need for a national electronics management system.

CERC very much appreciates the opportunity to provide the views of the consumer electronic and general retail industry concerning the need for a national approach to handling electronic devices at their end of life. We are also very appreciative, Mr. Chairman, of the leadership you have shown in holding this hearing

today and providing a forum for interested stakeholders to express their views. We

look forward to working with you and the members of this Committee to identify

the best means of developing a national solution for electronic device recycling.

BACKGROUND ON BEST BUY

Let me begin by thanking the members of this Subcommittee as well as the full

Committee for your leadership on energy issues related to the aftermath of Hurricane Katrina. Best Buy had 15 stores affected by the storm and 6 are still not functional. We have found all but 20 of our associates but are saddened to know that

somewhere between 750 and 1000 are now homeless. We are working with those

employees to secure needed support including temporary housing. As is our practice,

employees affected by natural disasters remain on the payroll. We do our best to

redeploy employees in other locations or provide them as local volunteers as needed.

Our employees across the nation are active in their local communities, assisting

where possible so trained disaster relief personnel can be deployed. The Company

has donated $1 Million in relief funds to the American Red Cross and we have

opened our point of sale systems in our stores to collect contributions from customers and the general public for the American Red Cross.

As you may know, Best Buy is the country’s leading consumer electronics retailer

with close to 700 stores in 49 of the 50 states and nearly 100,000 employees. The

company started in 1966 with a single store in St. Paul, Minnesota and we continue

to operate our headquarters in the Twin Cities. In addition to our product and service offerings, Best Buy is also known for our ongoing commitment to our communities, providing volunteer support, financial resources and leadership on many

issues, but especially on the use of innovative technology to improve the learning

opportunities for kids. We provide over 1300 scholarships to students entering higher education—3 scholarships in every Congressional district in the country. Our new

te@ch program rewards schools and educators who are using technology to energize

their lesson plans and engage students. The National Parks Foundation’s Junior

Ranger program is available to kids across the country through the Web Ranger

program sponsored by Best Buy. With Junior Achievement’s ‘‘Titan’’ business simulation game, we’ve helped harness the excitement of a video game to stimulate real

learning.

Best Buy has also been actively concerned with the issue of electronic waste. In

2001, we launched a series of recycling events to provide a simple, fun and convenient program for recycling electronics that protects the environment while raising

awareness of recycling options. Best Buy has helped consumers nation-wide recycle

over 2.6 million pounds of electronics in an environmentally responsible way since

the program began. In addition to recycling events, we also offer the ability to recycle cell phones, ink cartridges, and rechargeable batteries year round in all our U.S.

stores.

BACKGROUND ON CERC

CERC is a national coalition representing small, medium and large consumer

electronics retail businesses and associations that operate in all 50 states and worldwide. Our members, in addition to Best Buy, include Circuit City, RadioShack, WalMart, Target, the North American Retail Dealers Association and the Retail Industry Leaders Association. Our goal is to educate, advocate and instill continued consumer and market confidence in consumer electronics policy issues.

Following months of internal discussion, conducting an industry-wide survey,

holding meetings with state legislative leaders and experiencing the impact and initial results of the California advance recycling fee law, CERC drafted a consensus

legislative position paper on electronic waste management earlier this year, which

is attached to my written statement.— While other stakeholders have yet to reach

a broad consensus, consumer electronic and general retailers, including their naVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00140 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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tional and state federations, have come together around a position that we believe

lays out the issues, opportunities and obstacles—involved in setting up a nationwide

eWaste model. Since issuing this Position Paper, CERC has been working with and

recruiting broad cross-industry support among other interested stakeholders, including environmental groups, recyclers, state legislators and manufacturers.—

CURRENT PROGRAMS/ACTIVITIES

Even without state or federal laws governing management of electronic waste, the

private sector—manufacturers and retailers working with qualified recyclers—has

been fully supportive of the shared responsibility product stewardship approach

through numerous voluntary initiatives that collect and recycle devices. These programs have included the development of a strong and meaningful educational campaign for consumers and policy makers. Best Buy and other members of CERC, as

well as consumer electronic retailers that are not members of our organization, together with a number of manufacturers, have been actively involved in activities

that highlight the need for conservation and how best to handle electronic devices

at their end of life.

There are several initiatives in place today to reduce and manage electronic waste

both at the federal and industry levels. CERC members and other consumer electronic retailers and manufacturers have participated in such EPA programs as the

Plug-In To eCycling outreach campaign, which works to increase the number of electronic devices collected and safely recycled in the United States and has identified

new and creative flexible, yet more protective ways to conserve our valuable resources. Plug-In To eCycling focuses on:

• Providing the public with information about electronics recycling and increasing

opportunities to safely recycle old electronics; • Facilitating partnerships with communities, electronics retailers and manufacturers to promote shared responsibility for safe electronics recycling; and • Establishing pilot projects to test innovative approaches to safe electronics recycling.

Program partners have included manufacturers like Panasonic, Sharp, Sony, JVC,

Lexmark, Dell, Intel; retailers like our company, Best Buy, as well as Staples and

Office Depot; and approximately two dozen state and local governments. More than

26.4 million pounds of electronics were collected in the first ten months of this national program alone.

In addition to the Plug-In To eCycling campaign a number of retailers and manufacturers have taken part in voluntary programs to encourage greater recycling. As

noted in my introduction, Best Buy actively provides recycling options for our customers with our recycling events. We have had an overwhelming response to our

events. In fact, the event we hosted a month ago at our corporate headquarters in

Minnesota drew record crowds with over 2,900 cars and a collection of over 250,000

pounds (125 tons) in just two days. This is in a county that already has a program

in place for the recycling of electronics.

In addition to Best Buy activities, a number of CE retailers and manufacturers

have and are taking part in voluntary pilot projects. Staples, for example, sponsored

a New England-based pilot program in cooperation with EPA’s Plug-In To eCycling

campaign and the Product Stewardship Institute (PSI) in the summer of 2004. Also

last summer, Office Depot and HP sponsored a similar in-store electronics recycling

pilot nationwide. Both programs accepted hardware from any manufacturer, including PCs, mice, keyboards, PDAs, monitors, flat-panel displays, laser and ink jet

printers, scanners, all-in-one printers, digital cameras, fax machines, cell phones,

TVs, and TV/VCR combos. This summer, Good Guys is partnering with the EPA and

a number of electronics manufacturers to collect and recycle televisions.

THE NEED FOR A FEDERAL SOLUTION

But we all realize that voluntary programs cannot fully handle or solve the end

of life issues surrounding electronics products. CERC strongly believes a comprehensive nationwide approach to the management of electronics is the ultimate solution

and far more preferable, desirable and efficient than a patchwork of different

eWaste laws instituted by individual states. In the first half of 2005 alone, 30 state

and local legislatures saw more than 50 separate bills introduced on this issue including an eWaste measure introduced and still active in New York City. 50 different state approaches will be administratively unreasonable and infeasible for

manufacturers and retailers alike and will not lead to a comprehensive and efficient

electronics waste management system for our nation. Many states are acting because they do not see action from the Federal Government. Active consideration of

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this issue by Congress, like that shown by this Committee, may help in providing

a positive, national solution and in reducing the need for disjointed state and local

action.

THE ISSUE IS COMPLICATED

Through all of the voluntary efforts outlined above, we have first-hand knowledge

of the fact that this issue is complicated. It may be helpful to the Committee to

highlight one significant complication. There is the waste that is currently waiting

to be recycled. There are the products that are still in use but will need recycling

in the near future. Neither of these two categories of products—historic waste—was

produced with the understanding that they would have to be recycled. And then

there are the products that will be produced the future—future waste. Finding a solution may require us to think about these two categories of waste separately.

EFFICIENCY AND A LEAST COST SOLUTION

Both CE and general retailers unanimously support a shared responsibility approach to the handling of electronic devices at the end of their life cycle. In any scenario, the public will pay for the recycling of electronic waste. If the government

provides the solution, consumers pay in the form of additional taxes. If the government mandates a fee, the consumer pays. If the manufacturer must include recycling in their product costs, the consumer pays. But it is only in this last solution—

where the costs of recycling are part of the cost of the products—that there is an

inherent incentive to reduce both the need to recycle and the long term costs of recycling. Given the reality that the consumer will pay under any scenario, it seems best

to find the solution that will drive efficiencies and reduce costs over time.

It is the combination of these last two points--that there may need to be a couple

of solutions and that the best solution in the future is one that drives to least cost

and efficiency--that drives CERC to support the concepts of the Talent Wyden approach. This tax incentive program could go a long way to provide an immediate

incentive to deal with the historic waste over the next few years. If coupled with

a program of manufacturers’ responsibility for future products, the end result could

be a total solution that drives to least cost and maximum efficiency over time and

provides the right, limited incentives to jump start and capitalize recycling programs in the near term.

SPECIFIC SUGGESTIONS

Our Position Paper outlines the factors and components that a successful manufacturer responsibility program should include:

• Initially, any program should have a limited number of types included to insure

an easy transition, and clear definitions of which devices are covered.

• Making sure that any ‘‘take-back’’ programs—if mentioned at all—remain voluntary.

• A ‘‘safe harbor’’ for a consumer electronics retailer that sells a product not covered

under an approved management plan absent actual knowledge.

• Programs that help educate and are easily understood by consumers.

• A flexible system that allows manufacturers the ability to provide services to consumers and encourages the market to drive efficiencies and choices.

• Encouragement to voluntary collection initiatives by manufacturers to partner

with retailers, charities and/or local government.

• Establishment of manufacturers’ financial responsibility based on the products

that consumers return to the system—not fees at the point of sale or other financial models that do not reflect the true costs and realities of the return system.

• The ability of manufacturers to work independently or collaborate with others to

meet the established responsibility goals.

CERC EXPERIENCE WITH STATE-LEVEL ADVANCE RECOVERY FEES

Our members oppose a point of sale advance recovery fee (POSARF) system because we know from firsthand experience that such an ARF will not accomplish its

goals, is administratively burdensome for all parties, and will only guarantee a new

revenue source for government without guaranteeing that an effective recycling system will be put into place. In addition, such a program provides no incentive for

the design of more environmentally-friendly products, and fails to take advantage

of market forces to reduce the cost of recycling over time.

The recent institution of such a fee/tax program in California has already been

shown to be:

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• Too complicated for all parties—government, businesses and consumers—to understand and administer.

• Incredibly costly for both governmental agencies and retailers to implement.

• Impracticable to bring sufficient dollars down to the local level to implement

enough local collection and disposal facilities.

• Impossible to impose on out-of-state online/mail order retailers.

• Impractical, by asking the government to set up a new administrative structure

to collect the fees, to manage the program and disperse the revenue for effective

recycling.

• Impossible to know how high the taxes/fees charged to consumers needs to be in

order to adequately fund a successful electronics device recycling program.

In short, a POSARF—particularly given significant budget cutting at all levels of

government—will not adequately fund an effective recycling program, and will only

serve to confuse and burden the consumer with the imposition of new fees and perceived new taxes without any direct benefits.

CONCLUSION

The members of the Consumer Electronics Retailers Coalition, together with CE

and general retailers and their trade associations throughout the United States,

want to be constructive and contributing partners with law makers, manufacturers,

public interest groups, recyclers and our customers in dealing with the end of life

issues surrounding electronics products. We cannot, however, afford to let individual

states and certainly individual cities and counties, establish their own programs

that impose inconsistent mandates on retailers or manufacturers.

We very much appreciate the holding of this hearing and encourage Congress in

general and this Senate Committee in particular to continue to work towards a national solution to electronics waste management. We pledge to work with you in arriving at a fair, viable and effective approach.

Thank you.

Mr. GILLMOR. Thank you very much, Mr. Vitelli. And I want to

congratulate you. You almost hit the 5 minutes right on the button.

Next, we will go to Steve Largent, who is the President of CTIA,

the wireless association.

Steve.

Oh, Steve, could I ask you to suspend for a moment? We do have

a court reporter here, and we will give him time to set up.

We are good to go.

Mr. Largent.

STATEMENT OF STEVE LARGENT

Mr. LARGENT. I would like to ask that my entire written testimony be made a part of the record.

Mr. GILLMOR. Without objection, it will be done.

Mr. LARGENT. As a Member of Congress, I had the privilege of

serving on this subcommittee for 6 years. The experience and insight I gained formulating national environmental policy has proven invaluable as I work with CTIA’s member companies to minimize the environmental impact of discarded mobile phones and related accessories.

CTIA members recognize that one of our responsibilities as good

corporate citizens is a commitment to environmental stewardship.

This commitment is reflected in the industry’s voluntary disposal

recycling program, ‘‘Wireless...the New Recyclable.’’ This is a

multifaceted program the wireless industry launched in 2003 to facilitate environmentally sensible management of wireless products

at end of life. The program has been embraced by most CTIA members, including all national carriers and mobile phone manufacturers. The program guidelines incorporate all aspects of the recycling

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process: collection, transportation, reuse, refurbishment, and materials reclamation.

The guidelines assist companies in ensuring that the wireless devices that are collected are managed, transported, recycled or refurbished in a responsible way, and in accordance with Federal and

State environmental laws. The wireless industry has been able to

establish effective voluntary collection programs because of the

small size and portability of mobile phones and devices. Wireless

handset manufacturers have responded to consumers’ preference of

the less is more approach. I have with me today an old mobile

phone as well as a phone that is on the market today. This is our

old mobile phone; some of you may remember using that. This is

one of our newer phones here. It is a small, slim phone. That is

the way of our world. Less is more.

The new generation of wireless devices weigh approximately 42

percent less than earlier models and are constructed in a more environmentally friendly way with a reduction of hazardous materials. Carriers, recyclers, and refurbishers are in the process of

evaluating the best way to expand and assess their respective recycling and/or refurbishing programs. With that being said, I can

share the following heartening statistics: ReCellular, a refurbisher,

collected 4 million phones in 2004, up from 1.5 million in 2002.

Sprint Nextel has collected 4.4 million phones since 2002. They

also have refurbished 2.3 million phones since 2002. The Wireless

Foundation’s take-back programs have collected nearly 3 million

phones since 1999. Verizon Wireless has collected approximately 2

million phones through their HopeLine charitable donation program. eBay reportedly sells 130,000 used phones a month on its

Web site and approximately 4 million phones over the past 5 years.

Other examples are provided in my written testimony. CTIA and

the member companies I represent believe that mobile phones and

mobile devices are a consumer product in the national commerce

and best addressed at the national level. We believe that State-byState regulation is counterproductive. Rather, this challenge demands a comprehensive voluntary national solution tailored to address the issues raised by mobile phone and mobile device end of

life. The wireless industry fears that a State-by-State system would

lead to confusion, uncertainty, high compliance cost, and inefficient

use of resources, all of which will lead to increased costs for consumers.

The EPA has established a record of comprehensive voluntary

reuse and recycling programs. EPA’s programs, such as Waste

Wise and Resource Conservation Challenge are good examples of

government-industry partnerships designed to produce environmental sound results without the need for new regulation.

The industry I represent believes that mobile phones and mobile

devices demand a comprehensive voluntary national program for

reuse and recycling that takes into account the unique characteristics of our devices. We are committed to working with EPA and the

Department of Commerce to continue the industry’s initiative,

‘‘Wireless...the New Recyclable,’’ a program with a proven track

record of success in protecting our Nation’s environment.

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I thank you, Mr. Chairman, for the opportunity to testify and for

the opportunity to share the wireless industry’s views. Thank you,

Mr. Chairman.

[The prepared statement of Steve Largent follows:]

PREPARED STATEMENT OF STEVE LARGENT, PRESIDENT AND CEO, CTIA—THE

WIRELESS ASSOCIATION TM

Chairman Gillmor, Ranking Member Solis, and members of the Subcommittee,

thank you for the opportunity to appear before you today to testify on the issue of

electronic waste and the appropriate role of government, be it local, state, or Federal, to address this matter. As a Member of Congress, I had the privilege of serving

on this Subcommittee for six years. The experience and insight I gained formulating

national environmental policy has proven invaluable as I work with CTIA’s member

companies to minimize the environmental impact of discarded mobile phones and

related accessories. CTIA—The Wireless Association TM and its members have been

committed to the goal of sustainable development in the wireless industry and the

environmentally sound management of discarded, recycled, or refurbished wireless

mobile phone products.

CTIA’S COMPREHENSIVE, VOLUNTARY REUSE AND RECYCLING PROGRAM

CTIA members are at the forefront of providing consumers with wireless products

and services that facilitate communications wherever and whenever. Concurrent

with the industry’s business goal of providing ubiquitous wireless coverage, CTIA

members recognize that one of our responsibilities as good corporate citizens is a

commitment to environmental stewardship. This commitment is reflected in the industry’s voluntary disposal recycling program—Wireless...The New Recyclable.

WIRELESS ... THE NEW RECYCLABLE

What is ‘‘Wireless...The New Recyclable?’’ It is a multi-faceted program the wireless industry launched in October of 2003 to facilitate environmentally sensible

management of wireless products at end-of-life. The initiative provides a voluntary

and uniform set of guidelines allowing manufacturers and carriers to upgrade the

management of their environmental practices in the disposition of used wireless devices. It has been embraced and adopted by numerous CTIA members, including all

of the national carriers and mobile phone manufacturers.

The program guidelines incorporate all aspects of the recycling process: collection,

transportation, re-use, refurbishment and materials reclamation.

PUBLIC OUTREACH AND AWARENESS

‘‘Wireless...The New Recyclable’’ is designed to inform, educate, and encourage

consumers to recycle their ‘‘end-of-life’’ wireless products through a wide range of

company initiatives and incentives. In particular, the program focuses the public’s

attention on the importance and ease of recycling wireless devices by 1) supplying

the wireless industry with public awareness materials, such as posters and bill

stuffers, to reinforce the message to recycle wireless devices and; 2) directing consumers to www.recyclewirelessphones.com, a central website that provides consumers with important information on the recycling of wireless products and links

to CTIA member company sites which provide information on where consumers can

recycle phones.

CTIA ENVIRONMENTAL PRINCIPLES

‘‘Wireless...The New Recyclable’’ incorporates CTIA’s ten environmental principles that set forth the wireless industry’s commitment to sustainable development

and the proper management of wireless devices at their end-of-life. The principles

are listed on the second page of a handout that I’ve included with my testimony.

VOLUNTARY GUIDELINES

The guidelines assist companies in ensuring that the wireless devices that are collected are managed, transported and reused, refurbished or recycled in a responsible

way and in accordance with federal and state environmental laws. Promoting the

re-use, refurbishment or recycling of wireless devices minimizes waste destined for

landfills or incineration. Just as importantly, the recycling guidelines facilitate the

recovery of raw materials that are then used in the manufacture of new products.

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CELL PHONES ARE DIFFERENT FROM OTHER ELECTRONICS

A key aspect of any re-use or recycling program is the collection of the product.

The industry has been able to establish effective voluntary collection programs that

are a function of the small size and portability of mobile phones and mobile devices.

These voluntary programs include collection at municipal centers, return of products

to service providers or other retailers, or mail-in returns to manufacturers. The size

and relative lack of portability of most other electronics products, such as TVs and

computers may not practically or economically allow for this range of collection options.

For example, Verizon Wireless has a program that collects cellular telephones in

retail outlets and accepts the return of its products via mail through the charitable

program, HopeLineSM; this program offers these collected products to help the victims of domestic violence. T-Mobile’s Give More, Get More accepts used phones

through the mail and donates 100% of the recycling proceeds to charitable organizations. Cingular, SprintNextel, and other companies also collect previously used wireless phones and donate either the refurbished phones or the proceeds from the programs to charitable organizations. Finally, The Wireless Foundation, a charitable

organization created by CTIA, has sponsored collection events and charitable programs, such as Donate-a-Phone .

SIZE, PORTABILITY, AND REDUCED ENVIRONMENTAL IMPACTS

Wireless handset manufactures have responded to consumers’ preference of the

‘‘less is more’’ approach when it comes to the development of new mobile phones.

One only has to look at the size of mobile phones ten years ago juxtaposed to the

size of phones being manufactured today to see the tremendous strides the industry

has made not only in technological capabilities, but also environmental compatibility. The new generation of wireless devices weigh approximately 42% less than

earlier models and are being constructed in a more environmentally friendly manner. As mobile phone and device manufacturers comply with the European Union’s

Restriction of Hazardous Subtance (RoHS) Directive, we also see the reduction of

hazardous materials such as lead and cadmium in wireless phones marketed in the

United States.

We anticipate that the design changes required for sale in, or import to, the European Union will also be applied to products marketed and sold in the United States.

Such design changes will facilitate recycling and reuse and further reduce any potential environmental impacts from the recycling or disposal of mobile phones or

mobile devices.

MARKETS EXIST FOR USED MOBILE PHONES AND MOBILE DEVICES

The market for used mobile phones and mobile devices is different from most of

the electronics industry. Mobile phones have a relatively high re-use value creating

an ongoing market for these devices; therefore, the market forces providing incentives to collect and re-use these devices would be more efficient than for other electronics products. This is evidenced by the current efforts of ReCellular and HOBI

International, Inc., two for-profit companies established to collect and refurbish used

telephones for return to the market. The operation of for-profit companies is unusual in the electronics recycling and reuse market and is a clear indication of the

strength of the market for wireless device reuse.

CLOSE CONTACT BETWEEN CONSUMERS AND SERVICE PROVIDERS

Unlike most electronics manufacturers and retailers, wireless service providers

and consumers are typically in close contact during mobile phone or mobile device

replacement and billing. This contact presents the opportunity for efficient and costeffective collection. Many wireless customers return to a service provider or independent agent to replace their devices. Moreover, through monthly billing, service

providers are in communication with their customers on recycling and re-use options. This readily available occasion for re-use or recycling opportunities is not common to most other electronics industries.

SUCCESS OF ‘‘WIRELESS ... THE NEW RECYCLABLE ’’

Carriers, recyclers, and refurbishers are all in the process of evaluating the best

way to expand and assess the success of their respective recycling and/or refurbishing programs. With that being said, I can share with the Subcommittee the following statistics:

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• ReCellular, a refurbisher, has collected approximately four million phones in

2004, up from 1.5 million in 2002. • Nextel has collected 4.4 million phones since 2002. Nextel also has refurbished 2.3

million phones since 2002. • The Wireless Foundation’s take-back programs have collected nearly three million

phones since 1999. • Verizon Wireless has collected approximately two million phones through their

HopeLineSM charitable donation program. • GRC Wireless Recycling has collected approximately one million phones since

2001. • Old Cell Phone Co. reportedly buys back 30,000 used cell phones a month, and

has been doing so since 2002. • RMS Communications Group collected one million phones in 2004, and has been

collecting phones for the past ten years. • eBay reportedly sells 130,000 used phones a month on its website, and has sold

approximately four million phones over the past five years.

STATE-BY-STATE REGULATION IS UNWORKABLE

Mobile phones and mobile devices are a consumer product in national commerce

best addressed at the national level. The re-use and recycling of these wireless devices present issues unlike those presented by traditional state solid waste management and disposal. The size, marketing and re-use and recycling options available

for wireless devices are also distinct from other types of electronics. In our view, a

voluntary, industry-supported national program will facilitate the re-use and responsible recycling of wireless devices regardless of where the devices are purchased

or where the devices wind up.

The re-use and recycling of mobile phones and mobile devices is a national environmental challenge. We believe that state-by-state regulation is counter-productive

and a one-size fits all national approach is not workable for the entire electronics

industry. Rather, this challenge demands a comprehensive, voluntary national solution tailored to address the issues raised by mobile phone and mobile device endof-life. Consumers and industry are already confronting inconsistent state requirements, as evidenced by the inconsistent take-back, financing and manufacturing requirements already enacted in California and pending in several other states. Absent a definitive federal endorsement of a voluntary national recycling program, it

seems that a piecemeal and inconsistent network of state regulatory programs will

be the default solution. The wireless industry fears that a state-by-state system

would lead to regulatory uncertainty and confusion, high compliance costs, and the

inefficient use of resources, all of which combined will lead to increased costs for

consumers and a much less efficient and effective take-back program, particularly

for wireless providers and manufacturers that serve multiple markets. The environmental benefits of such an approach are also questionable.

Wireless consumers will pay, either directly or indirectly, for inefficient and inconsistent state regulatory programs. Increased regulatory costs will invariably be

passed through to the consumer as a result of an increase in product costs.

It’s unfortunate, but true, that regulatory systems simply cost more and those

states that choose to adopt such programs will incur potentially significant costs,

at both the state and local level, to implement a mandatory regime, including costs

of collection, administration, oversight and enforcement. Again, consumers will ultimately pay for these increased costs through local taxes.

Working with industry to promote product reuse and recycling on a national level

will help the United States in its efforts to work with other nations in finding environmentally sound, effective, workable solutions to address the increasing volume

of used wireless devices elsewhere. A piecemeal state-by-state approach will leave

the United States without a strong basis for a leadership role in the international

discussion on recycling issues.

EPA AND DEPARTMENT OF COMMERCE CAN PLAY AN IMPORTANT ROLE IN ASSISTING

INDUSTRY TO TAKE THE LEAD ON PROMOTING PRODUCT STEWARDSHIP

The EPA has an established record of comprehensive, voluntary re-use and recycling programs. EPA’s programs, such as ‘‘Waste Wise’’ and ‘‘Resource Conservation

Challenge,’’ are good examples of government/industry partnerships designed to

produce environmental results without the need for new regulation. In May of 2004,

EPA issued national guidelines for the management of ‘‘end-of-life’’ electronics.

Additionally, EPA has worked with states and industry for several decades in developing national markets for traditional recycled materials, such as aluminum,

glass and paper. The Department of Commerce has expertise in technology and

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markets. We believe mobile phones and mobile devices demand a comprehensive,

voluntary national program for re-use and recycling that takes into account the

unique characteristics of mobile phones and mobile devices and we are committed

to working with the EPA and the Department of Commerce to continue to promote

the industry’s initiative, ‘‘Wireless...The New Recyclable’’—a program with a proven track record of success in protecting our nation’s environment.

Thank you for the opportunity to share the wireless industry’s views on this important issue, I welcome any questions you may have.

Mr. GILLMOR. Thank you, Steve.

Ms. Solis

Ms. SOLIS. Thank you, Mr. Chairman. I would like to request

unanimous consent to submit a letter by Representative Alan Mollohan to our subcommittee on this particular issue.

[The information referred to follows:]

PREPARED STATEMENT OF HON. ALAN B. MOLLOHAN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF WEST VIRGINIA

Thank you Chairman Gillmor and Ranking Member Solis for the opportunity to

provide comments on the issue of electronic waste, or e-waste. I applaud the subcommittee on your efforts to advance the dialogue in Congress on this important

issue, and to find both an environmentally sound and economically beneficial solution to the electronics recycling problem.

As a member of the Appropriations Committee, I have worked for the past several

years to further develop regional and national solutions to e-waste technology and

to its associated collection infrastructure. Specifically since 1998, I have supported

grant funding for the Mid-Atlantic Recycling Center for End-of-Life Electronics

(MARCEE) project, a public-private initiative designed to improve the economics of

recycling used electronics.

Launching in 1999, the MARCEE project has provided grant funding to tackle

some of the biggest challenges facing the electronics recycling industry. MARCEE

has focused on developing new technologies to make plastics recycling economically

feasible, supporting both laboratory research and a plastics recycling demonstration

project. With support from MARCEE, West Virginia University recently created a

Polymer Research Center as a public-private partnership to develop new recycling

technologies and commercial applications in the plastic industry.

Through MARCEE’s online platform, GreenOnline, MARCEE has also helped to

pioneer the application of new information technologies to exchange electronics recycling data. The MARCEE project has also led to the development of a new cluster

of electronics recycling activity and related services at the MARCEE-inspired Polymer Technology Park in Wood County, West Virginia, and continues to provide assistance in developing new electronics recycling infrastructure on behalf of West Virginia and around the nation. MARCEE has also provided the seed funding for the

National Center for Electronics Recycling (NCER). The NCER is a new non-profit

organization organized under the guidance of a 13 member Industry Advisory Committee of leading electronics manufacturers. Working closely with industry, U.S.

EPA, state and local government officials, the NCER is a leading institution in the

development of electronics recycling systems across state lines.

Through the NCER and other activities initiated with MARCEE’s assistance, I

have seen how Congress can make a difference by developing and improving systems to recover the valuable resources contained in used electronics that would otherwise go to non-recyclable waste. I look forward to working with this subcommittee

on finding additional environmentally sound, economically beneficial solutions to the

electronics recycling problem by optimizing the advances already put in place

through the MARCEE initiative.

Mr. GILLMOR. Without objection, so ordered.

Before I go to the next witness, Steve, I used to have one of those

big clunky things. I had one that was even clunkier. My 13-yearold, his mother got him a cell phone about 2 weeks ago. It is amazing, 13-year-olds are getting those now. He gives me the weather

report. He tells me what Ohio State and Texas’ standings are, because we have a big game this weekend. I do not even know what

button to push. Amazing stuff.

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Dave McCurdy, President and CEO of the Electronic Industries

Alliance.

STATEMENT OF DAVE MCCURDY

Mr. MCCURDY. Thank you, Mr. Chairman and Ranking Member

Solis. It is a pleasure to be here. I, like my colleague, Steve

Largent, having been on that side of the dais, know the challenges

of trying to put this hearing together, and we commend you and

appreciate your flexibility.

I am here representing the Electronic Industries Alliance, which

is one of the largest trade associations representing the full

breadth and depth of the over $400 billion U.S. high-tech and electronics industries. Our 1,300 member companies represent the entire range of products from electronic components to state-of-the-art

defense and space industry high-tech systems, including the full

range of telecommunications information-technology consumer electronics products.

Dozens of our major manufacturers actually participate in our

Environmental Issues Council which has led industry involvement

on environmental priorities for well over a decade. And again, we

commend you for your interest in this hearing.

Basically, for the members, I am going to make five points, and

then these are the ones that stand out. First of all, our industry

is and has been committed to efficient environmentally sound management. I think the record will speak for that, and I will give you

some examples.

Second, this is an important issue, and in order to discuss it, we

need to put it in proper environmental context. I will give some rationale for that.

Third, our industry may be the most competitive in the world.

And this particular issue may have an impact and effect the competitive balance so it is important to us.

Fourth, we strongly support the principle of shared responsibility.

And last, I and my colleagues believe there is a Federal role, and

we have some suggestions that we would like to make.

So, first, our member companies have been at the vanguard in

taking action to support the safe and appropriate recycling of used

electronic products to help meet the important environmental goal

of resource conservation and recovery. This ongoing commitment of

our member companies to product stewardship, environmental design, and recycling can best be demonstrated by noting concrete examples.

Through a combination of direct corporate efforts and innovative

partnerships including EPA’s Plug-in to eCycling campaign, EIA

member companies have been involved in the proper recovery and

management of well over 2 billion pounds of used electronic products.

It is important to note that EIA member companies are on target

to be in compliance with the European Union directive on the restriction of hazardous substances, the RoHS Directive when it

takes effect next year.

More importantly many of our companies have long-standing design for environment or product stewardship programs that predate

146

the adoption of the RoHS Directive by years. Since our companies

manufacture electronic products for global sale, production, and

distribution, consumers in the United States and in overseas markets alike enjoy broad access to products with the latest environmental innovations.

And as a result of our members’ long-standing dedication to product stewardship and technological innovation, our industry continues to achieve significant and sustained environmental progress

throughout the entire product life cycle from design, through beneficial use, to end of life.

On the whole, every year, our products become more energy efficient, use fewer materials of potential environmental concern, and

become easier to upgrade, disassemble, and recycle. And where Mr.

Largent showed you the cell phone, we can demonstrate that in

technology after technology and product. They get better, cheaper,

and smaller every single year.

And on this last point, it is imperative to note that the competitive marketplace, not broad mandates or increased regulation, continues to be the primary driver behind these product innovations.

This project of continuous evolution driven by market demand and

competition leads to critical production efficiencies that directly

translate into important benefits for reuse and recycling.

Moving to the environmental discussion, I think we have to get

beyond the rhetoric and hyperbole that we often hear because we

believe it is essential to consider the science related to electronic

products as part of any public policy discussion regarding recycling.

Compounds such as lead and mercury are present in some electronic products because they provide clear safety, performance and

energy-efficiency benefits. As our industry and others have developed viable substitutes, manufacturers have successfully incorporated them into our products. You can go to conference after conference that we lead on lead-free products and lead-free development.

These compounds can and should be appropriately managed at

the end of life. EPA shares this view and has consistently stated

that the used electronics products when properly managed do not

represent a human health or environmental concern. The agency

considers electronics recycling as fundamentally a solid waste management and resource conservation issue.

The third point I was going to reiterate was market competition.

Any discussion of recycling must recognize the intense competitive

pressures within this industry and the potential impacts of any

given recycling system could have on the competitive balance. As,

again, the Department of Commerce witness noted in the first day

of this hearing, government decisions on electronics recycling can

impact the market competitiveness of the U.S. companies, and our

organization strongly agrees with this assessment.

Consequently, any prospective recycling approach should strive

to consider global competition and preserve market balance by applying equally to all producers while recognizing the important

roles that many other stakeholders have in achieving this solution.

And that comes to the principle of shared responsibility.

Given the complex nature of this challenge, EIA supports efforts

to support a viable recycling infrastructure in which all major

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stakeholders, manufacturers, retailers, government, nongovernment organizations, and recyclers, participate based on their

unique expertise and capabilities. The combined goal of these institutional stakeholders should be to develop a recycling infrastructure that is convenient for the residential consumer.

Implementing a system based on principles of shared responsibility will increase the efficient collection of electronics and ensure

economies of scale by taking advantage of existing infrastructure.

This existing infrastructure includes municipal waste collection

systems and reverse distribution systems that rely on established

product distribution and retail channels.

Last, Mr. Chairman, what is the Federal role? We have had

these discussions, and I think they are important to note.

There is clearly a role for the Federal Government in bringing

national consistency to this emerging field. Federal action should

strive to keep cost to consumers as low as possible, create a level

playing field for market participants, and ensure that products are

being recycled in an environmentally sound manner.

Federal action can promote safe and appropriate recycling by creating a streamlined uniform regulatory framework that removes

artificial barriers and instead encourages the free flow of used

products with proper management. Specific steps include: one, establishing consistent regulatory definitions key terms and strictly

defining the scope of covered products through the application of

fixed criteria. Two, consider the establishment of a flexible third

party organization that can help with roles such as data reporting,

compliance, and financing. Third, ensure broad consistency with labeling, product information, and regulatory reporting requirements.

Last, assess whether additional recycling regulations or standards

are necessary to ensure the environmentally sound management of

used electronics.

EIA and our member companies stand ready to work with the

subcommittee on these and other initiatives. Thank you again for

bringing this important topic to the Congress and for taking appropriate action. We look forward to working with you and are prepared to answer any questions.

[The prepared statement of Dave McCurdy follows:]

PREPARED STATEMENT OF DAVE MCCURDY, PRESIDENT AND CEO, ELECTRONIC

INDUSTRIES ALLIANCE

INTRODUCTION

Thank you Chairman Gillmor, Ranking member Solis and members of the Subcommittee. I am appearing today as the President and CEO of the Electronic Industries Alliance (EIA), an alliance of several major trade associations. EIA is the only

organization that represents the full breadth and depth of the $400 billion U.S.

high-tech and electronics industries. Our 1,300 member companies provide products

and services ranging from microscopic electronic components to state-of-the-art defense, space and industry high-tech systems, as well as the full range of telecommunications, information technology and consumer electronics products. Dozens

of our major manufacturers actively participate in EIA’s Environmental Issues

Council, which has led industry involvement on environmental priorities for well

over a decade.

As the leading advocate of the high-tech and electronics industries, EIA appreciates the opportunity to provide the views of our membership concerning the endof-life management of our products. In February of this year, EIA hosted a meeting

with Chairman Gillmor and representatives of several of our key manufacturers to

discuss the challenges and opportunities surrounding electronics recycling. We are

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pleased to see the active interest that the Chairman has taken in this matter, and

we commend the Subcommittee for holding this hearing and advancing the dialogue

on this important issue.

INDUSTRY COMMITMENT

EIA and our member companies have been at the vanguard in taking action to

support the safe and appropriate recycling of used electronics products to help meet

the important environmental goal of resource conservation and recovery. As manufacturers, we recognize our key role in the process, and we will continue to work

with Congress, federal agencies, the states and involved stakeholders to address this

challenge.

The ongoing commitment of our member companies to product stewardship, environmental design and recycling can best be demonstrated by noting some of our industry’s concrete achievements:

• Through a combination of direct corporate efforts and innovative partnerships—

including the U.S. Environmental Protection Agency’s Plug-in to eCycling campaign—EIA member companies have been involved in the proper recovery and

management of well over two billion pounds of used electronics products. In addition, EIA member companies use significant quantities of recycled materials,

including glass, metals and plastics, in new generations of their products, thus

creating demand that helps sustain markets for these materials. • EIA member companies are on target to be in compliance with the European

Union Directive on the Restriction of Hazardous Substances (the RoHS Directive) when it takes effect next year. In fact, many of our companies have longstanding design-for-environment or product stewardship programs that pre-date

the adoption of the RoHS Directive by years. Since EIA companies manufacture

electronics products for global sale and distribution, consumers in the U.S. and

in overseas markets alike enjoy broad access to products with the latest environmental innovations. • In conjunction with our members, EIA has developed a consumer outreach program, known as the Consumer Education Initiative, to inform the public of the

options available for electronics recycling. A website (www.eiae.org) directs consumers to updated recycling and reuse options available in local communities

throughout the United States. The Consumer Education Initiative website now

contains information on over 2,000 recycling opportunities nationwide.

MARKET COMPETITION

Any discussion of electronics recycling must recognize the intense competitive

pressures within our industry, and the potential impacts that any given recycling

system could have on the competitive balance. As the U.S. Department of Commerce

witness noted in the first part of this hearing, government decisions on electronics

recycling can impact the market competitiveness of U.S. companies. EIA strongly

agrees with this assessment. Our member companies are already facing unprecedented global competition, as the primary products contemplated under most electronics recycling approaches are increasingly treated by the market as commodities.

Since margins are thin and producers depend on volume sales, any shift in the competitive playing field can have a direct and immediate impact on market share and

the bottom line.

The EIA member companies, which include all the global brand-name manufacturers of these products, hold divergent views based in large part on their particular

business models and corporate strategies. Specific factors include but are not limited

to:

• Company size • Number and types of product lines, and the comparative life-spans of their products • Sales and distribution methods (i.e., traditional distribution and retail channels

versus direct-to-consumer sales) • Experiences and capabilities related to recycling • Relative market share (i.e., current market share as compared to historical market share; business sales as compared to household sales)

Given this diversity of business models and capabilities, any particular funding

approach may result in a competitive imbalance in this extremely competitive industry.

The competitive issues are intense enough between the EIA member companies.

However, concerns over fair competition are significantly compounded due to the

presence in the market of numerous small producers and generic-brand manufacturers that cannot necessarily be compelled to participate in a recycling program.

149

These manufacturers fall predominantly into one of two groups: (1) small foreign

producers that sell mostly low-end units into U.S. markets; and (2) the so-called

‘‘white box’’ manufacturers that produce and sell generic computers at retail or remotely via catalogs or the internet. While individual manufacturers in these categories are usually small, they nonetheless collectively represent a noteworthy segment of the overall market.

EIA member companies comply with existing state requirements, and will certainly step up and participate in any broader national system. The same cannot necessarily be said of ‘‘fly-by-night’’ companies that often frequently change brand

names or sell products remotely into regulated markets. EIA members have significant doubts over whether individual states can take effective enforcement actions

against these manufacturers to ensure they pay their fair share of recycling costs.

This threatens to result in a competitive imbalance that will disadvantage legitimate producers. Consequently, any prospective recycling approach should strive to

consider global competition and preserve market balance by applying equally to all

producers, while also recognizing the important roles that many other stakeholders

have to play in achieving a solution.

SHARED RESPONSIBILITY

Given the complex nature of the challenge, EIA supports efforts to establish a viable recycling infrastructure in which all the major stakeholders—manufacturers, retailers, government, non-governmental organizations (NGOs) and recyclers—participate based on their unique expertise and capabilities. The combined goal of these

institutional stakeholders should be to develop a recycling infrastructure that is convenient for the residential consumer. Implementing a system based on principles of

shared responsibility will increase the efficient collection of electronics and ensure

economies of scale by taking advantage of existing infrastructure. This existing infrastructure includes municipal waste collection systems and reverse distribution

systems that rely on established product distribution and retail channels. Given

that there is no true national or even regional collection and transportation infrastructure for electronics, making use of these systems is critical.

The vast majority of electronics products are sold through traditional distribution

and retail channels. In general, manufacturers sell products in bulk to distributors,

who sell them to retailers. Retailers in turn sell them to consumers through a network of thousands of retail locations. These products then have years of useful life,

and are often re-sold, passed along to friends or family members, or donated to

schools or charities. In most cases, manufacturers do not have a direct relationship

with the end user at the time of initial sale, let alone years later when the product

is ready to be placed into the recycling stream.

Given the way our products are manufactured, distributed and sold, it is clear

that each stakeholder can and should bring its own strengths and capabilities to the

table under a shared responsibility model. Manufacturers, for example, can best fulfill our role by continuing with our broad and successful efforts to design products

that are lighter, more efficient, more environmentally-friendly, and easier to upgrade and recycle. We will also continue to participate as a key partner in efforts

to develop a broader national approach to electronics recycling.

Retailers can likewise make unique contributions. Unlike any other stakeholder

in the process, retailers have millions of face-to-face interactions with consumers

every year. When consumers come into a retail store to purchase a new computer

or television, it is often to replace an older unit that is ready to be collected and

recycled. Many retailers have already participated in successful recycling events—

often in partnership with manufacturers, NGOs and government—that include collecting used devices at retail locations. Because of their direct and special relationship with the public, their numerous stores and their existing transportation and

distribution networks, retailers have a vital role to play.

For their part, recyclers need to provide their services in a safe, cost-effective and

environmentally-sound manner. EIA is working with the U.S. EPA, recyclers and

other stakeholders to help develop appropriate standards and a certification process

for electronics recyclers.

ENVIRONMENTAL DISCUSSION

EIA believes it is essential to consider the science related to electronics products

as part of any public policy discussion regarding recycling. Compounds such as lead

and mercury are present in some electronics products because they provide clear

safety, performance and energy efficiency benefits. As our industry and others have

developed viable substitutes, manufacturers have successfully incorporated them

into our products. However, these compounds cannot yet be replaced in all applicaVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00153 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
150

tions. For example, the RoHS Directive provides narrow exemptions for specified

uses of these materials to provide for product safety or energy efficiency, or when

no technically or environmentally suitable alternatives exist.

Nonetheless, these compounds can and should be appropriately managed at the

end of life. U.S. EPA shares this view, and has consistently stated that used electronics products, when properly managed, do not represent a human health or environmental concern. The agency considers electronics recycling as fundamentally a

solid waste management and resource conservation issue. Likewise, our member

companies recognize that reusing and recycling electronics at the end of life is the

most environmentally preferable option, and we support reasonable efforts to develop the recycling infrastructure.

MARKET-DRIVEN ACHIEVEMENTS

As part of our commitment, producers acknowledge that we have a critical role

to play in the process by continuously improving product design for environment

and recycling. Our companies have consistently risen to that challenge. As a result

of our members’ abiding dedication to product stewardship and technological innovation, the high-tech and electronics industries continue to achieve significant and sustained environmental progress throughout the entire product lifecycle: from design,

through beneficial use, to end-of-life.

It is also critical to emphasize that the competitive marketplace—not broad mandates and increased regulation—continues to be the primary driver behind these improvements. On the whole, every year our products become more energy efficient,

use fewer materials of potential environmental concern, and become easier to upgrade, disassemble and recycle. This process of continuous evolution, driven by market demand and competition, can be readily observed by comparing today’s products

to similar products that were manufactured just a few years ago. These marketdriven innovations on the production side directly translate into benefits for reuse

and recycling. Given the intense market competition, manufacturers have a clear incentive to streamline and simplify product assembly to improve production efficiency. Not only does this make products easier to service during their useful lives,

it also makes products easier to upgrade, disassemble and recycle at the end of life.

Market competition and consumer demand will continue to drive our companies to

make important innovations in product design, efficiency, performance and recycling.

SUGGESTED FEDERAL ROLE

Absent a consistent national approach to electronics recycling, manufacturers, retailers and recyclers will be confronted by an expensive, inefficient and unworkable

confusion of state laws and regulations. If this state-by-state pattern continues, it

will impose an enormous administrative and logistical burden on the system that

will ultimately result in increased prices to consumers for new products.

There is clearly a role for the federal government to play in bringing national consistency to this emerging field. Federal action should strive to keep costs to consumers as low as possible, create a level playing field for market participants, and

ensure that products are being recycled in an environmentally sound manner. Federal action can also help promote safe and appropriate recycling by creating a

streamlined and uniform regulatory framework that removes artificial barriers and

instead encourages the free flow of used products for proper management. Specific

steps include:

• Establishing consistent regulatory definitions of key terms, and strictly defining

the scope of covered products through the application of fixed criteria;

• Considering the establishment of a flexible third party organization that can help

with roles such as data reporting, compliance, and financing;

• Ensuring broad consistency in labeling, product information, and regulatory reporting requirements; and,

• Assessing whether additional recycling regulations or standards are necessary to

ensure the safe and environmentally sound management of used electronics.

EIA and our member companies stand ready to work with the Subcommittee on

these and other initiatives. Thank you again for the opportunity to share industry’s

position on this important issue. I would be pleased to respond to any questions.

Mr. GILLMOR. Thank you very much. Our next witness is Mr.

Parker Brugge.

Did I pronounce that right.

Mr. BRUGGE. It is Mr. Brugge.

151

Mr. GILLMOR. Mr. Brugge, who is the Senior Director and Environmental Counsel of the Consumer Electronic Association.

STATEMENT OF PARKER E. BRUGGE

Mr. BRUGGE. Good afternoon, Chairman Gillmor, Ranking Member Solis, and members of the subcommittee. I am Parker Brugge,

and I am senior director and environmental counsel for the Consumer Electronics Association and I would like to ask that my written statement be made a part of the record.

Mr. GILLMOR. Without objection. Actually, all statements submitted will become a part of the record.

Mr. BRUGGE. CEA is the trade association of the U.S. consumer

electronics and information technology industries. Our 2,000 members are involved in all aspects of the consumer electronics industry and are responsible for over $125 billion in annual sales. Their

products include televisions, computers, audio and video equipment, and other consumer electronics. CEA also produces America’s

largest annual trade event, the international consumer electronics

show.

Our member companies are fully supportive of the safe and appropriate recycling and reuse of consumer electronics products.

Many of our companies, both manufacturers and retailers, have already established programs to collect and recycle computer monitors and other consumer electronics. In addition, our members

have pioneered the concept of design for the environment as products are now engineered from the earliest design stages to ensure

maximum recyclability and minimal use of potentially hazardous

materials.

In the title of this hearing, you asked whether the Federal Government has a role to play in the management of electronic waste.

Let me emphasize that the answer is yes. It is essential that Congress establish a national framework to address the management

of electronics recycling. The current ad hoc approach of State-byState programs is not a viable or successful system. Conflicting

State programs impose unnecessary burdens on global technology

companies and consumers alike.

Electronics recycling is a national issue that warrants a national

solution. Moreover, with the upcoming transition to digital broadcasting and the inevitable enactment of a hard deadline on analog

broadcasts, there has never been a more opportune time to address

the issue with respect to television sets.

A national end-of-use framework must apportion responsibility

among all the stakeholders and ensure a level playing field. Above

all, we must develop a solution that convenient for the consumer

and broadly consistent in product scope. The consumer electronics

industry has reached consensus on many elements of an electronics

recycling approach. First, there needs to be national consistency

and uniform framework. Second, whatever approach that is put in

place should begin with a limited and clearly defined scope of products. Third, all major stakeholders should bear some responsibility

for the recycling of electronics product. And fourth, standards or

best business practices should be established for recyclers to ensure

the safe and appropriate recycling of electronics.

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With respect to the financing system, a large majority of CEA’s

members favor a visible advanced recovery fee for a member of reasons. These companies believe that an advanced recovery fee is convenient and transparent for consumers and is the most effective

way to handle the large volume of historic product in the market

place. The consumer electronics sector is a dynamic sector with

businesses and brands constantly entering and leaving the marketplace. Supporters of a fee-based approach believe that producer responsibility, or take-back, approach can be abused by those companies that enter but do not stay in business for a significant length

of time. Essentially, a take-back approach is a promise to pay or

a promise to act at a later date when the product reaches its end

of life. If those companies are no longer in business, the burden for

recycling their products will fall on other companies and perhaps

the government.

The best way for such a financing mechanism to be implemented

is through a national framework that ensures harmonization. We

believe that additional elements of the national approach should include the following: tax credits should be available to all stakeholders involved in the end-of-life infrastructure. CEA supports

reasonable Federal procurement policies such as EPA’s electronic

product environmental assessment tool or EPEA. CEA is actively

working with the national center for electronics recycling to create

a third party organization that will provide a clearinghouse for

product scope and ensure stable harmonization of State level systems. And finally, the role of the Federal Government we believe

lies primarily in ensuring a level playing field nationally for recycling stakeholders complying with State level recycling systems.

Finding a solution to the electronics recycling challenge is a top

priority for CEA. As we continue to make strides in eco-friendly design initiatives, lead the consumer electronics industry on environmental issues, and be a part of the effort to educate consumers,

CEA stands ready to work with Congress and all interested parties

to reach a common sense national solution that makes recycling as

convenient as possible for all Americans.

I am grateful for the opportunity to share CEA’s position on this

important public policy issue, and I look forward to addressing any

questions you may have.

[The prepared statement of Parker E. Brugge follows:]

PREPARED STATEMENT OF PARKER E. BRUGGE, SENIOR DIRECTOR AND

ENVIRONMENTAL COUNSEL, THE CONSUMER ELECTRONICS ASSOCIATION

INTRODUCTION

Mr. Gillmor, Ms. Solis and Members of the Committee: My name is Parker

Brugge and I am the Senior Director and Environmental Counsel for the Consumer

Electronics Association (CEA). CEA is the principal U.S. trade association of the

consumer electronics and information technology industries. CEA’s 2,000 members

are involved in the design, development, manufacturing, distribution and integration of audio, video, in-vehicle electronics, wireless and landline communication, information technology, home networking, multimedia and accessory products, as well

as related services that are sold through consumer channels. Moreover, CEA’s members include manufacturers of consumer electronics products, as well as many of the

largest retailers. CEA also produces the nation’s largest annual trade event, the

International Consumer Electronics Show. CEA commends the Subcommittee for

holding this hearing on the important issue of electronics recycling and we appreciate the opportunity to provide the views of our membership.

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By extending information and entertainment to everyone—regardless of income or

geographic location—our members’ products have improved lives and changed the

world. Meanwhile, America stands as the global leader in innovation, ingenuity and

creativity. In addition, the competition and falling prices characteristic of our industry continue to confer benefits to consumers. As our products become increasingly

affordable, it is often more economical for consumers to replace a product with a

new one then to repair older equipment.

While these displaced products may have reached the end of their lives or be outof-date, they certainly are too valuable to be completely discarded. Most consumer

electronics products contain valuable materials, such as precious metals, plastics

and other raw materials that can be resold in the commodities market by recyclers.

Moreover, used, working computers can find use in thousands of schools, charities

and public agencies committed to training people with disabilities, students at risk

and economically disadvantaged Americans.

Although certain substances of concern, such as lead, mercury and cadmium, are

present in these products, they are there for a good reason. For example, lead

shields users of monitors from electromagnetic fields and mercury is used in

backlights to conserve energy. According to U.S. EPA, these compounds, if properly

managed and disposed of, present little or no risk to human health or the environment. The Agency views the issue of electronics recycling as one of resource conservation and solid waste management, and so do CEA and its members.

CEA’S MEMBERS ARE COMMITTED TO ELECTRONICS RECYCLING

CEA and its member companies have been and will continue to be fully supportive of the safe and appropriate recycling and reuse of consumer electronics products. A number of our member companies, both manufacturers and retailers, have

partnered in voluntary pilot projects to collect and recycle computers, monitors and

other consumer electronics. Many of our member companies have participated in

EPA programs, such as Plug-In To eCycling, a consumer electronics campaign working to increase the number of electronic devices collected and safely recycled in the

United States.

CEA recently joined eBay’s Rethink initiative, which brings together leading technology companies, government agencies, environmental groups and millions of eBay

users to confront the issue of electronic waste through consumer education via comprehensive information on options available to reuse or responsibly recycle, as well

as disposition tools such as assisted selling, convenient local drop-off, trade-in programs and charity donations. We believe that the Rethink initiative can serve as

a component of an important element in electronics recycling—consumer education.

A primary responsibility shared by manufacturers of consumer electronics lies in

product design. Advances in technology have been accompanied by large reductions

in the consumption of energy, fewer materials of potential concern, and other positive environmental attributes. Further, manufacturers use significant amounts of

recycled content, such as glass, plastics and metals, in the production of new devices.

CEA SUPPORTS A NATIONAL APPROACH TO ELECTRONICS RECYCLING

CEA and its member companies all realize that voluntary programs alone cannot

resolve the very important issue of electronics recycling. CEA strongly believes that

a successful national framework should be established to address the management

of electronics recycling. The current de-facto framework is an evolving patchwork of

state-by-state approaches. As this Subcommittee is aware, three states, California,

Maine and Maryland, have passed legislation to manage used electronics. These inconsistent state requirements likely will soon be joined by even more conflicting

state requirements, as there were over twenty-five states that introduced legislation

on the subject in 2005. This conflicting, ad-hoc approach imposes unnecessary burdens on global technology companies and consumers alike. Electronics recycling is

a national issue that warrants a national solution.

A national end-of-use framework should apportion responsibility among all of the

stakeholders and ensure a level playing field, while promoting a widespread and

adequately financed electronics recycling solution. Above all, we must develop a solution that is convenient for the consumer and one that is broadly consistent in

product scope.

CEA believes that a national framework should include the following elements:

1. Tax Credits

The federal government should support states choosing to rely on effective market-based solutions. Federal tax credits can enable manufacturers, recyclers, and reVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00157 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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tailers to offer recycling services in those states. Tax credits also may enable stakeholders in other electronic sectors to offer recycling services or to develop markets

for recycled products. Tax credits should be available to all stakeholders involved

in the end-of-life infrastructure, including retailers, to help defray costs in those

states adopting visible fee-based systems.

2. Fostering Design for Environment

CEA supports the creation of reasonable federal procurement policies based on environmental criteria. The market power of the government can play a significant

role in providing a direct sales-based incentive to manufacturers. States can augment this by adopting federal environmentally sensitive procurement guidelines, increasing the market and the incentive for manufacturers. In addition, federal and

state governments will capture cost-savings through reduced energy usage and other

advantages offered by these products.

3. A National Recycling Third-Party Organization

States considering Advanced Recovery Fee or ARF-based systems, as well as producer responsibility or takeback approaches, may opt to select a third-party organization (‘‘TPO’’) to collect and administer recycling funds. CEA is actively working

with the National Center for Electronics Recycling to support the creation of a national third-party organization, to assist states considering a TPO system, to provide

a national clearinghouse for product scope, and to ensure stable harmonization of

state-level systems. A national TPO should include manufacturers, retailers, and recyclers in its governance structure. A national TPO that is available to states can

serve as a further incentive to create state-level systems complementing a national

solution. If additional federal authority to enable harmonization is required, CEA

will work with Congress as appropriate to put that authority in place.

4. Ensuring a Level Playing Field through Federal Policy

The role of the federal government lies primarily in ensuring a level playing field

nationally for recycling stakeholders complying with state-level recycling systems.

The federal government should put measures in place that enable states to ensure

a level competitive playing field for in-state retailers with Internet and out-of-state

retailers. CEA will advocate for any required additional federal authority to ensure

interstate compliance with state-level market-based or visible fee-based systems, including seeking retailer stakeholder support.

CONCLUSION

Finding a solution to this public policy challenge is a priority for CEA. As we continue to make strides in eco-friendly design initiatives, lead the consumer electronics industry on environmental issues and be a part of the effort to educate consumers about electronics recycling, CEA stands ready to work with Congress and

all interested parties to reach a common-sense, national solution that makes recycling as convenient as possible for all Americans.

Thank you again for the opportunity to share CEA’s position on this important

public policy issue. I look forward to addressing any questions you may have.

Mr. GILLMOR. Thank you very much. And we will go to David

Thompson of Panasonic Corporation of North America.

STATEMENT OF DAVID A. THOMPSON

Mr. THOMPSON. Chairman Gillmor, Ranking Member Solis, I am

David Thompson, Director of the Corporate Environmental Department of the Panasonic Corporation of North America. I am here

today on behalf of the electronics manufacturers coalition for responsible recycling. We commend you on your leadership and are

pleased to have the opportunity to present our views on an emerging issue of concern, the collection and recycling of electronic products.

Our coalition consists of 16 manufacturers which I have listed in

my testimony. And I would like to emphasize five points, if I may:

one is that our coalition and industry has been actively engaged in

electronic product recycling and design for the environment; our

support for an advanced recycling fee approach; our concerns with

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the take-back system that is now being developed in Maine; our

concern that take-back is not a strong design incentive, in fact we

think it is a very weak design incentive; and last suggestions for

going forward.

Our companies have come together to introduce recycling systems around the world, in the U.S., Japan and Europe. And collectively, we have recycled more than 1 million tons of electronic products to date. We are world leaders in the area of environmental design, including in the energy efficiency of products, in minimization

or elimination of hazardous materials from our products and design

for recycling.

My company alone spent almost $125 million last year on environmental product design improvements. And from 1999 to 2003,

we have spent approximately $725 million changing the designs of

our products to make them more environmentally conscious. Collectively, as a coalition, we have spent billions of dollars on environmental design. IBM is a member of our coalition. They are the

world leader in computer product recycling. They have recycled

over 1 billion pounds of computer products to date. Panasonic and

Sanyo played a leading role in establishing the successful rechargeable battery recycling corporation. This is a program to recycle rechargeable batteries, and it was enabled, I believe, in 1996 by an

act of Congress that enabled us to implement nationwide this cost

internalization program. I took a leave of absence from my company to work for 1 year to startup this program, so I have some

experience in this area with cost internalization programs.

JVC, Panasonic, Sharp, and Sony have developed a voluntary

shared responsibility program under which we have sponsored

1,000 collection events over the past 5 years in the United States,

many of them with BestBuy. And these events have collected over

10,000 tons of electronic products and recycled them.

And, finally, LG, Philips, Panasonic, RCA, Samsung, and Sony

have taken the lead in the reuse of post-consumer CRT glass and

now have in many of our picture tubes 20 to 50 percent post-consumer CRT glass recycled content. Based on our experience, we

came together in 2003 to support the California electronic waste recycling act, which essentially established a statewide system in

California based on an advanced recycling fee. We thought this approach had a number of advantages and supported it for that reason.

Our approach is that, one, we think first and foremost manufacturers should be responsible for the design of electronic products to

make them more environmentally conscious. That is something

that we can do based on our core expertise. We thought that consumers should pay an advance recycling fee to cover the cost of collection and recycling, that retailers should collect this fee, and

manufacturers who sell products directly to consumers in California are also responsible for collecting the fee. The State government manages the financing of the system as well as ensuring a

level playing field, and we also thought that a third party organization could be established that would manage the same process, the

collection and recycling of electronic products. That seemed to be

more realistic to solve this problem.

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Local governments organize and provide collection services, and

their costs are covered under this program. Manufacturers, retailers, and both State and local governments cooperate to provide

education. And the manufacturers report on our design for recycling plans in progress, our chemical usage, and our consumption

of recycled materials to the State on an annual basis. That is what

was enacted, essentially, from our perspective as a manufacturer in

California.

The advantages were numerous. We thought it was visible to the

consumer and delivered a strong educational message to the consumer that they had a role to play and that systems are available.

We also thought a visible fee would exert pressure on system operators to keep costs as low as possible.

We thought that the visible fee, an advanced fee was not subject

to markup as the product moved through the chain of retail distribution. It would not be taxed thereby increasing the cost of recycling to the consumers. It eliminates the competitive disadvantage

of associated systems based on waste stream share. It creates one

unified system, as opposed to several competing manufacture based

systems. It eliminates costly brand sorting. It eliminates the problem of orphaned products that are no longer associated with a manufacturer. And we thought it was easier to enforce than manufacturer take-back models, hence we came together to support this approach in California.

Since California, Maine has also enacted electronic product recycling legislation that essentially requires manufacturers to take

back and recycle electronic products. One of our concerns with this

particular approach is that electronic products are very long-lived.

Televisions, based on our research, last about 17 years on average

before people throw them away, and computer monitors approximately 10 to 11 years. So you have a situation where, since the

Maine system is based on a manufacturer’s waste stream share, a

manufacturer is responsible for collecting products that are actually being thrown away today. You have a system where historical

manufacturers who have a legacy waste stream share have an immediate financial burden whereas newcomers to the market have

no burden to pay and help support a collection recycling system.

And we felt that represented a competitive disadvantage to the historical manufacturers, many of whom are North American manufacturers.

According to an article in the May 2005 edition of Smart Money

called ‘‘Behind the Glass, there has been a wave of new entrants

into the television manufacturing business with 127 brands now

available, 70 percent more than a decade ago. So I think you can

get an idea of the potential competitive disadvantage this system

would place on historical manufacturers.

The Maine approach requires that products be separated by

brand in order to be managed. A recent study in Hennepin County,

Minnesota, over the last 6 months of 2004, looked at 17,134 TV

brands and 11,920 computer monitor brands.

Mr. GILLMOR. Could we ask you to wrap up here so we could

keep on schedule? Thank you.

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Mr. THOMPSON. So brand sorting is going to be a problem. We

think multiple programs will be confusing. We think take-back

does not present a strong design incentive.

And finally, we would like to recommend that, one, we do a study

to get a sense of this problem. The last study was done in 1999.

Many people have concerns about many different issues. That

study could address those issues.

Finally, we look forward to working with this committee and our

colleagues to develop an approach to electronic recycling that

makes sense for all of us.

[The prepared statement of David Thompson follows:]

PREPARED STATEMENT OF DAVID A. THOMPSON, DIRECTOR, CORPORATE ENVIRONMENTAL DEPARTMENT, PANASONIC CORPORATION OF NORTH AMERICA ON BEHALF

OF MANUFACTURERS COALITION FOR RESPONSIBLE RECYCLING

Electronics Manufacturers Coalition for Responsible Recycling consists of major

manufacturers of televisions, computers, and laptops. Canon USA; LG Electronics;

Sanyo Fisher; Epson; Mitsubishi Digital Electronics America; Sharp Electronics;

Hitachi America; Panasonic Corporation of North America; Sony Electronics; IBM

Corporation; Philips Consumer Electronics North America; Thomson Inc.; JVC

America; Pioneer Electronics (USA) Inc.; Toshiba; and Samsung Electronics America.

Chairman Gillmor, Ranking Member Solis, and members of the subcommittee, my

name is David Thompson, Director, Corporate Environmental Department,

Panasonic Corporation of North America.

I am here today on behalf of the Electronic Manufacturer’s Coalition for Responsible Recycling (‘‘Coalition’’). The Coalition commends you on your leadership and

is pleased to have the opportunity to present our views on an emerging issue of concern—the collection and recycling of electronic products.

The Coalition consists of 16 major manufacturers and marketers of consumer,

commercial and industrial electronic products.

Our Coalition members have actively supported the recycling of used electronic

products and have been deeply involved in developing product recycling systems in

the US, Japan, Europe, and other countries around the world. Collectively we have

recycled more than 1 million tons of electronic products to date. Our Coalition members have also led the electronics world in eco-design, ranging from energy efficiency, hazardous material minimization, and design for recycling. My company

alone spent almost $125 million on environmental product design improvements just

last year, and almost $725 million from 1999-2003.

Here are a few of our members’ noteworthy accomplishments:

• IBM is the world leader in computer equipment recycling, having recycled over

1 billion pounds to date.

• Panasonic and Sanyo played a leading role in establishing the successful Rechargeable Battery Recycling Corporation (RBRC) Program. Sony is also an

RBRC member company and Board member.

• JVC, Panasonic, Sharp, and Sony have developed a voluntary Shared Responsibility Program, under which we have sponsored over 1,000 collection events

over the past 5 years in the United States. These events have collected over

10,000 tons.

• LG, Philips, Panasonic, RCA, Samsung and Sony have lead the way in incorporating post-consumer recycled CRT glass into new picture tubes, in some

cases achieving 20% post-consumer CRT glass recycled content.

• Canon operates a world-leading printer cartridge recycling program.

• Sharp is the world leader in the manufacturer of solar panel displays.

• Sony used 160,000 tons of recycled materials in 2004.

• Panasonic and Sanyo are the world leaders in manufacturing Ni-MH batteries

used to power hybrid cars, trucks and buses. Look in the trunk of a Prius hybrid automobile and you will find a Panasonic battery.

• Mitsubishi Electric established the first home appliance recycling plant in 1988.

Based on our collective experience around the world in establishing recycling systems, our Coalition came together in California to support The Electronic Waste Recycling Act of 2003, a new law that established a state-wide recycling system financed by a point of sale advanced recycling fee.

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1 A National Electronics Product Stewardship Initiative was convened by the U.S. EPA in

order to provide all key stakeholders an opportunity to discuss and debate comprehensive responses to the electronic product recycling challenge, particularly the finance aspect associated

with collection and recycling.

The Coalition members have been for some time strongly committed to helping

design and implement a national system for electronics recycling. Many of us were

active participants in the three-year NEPSI process.1 We believe that the NEPSI negotiations resulted in the detailed design of an excellent national system, one which

was supported by the great majority of the NEPSI stakeholders. We understand

that a small number of companies and stakeholders prefer a different approach, and

we have worked hard with them to craft a compromise. Unfortunately these efforts

have been unsuccessful to date and we are left with competing proposals. We believe

that a compromise is within reach and we are still committed to achieving that compromise.

SUMMARY OF COMPETING APPROACHES

In this testimony, I will lay out the details of the two competing approaches and

their pros and cons from the Coalition’s perspective. We understand that it is time

to make progress toward a compromise. I will therefore conclude our testimony with

a set of principles that we believe are important to recognize in developing a compromise.

The consumer fee approach: In simple terms the NEPSI majority solution is based

on a consumer fee that is paid on every covered product—an advanced recycling fee.

The fee provides the money needed to finance the entire recycling system—collection

through processing plus public education. A private third-party organization, consisting of manufacturers and other stakeholders, would contract for services, assure

that environmental standards are followed, provide public education, and report on

results.

The manufacturers’ responsibility or take-back approach: In contrast the alternative approach assigns a responsibility to each manufacturer to recycle a share of

products that are returned. Their share, in most cases, is determined by the portion

of their brand that is returned, plus in some models, an allocation of old products

for which the brand no longer exists, called orphan products. Manufacturers individually or collectively figure out how they will meet their responsibility and contract

for services. Often local governments are asked to pay for collection from the public.

In both approaches the consumers pay for recycling services at the time of new

product purchase. In the first the fee is visible, while in the second it is internalized

in the product price and not visible.

COALITION APPROACH: SUPPORT ADVANCE RECYCLING FEE COLLECTED AT POINT OF

SALE

The California legislation embodies our concept of a shared responsibility system

based on a consumer fee, where all stakeholders have defined roles of responsibility.

• Manufacturers must design environmentally conscious products

• Consumers pay an advanced recycling fee to cover the costs of collection and recycling

• Retailers collect the required fee. Manufacturers who sell products at retail also

collect the recycling fee.

• State government manages the financing of the collection and recycling system,

as well as ensuring a level playing field.

• Local governments organize and provide collection services and their costs are

paid out of the fee revenues. Retailers and manufacturers, to the extent that

it makes business sense, may also provide collection services and receive compensation.

• Manufacturers, retailers, and both state and local government cooperate to provide education.

• Manufacturers report on design-for-recycling plans and progress, chemical usage,

and consumption of recycled materials.

An advanced recycling fee has a number of advantages:

• Visible to the consumer, it delivers a strong educational message that the consumer has a role to play in recycling used products and that recycling programs

are available. A visible fee will also direct consumer pressure toward keeping

recycling costs as low as possible.

• In contrast to the internalized costs envisioned by take-back models, a retail fee

will not be marked up as the product moves through the distribution chain

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2 Additionally, new brand compliance in Maine appears to be less than 25%, based on the most

recent information published by Maine Department of Environmental Protection (DEP). (Waste

stream share compliance is much higher, approaching 80% based on April 21, 2005 summary

prepared by Maine DEP.

(typically 30% or more) and will not be taxed, thereby minimizing the cost of

recycling to consumers.

• Eliminates the competitive disadvantages associated with systems based on waste

stream share. (The European Union Waste Electrical and Electronic Equipment

Directive (WEEE) established financial responsibility on current and future

sales, and not retroactively.)

• Creates one unified system as opposed to several competing, confusing systems

that may minimize potential economies of scale.

• Eliminates costly brand sorting

• Eliminates orphan problem

• Easier to enforce than take-back models

Our Coalition acknowledges that the California Advanced Recycling Fee system

is not perfect. Particularly, no one likes to pay a fee, but we should also acknowledge that in some states consumers have become accustomed to paying a user fee

to ensure the proper recycling or disposal of used motor oil, tires, and car batteries.

In addition we recognize that in California the State bears the burden of managing the infrastructure—the Waste Board audits and pays the companies that provide collection and processing. These functions could be better performed by a private entity. The Coalition is working with other stakeholders in a project sponsored

by EPA in the Pacific Northwest to design a private third-party organization that

would deliver these services more cheaply and efficiently than government can.

Of course there are some other issues that need to be addressed including:

• Legitimate enforcement issues against remote sales. Data collected to date, however, indicates that California is meeting its projected revenue targets, suggesting a high level of compliance.

• Retailer start-up and administration costs. (Retailers are allowed to keep 3% of

the fees they collect to cover administration costs.)

• The fee was set too high. The California statute has an adjustment mechanism.

We believe there is room for improvement, and have proposed a number of suggestions.

MAINE STATUTE DISADVANTAGES NORTH AMERICAN MANUFACTURERS

In contrast to the California Advanced Recycling Fee system, Maine has passed

the first manufacturer take-back law in the United States.

Our principle concern centers on a fundamental inequity the Maine approach

places on established manufacturers (and by extension on North American manufacturers) vis-a`-vis newer market entrants. First, our research indicates that televisions are on average 17 years old when discarded and that computer monitors are

about 11 years old. Second, we are experiencing a wave of new manufacturers, primarily form China, entering the North American market. According to an article in

the May 2005 edition of Smart Money, ‘‘Behind the Glass,’’ there has been a wave

of new entrants into the television manufacturing business with 127 brands now

available, 70% more than a decade ago. Since the Maine law requires manufacturers

to finance the management of their own products based on actual collection volumes, established manufacturers will have take-back costs while the 70% of the new

market entrants will have no costs since their products are simply too new to be

winding up in the recycling system. Only basing responsibility on current sales can

eliminate this disadvantage to established manufacturers and their North American

workers. 2

Maine’s approach to orphan products could further exacerbate this competitive

disadvantage. Maine, the only state that has passed take-back legislation, is attempting to allocate responsibility for orphan products based on a manufacturer’s

waste stream share. Obviously, such an approach places the established, legacy

manufacturers at a double competitive disadvantage to the newer market entrants,

even though neither subset of the market (those with waste shares and those too

new to the market place to have a waste stream share) is in any way responsible

for the orphan problem. The only fair way to deal with orphan products is to base

responsibility on current sales. Unfortunately this would result in a complex and

burdensome dual financing system that would be difficult to administer and enforce.

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REQUIRES TIME-CONSUMING AND EXPENSIVE SEPARATION BY BRAND

In order to allocate manufacturer responsibility under the Maine system, collectors and recyclers would have to sort products by brand, an extremely burdensome

and costly endeavor. A recent brand sort completed by Hennepin County, Minnesota, during the last six months of 2004 looked at 17,134 TVs and 11,920 computer monitors by brand. Hennepin County reported 281 TV brands and 458 computer monitor brands respectively. While some brands have significant waste stream

shares, the vast majority of the brands have waste streams shares that are below

1%: 258 TV brands and 438 computer monitor brands. It should be clear that attempting to manage collection by waste stream brand is going to be extremely burdensome and expensive.

It will be argued that brand sorting can be minimized through periodic sorting

and reporting in order to establish manufacturer shares and proportionate responsibility. While possible in theory, sorting will still have to be done frequently in order

to catch the brands of the new market entrants as soon as they begin entering the

waste stream.

MULTIPLE PROGRAMS WILL BE CONFUSING AND INEFFECTIVE

The disparity in waste stream shares described above will result in those companies with larger shares establishing their own programs and smaller companies attempting to band together. The result will likely be a mish-mash of competing programs that will be both extremely difficult for Maine to administer and confusing

for consumers, local governments and retailers to utilize. These divergent programs

will place enormous burdens on compliant companies to achieve the public awareness goals outlined in the bill.

TAKE-BACK DOES NOT PROVIDE A MEANINGFUL DESIGN INCENTIVE

Let me refer to an example from my own company’s activities, which I believe is

indicative of what all leading electronic manufacturers are doing. Panasonic recently

completed a redesign of our complete line of CRT-technology TVs in order to make

them easier to recycle. Compared to a Panasonic TV manufactured in 1980, we have

reduced the number of plastic resins we use from 13 to 2. We have reduced the

number of plastic parts from 39 to 8, not only making the sets easier to disassemble,

but improving the ability of the recyclers to sort and manage the plastic parts more

effectively. In all, the disassembly time has dropped from approximately 140 seconds to 78 seconds. I am confident that other TV manufacturers are in the process

of making similar design improvements.

While we, like all members in our Coalition, endeavor to design products where

the value of the materials contained within will cover the cost of collection and recycling, these design changes will not benefit the recycling process until the newly improved sets have exhausted their useful life 15—17 years from now. This time lag

calls into question the common supposition that mandated product take-back requirements will lead to design improvements. No chief financial officer would approve even an incremental investment in recycling design in the hope that the investment would be recouped or would advantage the company 15 years in the future. Companies that suggest otherwise are being disingenuous.

Under the type of take-back system mandated by the Maine legislation it should

be clear that Panasonic would not receive any immediate financial benefit from the

design improvements already made. It is quite possible that the added costs of complying with the Maine statute will actually reduce the amount of resources available

to implement environmental design enhancements, given the ongoing competitive

pressures now prevalent in the electronic marketplace. I therefore urge you to consider a system where market forces are harnessed to encourage and reward design

innovations. The US Environmental Protection Agency’s ENERGY STAR Program

and newly launched Electronic Product Environmental Assessment Tool (EPEAT)

represent excellent examples of a positive role the federal government can play in

assuring product designers work diligently toward environmentally conscious designs.

In addition to the types of specific design for recycling efforts already discussed,

it should be re-emphasized that all of our Coalition companies have accelerated

plans to reduce or eliminate the use of potentially hazardous chemicals in the manufacture of and contained within our products.

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3 ‘‘Lessons Learned from Multi-stakeholder Dialogues’’, Catherine Wilt, Resource Recycling,

August 2005.

GOING FORWARD: THE FEDERAL GOVERNMENT

First, we need an accurate understanding of the problem and the challenge. The

most recent governmental study was concluded by the National Safety Council back

in May 1999. We need to better understand:

• How many products of concern are being generated

• The capability of the domestic recycling industry in terms of capacity and technology

• The adequacy and viability of secondary markets for materials contained in electronic products, both in the US and around the world

• The volumes of electronic products that are being exported, and the adequacy of

overseas recyclers.

• The economic consequences of different financing mechanisms: An advanced fee

versus cost internalization models versus pay-to-throw systems.

• The adequacy of modern landfills to handle the disposal of electronic products.

A national study conducted by US EPA would answer these questions. As recently

written by the EPA-appointed NEPSI facilitator, ‘‘Prior to starting a full-fledged dialogue, an adequate level of base research must be in place...[In] the NEPSI dialogue, this baseline did not exist at the outset, which created recurring disagreements through the dialogue on basic facts.’’ 3

We need a system of consistent laws and regulations that do not burden commerce in new products and recyclable materials unnecessarily. The so-called CRT

rule would help achieve this goal.

We need a system that actually rewards investments in environmental design. We

have suggested some approaches that are preferable to mandating take-back in

order to accomplish such a goal.

Again our Coalition companies are generally supportive of up-front, fee-based financing models, particularly fees assessed at the point of retail sale and run by

independent 3rd party organizations.

Our Coalition has prepared a white paper on electronic product recycling that provides an in-depth discussion of the above issues and challenges, as well as model

ARF legislation and a suggested design incentive system. Copies are submitted for

your review.

RECOMMENDED PRINCIPLES OF A NATIONAL SOLUTION

In closing, the Electronic Manufacturers Coalition for Responsible Recycling

stands by to work with the Committee to address this emerging issue. It’s time to

find a solution—the public is rightly expecting a way to reasonably and responsibly

recycle their old electronics which are accumulating every day.

We understand that compromises will need to be made in order to bridge the gaps

that separate companies favored approach to this challenge. Above we offered you

our preferred solution—the advanced recycling fee. Here we offer three simple principles that should guide a compromise solution.

• The solution should actively engage and involve all stakeholders, each in proportion to their ability to contribute. Each stakeholder group is best able to provide

some elements of the needed system. By all sharing in the burden it will not

fall too heavily on any one group.

• The solution should not disadvantage any manufacturer or retailer over others.

In particular, an unfair burden should not be placed on small companies because they lack the resources of a nationwide presence, nor should unfair advantage be given to recent market entrants because their products will not

enter the recycling stream for years. All companies should be treated equally.

• The national solution should be as straightforward and efficient to implement as

possible. It should avoid complex or contentious regulations and enforcement.

Thank you again for the opportunity to present our views and ask for your leadership on this issue.

Mr. GILLMOR. Thank you very much, Mr. Thompson. And we will

now go to Gerald Davis who is President and CEO of Goodwill Industries, central Texas, and is also distinguished by being an Ohio

State alum and further distinguished by being a former resident of

Port Clinton, Ohio, in the Fifth District of Ohio.

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STATEMENT OF GERALD L. DAVIS

Mr. DAVIS. And it is a particularly hard time to live in Austin,

Texas, these days. Not after Saturday.

Chairman Gillmor, Ranking Member Solis, members of the subcommittee, first I want to say that our prayers and sympathies go

out to those affected by Hurricane Katrina, our agencies in New

Orleans and Gulfport and their 700 employees who have suffered

devastating losses. Goodwill agencies from Texas to Arizona to

North Carolina are gearing up for increased demand in job placement and career services as tens of thousands of Americans arrive

in new cities looking for shelter, food, and work, including Austin.

Many Goodwills have already helped out with donation gathering

and distribution. We have 207 community-based autonomous Goodwill agencies in the U.S. and abroad. We fund our mission through

revenues earned from donated goods, government contracts, and

workforce development funding. Goodwill industries is one of the

world’s largest nonprofit providers of education training and career

services for people who have physical, mental, and emotional disabilities as well as those with disadvantages such as welfare dependency, criminal history, lack of work experience, and dislocation.

Donors play a pivotal role in our ability to fulfill our mission.

Last year, we had nearly 54 million donors. In the past decade, we

have seen a growing number of computers and other electronic devices donated. Many of these items are dropped off at our stores

or drop-off locations. But because of the environmental concerns

specific to computers and other electronic devices, we have to grapple with a number of issues, from effective disposal of these items

to successful recycling of them. Unlike clothing and household

goods, we cannot always simply sort them and place them back in

our retail stores for sale. However, a number of Goodwill agencies

have come together to seek innovative solutions to this problem. On

the policy side, we have been involved with initiatives both local

and national. And on the business side, we have been seeking various partners to help us develop reasonable solutions to the e-waste

problem, while at the same time sustaining our funding to help the

disadvantaged and those with disabilities.

For many of our agencies, e-waste represents anywhere from 10

to 30 percent of all electronic donations. We consider this to be one

of our top concerns. As a charitable organization with retail stores

across the country, Goodwill has a unique perspective on the problem of e-waste. Nearly all Goodwill agencies receive computers

through donation streams, although some do not willingly accept

them. In 2004, Goodwill Industries received over 23 million pounds

of used electronics. A large number of these donations are unusable, and the cost of safely and responsibly disposing of these products can directly impact the job training and career services offered

by Goodwill Industries.

More and more, landfills refuse to accept electronic products and

charge a hefty disposal fee. In 2003, a quarter of all Goodwill agencies reported having to pay a landfill fee, again taking money from

mission. All of the fees vary according to agency, the State, and the

locale.

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As part of our policy efforts, Goodwill participated in the NEPSI

initiative, National Electronics Products Stewardship Initiative, a

multi-stakeholder initiative focused on the recycling of used electronic products. Unfortunately, the group was not able to reach

consensus. Recently, we joined the Congressional E-waste Working

Group, a bipartisan group consisting of Members of the U.S. House

of Representatives and other stakeholders working together to discuss end-of-life management solutions that are mutually beneficial

to all stakeholders.

Increasingly, local Goodwill agencies are developing innovative

business solutions to address the growing surplus of computer donations. Some Goodwill agencies are refurbishing and

demanufacturing equipment, reselling systems and components, expanding client training and career services and avoiding high disposal costs. Through pilot programs with computer companies like

Dell, county and city governments, as well as other organizations,

Goodwill is exploring socially responsible ways of managing consumer electronics in a cost-effective manner.

We are using four models. The first is a retail model which focuses on collecting, demanufacturing, refurbishing and reselling

computer systems. You will find these models in L.A., Santa Cruz

and Austin. The client model, a model integrating client technology

training and workforce development, can be found in Charleston,

South Carolina. A third model, a corporate model, focuses on erasing hard drives and preventing identity theft is one that is being

used at Pittsburgh Goodwill. And last, the collaborative model, one

you will find in San Francisco, is a mixture of many things from

stores to relationships with cities and counties as well as the Goodwill agency.

In Austin, where I am the President, we began in 1997, as a

training program, a retail outlet for donated computers. We sell all

forms of systems and products in a dedicated computer store called

Computer Works. There is one in Orange County and Fort Worth.

We are well positioned in Austin and these other Goodwills in both

refurbishing and recycling used computers. We have developed a

well-proven, state-of-the-art dismantling and sorting process similar to what you would find at any third party recycling vendor and

what they can offer on the marketplace. This year, we look at processing 2 million pounds.

We are sharing the results of our business model with other

Goodwill agencies in Charlotte, Dallas/Ft. Worth, Portland, and

San Antonio. So we are spreading best practices.

The Federal Government plays a leadership role in e-waste disposal. We also believe in the shared responsibility approach and

support the concept of advanced recovery fees.

We recognize there are significant costs with any recycling program, and the cost will be borne by consumers and manufacturers

primarily. We believe that the government has a role in balancing

the impact of the costs in developing safe disposal methods and

standards. We believe the Federal Government can play a vital role

in assisting the development and sustainability of a recycling reuse

infrastructure. The Federal Government, using incentives perhaps

could, aid and perhaps encourage necessary private sector investment in the used electronic recycling and reuse markets.

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We believe that one possibility is a tax credit. Not just for the

manufacturers, but also the consumers. Recycling grants and other

initiatives could also spur innovative solutions.

We also hope that the Federal Government would support pilot

projects for sustainable initiatives. And other projects that would

result in the development of recycling and reuse infrastructure.

We believe that the government can play a key role in educating

consumers, especially those in the residential marketplace where

many of the used computers are.

Goodwill Industries looks forward to working with the subcommittee in finding electronic waste management solutions.

Thank you very much for your time.

[The prepared statement of Gerald L. Davis follows:]

PREPARED STATEMENT OF GERALD L. DAVIS, PRESIDENT & CEO, GOODWILL INDUS- TRIES OF CENTRAL TEXAS, INC. (AUSTIN), CHAIRMAN, GOODWILL INDUSTRIES INTER- NATIONAL, INC.

Mr. Chairman and members of the Subcommittee, I am pleased to testify today

on the role of various stakeholders, including government and businesses, in the

safe disposal of the growing problem of electronic waste in our country.

My name is Jerry Davis, and I am the President and CEO of Goodwill Industries

of Central Texas located in Austin, Texas and the Chair of the Board of Directors

for Goodwill Industries International, Inc. Goodwill Industries of Central Texas is

the 15th largest of the Goodwill agencies, and this year we mark our 47th anniversary.

I want to say that our prayers and sympathies go out to the victims of Hurricane

Katrina. Our prayers are with the hundreds of thousands of people who have lost

their homes and loved ones. Goodwill Industries has agencies in the affected Gulf

Coast areas: Alabama, Louisiana, and Mississippi. Our agencies are mobilizing efforts to assist with relief to the victims of the hurricane.

BACKGROUND

We have 207 local, autonomous Goodwill agencies in the U.S. and abroad, and we

fund our mission through revenues collected from donated goods, government contracts, and workforce development funding. Goodwill Industries is one of the world’s

largest nonprofit providers of education, training, and career services for people with

physical, mental, and emotional disabilities, as well as those with disadvantages

such as welfare dependency, criminal history, and lack of work experience. Donors

play a pivotal role in our ability to fulfill our mission.

Founded in Boston in 1902 by Rev. Edgar J. Helms, a Methodist minister, Goodwill Industries first put people to work by hiring them to repair and sell donated

goods. Today, Goodwill Industries trains people for careers in fields such as financial services, computer programming and health care. To pay for its programs,

Goodwill Industries sells donated clothes and other household items in more than

2,000 retail stores, and online at www.shopgoodwill.com. The organization also

builds revenues, and creates jobs, by contracting with businesses and government

to provide a wide range of contract services, including janitorial work, packaging

and assembly, food service preparation, and document shredding. Eighty-four percent of revenues are channeled back into programs and services. More than 723,000

people benefited from Goodwill’s career services in 2004.

Last year, collectively we had nearly 54 million donors. However, during the past

decade, we have seen a growing number of computers and other electronic devices

donated to Goodwill agencies. Many of these items are dropped off at our stores or

drop off locations. Because of the environmental concerns specific to computers and

other electronic devices, we have to grapple with a number of issues, from effective

disposal of these items to successful recycling of them. Unlike clothing and household goods, we cannot always simply sort through computers and electronics and

place them back in our retail stores for sale.

However, a number of Goodwill agencies have come together to seek innovative

solutions to this problem. On the policy side, we have been involved with initiatives

both local and national, and on the business side, we have been seeking various

partners to help us develop reasonable solutions to the e-waste problem, while at

the same time sustaining our funding to help the disadvantaged and those with disabilities. For many of our agencies, e-waste represents anywhere from 10-30 percent

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of donations. For example, in Orange County California, our agency there receives

approximately 8,000 televisions and 280,000 pounds of monitors annually; in Richmond, Virginia, they receive 353,000 pounds of computers and 390,000 pounds of

televisions.

My testimony today will focus on our business-to-business solutions and possible

policy venues to address this problem that should be considered by local, state, and

federal governments. Many state and local governments are developing and passing

legislation to address the issue of e-waste.

As a charitable organization with retail stores across the country, Goodwill Industries has a unique perspective on the problem of e-waste. Nearly all Goodwill agencies receive computers through their donation streams, although many do not willingly accept them. In 2004, Goodwill Industries received over 23 million pounds of

used electronics. A large number of these donations are unusable and the cost of

safely and responsibly recycling or disposing of these products can directly impact

the job training and career services offered by Goodwill. As our generous donor base

(which averages 40 pounds per drop-off) continues to grow, the challenge of disposing of non-recyclable and unusable donations in landfills also increases. Some of

our agencies have been able to negotiate reduced landfill fees with their localities

or to seek a waiver of these fees.

But, more and more, landfills refuse to accept electronic products, or charge a

hefty disposal fee. In 2003, 24% of Goodwill agencies responding to an internal survey reported paying a landfill fee. The landfill fees vary by agency. State governments are imposing stricter guidelines on the proper disposal of e-waste and a

patchwork of differing laws appears to be emerging.

As part of our policy efforts, Goodwill Industries participated in the National Electronics Product Stewardship Initiative (NEPSI), a multi-stakeholder initiative

formed a few years ago and focused on the recycling and reuse of used electronics;

unfortunately, the group was not able to reach consensus.

Recently, Goodwill Industries joined the Congressional E-Waste Working Group,

a bipartisan group consisting of m embers of the U.S. House of Representatives and

other stakeholders working together to discuss end-of-life management solutions

that are mutually beneficial to all of the stakeholders.

Currently three states (California, Maine and Maryland) have enacted laws governing electronics end-of-life management. California’s law is based on an advance

recovery fee paid by the consumer. We have 13 Goodwill agencies in the state of

California and already a number of them have applied to the state to become recyclers to benefit from the new law. It is too early to tell whether this particular

model is a success, but early indications appear that the fund has raised revenue

available for recycling efforts.

In Maine, the law requires producer-financed collection, recovery, and recycling of

electronic waste. In Maryland, a new law requires manufacturers to offer a take

back program and pay a fee. Still, other states have banned landfills from accepting

Cathode Ray Tube (CRT) monitors, or have commissioned study committees on the

issue. In May, the New York City Council passed a bill—the first ever to be introduced by a municipality—which requires manufactures to develop and divulge specific plans to reuse, recycle, and properly dispose of waste.

In 2004, 26 states introduced e-waste legislation. This year 30 states introduced

e-waste legislation and in state legislatures across the country 109 bills were introduced with 12 of those bills enacted; 84 will carryover to next year. While we applaud the efforts of localities in addressing this issue, we do believe that the various

models and financing mechanisms can become confusing to consumers, businesses,

and manufacturers that have business across state lines. A leadership role does

exist for the federal government to bring agencies together and to develop a national, comprehensive solution to this growing problem.

GOODWILL AGENCY E-WASTE PROGRAMS

Nonprofit organizations that accept donated goods, such as Goodwill Industries,

are often left with a surplus of unusable computers and televisions that they have

to pay to dispose of safely. Unfortunately, the payment to recycle and to dispose of

these items diverts funds from critical human services we provide in communities.

Where permitted by law, some Goodwill agencies dispose of unwanted electronics in

landfills.

Increasingly, however, local Goodwill agencies are developing innovative business

solutions to address the growing surplus of computer donations. Some Goodwill

agencies are refurbishing and de-manufacturing equipment; reselling systems and

components; expanding client training and career services; and avoiding high disposal costs.

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Through pilot programs with computer companies like Dell, Inc., county and city

governments, as well as other organizations, Goodwill Industries is exploring socially responsible ways of managing used electronics in a cost-effective manner. An

internal Goodwill Industries taskforce has researched the issue and has identified

four innovative e-recycling models that have so far been successful in meeting Goodwill Industries’ revenue goals, concern for the environment, and most importantly,

our charitable mission.

Specifically, the various models are as follows:

(1) Retail—a model focusing on collecting, de-manufacturing, refurbishing and reselling computer systems and components in a dedicated retail store.

(2) Client—a model integrating client technology training and workforce development programs into computer collection, recycling and reuse.

(3) Corporate—a model integrating corporate services into computer collection,

recycling and reuse.

(4) Collaborative—a model utilizing partnerships and collaboration to address

computer collection and recycling.

In Austin, Texas, where I am the President and CEO, we employ a retail model.

Beginning in 1997 as a training program and retail outlet for donated computers,

we sell all forms of systems, products, and accessories in a dedicated computer store

called Computer Works. Some of the benefits that are a direct yield from our computer recycling business include the creation of new jobs for people with disadvantages and disabilities while increasing revenue from parts and component sales. Our

computer business operations also result in little or no waste going to landfills,

which is also important to us as we strive to be better stewards of our environment.

In Austin, Texas, we are well-positioned in both refurbishing and recycling used

computers; we have developed a well-proven state of the art dismantling/sorting

process, similar to what any third party recycling vendor can offer in the marketplace. This year, we are looking at processing two million pounds; 50 percent of

what’s collected gets refurbished or dismantled; of that, 20 percent will get refurbished and be sold as complete systems in our store; 75 percent will be broken down

and sold as parts in the store; and 5 percent will be broken down and sold to a

third-party recycler. We are sharing the results of our business model with other

Goodwill agencies.

The reduction in landfill deposits coming from programs like the one we use in

Austin, we believe, is encouraging. As this subcommittee is well aware, the overburdening of landfills with otherwise recyclable electronics is problematic. In addition

to aggravating the cost and availability of landfills, electronics products contain materials that increasingly cannot be treated as common waste.

Recent studies show that the component materials of electronic items threaten

human health and the environment, especially water and air quality. Computers

contain heavy metals such as lead, chromium, nickel, and zinc. CRT glass picture

tubes found in television and computer monitors contain five to eight pounds of lead.

CRT monitors are the biggest e-waste cost factor for noncommercial computer refurbishers.

LEGISLATIVE AND POLICY SOLUTIONS

The federal government can play a leadership role in e-waste disposal. A ‘‘shared

responsibility approach’’ must be applied to future policy and we cannot compromise

on environmentally sound disposal practices. The financial burdens should be shifted from nonprofits (for example, the average landfill fee per unit is $25.00). We do

support collection of ‘‘point of sale’’ fee/deposit shared by consumer and manufacturer. but realize that other solutions in the immediate period are feasible, such as

working directly with manufacturers in various partnerships.

In Europe, the European Commission in 2003 published the WEEE (Waste Electrical and Electronic Equipment) and RoHS (Restriction of Hazardous Substances)

Directives to regulate component materials. Under the WEEE and RoHS Directives,

all but a few exempted electronics applications will have to comply with the elimination of lead in their manufacture by July 2006. The substances to be banned are:

Lead, Mercury, Cadmium, Hexavalent Chromium, Polybrominated Biphenyls (PBB)

and Polybrominated Diphenyl Ethers (PBDE). While we do not have a formal position on WEEE, it seems that policymakers in the U.S. could look to the European

Commission’s work with respect to the regulation of component materials. The Environmental Protection Agency (EPA) during the course of the last year, has held

meetings of the various stakeholders and has played a role by hosting ongoing conference calls on the issue. We hope these efforts continue.

Goodwill Industries supports the development of a national solution that embraces and balances environmentally sound disposal practices with market-based soVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00170 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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lutions that are inclusive of nonprofits recyclers/collectors and will aid in the development of a reuse infrastructure. Goodwill Industries supports product recovery requirements for electronic manufacturers and incentives for businesses (including

nonprofits) and individuals that recycle.

At present, several legislative approaches have been introduced in Congress. The

Electronic Waste Recycling Promotion and Consumer Protection Act (S.510) introduced by Sens. Wyden (D-ORE) and Talent (R-MO) recommends among other

things, the use of tax-credits as an incentive to ‘‘jump-start’’ the building of a recycling infrastructure. Similarly, the Tax Incentives to Encourage Recycling Act (H.R.

320) by Rep. Duke Cunningham (R-CA) would also provide tax incentives.

Another legislative approach provides an advanced recovery fee (ARF) model similar to legislation enacted in California. Utilizing grants as an incentive, H.R. 425

the National Computer Recycling Act, introduced by Rep. Mike Thompson (D-CA)

creates a fund generated by the collection of ARFs to be managed by the Environmental Protection Agency (EPA). This is one approach supported by Goodwill Industries, because we do believe there is a role for the model using ARFs.

We recognize that there are significant costs with any recycling program and the

costs will be borne by consumers and manufacturers primarily. We believe that the

government has a role in balancing the impact of the costs and in developing safe

disposal methods and standards for computer manufacturers. To that end, Goodwill

Industries supports market-based incentives for nonprofit collectors/recyclers and a

national solution to the issue that brings together manufacturers, recyclers and

other stakeholders.

We believe the federal government can play a vital role in assisting the development and sustainability of a recycling/reuse infrastructure. The federal government,

by utilizing incentives, could aid and encourage necessary private sector investment

in the used electronic recycling/reuse markets. This can be done through tax credits

for manufacturers and consumer, recycling grants, and other initiatives that could

spur innovative solutions and help stakeholders handle this problem.

Additionally, increased federal support for pilot projects and other sustainable initiatives would be helpful in promoting the development of a recycling/reuse infrastructure. The federal government also can play a key role in educating consumers.

Through increased consumer awareness, a greater impact can be made upon the established and developing markets, particularly the residential market. A developing

infrastructure could benefit greatly from increased federal support of consumer education campaigns.

For example, one such consumer awareness project that Goodwill Industries has

recently become involved with is eBay’s ‘‘Rethink’’ initiative. The Rethink Initiative

is a web portal linking the public to e-cycling programs and information. Goodwill

has partnered with eBay in their mission of educating and enabling eBay’s computer users to take action to reduce e-waste. By helping buyers and sellers connect

it makes it easier for people with idle computers and electronics to find others who

can put them to good use. Putting old products to new use extends their useful life

and delays their entry into the waste stream.

Lastly, the federal government should play a role in the handling of orphan waste

(electronic waste produced by a company that is no longer in business or cannot be

identified). A significant stumbling block to the development of a recycling/reuse infrastructure is the problem of who is responsible for orphan waste.

Existing companies that have been justly rewarded by surviving in a competitive

marketplace through innovation and efficiency are naturally hesitant to bear responsibility for the remaining products of companies no longer in business. Goodwill

believes that product recovery requirements that also require current manufacturers

to be share responsibility for orphan waste is necessary and appropriate for the development of a recycling/reuse infrastructure.

CONCLUSION

Goodwill Industries looks forward to working with the Subcommittee in finding

electronic waste management solutions. Goodwill Industries remains committed to

environmentally sound disposal practices; the exploration and development of nationally based solutions leading to the development of a recycling and reuse infrastructure; and supports product recovery requirements for electronic manufacturers

and tax incentives for businesses and individuals that recycle and grant-based incentives for nonprofits—all of which supports our mission of helping the disadvantaged and individuals with disabilities find employment and become productive

members of society.

Mr. GILLMOR. Thank you Mr. Davis.

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Mark Murray of Californians Against Waste.

STATEMENT OF MARK MURRAY

Mr. MURRAY. Good afternoon, Mr. Chairman. My name is Mark

Murray, the executive director of the nonprofit environmental

group, Californians Against Waste. It is a 28-year old environmental group that has been involved in a wide spectrum of solid

waste and recycling policies from direct producer responsibility programs, advanced disposal fee programs, command and control types

of recycling programs. So we have had a great deal of experience,

and we were the legislative sponsor of State Senator Byron Sher’s

S.B. 20, the 2003 legislation which enacted California’s first in the

Nation e-waste recycling law. Along with Senator Sher, we developed the initial proposal for the legislation which was a hybrid of

direct producer responsibility and advanced disposal fee producer

responsibility. We consider both of those concepts producer responsibility. It is a matter of whether you are charging the fee directly

or it gets internalized. We organized the support for that, and we

negotiated the final language with the various industry players.

Today, I would like to briefly describe a number of things: No.

1, the features of the California law; No. 2, summarize the progress

to date; No. 3, describe the unique political coalition that came together to create and implement and move this legislation; and finally, identify a few areas where I think the Federal Government

might focus.

No. 1, you have already heard from a representative of the State

of California at a previous hearing describing the details of the

California law. My written testimony provides those details as well.

Let me just summarize that the California law that went into place

on January 1 is a producer responsibility system that utilizes a

front-end advanced disposal fee. Under the system, public, private,

and nonprofit collectors of covered electronic waste—in California,

covered electronic waste is devices with a screen, flat screen, CRT

screen. Those are the devices we are concentrating on right now

and providing a financial incentive that is designed to cover the average net cost of recycling those devices. And the concept is to provide a network of free and convenient recycling opportunities for

consumers, both individual, residential as well as business consumers and industry, institutional consumers. The system is financed by a front-end fee that ranges from $6 to $10 per device, depending on the size. It is great that we are actually able to talk about the program after just talking about talking

about the program for several years; now to be talking about a program that is up and running. In the 10 months since implementation, 286 e-waste collectors and 39 recycling have stepped forward

and are providing recycling opportunities at more than 500 locations in California. These locations include nonprofit thrifts, such

as Goodwill and the Salvation Army, to local government operated

household hazardous waste collection depots. There are also local

governments and private sector recyclers who have partnered with

electronics retailers to provide point of purchase recycling opportunities. Additionally, many e-waste collectors and most e-waste recyclers in the State are providing direct pick up and recovery services

for business and institutional generators of electronic waste. In

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some locations, the added cost of those collections is paid for by the

generators, but at this point in time, the environment is so competitive for recycling that these services including these Cadillac

recycling services are being provided at no additional cost to the

generators.

With 6 months of program data, it is premature to speculate on

the success of California at this point. The exponential growth both

in the opportunities for recycling and the volumes of collected recyclable e-waste is worth noting. There are 500 locations in the State

of California where folks can drop off material for recycling; 311 of

these are certified physical locations in the State, permanent locations, where people can know that they can on a regular basis drop

off their devices. There are an additional 250 locations that provide

some level of drop-off. Sometimes it is a store that is running a promotion that allows folks to bring back their devices. And in some

cases, it is something that is a mobile recycling location.

Free and convenient e-waste recycling opportunities are available

across the State for most Californians. To date, more than 20 million pounds of covered electronic waste has been collected in the

first 6 months that has been reported being collected. There are additionally more than a million pounds of materials in the system.

We are projecting that for the first year of the program, we will see

50 million pounds of covered electronic waste recycled in the State

of California.

The State board of equalization, which collects the fee from man- ufacturers, has reported collecting $30.8 million dollars in e-waste

fees. The sales of consumer electronic devices that the board of

equalization has tracked represents 80 to 85 percent of the devices

that the industry is projecting should have been sold in the State

of California. Concerns about materials slipping through the cracks

has not manifested itself.

For the first year of the program, we are projecting $60 to $70

million in revenue which will be more than sufficient to cover the

costs of recycling.

I just want to mention briefly that the California law was supported by a broadbased coalition of local governments, environmental groups, retailers, and a large sector of the manufacturing

industry. Those entities continue to support the program. Private

sector recyclers and private sector waste haulers also supported the

program and continue to support it.

In terms of a Federal role, I want to identify a couple of areas.

No. 1, there are some devices and fees that are slipping through

the cracks, and that is, devices that are sold by or sold to Federal

agencies in the State of California. It would be helpful if the Federal Government in their purchases of devices used in California

would pay the fee. Right now, they are not doing that.

Second, States could use assistance in terms of providing a

framework for dealing with the export problem. States have limited

ability to deal with the export problem, and we are continuing to

see devices slip through the cracks and go to the developing world.

It seems like an appropriate role for the Federal Government.

Additionally, we believe that the State of California and other

States have the legal authority to impose an environmental protection responsibility on entities, be it in the form of a fee or a manuVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00173 Fmt 6601 Sfmt 6602 22988.TXT HCOM1 PsN: HCOM1
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facturer responsibility on entities outside of the State when they

are impacting the State. However, we are relying on court decisions. It would be helpful if the Federal Government would provide

clarity to the State on the their authority to do that.

In wrapping up, I want to say that, at this point, we feel like we

have a successful program under way in California. And we look

forward to reporting to your committee, continuing to report on our

progress.

[The prepared statement of Mark Murray follows:]

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Mr. GILLMOR. Thank you very much, Mr. Murray.

Renee St. Denis of the Hewlett-Packard company.

STATEMENT OF RENEE ST. DENIS

Ms. ST. DENIS. Hello Mr. Chairman. I want to thank you for giving me this opportunity to speak to you today. I am Renee St.

Denis. I am the director of America’s Product Take Back for the

Hewlett Packard Company, and we submitted written comments,

but I wanted to highlight a few key points today. I will try to keep

it brief to get to the questions.

First of all, I want to share with you a little bit about HP’s experience and insights in the area of electronics recycling. You probably all know HP, but one thing that you may not know is that HP

is the largest electronics recycler in the country. The 2 billion

pounds of electronics that Mr. McCurdy spoke about being recycled,

25 percent of that, half a billion pounds, was recycled in the U.S.

facilities of HP. That is a huge achievement for HP and a great

contribution to the environment.

HP runs these recycling facilities, and we invest in technology.

We have partners in the recycling business, many of them members of ISRI whom we work with, but HP does have intellectual

property in this area as well. HP offers recycling services to our

customers in a variety of forms: easy-to-use, over-the-web services

where we pick up at a customer’s house. We offer services to small

and large businesses. We have partnerships with retailers such as

BestBuy. We did a promotion last year, over 7 weeks in the summer with Office Depot, where we collected 10.7 million pounds in

7 weeks. Another very significant achievement and something that

I have yet to see us be able to duplicate, although we are working

on another one soon.

HP is a global entity, and we look at product take-back as a global issue. We draw on worldwide experience. We are familiar with

recycling around the world in all major markets, and we view this

as an important market issue. One thing we want to stress is that

these products are mostly metals and plastics. The plastics are an

embedded source of energy, and we are looking at ways to reuse

that embedded energy, to take the plastics and put them back in

new products and not use raw plastics or oil out of the ground.

This is something I think we can all really think about as we

move forward with this, what kind of incentives are going to get

us to keep these valuable resources in the stream of commerce and

not have them go to waste.

I want to talk to you a little bit about HP’s position and how we

arrived at it. HP favors a market-based solution that is flexible and

promotes innovation. And I have heard many other witnesses talk

today about a take-back system, it is what we call manufacturer

responsibility, and those are solutions that are structured to provide incentives for improved performance, for environmental design, and for reducing costs in the system.

I have to agree with Mr. Vitelli. No matter what system we come

up with, the costs are going to be borne by our customers, our

shared customers, your constituents. And no matter how we structure the deal, it is true that today’s consumers are going to have

to pay for yesterday’s waste.

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I think the one thing we all share is a desire to keep those costs

as low as possible while still meeting environmental goals. And our

solution is really built out of the needs of our customers who have

said to us they want to solve this problem, but they don’t want to

pay for government bureaucracy and lots of overhead; they would

really like to have solutions put in place that work and work well

for them.

We know that a one-size-fits-all approach is not going to be the

most effective approach. Customers, like I said, have different

needs; they interact with us in different ways in business today.

We expect that as this is yet another part of our business, they will

want to interact with us in different ways when it comes to disposing of their old electronics.

HP looks at electronics recycling as a continuation of our supply

chain. We design our products, we manufacture them, we distribute them, we take care of them in the customer’s home, and we

want to be a part of taking care of those products at the end of

their lives.

We have a responsibility to provide solutions to our customers,

but we need to have flexibility to implement these in a cost-effective way that meets the needs of our customers and our business.

We want to limit government enforcement. Governments should be

there to provide a framework, but we need to allow the private sector to utilize our expertise, our inventiveness, our technology to address this challenge without, again, investment in overhead or bureaucracy.

And it is clear that we need to reduce the burden on local governments, but at the same time provide them opportunities and provide opportunities for nonprofits like Goodwill to participate in a

solution where they can do so in a cost-effective way. They should

not be granted an open checkbook to provide Cadillac services

when those aren’t necessarily the most effective ways of providing

services to customers.

The one thing that is clear is that new taxes on technology products are good at one thing, and that is raising a lot of money. In

California, they have raised over $30 million in the last 6 months.

By our estimates, 10 to 15 percent of that money came from sales

of HP products, so we are talking about $3 to $4.5 million. I run

a recycling center for my day job, and I can tell you that for $3 to

$4.5 million, we could have provided services to every customer in

California that HP has.

There is really not an incentive for improvements or cost savings

or superior performance in a system that just assigns one—or in

the case of California, one of three flat fees or taxes to the sale of

new products. We want something that is sufficient, but doesn’t

just give the bare minimum, and we are clear that as industry continues to innovate, we are going to have ways to drive cost out of

this system and efficiencies up. We have seen that in our experiences in our facilities in California and Toronto.

So finally, we are here to ask for some help. One thing that

would be very helpful to all of us here at this table is a harmonized

national solution. It is clear that the patchwork increases

everybody’s costs, increasing the complexity of doing business, and

increases the complexity of complying with the law. To the extent

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that we have a national solution, I think our lives become easier.

And again, that money that is spent on those administrative burdens will go to actually relieving the burden of these items ending

up in local landfills.

In addition, there are improvements that can be made to regulations applicable to these products at the time they are recycled. As

Mr. McCurry said, we believe that these products don’t pose any

more harm at the point where we determine that they are destined

for recycling than they do in use. It is at the point when you start

working with them that we need to make sure the regulations are

in place.

That is it for me. I am happy to answer questions.

[The prepared statement of Renee St. Denis follows:]

PREPARED STATEMENT OF RENEE ST. DENIS, DIRECTOR, AMERICAS PRODUCT TAKE

BACK, HEWLETT-PACKARD COMPANY

On behalf of Hewlett-Packard Company (HP), I am pleased to provide this testimony on the recycling of used electronics. My name is Renee St. Denis, and I am

Director, Americas Product Take Back, based in Roseville, California. HP is a technology solutions provider to consumers, businesses and institutions globally. The

company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing. More information about HP is available at

www.hp.com.

HP applauds Chairman Gillmor for convening this second part of the hearing to

discuss electronic waste and for providing HP with an opportunity to testify. Today’s

hearing is a valuable first step in advising Members of the House and the public

on the emerging challenge of managing and recycling used electronics in the United

States. HP supports increased recycling to conserve natural resources and protect

our environment through a harmonized national approach. HP calls on Congress to

support a national solution to the challenge of recycling used electronics, the adoption of recycling incentives and the removal of regulatory barriers to cost-effective

recycling, and market-based solutions to finance government recycling programs.

HP believes that the Congress should reject attempts to impose a new tax on American consumers and to create bureaucratic recycling programs. Imposing more taxes

on consumers will needlessly increase costs to the public and fail to achieve our nation’s recycling goals in an efficient manner. Several decades of experience in implementing environmental laws and regulations in this country have proven that environmental goals can best be achieved by providing the private sector with flexibility

and incentives to innovate.

As a major manufacturer of a broad range of technology products, as well as a

leading recycler of these products, HP has a strong interest in the development of

policies relating to electronics recycling. HP has nearly twenty years of first-hand

experience in product take-back and recycling. Since 1987, HP has successfully collected and recycled more than 600 million pounds of used or unwanted computerrelated equipment globally. With our vast knowledge and experience, HP’s goal is

to recycle 1 billion pounds of equipment by the end of 2007. HP has established a

recycling service throughout the US (as well as other countries around the world)

that provides consumer and commercial customers with a convenient opportunity to

recycle their old products in an environmentally sound manner. For more information see: http://www.hp.com/hpinfo/community/environment/productinfo/design.htm.

HP currently operates two large, state-of-the-art recycling facilities in the U.S.,

in California and Tennessee, and recently signed a contract with a partner company

for a third facility in Canada. All materials are managed in the U.S. and Canada

in an environmentally sound manner; under HP’s program, no waste materials are

shipped overseas and no electronic material is sent to a landfill. In the past year,

HP has recycled almost 3.5 million pounds of electronic waste each month and reused or donated an additional 400,000 pounds annually.

HP encourages Congress to allow companies such as HP to maintain this flexibility in implementing recycling—which provides American companies opportunities

and incentives to continue to focus on innovation—and efficiently achieve superior

recycling results that best protect our nation’s natural resources for future generations.

We wish to emphasize the following points in our testimony today:

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• A harmonized national approach to the recycling of used electronic products is

necessary to avoid a patchwork of varying state and local requirements. • As first steps in the development of a national approach, Congress should adopt

incentives for recycling, such as those set forth in the ‘‘Electronic Waste Recycling Promotion and Consumer Protection Act’’ (S.510); expand federal support

for recycling projects; and remove regulatory impediments to recycling. • A comprehensive national approach should promote innovation and allow for flexible implementation to achieve recycling goals in the most efficient manner. • Congress should reject calls for new taxes on technology products and new government recycling programs.

I. A NATIONAL APPROACH IS NECESSARY AND APPROPRIATE

A national solution for the recycling of used electronic products can help promote

efficiency and avoid a patchwork of inconsistent state approaches. Electronics recycling is an emerging national challenge resulting from the growing use and enjoyment of technology products and consumer electronics throughout our society. As an

emerging environmental challenge, the country as a whole would benefit from a national approach that enables the U.S. to address this issue at a relatively early

stage in its development. Environmental challenges are too often addressed by the

Congress after a problem already exists. This issue presents an opportunity for the

Congress to act proactively in developing a solution to an emerging challenge.

A patchwork has already begun to develop. Three states—California, Maine, and

Maryland—have adopted comprehensive recycling laws for certain electronic products, but each of these laws is significantly different from the other. The most important differences are the varying methods of financing the recycling system. California has imposed a new tax on consumers to fund a bureaucratic government recycling program. In contrast, Maine has developed an innovative shared responsibility

model in which the burdens of recycling are shared by various stakeholders. Manufacturers are required to pay for consolidation and recycling or to conduct recycling

of their products on their own. Maryland has imposed a fee on manufacturers to

finance computer recycling programs around the state, with the fee varying depending on whether a manufacturer offers a computer take-back program. Moreover, numerous states, and even some localities, have been and are considering proposals

to address the management of used electronics, and we anticipate that this trend

will continue.

This emerging patchwork of differing state laws is adding significant new costs

and impeding the development of an efficient nationwide infrastructure, while creating the potential for consumer confusion. A consistent national approach is necessary and appropriate.

We recognize, however, that solid waste issues are traditionally managed by the

states and localities. Nonetheless, a federal solution is needed in this instance because of the potential for disparate state programs to result unnecessarily in added

costs to consumers and companies, while failing to achieve our environmental goals

in an effective manner. In addition, a national solution is desirable because of the

connection between the recycling of used electronics and the adoption of state-specific design standards. Several states have adopted, or are considering, mandated

design requirements on new technology products as part of their recycling laws or

other environmental initiatives, driven largely by concerns with environmental

issues associated with disposal of used electronic products. Differing state design requirements are problematic for HP and other technology companies because our

products are designed and manufactured for global distribution. Conflicting state design requirements can impair our ability to sell products globally, may needlessly

raise costs, and ultimately restrict innovation in the development of new products.

An effective national solution can address the concerns of the states with the disposal of used electronics, thereby avoiding the need for design standards at the state

level that may balkanize the global technology marketplace.

II. RECYCLING INCENTIVES, FEDERAL SUPPORT, AND REMOVAL OF REGULATORY IMPEDIMENTS ARE APPROPRIATE FIRST STEPS IN THE DEVELOPMENT OF AN EFFICIENT RECYCLING INFRASTRUCTURE

To further the development of an effective recycling infrastructure for used electronics, HP believes that incentives to promote recycling are a useful first step. One

such incentive is a tax credit for consumers to return their products for recycling

and for manufacturers to offer recycling services to their consumers. In this regard,

HP supports the ‘‘Electronic Waste Recycling Promotion and Consumer Protection

Act’’ (S.510), a bipartisan bill introduced by Senator Talent and Senator Wyden.

This bill would provide tax credits to help manufacturers, retailers, the recycling inVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00188 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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1This is a hybrid approach that combines elements of a producer responsibility system and

the widely supported Maryland Statewide Computer Recycling Pilot Program (HB 575). A producer responsibility system enables manufacturers to assume responsibility for their products

by establishing a recycling program. The Maryland law requires manufacturers to pay to the

state an annual registration fee—the amount of which varies depending on whether the manufacturer offers a computer takeback program.

dustry, and others to establish an efficient national infrastructure for the environmentally sound recycling of computers and other products and to encourage consumers to return their products for responsible recycling. These incentives can serve

as a catalyst for voluntary, market-based solutions that avoid the need for potentially burdensome, costly mandates at the federal or state level.

Similarly, expanded government support for pilot projects and other initiatives

can help promote the development of an efficient recycling infrastructure for electronics. Programs such as the ‘‘Plug-In to eCycling’’ initiative of the U.S. Environmental Protection Agency have played a useful role in successfully recycling large

volumes of products and collecting data on the nature of the issue and the range

of approaches that can be successful. For example, during the summer of 2004 HP

partnered with Office Depot stores nationwide on an in-store takeback program that

collected and recycled approximately 10 million pounds of products in less than

seven (7) weeks. The recycling of this amount of products was accomplished in a

manner that was convenient for consumers and efficient for the two companies. Another retail return program, in which HP participated, involving Staples stores in

New England also proved to be successful. Continued and expanded funding for

these ‘‘Plug-In to eCycling’’ programs can facilitate more recycling of used electronics and the development of new approaches.

Finally, the federal government can play an important role in promoting recycling

by removing regulatory impediments to cost-effective recycling. Under current federal and state regulations, used electronics are sometimes classified as ‘‘hazardous

waste,’’ even though they are routinely used in our homes and offices and, when recycled, pose no risk to human health or the environment. When these used products

are classified as hazardous waste, they become subject to burdensome and costly

regulatory requirements associated with their collection, storage, transportation,

and processing. Congress and the EPA should reform these regulatory requirements

to facilitate recycling of used electronics, while continuing to protect human health

and the environment.

III. A NATIONAL APPROACH SHOULD PROMOTE INNOVATION AND ALLOW FOR FLEXIBLE

AND EFFICIENT IMPLEMENTATION

HP supports a comprehensive, national approach to the recycling of used electronics that allows for flexible implementation and innovative approaches that can

achieve our recycling goals in the most efficient manner. In discussions with several

states, we have advocated a Product Stewardship Solution that is based on implementing a market driven system for recycling CRT-containing computer monitors

and TVs (‘‘CRT devices’’). The approach requires manufacturers to take responsibility for the recycling of a specified amount of CRT devices, either by implementing

a recycling program to cover this specified amount or by assuming financial responsibility for this amount. It places limited responsibilities on retailers and state government and avoids creation of new taxes and government bureaucracies. It provides funds to local governments for CRT device collection, consolidation, and recycling. As a result, the approach promotes flexible and efficient implementation of

CRT recycling.

Under the Product Stewardship Solution, manufacturers must take responsibility

for their ‘‘equivalent share’’ of CRT devices—including orphan CRT devices—returned by households (individual consumers and home businesses) for recycling.

They can do this either (1) by establishing a recycling program or (2) by paying the

state reasonable collection, consolidation, and recycling costs for their equivalent

share.1 Manufacturers implementing a recycling program have the flexibility to design their program as they see fit, so long as they recycle their equivalent share

in compliance with applicable laws and regulations.

Manufacturer equivalent shares are determined annually by the state. A manufacturer’s equivalent share is that manufacturer’s portion of the annual CRT device

waste stream. The equivalent share concept allows manufacturers that choose to

run a recycling program to satisfy their obligations with CRT devices of any brand

or their own brand. This approach avoids the need for brand sorting, but preserves

the ability of manufacturers to implement recycling programs that collect only their

own brand products. It provides an efficient recycling system with multiple options

for consumers.

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Manufacturers will be held accountable to the state to meet their equivalent share

obligations. This is a self-implementing performance standard keyed to a specific

amount of CRT devices to be recycled. Thus, a manufacturer that chooses to provide

a recycling program but fails to recycle its equivalent share has a predetermined

payment obligation for the shortfall to the state. This system is designed to achieve

recycling results by manufacturers, not merely to generate revenue or establish government recycling programs.

The Product Stewardship Solution has numerous benefits and advantages compared to alternative approaches such as advance recycling taxes or fees (‘‘ARFs’’):

A. Provides efficiencies through market-based solutions and the opportunity for improvements over time, thereby offering a lower cost solution to consumers.

Relies on and leverages the expertise of manufacturers to produce competitive, market-based solutions. Key recycling responsibilities are placed on manufacturers competing among themselves in the private sector, rather than on the government,

which faces no competitive pressure.

Provides flexibility to allow manufacturers to develop over time least-cost recycling

arrangements. Manufacturers have broad flexibility to act individually or in partnership with others to develop recycling programs or to pay for their recycling responsibility. This provides manufacturers with maximum flexibility to be innovative and

to work with recyclers to develop least-cost alternatives.

Allows collection costs and responsibilities to be determined by the market. Manufacturers that choose to run recycling programs are required to recycle their equivalent share of discarded CRT devices. But no particular entity has a mandated responsibility to collect discarded CRT devices. This fosters development of cost-effective, market-driven collection methods by manufacturers, non-profits, independent

collectors, municipal governments, and others.

Provides consumers a broad range of collection/recycling options. Consumers may

return their unwanted CRT devices to recycling programs offered by manufacturers

or to any other recycling program—whichever collection/recycling option best suits

their needs.

B. Avoids new taxes on consumers.

The Product Stewardship Solution imposes no point-of-sale taxes on consumers.

ARF proposals are simply a new tax on consumers to finance new government recycling programs.

C. Places key responsibilities on manufacturers, not government, to achieve recycling

goals, including recycling of orphan CRT devices.

Manufacturers are responsible for their contribution to the household-CRT device

waste stream—the fundamental performance goal of a recycling program. Manufacturers are responsible for their equivalent share of CRT devices that are discarded

each year by households, i.e., the contribution that their products make to the annual CRT device waste stream.

Manufacturers are responsible for the orphan waste stream. This includes both

unlabeled CRT devices and CRT devices for which the manufacturer is no longer

in business and has no successor in interest.

D. Places minimal responsibilities on retailers.

Retailers are not required to impose and collect new taxes and are not obligated

to collect products. The only obligations of retailers are not to sell unlabeled and unregistered CRT devices. Retailers will also certify annually that they checked the

state CRT device registration website to determine if the branded CRT devices they

sell are registered.

E. Limits government involvement to enforcement and other necessary functions,

avoiding the creation of new taxes and new agencies.

Requires government to perform limited administrative and enforcement functions.

These limited functions will be sufficient to establish the level playing field that

makes it possible for manufacturers to provide market based recycling solutions.

Among the functions performed by government are determining annual manufacturer equivalent share obligations, enforcing the requirements of the law, and collecting and compiling recycling data.

Avoids establishing new taxes and new agencies. By placing fundamental recycling

responsibilities on manufacturers, there is no need for consumers to pay new taxes

on their purchases of CRT devices or for new agencies to be created to collect or

administer a tax. The limited government responsibilities required by the approach

are designed, like the other parts of the approach, to achieve overall recycling goals

efficiently.

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2Supporters of this approach refer to it as a ‘‘fee’’ and not a tax. The law generally distinguishes between ‘‘taxes’’ and ‘‘fees’’ based on whether the payment provides a public benefit (a

tax) or a specific service (a fee). National Cable Television Assn. v. United States, 415 U.S. 336

(1973). Because the revenue raised provides a general public benefit and not a specific service

for the consumer paying the tax, an ARF is properly characterized as a tax.

F. Reduces burdens on local governments by providing manufacturers with incentives

to keep CRT devices out of the municipal waste stream and by providing a funding source for CRT device collection, consolidation, and recycling.

Provides manufacturers with incentives to keep their CRT devices out of the municipal waste stream. Manufacturers’ equivalent share obligations are based on the percentage of CRT devices for each manufacturer that are collected in local government

recycling programs. Thus, manufacturers have incentive to keep their CRT devices

out of the municipal waste stream.

Provides local governments with a funding source for CRT device collection, consolidation, and recycling. Manufacturers that elect to pay the government for their

recycling obligation, or that are required to pay for failing to meet their equivalent

share obligation, provide local governments with a funding source for collecting, consolidating, and recycling CRT devices.

G. Provides the opportunity for design improvements.

Allows manufacturers to benefit from improved environmental design and innovation. Those manufacturers that collect their own brand products can benefit from

design improvements they have made. Moreover, the system provides an incentive

to improve product design by removing materials of concern, enhancing recyclability,

and incorporating recycled content into their new products.

IV. CONGRESS SHOULD REJECT NEW TAXES AS A MEANS OF FINANCING RECYCLING

PROGRAMS

California has adopted a new tax, or ‘‘advance recycling fee’’ (‘‘ARF’’), to finance

a government recycling program, and other states are considering this approach.2

Congress should reject this approach. HP believes that a new tax on technology

products to raise revenue for government to use for recycling is a poor way of

achieving recycling goals.

This new tax on consumers will raise the price of technology products and, assuming it is used for its intended purpose, establish a new government program that

will likely result in efficient recycling solutions. There is no incentive for improvements over time—all products are subject to the same fee regardless of the cost of

recycling that product. Manufacturers and others have little incentive to reduce

these costs. This new tax is a one-size-fits-all approach that removes incentives for

innovation and market-based solutions, thereby likely resulting in higher overall

costs. Moreover, there is the risk that the funds collected by the government would

be used for purposes other than recycling, thereby failing to address the issue.

A tax-based approach suffers from other deficiencies, including the following:

A Tax Finances A Large New Government Program. A tax-based system requires

receipt and administration of new sales taxes on consumers transmitted by likely

thousands of retailers and distribution of the tax proceeds to hundreds of collectors

and recyclers. The result is a large new government program with substantial administrative expenses.

The Tax Revenues Can Be Diverted For Other Governmental Purposes. The tax

revenues may be diverted to finance other governmental programs. Given tight government budgets and numerous competing priorities, governments often shift spending from one area to another. Indeed, there is no way to prevent a future legislature

from taking such action. Numerous recycling and other environmental programs

based on special taxes or fees that are presumably dedicated to a specific purpose

have witnessed the funds being shifted to other uses.

A Tax System Does Not Guarantee That Any Amount of Electronic Devices Will

Be Recycled. Although proponents of tax-based recycling systems typically call for

achieving numeric collection goals, the proposed systems provide no mechanism for

enforcing these goals or ensuring that any amount of electronic devices are actually

recycled. The California ARF statute does not require that any amount of discarded

electronic devices must be recycled. The only guaranteed outcome of these tax-based

systems is the generation of new tax revenue for government, not the recycling of

products.

A Tax on Products Is Burdensome To Retailers. The Consumer Electronics Retailers Association (‘‘CERC’’), supported by retailers such as Best Buy Co., Circuit City

Stores, Inc., Radio Shack Corp., Sears Holdings, Target, and Wal-Mart, opposes an

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3See http://www.ceretailers.org/cerc/CERC—Position—on—eWaste.pdf.

ARF because an ARF is ‘‘administratively burdensome for all parties;’’ and ‘‘too complicated for all parties.’’ 3

Collection And Administration Of Taxes By A TPO Raises Concerns of Efficiency,

Expertise, Legality, and Accountability. Some proponents of new taxes advocate the

formation of a ‘‘Third Party Organization’’ (TPO) to receive and administer the government-imposed taxes collected by retailers. This proposal raises concerns of efficiency, expertise, legality, and accountability:

• The TPO duplicates functions currently performed by government agencies. • The TPO lacks the expertise of existing tax collecting agencies and is unlikely

ever to acquire equivalent expertise. • The lack of accountability of the TPO to the government for TPO expenditures

of public revenues raises significant legal issues. A TPO would control public

tax revenues without congressional oversight over appropriations. • TPO proposals provide no accountability if the TPO fails to achieve recycling goals

or fails to meet other obligations. There is no ability by the government to enforce against a TPO.

An ARF Constrains Competition And Limits The Efficiencies To Be Gained From

Competition. A new tax to fund a monopolistic recycling program fails to establish

a competitive environment that will provide incentives for improved performance.

Under the California ARF system, all collectors and recyclers receive a uniform rate

of compensation set by the state. In ARF systems that depend on a TPO, the only

possibility of competitive bidding is with a monopoly organization that sets the bid

requirements. This is not the same as a fully functioning private market with multiple manufacturers seeking recycling services.

V. CONCLUSION

HP supports a Product Stewardship Solution that requires manufacturers to take

responsibility for their equivalent share of CRT devices returned for recycling by

households, that places minimal responsibilities on retailers and state government,

and that provides local governments with funds for CRT collection, consolidation,

and recycling. Overall, this approach offers a more efficient and flexible way to

achieve our recycling goals.

HP looks forward to working with the Subcommittee and other Members of Congress on the development of a national recycling system that leverages the capabilities and expertise of manufacturers, retailers, recyclers, and others to achieve efficient and low cost opportunities for all consumers.

For more information, please contact Renee St. Denis at 916-785-8034 or

renee.stdenis@hp.com.

Mr. GILLMOR. Okay. Thank you very much.

Let me start with the questions, and direct this to the whole

panel, those of who you want to respond; I would imagine that

would be those of you in the retailing or manufacturing.

Many of the organizations have been members of several stakeholder processes, including the National Electronic Product Stewardship Initiative, that have been trying to seek a consensus of recommendations of what a Federal response should be, but each time

the talks have not produced a resolution. So I guess I would ask

why is that, what lessons have you learned from those meetings,

and is there a possibility of a consensus developing, or are we going

to be in the position of having no consensus and then just trying

to pick what would appear to be the best solution? Dave.

Mr. MCCURDY. Mr. Chairman, it is a very appropriate question.

And EIA was very involved in the NEPSI dialog, as were many

other stakeholders here. And I think you hit the key point first,

and just let me quickly reiterate. I think what happened during

NEPSI and through this process is that there was a number of

areas of consensus. We started with a lot of disharmony on a lot

of these issues and a lot of miscommunication and people talking

past each other, and I think throughout this process—and EPA did

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facilitate and work and tried to even hold the hammer over us at

some point trying to build the most consensus.

In the areas that we mentioned before, national consistency and

electronic recycling, we really want to see a streamline in uniform

regulatory framework. I don’t think there is disagreement on this

panel; if there is, it is rare. A viable infrastructure that requires

coordinated efforts—and we say shared responsibility, it really

comes down to a funding issue which I think is really the crux of

the question. And I think there was consensus as well. And in California there was a debate, and I think there was agreement, this

is a solid waste management and resource conservation issue.

There is a consensus on that. There are those on the fringe who

will argue it is hazardous waste. That is not the case. This is a resource conversation issue.

We want to see a limited and defined scope of products, and

again, Mr. Murray from California said the screen was the nexus.

The size of the screen actually we had a lot of debate on, and industry was involved in that. We also saw that there was a need

to harmonize labeling product information and regulatory reporting

requirements. That is important.

And then last, regulations or standards for recyclers, there is a

discussion there, and there have been questions and kind of subquestions that are just waiting to be asked of this on issues such

as export. And I think it is important our manufacturers and others believe that the recyclers have a role to play, and there is a

need for safe, environmentally sound management there, and that

there have to be standards and certification of those recyclers that

are responsible for the product they take back in order to make

sure that it doesn’t end up in the wrong place or that it is misused

or not controlled. Those areas we have reached consensus, I think;

I think it is safe to say. So as the subcommittee looks at this, don’t

write those off. Those are really critical.

The other question, though, is on the issue of financing. Recycling unfortunately today, the cost of the transportation, the labor

of dismantling, the collection far exceed the value of the end product, the recycled product, so there is a differential, and that really

is the crux of the problem is how do you manage those costs.

California, we didn’t oppose the California bill as an alliance.

Some of our companies support it; some opposed it. We as an association didn’t oppose the final compromise, but I will say that I

think the jury is still out on what happens in California. There is

a bureaucracy at work there. We will see how that is managed.

And what I think we are asking the subcommittee to do at the end

is help us find a way to reach a concensus so that we don’t have

a main solution and a California solution multiplied across the

country.

Mr. GILLMOR. Thank you, Dave.

My time for questioning is expiring, but I want to give anybody

else that wants to take a crack at that the opportunity, then go to

Ms. Solis and Mrs. Bono. And I have been informed that probably

in about 10 minutes they are going to start a series of votes on the

floor, so we will need to conclude.

Anybody else want to take a crack at that question, or did Mr.

McCurdy so profoundly sum it up that we are all set?

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All right. Ms. Solis.

Ms. SOLIS. Thank you.

My question is for Mr. Thompson from Panasonic. You raised a

good issue. What should the EPA do in terms of recommending a

national study? The last one you mentioned wasn’t out until 1999.

Give me some idea of what you would see in something like that.

Mr. THOMPSON. I have a quotation in my testimony that was

written by the NEPSI coordinator, and she said, ‘‘Prior to starting

a full-fledged dialog, an adequate level of base research must be in

place. In the NEPSI dialog this baseline did not exist at the outset,

which created recurring disagreements through the dialogs on basic

facts.’’

What I see as a manufacturer who participated in NEPSI and

supported the NEPSI consensus, if you will, was that we didn’t

have an understanding of how many products are being generated

and how many products are actually of concern. We didn’t have an

understanding of the capability of the domestic recycling industry

in terms of its capacity, its technology, the markets for materials.

We didn’t have an understanding of the adequacy of secondary

markets for materials containing electronic products, both in the

United States and around the world. We didn’t have an understanding of the volumes of products being exported and the adequacy of overseas recyclers. And we didn’t have an understanding,

probably most importantly to me, of the different economic consequences and ramifications of different systems.

So, for example, we have talked about California, and California

has a centralized bureaucratic approach that is very easy to focus

on and associate a cost on that. If you look at an approach that is

being suggested in Maine, for example, the take-back approach,

you will have a number of consolidation facilities, probably 10 to

20, I am not sure what that number will be yet, to which local governments will collect and deliver electronic products. Those products will have to be sorted by brand, and then once that is done,

manufacturers will be assessed a cost for paying for their brands

at those consolidation facilities, including transportation, dismantling and recycling. That, when you combine all those together, you

are going to have a large number of what I will call

minibureaucracies that is also going to be a very substantial cost.

Ms. SOLIS. Because my time is short, what are you recommending then? Obviously we need to do an inventory of what is

going on, and that has to be done.

Mr. THOMPSON. Plus focus on the different economic consequences for American society of different approaches.

Ms. SOLIS . Is there anyone on the panel that differs from that

and wants to speak to that? No?

Mark.

Mr. MURRAY. I think there has been so much focus on assessing

the different approaches, and I think, and I may disagree with

some with regard to the need for a national solution, that it is appropriate to allow these two experiments in California and Maine

to move forward and allow the real world to determine which approach works and what are the strengths and weaknesses of those

systems. I think that is going to be more valuable than a U.S. EPA

study of those kinds of systems.

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It seems to me that there are specific areas that the Federal Government can play a role. The export issue is one of those areas;

again, State authority to impose responsibility on any of these that

are outside of their State, whether it is an advanced disposal fee

responsibility or a direct manufacturer responsibility. Those are

two areas where States could use some assistance from the Federal

Government. But my recommendation would be, rather than studying what system works from a theoretical perspective, allow these

two experiments to move forward and see how the real world

emerges there.

Ms. SOLIS. My next question is for Mr. McCurdy. Since you represent the high-tech industry there, is your organization planning

on addressing the issue of phasing out toxic materials that are

used in the manufacturing processes?

Mr. MCCURDY. Yes, ma’am. As I stated in my testimony, the design cycle is very important. We don’t just talk about manufacturing and sale, it is a life cycle. And our manufacturers and representative here, as well as Mr. Thompson, indicated in the consumer electronic sector, in the IT sector our companies invest in literally hundreds of millions, perhaps billions, of dollars in the design of products that not only make them more efficient, reduce

these materials—again, if they are suitable alternative materials—

and again, they have to apply science to do that. Our company is,

I think, ahead of implementation or ability to implement directives.

Again, I mentioned lead free. A lot of our companies today are

talking about green manufacturing. They are looking at this as potential market enhancement for them or competitive advantage.

So, yes, there are many, many examples, incredible steps, and we

see it every single day. Mr. Largent showed you the examples of

the different systems. Look at televisions today. The television

today, most models—and hopefully the price points of these are

coming to the point that they are going to be readily available—

instead of having these big tubes, are going to be thin-screened,

just like your computer screens today. Those are computers and

televisions at the same time. That is where the future is going.

Mr. BRUGGE. Can I just add to that? You asked about contaminants like lead and cadmium. There is already agreement among

wireless carriers to completely phase those out by mid-2006, next

year.

Mr. GILLMOR. The gentlelady from California.

Mrs. BONO. Thank you, Mr. Chairman. I actually am going to

pass on any questions, which is very strange, I know. But I want

to point out to the panel that I look forward to working with each

of you on a solution as we move forward here. And I did have a

question for Steve Largent, but I will talk to you about it in person

as we move forward.

So, again, thank you all for your time. And you know that I am

personally interested in this, and I look forward to working with

each and every one of you.

Thank you, Mr. Chairman, also, for holding this hearing.

Mr. GILLMOR. I also commend the gentlelady for her leadership

and the interest that she has evidenced in this issue over a period

of time.

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I would like to ask the panel, I think, because everything was

going on, our membership at this hearing was not what we would

like, but there may be some members wanting to submit questions

to the panelists in writing, and we would ask if you would be willing to respond to that.

With that, I want to thank you all very much for being here. It

was very informative. And we will conclude.

[Whereupon, at 3:20 p.m., the subcommittee was adjourned.]

[Additional material submitted for the record follows.]

PREPARED STATEMENT OF CAROLYN BRANDON, VICE PRESIDENT, POLICY, CTIA—THE

WIRELESS ASSOCIATION TM

Chairman Gillmor, Ranking Member Solis, and members of the Subcommittee,

thank you for the opportunity to appear before you today to testify on the issue of

electronic waste and the appropriate role of government, be it local, state, or Federal, to address this matter. My name is Carolyn Brandon and I am CTIA’s Vice

President for Policy. CTIA—The Wireless Association TM and its members have been

committed to the goal of sustainable development in the wireless industry and the

environmentally sound management of discarded, recycled, or refurbished wireless

mobile phone products.

CTIA’S COMPREHENSIVE, VOLUNTARY REUSE AND RECYCLING PROGRAM

CTIA members are at the forefront of providing consumers with wireless products

and services that facilitate communications wherever and whenever. Concurrent

with the industry’s business goal of providing ubiquitous wireless coverage, CTIA

members recognize that one of our responsibilities as good corporate citizens is a

commitment to environmental stewardship. This commitment is reflected in the industry’s voluntary disposal recycling program—Wireless...The New Recyclable.

WIRELESS ... THE NEW RECYCLABLE

What is ‘‘Wireless...The New Recyclable?’’ It is a multi-faceted program the wireless industry launched in October of 2003 to facilitate environmentally sensible

management of wireless products at end-of-life. The initiative provides a voluntary

and uniform set of guidelines allowing manufacturers and carriers to upgrade the

management of their environmental practices in the disposition of used wireless devices. It has been embraced and adopted by numerous CTIA members, including all

of the national carriers and mobile phone manufacturers.

The program guidelines incorporate all aspects of the recycling process: collection,

transportation, re-use, refurbishment and materials reclamation.

PUBLIC OUTREACH AND AWARENESS

‘‘Wireless...The New Recyclable’’ is designed to inform, educate, and encourage

consumers to recycle their ‘‘end-of-life’’ wireless products through a wide range of

company initiatives and incentives. In particular, the program focuses the public’s

attention on the importance and ease of recycling wireless devices by 1) supplying

the wireless industry with public awareness materials, such as posters and bill

stuffers, to reinforce the message to recycle wireless devices and; 2) directing consumers to www.recyclewirelessphones.com, a central website that provides consumers with important information on the recycling of wireless products and links

to CTIA member company sites which provide information on where consumers can

recycle phones.

CTIA ENVIRONMENTAL PRINCIPLES

‘‘Wireless...The New Recyclable’’ incorporates CTIA’s ten environmental principles that set forth the wireless industry’s commitment to sustainable development

and the proper management of wireless devices at their end-of-life. The principles

are listed on the second page of a handout that I’ve included with my testimony.

VOLUNTARY GUIDELINES

The guidelines assist companies in ensuring that the wireless devices that are collected are managed, transported and reused, refurbished or recycled in a responsible

way and in accordance with federal and state environmental laws. Promoting the

re-use, refurbishment or recycling of wireless devices minimizes waste destined for

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landfills or incineration. Just as importantly, the recycling guidelines facilitate the

recovery of raw materials that are then used in the manufacture of new products.

CELL PHONES ARE DIFFERENT FROM OTHER ELECTRONICS

A key aspect of any re-use or recycling program is the collection of the product.

The industry has been able to establish effective voluntary collection programs that

are a function of the small size and portability of mobile phones and mobile devices.

These voluntary programs include collection at municipal centers, return of products

to service providers or other retailers, or mail-in returns to manufacturers. The size

and relative lack of portability of most other electronics products, such as TVs and

computers may not practically or economically allow for this range of collection options.

For example, Verizon Wireless has a program that collects cellular telephones in

retail outlets and accepts the return of its products via mail through the charitable

program, HopeLineSM; this program offers these collected products to help the victims of domestic violence. T-Mobile’s Give More, Get More accepts used phones

through the mail and donates 100% of the recycling proceeds to charitable organizations. Cingular, SprintNextel, and other companies also collect previously used wireless phones and donate either the refurbished phones or the proceeds from the programs to charitable organizations. Finally, The Wireless Foundation, a charitable

organization created by CTIA, has sponsored collection events and charitable programs, such as Donate-a-Phone .

SIZE, PORTABILITY, AND REDUCED ENVIRONMENTAL IMPACTS

Wireless handset manufacturers have responded to consumer’ preference of the

‘‘less is more’’ approach when it comes to the development of new mobile phones.

One only has to look at the size of mobile phones ten years ago juxtaposed to the

size of phones being manufactured today to see the tremendous strides the industry

has made not only in technological capabilities, but also environmental compatibility. The new generation of wireless devices weigh approximately 42% less than

earlier models and are being constructed in a more environmentally friendly manner. As mobile phone and device manufacturers comply with the European Union’s

Restriction of Hazardous Subtance (RoHS) Directive, we also see the reduction of

hazardous materials such as lead and cadmium in wireless phones marketed in the

United States.

We anticipate that the design changes required for sale in, or import to, the European Union will also be applied to products marketed and sold in the United States.

Such design changes will facilitate recycling and re-use and further reduce any potential environmental impacts from the recycling or disposal of mobile phones or

mobile devices.

MARKETS EXIST FOR USED MOBILE PHONES AND MOBILE DEVICES

The market for used mobile phones and mobile devices is different from most of

the electronics industry. Mobile phones have a relatively high re-use value creating

an ongoing market for these devices; therefore, the market forces providing incentives to collect and re-use these devices would be more efficient than for other electronics products. This is evidenced by the current efforts of ReCellular and HOBI

International, Inc., two for-profit companies established to collect and refurbish used

telephones for return to the market. The operation of for-profit companies is unusual in the electronics recycling and re-use market and is a clear indication of the

strength of the market for wireless device re-use.

CLOSE CONTACT BETWEEN CONSUMERS AND SERVICE PROVIDERS

Unlike most electronics manufacturers and retailers, wireless service providers

and consumers are typically in close contact during mobile phone or mobile device

replacement and billing. This contact presents the opportunity for efficient and costeffective collection. Many wireless customers return to a service provider or independent agent to replace their devices. Moreover, through monthly billing, service

providers are in communication with their customers on recycling and re-use options. This readily available occasion for re-use or recycling opportunities is not common to most other electronics industries.Success of ‘‘Wireless...The New Recyclable ’’

Carriers, recyclers, and refurbishers are all in the process of evaluating the best

way to expand and assess the success of their respective recycling and/or refurbishing programs. With that being said, I can share with the Subcommittee the following statistics:

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• ReCellular, a refurbisher, has collected approximately four million phones in

2004, up from 1.5 million in 2002. • Nextel has collected 4.4 million phones since 2002. Nextel also has refurbished 2.3

million phones since 2002. • The Wireless Foundation’s take-back programs have collected nearly three million

phones since 1999. • Verizon Wireless has collected approximately two million phones through their

HopeLineSM charitable donation program. • GRC Wireless Recycling has collected approximately one million phones since

2001. • Old Cell Phone Co. reportedly buys back 30,000 used cell phones a month, and

has been doing so since 2002. • RMS Communications Group collected one million phones in 2004, and has been

collecting phones for the past ten years. • eBay reportedly sells 130,000 used phones a month on its website, and has sold

approximately four million phones over the past five years.

STATE-BY-STATE REGULATION IS UNWORKABLE

Mobile phones and mobile devices are a consumer product in national commerce

best addressed at the national level. The re-use and recycling of these wireless devices present issues unlike those presented by traditional state solid waste management and disposal. The size, marketing and re-use and recycling options available

for wireless devices are also distinct from other types of electronics. In our view, a

voluntary, industry-supported national program will facilitate the re-use and responsible recycling of wireless devices regardless of where the devices are purchased

or where the devices wind up.

The re-use and recycling of mobile phones and mobile devices is a national environmental challenge. We believe that state-by-state regulation is counter-productive

and a one-size fits all national approach is not workable for the entire electronics

industry. Rather, this challenge demands a comprehensive, voluntary national solution tailored to address the issues raised by mobile phone and mobile device endof-life. Consumers and industry are already confronting inconsistent state requirements, as evidenced by the inconsistent take-back, financing and manufacturing requirements already enacted in California and pending in several other states. Absent a definitive federal endorsement of a voluntary national recycling program, it

seems that a piecemeal and inconsistent network of state regulatory programs will

be the default solution. The wireless industry fears that a state-by-state system

would lead to regulatory uncertainty and confusion, high compliance costs, and the

inefficient use of resources, all of which combined will lead to increased costs for

consumers and a much less efficient and effective take-back program, particularly

for wireless providers and manufacturers that serve multiple markets. The environmental benefits of such an approach are also questionable.

Wireless consumers will pay, either directly or indirectly, for inefficient and inconsistent state regulatory programs. Increased regulatory costs will invariably be

passed through to the consumer as a result of an increase in product costs.

It’s unfortunate, but true, that regulatory systems simply cost more and those

states that choose to adopt such programs will incur potentially significant costs,

at both the state and local level, to implement a mandatory regime, including costs

of collection, administration, oversight and enforcement. Again, consumers will ultimately pay for these increased costs through local taxes.

Working with industry to promote product re-use and recycling on a national level

will help the United States in its efforts to work with other nations in finding environmentally sound, effective, workable solutions to address the increasing volume

of used wireless devices elsewhere. A piecemeal state-by-state approach will leave

the United States without a strong basis for a leadership role in the international

discussion on recycling issues.

EPA AND DEPARTMENT OF COMMERCE CAN PLAY AN IMPORTANT ROLE IN ASSISTING

INDUSTRY TO TAKE THE LEAD ON PROMOTING PRODUCT STEWARDSHIP

The EPA has an established record of comprehensive, voluntary re-use and recycling programs. EPA’s programs, such as ‘‘Waste Wise’’ and ‘‘Resource Conservation

Challenge,’’ are good examples of government/industry partnerships designed to

produce environmental results without the need for new regulation. In May of 2004,

EPA issued national guidelines for the management of ‘‘end-of-life’’ electronics.

Additionally, EPA has worked with states and industry for several decades in developing national markets for traditional recycled materials, such as aluminum,

glass and paper. The Department of Commerce has expertise in technology and

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1Letter from John Skinner & Bruce J. Parker to the Honorable John Thune (Aug. 16, 2005),

at 1-2. 2 Id.

markets. We believe mobile phones and mobile devices demand a comprehensive,

voluntary national program for re-use and recycling that takes into account the

unique characteristics of mobile phones and mobile devices and we are committed

to working with the EPA and the Department of Commerce to continue to promote

the industry’s initiative, ‘‘Wireless...The New Recyclable’’—a program with a proven track record of success in protecting our nation’s environment.

Thank you for the opportunity to share the wireless industry’s views on this important issue, I welcome any questions you may have.

HEWLETT-PACKARD COMPANY

ROSEVILLE, CA 95747

October 6, 2005

Paul E. Gillmor, Chairman

Subcommittee on Environment and Hazardous Materials

2323 Rayburn House Office Building

Washington, DC 20001

DEAR CHAIRMAN GILLMOR: On behalf of HP, it is my pleasure to respond to the

questions we received from the Subcommittee on Environment and Hazardous Materials regarding electronics recycling. I also would like to take this opportunity to

thank you for allowing me to address your committee on September 8, 2005, about

this important issue and HP’s views.

HP applauds Chairman Gillmor for holding hearings on this emerging issue and

we hope that you view, as we do, that the hearings were a success. In our view,

the hearing succeeded in raising the awareness and advising the Members of the

House and the public on the challenges of managing and recycling used electronics

in the United States.

Thank you again for this opportunity. Please do not hesitate to contact me should

you have any additional questions.

Sincerely,

RENEE ST. DENIS

Director, Americas Product Take Back

Attachment

cc: The Honorable Hilda L. Solis, Ranking Member,

Subcommittee on Environment and Hazardous Materials

HEWLETT-PACKARD ANSWERS TO QUESTIONS FROM HON. PAUL E. GILLMOR

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: As between whether electronic waste is a resource conservation issue

or a hazardous waste issue, HP sees electronic waste as primarily a resource conservation issue.

As a company committed to environmental stewardship, HP believes that society

has an interest in minimizing waste and that the recycling of electronic products

can help to conserve natural resources. HP believes that the determination of

whether electronic devices generally warrant hazardous waste management remains

debatable. While we recognize that some stakeholders view mismanagement of electronic waste as posing potential environmental issues, studies also have been conducted that indicate minimal risks. For example, in a recent letter to Senator

Thune, the Solid Waste Association of North America (SWANA) and the National

Solid Wastes Management Association (NSWMA) stated that electronic products can

be safely managed in municipal solid waste landfills and that the natural processes

occurring within a municipal solid waste landfill, such as precipitation and absorption, effectively inhibit heavy metals from dissolving into the leachate or being released from the landfill in the form of landfill gas.1 In addition, landfill liner systems substantially prevent leaking of leachate from the landfill to the land upon

which the landfill is constructed.2 And, as industry moves to put EU RoHS compliant products on the world-wide market, waste concerns should become even more

limited. HP can provide other examples if needed. While considering the above inVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00199 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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formation from the solid waste management experts, HP believes and is involved

with this issue because it is an important resource conservation issue.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: HP finds that legacy and orphan waste are a significant—but not the

biggest—electronic waste issue. The major issue is developing and implementing a

national, uniform approach to electronic waste recycling that will achieve our recycling goals in a fair, flexible, and efficient manner, including providing incentives

for improved performance over time. Regarding legacy and orphan wastes, we think

it important to understand that these waste streams derive from different sources.

‘‘Legacy wastes’’ result from electronic products that are currently in use or otherwise owned by households and that were sold without being subject to any requirements regarding recycling or end of life management. When companies sold these

products, there was no expectation that manufacturers would be responsible for

managing them at end of life. End-of-life management of these wastes will be taken

care of by many recycling approaches, including HP’s Product Stewardship Solution.

‘‘Orphan waste’’ results from discarding products that: (1) are not labeled with a

manufacturer’s brand; or (2) for which the manufacturer of the product is no longer

in business and has no successor in interest. A key fact about orphan waste is that

it is much smaller in amount than what is regularly attributed to it. Preliminary

data circulated by the Maine Department of Environmental Protection suggest that

orphan waste currently constitutes approximately 10 percent of returns to local

waste collection systems. Thus, while orphan waste is an issue, it is not as big an

issue as many assumed that it might be. The orphan waste percentage can be minimized going forward by enforcement of labeling requirements and a thorough assessment of which manufacturers are in business or have a successor in interest.

End-of-life management of orphan waste will be taken care of by many recycling approaches, including HP’s Product Stewardship Solution.

In the absence of federal or state laws, a grant program for state or local governments would assist in jump-starting the solutions necessary to address this emerging environmental challenge. This has been demonstrated in the EPA’s Plug Into

E-cycling programs such as the Staples/Product Stewardship Institute (‘‘PSI’’) take

back offerings. HP is an active participant, both financially and through establishing taking back programs, in many of these programs and continues to support

the government role in supplying grants.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: The various ways that state and local governments address the electronic waste issue demonstrate that a federal solution is appropriate and, in fact,

the best solution.

First, state and local governments are not treating electronic waste in the same

way that they generally treat household waste. State and local governments are not

managing and financing the collection, handling, and recycling of electronic products

on a local basis in the traditional way, either through drop-off fees or through taxes

that residents pay. Instead, state and local governments are requiring global manufacturers to manage and finance unique electronic waste collection and recycling

systems.

Second, the three states—California, Maine, and Maryland—that have enacted

electronics recycling laws have imposed fundamentally different requirements on

manufacturers. (See Answer to Question No. 4 below for more information.) The effect of this patchwork is to increase the costs to manufacturers of managing electronic waste at its end-of-life. Manufacturers have to incur higher costs to meet

these differing state schemes than the costs that manufacturers would incur to meet

a uniform, federal scheme.

Third, state electronics recycling proposals often include design mandates. Thus,

rather than managing the local collection and disposal/recycling of electronic waste,

these new state electronic waste proposals reach back to manage the design of electronic products. In addition, design mandates affect movement of products in both

interstate and global commerce. Traditional state and local government waste management programs do not affect interstate or global commerce. In sum, these design

mandates underscore that electronic waste should not be treated as a local problem.

Fourth, unlike household waste, which is disposed of in solid waste disposal facilities, state electronic waste proposals require electronic waste to be recycled. LocalVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00200 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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ities have access to local solid waste disposal facilities for disposal. Electronic recycling facilities typically are not located within each local government jurisdiction

and may not be located within a state. Thus, electronic recycling often involves

interstate commerce issues as well as other transport and management issues associated with the need to use recycling rather than landfill disposal facilities.

Due to these unique features of electronic waste recycling programs (both enacted

and proposed), HP supports a uniform federal approach to electronics recycling.

Question 4. H-P sells in not only brick-and-mortar stores, but also over the Internet. Your testimony states: ‘‘the emerging patchwork of differing state laws is adding significant new costs and impeding the development of an efficient nationwide

infrastructure, while creating the potential for consumer confusion.’’ Could you

please tell me, specifically, how this is a problem?

Response: The three current systems—in California, Maine, and Maryland—have

imposed significant costs on HP and other manufacturers that could be avoided

under a uniform, national electronics recycling program. The three distinct sets of

rules in these states that HP has to examine, comply with, and communicate

throughout our company and to our retail partners, most of whom are doing business on an interstate basis, add significant complexity to establishing a nation-wide

infrastructure.

Compliance with the California electronics product tax requires HP to undertake

a broad range of activities, from developing internal IT systems, to identifying those

individual products covered by this new law, to collecting new taxes on our internal

and direct sales in California and remitting to the state the required amount on

those products. All of these requirements combined impose significant costs on HP.

For example, HP incurred a cost of more than $3.5 million to meet only one of these

requirements—collecting taxes on HP’s direct sales within California.

In contrast, to comply with Maine’s producer responsibility program, HP will not

be forced to make any changes to our IT systems nor impose new taxes on our consumers. HP’s requirement is to develop and finance a statewide electronic waste

management plan.

Maryland has established yet a different electronic waste management system.

The Maryland law requires manufacturers to pay the state a registration fee. HP

can reduce the amount of that fee by establishing an electronic waste recycling program. The requirements of an electronic waste recycling program in Maryland will

likely differ from those required in Maine.

Increasing the compliance complexity for HP is that each state has imposed its

electronic waste recycling requirements on a different scope of products. California’s

and Maine’s programs both address computer monitors and televisions containing

a screen greater than four inches measured diagonally. California’s program, however, covers only computer monitors and televisions that have been identified as

hazardous wastes by regulation. Maryland’s program addresses only computers and

computer monitors and does not address televisions. In addition, electronic products

tax requirements are more difficult to administer than an ordinary sales tax because the taxes differ by product type (e.g., California’s tax ranges from $6 to $10

depending on screen size). These inconsistencies restrict the development of nationwide solutions. Keeping track of these three systems is a challenge. Imagine if there

were 47 others.

The emerging patchwork of differing state laws also has the potential for consumer confusion. Consumers may be using common carriers or the U.S. mail to ship

devices for recycling. Having different management standards for electronic waste

in different states complicates compliance by both senders and transporters. In addition, in our mobile society, consumers moving from state-to-state may be confused

by a wide variety of systems.

The US EPA’s proposed rule for managing cathode ray tubes (CRTs) is one example of how a national approach could simplify and increase the efficiency of managing end-of-life CRTs. The proposed rule would exclude from the definition of solid

waste CRT devices sent for recycling. To the extent that states adopt the rule it

would enable companies to ship CRT devices to recycling centers without worrying

about multiple differing state labeling, shipping paper, and other requirements.

As shown by the discussion above, the emerging patchwork of different state electronic waste management laws will impose on manufacturers’ significant new costs,

impede the development of a national electronic waste recycling infrastructure, and

cause consumer confusion.

Question 5. Your testimony mentions that several states have adopted or are considering mandated design requirements or new technology products as part of their

recycling laws or other environmental initiatives. What are your feelings about the

use of environmental statutes to govern individual manufacturing processes? Do you

support this type of action or think it is a wise precedent to have set?

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3For more information, see http://productstewardship.us/pilotltakebacklstaples.html.

Response: We find that state mandated design requirements are not a wise precedent.

At the outset, it is important to distinguish between environmental regulation of

‘‘manufacturing processes’’ and establishing product design mandates. Environmental regulation of manufacturing processes is the traditional approach of most

environmental statutes, such as establishing controls on end-of-pipe wastewater discharges through NPDES permits. These state (and sometimes local) environmental

requirements are imposed on and met by individual HP facilities. Product design

mandates, on the other hand, apply to products before they are even created and

force manufacturers to apply such mandates to all products or to sell differently designed products on a state-by-state basis. HP questions the wisdom of state-by-state

design standards as a matter of law, policy, and cost.

Several recent state electronics recycling proposals have included RoHS or RoHStype requirements. As you are aware, the European Directive called ‘‘Restriction of

Hazardous Substances’’ (‘‘RoHS’’) limits the amounts of the certain chemical substances that can be present in electronic products sold within the European Union.

HP considers having individual states impose provisions of the RoHS directive at

a state level to be inappropriate for a number of reasons. Manufacturers generally

are complying with RoHS on a worldwide basis. Incorporating RoHS requirements

into state legislation will not provide any additional incentives to increase the

recyclability of products. Moreover, inclusion of such material restrictions in U.S.

state legislation will create confusion and interfere with the flow of these products

in interstate commerce because the state requirements may be different from RoHS

or may be interpreted by state agencies differently than the worldwide standard.

Question 6. Your testimony recommends expanding government support for pilot

projects and other initiatives to promote the development of an efficient electronicsrecycling infrastructure. In particular, you single out the U.S. EPA’s ‘‘Plug-In to eCycling’’ program—the same one praised by Maryland Secretary of Environment in

the first part of our hearing. What do you see as being needed and do you see a

lack of support for these or other Resource Conservation Challenge Programs?

Response: The results of implemented pilot projects demonstrate their value. By

showing what works, pilot programs can also serve as a guide for development of

electronics recycling programs. For instance, during the summer of 2004, Staples,

Inc., in partnership with the Product Stewardship Institute (‘‘PSI’’) and the U.S.

EPA—with participation from state agencies, a recycler, and ten electronics manufacturers, including HP—launched a program to measure the success of retail-based

electronics recycling. Staples collected used computers and related equipment from

customers at retail stores and businesses in five northeastern states, then transported the materials to a recycler. The program report concluded that customers

were overwhelmingly positive about the program and wanted it to continue. From

an operational perspective, the program was easy to implement. The cost of collection was competitive with other electronics collections. (See Answer to No. 3 of Mr.

Dingell for detailed cost information for the Staples, Inc./PSI pilot project.) Overall,

the program was a success.3

In several meetings, including a recent meeting held in Minnesota, EPA has stated that the Plug-in program has raised awareness of the electronics recycling issue.

To continue this progress, it is apparent that additional funding and support are

needed now to support additional pilot programs. Pilot programs started with government seed money can grow into self-supporting programs and lead to the development of permanent recycling infrastructure.

Question 7. Your testimony mentions H-P’s strong advocacy of a ‘‘Product Stewardship Solution.’’ Could you please explain this program and why you consider it

so much better than the California, Maine, or Maryland approaches? Does this guarantee that all CRTs are eventually addressed? What is H-P’s burden vis-a`-vis the

rest of the consumer products industry, particularly if you use as the basis the number of annual cathode ray tube devices sold? What do you estimate to be the economic or other practicality burden on your competitors or other sectors of the ewaste recycling chain?

Response: We summarize the key elements of HP’s Product Stewardship Solution

below and show that the approach is not biased in favor of any particular manufacturer, including HP. The Product Stewardship approach provides a fair and equitable allocation of end-of-life management responsibilities for manufacturers’ electronic products based on the amount of each manufacturer’s contribution to the electronics waste stream.

Under Hewlett-Packard’s Product Stewardship Solution, manufacturers must take

responsibility for their ‘‘equivalent share’’ of CRT-containing computer monitors and

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TVs (‘‘CRT devices’’)—including orphan CRT devices—returned by households (individual consumers and home businesses) for recycling. They can do this either (1) by

establishing a recycling program or (2) by paying the state reasonable collection,

consolidation, and recycling costs for their equivalent share. Manufacturers implementing a recycling system have the flexibility to design their program as they see

fit, so long as they recycle their equivalent share in compliance with applicable laws

and regulations.

Manufacturer equivalent shares are determined annually by the government. A

manufacturer’s equivalent share is that manufacturer’s portion of the annual CRT

device waste stream. The equivalent share concept allows manufacturers that

choose to run a recycling program to satisfy their obligations with CRT devices of

any brand or their own brand if they desire. This approach avoids the need for

brand sorting, but preserves the ability of manufacturers to implement recycling

programs that collect only their own brand products. It provides an efficient recycling system with multiple options for consumers and manufacturers.

Manufacturers will be held accountable to the government to meet their equivalent share obligations. This is a self-implementing performance standard keyed to

a specific amount of CRT devices to be recycled. Thus, a manufacturer that chooses

to provide a recycling program but fails to recycle its equivalent share has a predetermined payment obligation for the shortfall to the state. This system is designed

to achieve recycling results by manufacturers, not merely to generate revenue or establish government recycling programs.

This approach has many benefits:

• Provides efficiencies through market-based solutions and the opportunity for improvements over time, thereby offering a lower cost solution to consumers.

• Avoids new taxes on consumers.

• Places key responsibilities on manufacturers, not government, to achieve recycling

goals, including recycling of orphan CRT devices.

• Places minimal responsibilities on retailers.

• Limits state government involvement to enforcement and other necessary functions, avoiding the creation of new taxes and new agencies.

• Reduces burdens on local governments by providing manufacturers with incentives to keep CRT devices out of the municipal waste stream and by providing

a funding source for CRT device collection, consolidation, and recycling.

• Provides the opportunity for design improvements.

• Provides a simple approach that can transition to a national system.

HP supports a comprehensive national solution to the challenge of recycling discarded electronics. While federal legislation based on the principles of product stewardship outlined above would be the most efficient approach, we recognize that several states will likely act prior to the adoption of a federal program and are working

with state governments to enact our Product Stewardship Solution.

HP’s Product Stewardship Solution includes elements of the widely supported

Maryland Statewide Computer Recycling Pilot Program. The Maryland law requires

manufacturers to pay to the state an annual registration fee—the amount of which

varies depending on whether the manufacturer offers a computer take back program. Thus, both HP’s model bill and Maryland’s approach offer manufacturers the

opportunity to ‘‘pay’’ or ‘‘play.’’ Maine’s Electronics Waste Law requires manufacturers to submit to the state a statewide electronic waste management plan for the collection and recycling of computer monitors and televisions produced by the manufacturer and generated as waste by Maine households. We do not consider our approach superior to the Maryland or Maine approaches, but we have improved our

model based on experiences in Maryland and Maine.

HP believes that its approach is superior to the California approach and other advance recovery fee (‘‘ARF’’) approaches. An ARF system fails to provide the benefits

of the Product Stewardship Solution. In particular:

• The ARF ‘‘fee’’ is a new tax on consumers.

• The ARF is burdensome to retailers.

• The ARF creates a large new government program.

• The ARF does not guarantee that any amount of electronic devices will be recycled.

• An ARF constrains competition and limits the efficiencies to be gained from competition.

• An ARF favors remote sellers at the expense of in-state retailers because states

cannot require ARF collection by remote sellers that lack nexus to the state.

No system can guarantee that all CRTs are eventually addressed because end-oflife product management depends on consumer behavior. Under HP’s approach,

manufacturers provide information about how CRT devices may be returned via a

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4Testimony of Mark Murray, Executive Director, Californians Against Waste, to U.S. House

Subcommittee on Environment and Hazardous Materials (Sept. 8, 2005) at 7. 5 Id.

6 California Integrated Waste Management Board, California E-Waste Updates: Implementing

SB 20/SB 50 (Aug. 3, 2005). 7 14 Cal. Code Reg. § 18660.34(a). 8Product Stewardship Institute, The Collection and Recycling of Used Computers Using a Reverse Distribution System, A Pilot Project with Staples, Inc., Final Report to the U.S. Environmental Protection Agency (June 2005) at 47, available at http://productstewardship.us/

pilotltakebacklstaples.html. 9Murray Testimony, at 7.

website and/or toll-free telephone number. Local governments, charities, retailers,

and other organizations will offer other recycling opportunities including programs

implemented in cooperation with manufacturers. This variety of programs lets consumers choose the programs that best suit their needs. This broad flexibility of

choices for consumers increases, rather than decreases, the likelihood that they will

recycle their CRT devices.

Under HP’s approach, the economic burden on HP’s competitors would be no

greater or less than the burden on HP. All manufacturers must take responsibility

for their equivalent share, i.e., the contribution of their CRT devices to the annual

CRT device waste stream. Our approach would be advantageous for all manufacturers in that it offers flexibility. Manufacturers can choose whether to provide a recycling program or to pay the state reasonable collection, consolidation, and recycling

costs for their equivalent share. Manufacturers choose whether to act individually

or in partnership with other manufacturers. Finally, manufacturers that choose to

provide a recycling program can select among many approaches to obtaining their

equivalent share. HP’s approach fairly apportions the economic burden of electronics

end-of-life management to each manufacturer based on each manufacturer’s contribution to the electronics waste stream.

Question 8. As I understand it, H-P opposed California’s advanced recovery fee because it believes that manufacturers should be responsible for the recycling of their

products. Is that correct? Why do you believe manufacturers should be ‘‘tagged’’ with

responsibility for product recycling as well as ‘‘legacy’’ and ‘‘orphan’’ waste? What

has been H-P’s experience in California since enactment of the California law, are

you losing money because of it?

Response: You are correct that HP opposed California’s advanced recovery fee law.

We did so for a number of reasons, including its high cost, which we discuss below.

As discussed more fully in the Answer to Question No. 7 above, HP supports a product stewardship approach through which manufacturers take responsibility for their

‘‘equivalent share’’ of CRT devices returned by households (individual consumers

and home businesses) for recycling, either by implementing a recycling program or

by assuming financial responsibility for their equivalent share. HP’s opposition to

California’s approach stems from our belief—now borne out by experience—that a

one-size-fits-all tax on consumers at the point of sale is not the most efficient approach to electronics recycling.

Under any electronics recycling program—including HP’s Product Stewardship Solution and California’s electronic products tax—consumers are ultimately ‘‘tagged’’

with the cost of product recycling. Accordingly, our goal should be to develop a system that imposes the lowest overall costs on consumers and includes mechanisms

for consumers to gain from efficiency improvements over time. Creating a new bureaucracy to fund a new tax program as California has done is not, and was not

at the time of adoption, the best solution for consumers.

Consider the following California ARF system costs. Start-up administrative costs

are budgeted at approximately $8 million for the first year and then expected to stabilize at $5-6 million annually.4 In the first six months, revenues were about $30.8

million.5 As of early August, claims amounted to only about $8.1 million and about

$3.5 million in payments had been approved.6 The California program pays $0.48/

lb for collection and recycling, 7 which is more than 40% higher than the cost of collection and recycling under the Staples, Inc./Product Stewardship Pilot (‘‘PSI’’)

($0.34/lb).8 (For a description of the Staples, Inc./PSI pilot study, see the Answer to

Question No. 6 above.) The overall cost of this system, in relation to the overall

costs to recycle is high. The gross revenues under California’s proposal is expected

to be $60-70 million, and the estimates are that they will recycle approximately 50

million pounds of products in 2005.9 As a result, the overall system costs of this approach are approximately $1.20 to $1.40 per pound, and these costs will ultimately

be borne by consumers in the state. In contrast to California’s tax program, HP’s

approach is intended to provide efficiencies through market-based solutions and opVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00204 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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10Murray Testimony at 7. 11Some ARF systems (e.g., California’s program) incorporate an independent regulatory mandate to comply with the European Union’s restriction of the use of certain hazardous substances

in electrical and electronic equipment (‘‘RoHS’’) requirements.

portunities for improvements over time. HP’s market-based, flexible approach offers

a lower overall system cost, which will result in lower costs for consumers.

In addition, HP’s approach is more equitable for manufacturers because individual

manufacturers must take responsibility for their own ‘‘legacy’’ waste, and all manufacturers share the responsibility for ‘‘orphan’’ waste. In contrast, under California’s

electronic products tax, a tax on current sales funds recycling of ‘‘legacy’’ and ‘‘orphan’’ waste. This means that new market entrants and manufacturers with a growing market share disproportionately shoulder the responsibility for product recycling. In addition, based on data for the first six months of 2005, sales of covered

electronic devices for which the California State Board of Equalization has collected

taxes equal 80% to 85% of California’s share of national sales for the same period.10

This suggests that 15% to 20% of sellers, most likely internet and other remote sellers, are not collecting and remitting the tax. Overall, California’s electronic products

tax creates an unlevel playing field among manufacturers.

In response to your question about HP’s experience in California since enactment of California’s electronic products tax, HP has been forced to spend over $3.5 million

on a single aspect of the program—tax collection on direct sales in California. This

expenditure was incurred by HP as our role as a retailer under this program. The

$3.5 million does not include HP’s costs to update our systems with new SKUs

(stock keeping units) for new products, or other costs incurred by HP in our role

as a manufacturer. In addition, this cost does not include HP’s expenditures as a

consumer and the new taxes that we have had to pay the state for covered products

used by our California employees.

HEWLETT-PACKARD ANSWERS TO QUESTIONS FROM HON. JOHN D. DINGELL

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: HP’s Product Stewardship Solution provides the opportunity for manufacturers to benefit from improved environmental design and innovation, whereas

an advance recycling fee/tax approach provides no such opportunity.

Under HP’s approach, manufacturers take responsibility for their ‘‘equivalent

share’’ of CRT devices returned by households (individual consumers and home businesses) for recycling, either by implementing a recycling program or by paying the

state reasonable collection, consolidation, and recycling costs for their equivalent

share. Those manufacturers that collect and recycle their equivalent share can benefit from design improvements they have made. Moreover, the system provides an

incentive to improve product design by allowing market forces to decrease recycling

costs for those improved products. To the extent that recycling costs can be decreased, manufacturers—both those that run their own recycling programs and

those that pay the state for collection, consolidation, and recycling costs—will benefit.

An advance recovery fee/tax approach itself provides no identifiable incentives to

design for the environment.11 Under this approach, commercial recyclers conduct recycling. Consumers pay the tax. And manufacturers are divorced from the recycling

process. Therefore, recyclers have no incentive to reduce recycling costs where market forces are divorced from the system and they are paid a fixed price per pound.

The uniform fee/tax imposed on products has no linkage to recyclability of the products. Consequently, manufacturers gain no benefit from product improvements they

make.

Question 2. At the Subcommittee hearing on July 20, 2005, Mr. Breen of the Environmental Protection Agency testified that a good rule of thumb for the cost of recycling a desktop computer is $15, while the value of the materials recovered is anywhere between $1 and $2.50.

Do you agree with the economics of recycling desktop computers as described by

Mr. Breen? If not, please provide your views.

Response: Although the estimates might not be the same in all regions, we agree

with Mr. Breen’s fundamental point that the current costs of recycling electronics

in an environmentally sound manner are greater than the value of the materials

recovered. At least part of this disparity is due to the fact that electronics recycling

is in its infancy and markets are lacking for the recovered material. These economics are not fixed and may vary well change over time. Government policy should be

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12Product Stewardship Institute, The Collection and Recycling of Used Computers using a Reverse Distribution System, A Pilot Project with Staples, Inc., Final Report to the U.S. Environmental Protection Agency (June 2005) at 46, available at http://productstewardship.us/

pilotltakebacklstaples.html. 13 14 Cal. Code Reg. § 18660.34(a).

drafted in a way to provide incentives for changing these economics, and manufacturers and customers should benefit from any improvement in such economics. A

fixed uniform fee fails to provide such incentives and does not allow companies or

customers to benefit from any efficiencies that are gained over time.

Question 3. How much does it cost to recycle a laptop computer and what is the

value of the recovered materials?

Response: The recent Staples, Inc./Product Stewardship Institute (‘‘PSI’’) pilot

study provides the information you requested. The Staples/PSI study estimated the

cost of handling computer equipment in a retail store, shipping it to a distribution

center and then on to recycler, and recycling it to be $0.337/lb.12 HP’s Notebook computers weigh on average about 7 pounds. Thus, the recycling cost of a Notebook

computer would be $2.36. In contrast, under California’s electronics product tax, the

California Integrated Waste Management Board pays recyclers $0.48/lb,13 resulting in $3.36 for a 7-pound Notebook computer. Thus, under California’s program, the

cost of recycling a Notebook computer is more than 40% higher than under the Staples, Inc./PSI pilot study. The cost figures in the Staples and California programs

are net of any recovered value and do not include administrative overhead and other

costs. Recovered value of the commodities varies depending on available markets.

For the recovered value to increase, markets need to develop.

Question 4. Will your company be able to comply with the waste electrical and

electronic equipment (WEEE) directive of the European Union, which requires the

elimination of mercury, cadmium, lead, chromium, and other substances by July 1,

2006?

Response: We assume that the question is referring to the European Union’s restriction of the use of certain hazardous substances in electrical and electronic

equipment—the RoHS Directive—rather than the WEEE directive, which establishes a manufacturer electronics waste recycling system.

HP is committed to compliance with all applicable laws and regulations, including

the RoHS Directive, which will restrict the use of lead, mercury, cadmium,

hexavalent chromium and two bromine-containing flame retardants: PBB

(polybrominated biphenyls) and PBDE (polybrominated diphenyl ethers) in electrical

and electronic products. HP’s goal is to exceed compliance obligations by meeting

the requirements of the RoHS Directive on a worldwide basis. By July 1, 2006,

RoHS substances will be virtually eliminated (to levels below legal limits) for all HP

electronic products subject to the RoHS Directive, except where it is widely recognized that there is no technically feasible alternative (as indicated by an exemption

under the RoHS Directive).

In addition to HP’s commitment to adherence with the RoHS Directive, HP is participating in the development of global standards for the restriction of hazardous

substances and is working with industry partners through several consortia to accelerate industry’s transition to alternative materials. As similar regulations are adopted by other countries, we believe harmonized global standards will also accelerate

the industry transition.

HP’s initiative to address the RoHS Directive is part of the company’s Design for

Environment program which includes using materials more efficiently, finding alternatives for hazardous materials, designing for energy efficiency, and designing products that can be easily recycled.

Question 5. After July 1, 2006, will your company discontinue selling electronic

products, such as computers or televisions, in the United States that contain mercury, cadmium, lead, or chromium and other substances covered by the WEEE directive?

Response: As in the Answer to Question No. 4 above, we assume that the question

is referring to the European Union’s restriction of the use of certain hazardous substances in electrical and electronic equipment—the RoHS Directive. HP is committed to compliance with all applicable laws and regulations, including the RoHS

Directive, which will restrict the use of lead, mercury, cadmium, hexavalent chromium and two bromine-containing flame retardants: PBB (polybrominated

biphenyls) and PBDE (polybrominated diphenyl ethers) in electrical and electronic

products.

HP’s goal is to exceed compliance obligations by meeting the requirements of the

RoHS Directive on a worldwide basis. By July 1, 2006, RoHS substances will be virtually eliminated (to levels below legal limits) for all HP electronic products subject

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to the RoHS Directive, except where it is widely recognized that there is no technically feasible alternative (as indicated by an exemption under the RoHS Directive).

Question 6. Is it correct that the proposal described in your testimony would allow

companies to opt out of their take back responsibilities and pay a fee? If so, on what

basis would that fee be calculated and who would get the revenues?

Response: You are correct that HP’s proposal would allow companies to opt out

of their take back responsibilities and pay a fee. Under HP’s Product Stewardship

Solution, manufacturers must take responsibility for their ‘‘equivalent share’’ of

CRT-containing computer monitors and TVs (‘‘CRT devices’’)—including orphan CRT

devices—returned by households (individual consumers and home businesses) for recycling. They can do this either (1) by establishing a recycling program or (2) by

paying the state reasonable collection, consolidation, and recycling costs for their

equivalent share. An individual manufacturer’s payment amount is logically related

to the actual costs that the local government would incur to collect, consolidate, and

recycle the amount of that manufacturer’s CRT devices that constitute the manufacturer’s equitable share. The state determines the payment amount annually by a

simple calculation.

To determine the payment amount for an individual manufacturer who opts to

pay, the state multiplies two values: the reasonable cost per pound for collection,

consolidation, and recycling services and the total weight in pounds for which the

manufacturer is responsible (i.e., the equivalent share).

Reasonable collection, consolidation, and recycling costs for CRT devices are determined annually by the state based on the cost per pound incurred for such services

by local governments in the state that provide such services. An annual determination of these costs allows the state to adjust the values based on the actual experience of local governments in the state. The state notifies manufacturers of its annual determination of reasonable collection, consolidation, and recycling costs.

Equivalent shares are calculated annually by the state by a simple calculation:

each manufacturer’s return share percentage of CRT devices collected in local government recycling programs is multiplied by the total weight of CRT devices collected in manufacturer and local government recycling programs. Return share percentages are simply the number of CRT devices identified for an individual manufacturer divided by the total number of CRT devices identified for all manufacturers,

based on periodic samplings by local governments. Equivalent share calculations are

made separately for CRT computer monitors and TVs.

Under HP’s proposal, manufacturers who opt to pay—as well as manufacturers

who run recycling programs but fall short of their equivalent share obligations—

make payments to the state agency that implements the program. Funds collected

by the state agency are used for collection, consolidation, and recycling of CRT devices by local governments.

For more details on HP’s Product Stewardship Solution, please see HP’s White

Paper attached hereto.

RESPONSE FOR THE RECORD BY PARKER E. BRUGGE, SENIOR DIRECTOR AND

ENVIRONMENTAL COUNSEL, CONSUMER ELECTRONICS ASSOCIATION

Questions from The Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: CEA concurs with the U.S. EPA that electronic waste, if properly managed and disposed of, presents little or no risk to human health or the environment.

The Agency views the issue of electronics recycling as one of resource conservation

and solid waste management, and so do CEA and its members.

Although resource conservation issues have received relatively less attention in

the U.S. relative to solid waste toxicity issues, CEA recognizes the long-term importance of good stewardship of our natural resources. Development and implementation of wide-scale electronics recycling programs will relieve the need for energy-intensive resource extraction activities that can significantly affect on the environment.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

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Response: CEA agrees that an immediate e-waste challenge is what to do with

the historic and orphan waste now residing in peoples’ homes. While these unwanted ‘‘legacy’’ products sitting in basements and attics are the immediate challenge, the volume of unwanted/waste products over the next decade is expected to

increase as currently utilized products become obsolete. However, from the industry’s perspective, the overarching issue is the development of a national, uniform

system for electronics recycling. This is a complex issue with many challenges but

the biggest challenge is probably the creation of adequate national infrastructure.

CEA supports federal tax incentives or other measures fostering development of

recycling systems and infrastructure and defraying costs of recycling program implementation. CEA would support grant funding for state and local communities to

help finance and build the infrastructure to address this waste stream.

While CEA recognizes that grant programs can be helpful to build infrastructure,

the projected rise in volume of unwanted product calls for a sustainable funding

source. Furthermore, such a grant program might not address CEA’s overriding concern about the growing patchwork of conflicting state programs.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: CEA believes that a national solution is the most appropriate means

to addressing this public policy challenge, primarily as a means to avoid an undesirable patchwork of state legislative mandates.

Existing and proposed state legislative mandates on electronics have a significant

effect on interstate commerce and extend well beyond the scope of traditional solid

waste management systems that are financed by local fees or taxes on local waste

generators (including households) for local waste management services. These new

existing and proposed state mandates attempt through various means to redirect

the cost of waste management into the commerce of producing and selling new electronic products—and thus calls out for a Federal solution.

Ideally, a Federal program would establish a consistent set of financing and compliance rules but allow for implementation and flexibility at the local level. Such a

system should be established using a common set of metrics to facilitate evaluations

of program effectiveness from one geographic implementation area to another, and

to provide a means to evaluate national performance.

Question 4. Your testimony presents a classic ‘‘good news-bad news’’ situation

where the ingenuity and creativity of the electronics industry has created a situation where competition has driven down prices of consumer electronics, thus the economic incentives for consumers is to replace a product rather than repair it. What

do you suggest be done to decelerate the ‘‘throw-away’’ mindset that this creates?

What specifically are your companies doing to responsibly address the potentially

negative environmental legacy of their growing success?

Response: CEA would argue that the competition and falling prices characteristic

of our industry confers benefits to consumers that far outweigh the environmental

challenges caused by technology innovation. By extending information and entertainment to everyone—regardless of income or geographic location—our members’

products have improved lives and changed the world. Meanwhile, America stands

as the global leader in innovation, ingenuity and creativity. The electronics and software industry is also responsible for much—some claim most—of the extraordinary

gains in American productivity during the past decade. These are no small benefits

to the United States and CEA is proud of our industry’s contribution to society.

CEA also acknowledges, however, that as our products become increasingly affordable it is often more economical for consumers to replace a product with a new one

than to repair older equipment. This is especially true for televisions, where the end

of analog signals will provide consumers an additional incentive to replace their outdated television with the superior picture and audio performance of a new digital

television. This is an economic reality that has an impact on the environment. CEA

suggests that in lieu of attempting to change the economic reality of new technology

application and adaptation, the Federal Government establish a national framework

for responsible recycling of these products once they are no longer wanted. While

these displaced products may have reached the end of their lives or be out-of-date,

they certainly are too valuable to be completely discarded.

To address the long term effects of our products on the environment, CEA and

its member companies have been and will continue to be fully supportive of the safe

and appropriate recycling and reuse of consumer electronics products. A number of

our member companies, both manufacturers and retailers, have partnered in voluntary pilot projects to collect and recycle computers, monitors and other consumer

electronics. Many of our member companies have participated in EPA programs

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such as Plug-In To eCycling, a consumer electronics campaign working to increase

the number of electronic devices collected and safely recycled in the United States.

CEA recently joined eBay’s Rethink initiative, which brings together leading technology companies, government agencies, environmental groups and millions of eBay

users to confront the issue of electronic waste through consumer education via comprehensive information on options available to reuse or responsibly recycle, as well

as disposition tools such as assisted selling, convenient local drop-off, trade-in programs and charity donations. We believe that the Rethink initiative can serve as

a component of an important element in electronics recycling—consumer education.

A primary responsibility shared by manufacturers of consumer electronics lies in

product design. Advances in technology have been accompanied by large reductions

in the consumption of energy, fewer materials of potential concern, and other positive environmental attributes. Further, manufacturers use significant amounts of

recycled content, such as glass, plastics and metals, in the production of new devices.

Question 5. I am very intrigued about how you explain the issue of electronic

waste components in landfills and why regulating the materials and manufacturing

of your companies’ products could have negative effect on public health. As you

know, EPA testified at the first part of our hearing on July 20 that they believed

properly lined and operated landfills could handle e-waste. Could you please explain

to me the health benefits of using some of the constituent materials that others

would ordinarily characterize as hazardous waste and seek to discourage their use

in your products?

Response: Although certain substances of concern, such as lead, mercury and cadmium, are present in electronic products, they are there for a good reason. For example, lead shields users of cathode ray tube (CRT) monitors and televisions from

harmful x-rays. While CRTs are still made and sold, flat panel screens have displaced CRTs as the primary display product of choice, thereby removing the need

for this leaded shielding in most product displays on the market today.

Another example is mercury. One of the largest overall impacts to the environment is emissions from power plants. Since electronic products require electricity,

the more energy efficient the product, the fewer emissions will be created. Mercury

is an extremely energy efficient material used for backlighting in LCD displays that

reduces electricity use, thereby decreasing power plant emissions. Recognizing this

important environmental benefit, the European Union exempted mercury used in

compact fluorescent lamps from the material bans included in the RoHS directive.

According to U.S. EPA, these compounds, if properly managed and disposed of,

present little or no risk to human health or the environment. Additionally, forcing

the elimination of these materials in new products could have negative environmental consequences if the alternatives are less environmentally friendly.

Question 6. Your testimony focused on the size of the Federal government and its

substantial purchasing power with electronics products. Could you please elaborate

on the involvement of your member companies in Design for Recycling efforts at

EPA, including Energy Star, the Federal Electronics Challenge, and E-PEAT? What

has been your member companies experience with Federal and state government

electronics purchasing and recycling efforts? What more do you think can and

should be done?

Response: CEA supports the creation of reasonable federal procurement policies

based on environmental criteria. The market power of the government can play a

significant role in providing a direct sales-based incentive to manufacturers. States

can augment this by adopting federal environmentally sensitive procurement guidelines, increasing the market and the incentive for manufacturers. In addition, federal and state governments will capture cost-savings through reduced energy usage

and other advantages offered by these products.

In order to demonstrate industry leadership and shared responsibility in electronics recycling in its product design efforts, CEA supports market-driven environmental design initiatives, such as workable federal and state government programs

on purchasing of environmentally preferable display devices.

One of the biggest challenges in implementing and devising government procurement is consistency and recognition. Many government agencies at the federal and

state levels have their own, specific and sometimes conflicting criteria for what

makes a product ‘‘environmentally preferable.’’ Compounding this problem is the

fact that government procurement officials are not always informed about environmental purchasing programs and their benefits. EPA attempted to address this

problem in the negotiated stakeholder process to create the Electronic Product Environmental Assessment Tool (EPEAT). Manufacturers, government officials, environmental groups, and others reviewed and established a set of environmental criteria

and a scoring system for evaluating electronic products. In order for this program

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to be successful, it must be used in a consistent manner at all levels of government

and it must be promoted by all stakeholders to raise awareness.

CEA members have supported and been very involved in Energy Star, FEC, and

other affirmative procurement efforts (i.e. Executive Order on standby power). CEA

also supports reasonable federal procurement policies currently under development,

such as EPA’s EPEAT. The Federal government should use EPEAT as a government

wide standard for EPEAT electronics, and encourage or require use of EPEAT by

state and local governments as well.

Question 7. Why do you think the creation of a private, Third Party Organization

is a good idea to collect and disburse government sanctioned revenue. Would a

‘‘check-off’’ program funded by manufacturers and retailers seem like a better, more

responsible way for the industry to fund education and recycling efforts that will

ultimately benefit their sales?

Response: In the context of electronics recycling systems, an industry-led Third

Party Organization (TPO) could efficiently fulfill one or more roles that otherwise

would be borne by government or individual companies. For example, once authorized by Congress, a primary TPO function could be to provide a mechanism of delivering e-waste management services that engages electronics manufacturers to help

achieve national program objectives. Such a TPO could, but not necessarily, collect

and disburse government sanctioned revenue. Congress could decide that a TPO be

created or designated to operate a national recycling system under U.S. EPA oversight using appropriated federal funds. Alternatively, Congress could authorize a

TPO, or authorize U.S. EPA to authorize a TPO, to fulfill a universal manufacturer

requirement for participation in a national electronics recycling program. There are

a number of wholly private and quasi-public organizations authorized by Congress

to perform very specific duties identified as a national or multi-state concern. As the

outlines of a workable national electronics recycling system becomes clear, CEA offers its services to Congress in identifying efficient system implementation strategies.

Towards this end, CEA is actively working with the National Center for Electronics Recycling to support the creation of a national third-party organization to

assist states considering a TPO system, to provide a national clearinghouse for consistent product scope, and to ensure stable harmonization of state-level systems.

CEA believes that a national TPO should include manufacturers, retailers, and recyclers in its governance structure. A national TPO that is available to states can

serve as a further incentive to ensure any state-level systems complement an ultimate national solution. If additional federal authority to enable harmonization is required, CEA will work with Congress as appropriate to put that authority in place.

In contrast with check-off programs designed to promote various agricultural

products, a TPO as envisioned above would not directly contribute to the sales of

electronics. CEA also notes that there are many problems with such check-off programs, including recent federal court decisions that question the constitutionality of

many of these check-off programs to require payment for speech found objectionable

by the payee. As stated above, CEA recognizes the immediate e-waste challenge of

what to do with the historic and orphan waste now residing in peoples’ homes—it

is not fundamentally a problem of consumer education. Therefore CEA would not

support a check-off program if established similar to the programs administered by

the U.S. Department of Agriculture.

Question 8. Your testimony specifically says that your members primarily support

seeing the Federal government ensure a level playing field nationally for all electronic products recycling stakeholders in complying with state-level recycling programs. Since you are worried about the creation of a patchwork of state regulations,

does this mean you support either or both of: (1) minimum Federal guidelines for

states or (2) pre-emption of state programs?

Response: CEA suggests that the role of the federal government lies primarily in

ensuring a level playing field nationally for recycling stakeholders complying with

state-level recycling systems.

CEA strongly believes that a successful national framework should be established

to address the management of electronics recycling. The current de-facto framework

is an evolving patchwork of state-by-state approaches. As this Subcommittee is

aware, three states (California, Maine and Maryland) have passed legislation to

manage used electronics. These inconsistent state requirements likely will soon be

joined by even more conflicting state requirements, as there were over twenty-five

states that introduced legislation on the subject in 2005. This conflicting, ad-hoc approach imposes unnecessary burdens on global technology companies and consumers

alike. Electronics recycling is a national issue that warrants a national solution.

CEA believes that a national solution is the most appropriate means to addressing

this public policy challenge, primarily as a means to avoid an undesirable patchwork

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of state legislative mandates. Therefore, CEA supports a national framework providing localized, flexible implementation options that preempts the evolving patchwork of state programs. A national framework that preempts conflicting state programs would substantially relieve the ever-increasing burden on interstate commerce created by new state electronics recycling mandates. CEA recommends that

any such federal solution should begin with a measured approach and, once demonstrated as successful, should be reviewed and possibly expanded.

CEA recognizes the reluctance of Congress to assume such authority, and industry recognizes that there will be a transition period for existing state programs required for any national program. But the sooner such a national framework is created, the less difficult such a preemptive approach will be. For example, the new

California electronics recycling statute explicitly allows for deferral to a national

program, and the new Maryland law is structured as a pilot program that expires

in 2010.

Short of a federally legislated program that preempts conflicting and duplicative

state programs, the federal government should at a minimum put measures in place

that enable states to ensure a level competitive playing field for in-state retailers

with Internet and out-of-state retailers. CEA supports federal authority to ensure

interstate compliance with state-level market-based or visible fee-based systems.

Questions from The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: CEA recognizes that a primary responsibility shared by manufacturers

of consumer electronics lies in product design. Advances in technology have been accompanied by large reductions in the consumption of energy, fewer materials of potential concern, and other positive environmental attributes. Further, manufacturers use significant amounts of recycled content, such as glass, plastics and metals,

in the production of new devices.

That said, CEA notes that recycling programs usually have little effect on the design process. Some stakeholders claim that mandatory take-back programs provide

this benefit, but this is only true if two conditions are met: 1) the program is not

retroactive to any product sold before the effective date; and 2) manufacturers can

retrieve only their branded products in the recycling system. These conditions cannot be currently met because 1) to be effective, any program must address the historic and orphan waste that is currently stored in homes and businesses, and 2) it

is not cost-effective or feasible to sort collected products by brand in order to return

to the original manufacturer.

Furthermore, the longer the product life span, the more irrelevant any design

benefit due product take-back requirements. For example, a recent study by State

of Florida found that the average age of returned televisions is 14 years. Similar

analysis by the ongoing residential collection program in Hennepin County, Minnesota identified the average age of a returned television at 17 years. It is highly

unlikely that a company will spend extra dollars today to recoup potential savings

more than a decade away in recycling costs. Long product life cycles accentuate uncertainties about any return on investment in new recycling designs—uncertainties

about the future state of recycling technologies that may be fundamentally different

by the time the product enters the waste stream, the level of commodities markets,

the reuse market for product components, etc.

Question 2. At the Subcommittee hearing on July 20, 2005, Mr. Breen of the Environmental Protection Agency testified that a good rule of thumb for the cost of recycling a desktop computer is $15, while the value of the materials recovered is anywhere between $1 and $2.50.

Do you agree with the economics of recycling desktop computers as described by

Mr. Breen? If not, please provide your views.

Response: Many electronics recycling programs use 50 cents per pound as a starting estimate for the overall costs of collecting, shipping and recycling waste electronics. This estimate is close to the 48 cents per pound reimbursement rate established in California for costs incurred by approved electronics recyclers. If one assumes that the average weight of a desktop computer is 30 pounds and assumes

a 50 cents per pound cost estimate is reasonable, the total average cost of recycling

a desktop computer would be $15.

Although CEA has not performed any specific studies on these estimates, $15 per

desktop computer appears to be on the high end of a reasonable range for estimating overall per unit costs. Per unit processing costs would likely decline if a national system were put into place and economies of scale realized.

CEA does not have data on the average value of recovered materials.

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Question 3. How much does it cost to recycle an average size television and what

is the value of the recovered materials?

Response: Using California’s existing reimbursement rates for televisions (48

cents per pound) and assuming the weight of an average returned television is 50

pounds, the cost to recycle an average size television would be approximately $25. Although CEA has not performed any specific studies on these estimates, $25 per

television appears to be on the high end of a reasonable range for estimating overall

per unit costs. Per unit processing costs would likely decline if a national system

were put into place and economies of scale realized.

CEA does not have data on the average value of recovered materials.

Question 4. How much does it cost to recycle a laptop computer and what is the

value of the recovered materials?

Response: Using California’s existing reimbursement rates for laptop computers

(48 cents per pound) and assuming the weight of an average returned laptop is 8

pounds, the cost to recycle an average size laptop computer would be $4 per unit. Although CEA has not performed any specific studies on these estimates, $4 per

laptop appears to be on the high end of a reasonable range for estimating overall

per unit costs. Per unit processing costs would likely decline if a national system

were put into place and economies of scale realized.

CEA does not have data on the average value of recovered materials.

Question 5. Will your Member companies be able to comply with the waste electrical and electronic equipment (WEEE) directive of the European Union, which requires the elimination of mercury, cadmium, lead, chromium, and other substances

by July 1, 2006?

Response: A primary responsibility shared by manufacturers of consumer electronics lies in product design. Advances in technology have been accompanied by

large reductions in the consumption of energy, fewer materials of potential concern,

and other positive environmental attributes.

CEA members have pioneered the concept of ‘‘design for the environment’’ as

products are now engineered from the earliest design stages to ensure maximum

recyclability and minimal use of potentially hazardous materials.

The restrictions cited in the question are the result of the Restriction on Hazardous Substances (RoHS) Directive, not WEEE. While these new requirements will

increase manufacturing costs and may well inhibit product improvements and even

functionality, the primary challenge for compliance will be on small and medium

size businesses. Nearly all larger manufacturing companies have invested significant resources and are on track to comply. CEA expects all of its members selling

into the European market to comply with the RoHS Directive, although some smaller companies may comply by no longer selling those products into that market.

Question 6. After July 1, 2006, will your Member companies discontinue selling

electronic products, such as computers or televisions, in the United States that contain mercury, cadmium, lead, or chromium and other substances covered by the

WEEE directive?

Response: For large companies with overseas operations, the answer is yes. There

is less certainty for smaller niche market players who may not sell in the EU or

China. There is also a possibility that components made for larger companies that

are compliant will be available for smaller companies, but these components may

be more expensive and therefore drive out some of the smaller and niche players.

RESPONSE FOR THE RECORD BY GERALD L. DAVIS, PRESIDENT & CEO, GOODWILL

INDUSTRIES OF CENTRAL TEXAS, INC.

The Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: On the topic of leachabilty, Goodwill understands that at present there

is a difference of opinion as to whether landfills can safely contain electronic waste

for extended periods of time without leaching into the ground. Goodwill is aware of

various studies that comment on the suitability of landfills to properly accommodate

electronic waste deposits.

Most recent, the United States Government Accountability Office (GAO) on July

26, 2005, testified before the Senate Subcommittee on Superfund and Waste Management under the Environment and Public Works Committee. Testifying on behalf

of the GAO, John B. Stephenson, Director, Natural Resources and Environment offered the following:

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. . . standard regulatory tests show that some toxic substances with known adverse health effects, such as lead, have the potential to leach into landfills. Although one study suggests that leaching is not a concern in modern U.S. landfills, it appears that many of these products end up in countries without modern

landfills or the environmental regulations comparable to the U.S. Regarding the

issue of toxicity, the research we have reviewed to date is unclear on the extent

to which toxic substances may leach from used electronics in landfills. On one

hand, according to a standard regulatory test RCRA requires to determine

whether a solid waste is hazardous and subject to federal regulation, lead (a

substance with known adverse health affects) leaches from some used electronics under laboratory conditions. Tests conducted at the University of Florida

indicate that lead leachate from computer monitors and televisions with cathode

ray tubes exceeds the regulatory limit and, as a result, could be considered hazardous waste under RCRA. On the other hand, the study’s author told us that

these findings are not necessarily predictive of what could occur in a modern

landfill. Furthermore, a report by the Solid Waste Association of North America

suggests that while the amount of lead from used electronics appears to be increasing in municipal solid waste landfills, these landfills provide safe management of used electronics without exceeding toxicity limits that have been established to protect human health and the environment.

Without having the technical expertise required to comment on landfill

leachability, Goodwill cannot state definitively whether landfill deposits of electronic

waste are based upon ‘‘real concerns’’ or not. However, as an organization we are

very interested in landfill leachabilty and what effect this debate ultimately has

upon landfill use in particular and electronic waste recycling generally. Goodwill believes this issue should be further examined, and that forthcoming public policy decisions should be based on disinterested, unbiased scientific assessment.

Goodwill believes also that the creation of a recycling infrastructure would help

to significantly reduce the amount of electronic waste ending up in landfills, thereby

lessening or eliminating the potential affects of leachability.

On the topic of resource conservation, Goodwill has been in the reuse, recycle and

conservation business for over 100 years. By selling used clothing and household

goods ‘‘including used, refurbished computers at some Goodwills—we fund our mission of helping people with barriers to employment find and keep jobs. We are very

proud of the significant role we have played in keeping millions of tons of waste out

of landfills across America. Through the de-manufacturing programs used at some

of our Goodwills, we have been able to keep large amounts of used electronics out

of landfills. And through the refurbishing and re-selling of these operating units and

used components, Goodwill provides meaningful work for many disabled and vocationally disadvantaged job seekers, who in turn, become tax-paying members of the

U.S. workforce.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: ‘‘Orphan’’ and legacy waste is a very significant problem. However, we

believe a related concern—the nonexistence of a recycling/reuse infrastructure in the

United States—is a greater problem. The development of a properly functioning recycling/reuse infrastructure would address the larger problem of used electronic

management, particularly on the residential level.

However, to say that the nonexistent infrastructure is a greater problem is not

to dismiss concerns surrounding orphan/legacy waste. A significant stumbling block

to the development of a recycling/reuse infrastructure is the problem of who is responsible for orphan waste. To the extent that major manufacturers are reluctant

to agree to an end-of-life management solution for the United States because of the

issue of orphan/legacy waste, the problem is only further compounded. ‘‘Beginning

of life’’ solutions, (i.e., the development of newer computers), continue to develop at

a rapid pace as newer and better computers and other electronic devices flood the

U.S. marketplace with great speed and efficiency in natural response to market demands of the tech-savvy society we now occupy. Conversely, the ‘‘end of life’’ solutions that are necessary to properly manage the disposal and/or recycling of older

computers simply cannot keep pace without market incentives.

We recognize that there are significant costs associated with the development of

a recycling/reuse infrastructure and that the costs will be primarily borne by consumers and manufacturers. Goodwill believes that the government has a role in balancing the impact of the costs and in developing safe end-of-life standards. To that

end, Goodwill Industries supports market-based incentives for nonprofit collectors/

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recyclers, and a national solution that considers the interests of manufacturers, recyclers and other stakeholders. We believe the federal government can play a vital

role in assisting the development and sustainability of such an infrastructure. The

federal government, by utilizing incentives, could aid and encourage necessary private sector investment in the used electronic recycling/reuse markets. This can be

done through tax credits for manufacturers and consumers, recycling grants, and

other initiatives that could spur innovative solutions and help stakeholders handle

this problem. Additionally, increased federal support for pilot projects and other sustainable initiatives would be helpful in promoting the development of a recycling/

reuse infrastructure. Collection and dismantling grants, in particular, could prove

to be an effective method of processing orphan/legacy waste without financially burdening the public. The resale ‘‘value’’ of these reused, recycled computers could help

offset the amount the federal government would pay to collectors and recyclers. The

federal government also can play a key role in educating consumers. Through increased consumer awareness, a greater impact can be made upon the established

and developing markets, particularly the residential market. A developing infrastructure could benefit greatly from increased federal support of consumer education

campaigns.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: Goodwill believes that electronic waste management is a national environmental challenge. While household waste is exempt from the federal regulations

governing hazardous waste, states and municipalities increasingly have stricter regulations that ban household hazardous waste and specifically electronics. Even if

the state or municipality allows landfill deposits of household hazardous waste including electronics, many charge landfill fees that negatively impact our ability to

provide critical services to our clients. Consumers, manufacturers and other stakeholders are already confronting inconsistent state requirements. In California, for

example, where electronic waste is regulated at state level, the state requires collectors and recyclers to document the origin of every used computer in order to verify

that the state is only incurring processing costs for used computers from California.

Requirement such as this can be particularly problematic for nonprofits that accept

computer donations because donors frequently ‘‘drop-off’’ their donations without

providing any information. Under a national solution the need to document the origin of the computer would be nonexistent. For these reasons, Goodwill believes that

state-by-state regulation is counterproductive. The continuation of state-level solutions, we believe, could create regulatory uncertainty and confusion, high compliance costs, and the inefficient use of resources, all of which combined will lead to

increased end-of-life management costs.

Goodwill seeks to find environmentally responsible methods of managing our used

electronic donation stream that at a minimum are not financially burdensome to the

fulfillment of our charitable mission. The costs associated with inefficient and inconsistent state regulatory programs are a significant reason why various state-based

laws will not sustain a nation-wide recycling/reuse effort. We believe a national solution—be it federal or otherwise’ offers the best potential for creating a nation-wide

recycling/reuse infrastructure.

A national solution will also help the United States in its efforts to work with

other nations in finding environmentally workable solutions to address the increasing volume of U.S. manufactured electronics in foreign nations. A piecemeal, stateby-state approach will leave the United States without a strong basis for taking a

leadership role in the international discussion of recycling issues.

Question 4. I am interested in the way that Goodwill is involved in the acceptance

and recycling of electronics products. Some relief organizations, including some

Goodwill outlets, will not take these kinds of items. When and why did Goodwill

decide to accept donations of these items? What liabilities or other disincentives

exist that prevent other relief groups from taking these types of donations? Do you

sort out these items for resale or do you simply send them for recycling?

Response: Goodwill Industries is a network of 205 community-based, autonomous

member organizations. The common thread that unites each independently-operated

Goodwill is the goal of helping people with workplace disadvantages and disabilities

become and remain gainfully employed. Community-based employment and training

programs are central to the Goodwill mission. Most Goodwill member organizations

provide services that fall into four general categories: vocational evaluation, vocational adjustment, job-seeking skills/job placement services and transitional employment. To fund our mission, Goodwills collect donated clothing and household goods

to sell in more than 2,000 retail stores and online at www.shop.goodwill.com.

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Goodwills decide on an individual basis whether to accept any kind of donation,

including used electronics. The decision to accept used electronics depends primarily

on the local Goodwill’s ability to generate income that will fund its job training and

employment assistance programs.

Among the Goodwills that willingly accept used computer donations, a variety of

methods are used to handle the items ‘‘including sorting, demanufacturing and third

party recycling.

Donors play a pivotal role in our ability to fulfill our mission. Yet Goodwills that

do not accept used electronic donations, frequently must handle unwanted donations. Local Goodwills that refuse used computer donations at the donation site,

often find used computers that have been dumped at Goodwill locations after hours.

The reality for many organizations that accept and rely on non-cash donations is

that used computer donations ‘‘wanted or not’’ are a part of the donation stream.

For some Goodwills, properly managing and disposing of used computer donations

in an environmentally responsible manner is a financial strain. Where permitted by

law, some Goodwill agencies dispose of unwanted electronics in landfills. More and

more, landfills refuse to accept electronic products, or charge a hefty disposal fee.

The average landfill fee per unit is $25. In 2003, 24 percent of Goodwill agencies

responding to an internal survey reported paying a landfill fee. The landfill fees

vary by agency. While some of our agencies have been able to negotiate with their

localities for reduced landfill fees or a waiver of these fees, this is not so for many

of our organizations.

Software removal or software licensing for refurbished systems can also be a disincentive to organizations that do not wish to enter into used electronics as a business line. Additionally, some Goodwills express concern over potential liability

issues for personal data left on a computer.

Question 5. Several of the manufacturer and national retailer groups testifying

here today are calling for a national solution to e-waste because they are concerned

about a patchwork of state regulations. Your testimony, too, expresses concern about

the development of the same ‘‘patchwork of differing laws.’’ Could you please explain

to me why this is a concern to Goodwill Industries and what the practical effects

of this fragmented legal scenario will be on Goodwill’s operations?

Response: There are 171 North American Goodwills, crossing many state and

county boundaries. It is not uncommon for a local Goodwill to operate in a geographic territory that crosses three state lines. As a result, it can be a tremendous

challenge for local Goodwills to comply with different sets of laws. The costs attributed to these additional compliance requirements can quickly drain the limited financial resources of local Goodwills that could be better used in furtherance of our

charitable mission.

As Goodwill attempts to promote a national computer-recycling program in partnership with manufacturers, or recommend best practices to our local member organizations, conflicting state-level legislation and local regulations could greatly restrict the ability of organizations, like Goodwill, to implement recycling/reuse plans

on a national scale.

Further, even where state laws are not in conflict, state-level laws ‘‘by the limited

geographical scope of their authority’’ simply cannot abate certain issues, such as

the requirement to document the origin of used electronics as discussed in our response to Question 3.

Question 6. Your testimony identifies four (4) e-recycling models that Goodwill

uses. Could you please tell us the percentages of use of each model by Goodwill and

whether there are specific models that have had particular success with a certain

part of your mission or in certain parts of the country? Is there a governmental authority that oversees these models and are there any legal impediments to your deployment of these models?

Response: The used electronic management systems being used by Goodwills that

accept used computer donations fall under one of the following models. Some Goodwills employ a ‘‘retail model’’ that focuses on collecting, de-manufacturing, refurbishing and reselling computer systems and components in dedicated retail stores.

Other Goodwills use a ‘‘client model’’ that integrates technology training and workforce development programs with computer collection, recycling and reuse efforts.

Still other Goodwills use a ‘‘corporate model’’ that integrates corporate services into

computer collection, recycling and reuse. Lastly, some Goodwills implement a ‘‘collaborative model’’ that utilizes partnerships and collaboration to address computer

collection and recycling.

In Austin, Texas, Goodwill employs a retail model and enjoys a high level of success. Beginning in 1997 as a training program and retail outlet for donated computers, it sells all forms of systems, products, and accessories in a dedicated computer store, Computer Works. Some of the benefits that are a direct yield from its

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computer recycling business include the creation of new jobs for people with disadvantages and disabilities, and increased revenue from parts and component sales.

The model also results in little or no waste going to area landfills.

Not all Goodwills participate in used electronics recycling. Of those Goodwills that

do participate, 6 percent operate a retail model; 20 percent operate a client model;

3 percent operate a corporate services model; and 31 percent operate a partnership/

collaborations model.

Question 7. Your testimony suggests that Goodwill does not oppose the imposition

of an advanced recovery fee, but prefers a manufacturer responsibility/take-back approach? Why do you think requiring manufacturers to take-back their products is

a preferable policy choice? You mention tax incentives as a way to develop an infrastructure and market for e-recycling. Could you please talk about your work with

E-Bay and Dell and what you have learned from it?

Response: The primary policy objective of Goodwill regarding electronic waste is

to advocate for a national solution(s) that: (1) replaces the financial burden of used

electronic disposal borne by charitable organizations with end-of-life management

incentives; (2) promotes the development of a national recycling/reuse infrastructure; and (3) includes nonprofit recyclers in the eventual design and implementation

of a national recycling/reuse infrastructure.

Goodwill has in the past and continues to support Advanced Recovery Fees

(ARFs). We believe the National Computer Recycling Act introduced by Rep. Mike

Thompson (D-CA) which would create a fund generated by the collection of ARFs

to be managed by the Environmental Protection Agency (EPA), has merit. Some of

the benefits that Goodwill believes an ARF could provide include establishing a visible, national fee at all points of purchase; making the system as administratively

simple as possible; and a means to equitably allocate costs of historic product.

Through our education and awareness campaigns, and by participating in task

forces and forums with regulatory organizations like the EPA, we have learned that

some manufacturers disapprove of an ARF-based system. Opponents of an ARFbased system argue advanced recovery fees raise consumer prices and hurt retail

sails.

As Goodwill looks to address our immediate concerns over landfill disposal fees

for unwanted waste, we also look to expand our charitable services by commercially

utilizing the electronics that are a part of our natural donation stream. To that end,

Goodwill Industries’ internal public policy committee amended its public policy position to include support for market-based incentives for nonprofit collectors/recyclers

and support for a national solution that brings together manufacturers, recyclers

and other stakeholders. The rationale behind Goodwill’s support for this alternative

is largely based upon the inability of stakeholder groups to craft a consensus solution under the EPA-sponsored NEPSI project.

At the same time, we maintain our support of the ARF-based legislation (National

Computer Recycling Act) as a possible solution. Goodwill is also encouraged by the

current ARF-based system operating in California that ‘‘notwithstanding our previously mentioned concerns over state-level limitations’’ appears to be working.

From our involvement with Dell, Goodwill has learned that there is a market for

recycled computers, and especially computer parts. Dell can use its influence to

drive donations and has been useful in providing some specific technical knowledge.

Through our involvement with eBay, Goodwill has learned the importance of consumer education.

The Rethink Initiative is an Internet-based consumer awareness project. Through

a web portal linking the public to e-cycling programs and information, consumers

are provided information on computer reuse. Goodwill has partnered with eBay in

its mission of educating and enabling eBay’s computer users to take action to reduce

e-waste. By providing a venue for buyers and sellers to connect, eBay makes it easier for people with idle computers and electronics to find others who can put them

to good use.

The Honorable Paul E. Gillmor (continued)

Question 8. Your testimony supports ‘‘market-based incentives for recyclers and

collectors of electronic waste, but also advocates the precedent-setting, Europeanstyle, command and control of electronics manufacturing through the European

Union’s Waste Electrical and Electronic Equipment Directive (WEEE). How do you

justify heavy government regulation on the front end for manufacturers and minimal governmental oversight once the products get to you or other recyclers?

Response: Goodwill Industries supports the development of a national solution

that embraces and balances environmentally sound disposal practices with marketbased solutions that are inclusive of nonprofits recyclers/collectors and will aid in

the development of a reuse infrastructure. We believe the development of a recyVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00216 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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cling/reuse infrastructure is critical to effectively manage the current and growing

stockpile of used electronics. We believe that the government has a role in balancing

the impact of the costs and in developing safe disposal methods and standards for

computer manufacturers.

With respect to the European Union’s Waste Electrical and Electronic Equipment

Directive (WEEE), Goodwill has not adopted a formal position. In our written testimony, Goodwill noted that ‘‘policymakers in the U.S. could look to the European

Union’s work with respect to the regulation of component materials.’’ Goodwill also

believes that the WEEE model has potential value for American lawmakers and policy experts in that it offers another perspective on a tremendously difficult and complex problem.

The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: Goodwill believes that the development of a recycling/reuse infrastructure is of critical importance to dealing with the problem of electronic waste in the

United States. We believe that establishing such an infrastructure can best be accomplished by providing incentives for all stakeholders, and particularly manufacturers, given their unique position as generators in the computer industry.

The question as to which approach presents manufacturers with the strongest incentive to design their products for recycling is difficult and complex. As you know,

Goodwill participated in the EPA-sponsored NEPSI process and worked with other

stakeholder groups in an attempt to tackle this very question. While the NEPSI

group was unable to reach consensus, the discussions were not without great value.

Out of those discussions, Goodwill learned the concerns of different stakeholders as

well as the public, and some of the potential effects proposed solutions could possibly have upon them.

To that end, Goodwill believes that federal regulation would provide manufacturers with the strongest incentive to reevaluate computer design. We believe federal

regulations that, over time, phase in percentage reductions by specified dates (similar to the requirements under SB20/50) would be the strongest incentive for manufactures to place greater emphasis on computer design. Without clear goals driving

this system, we do not foresee any significant improvements in the areas of computer design. Manufacturers should be given the freedom to innovate with design,

but they must be held to certain performance goals, or they will not be motivated

to improve design. Noncompliance with such goals would result in graduated fines

and possibly the inability to sell noncompliant products.

Also, we would note our belief that manufacturers, inasmuch as they generate the

source of the waste stream, are not alone responsible for electronic waste generation. To the extent that our country relies upon computers for all of the obvious benefits enjoyed by their existence, we all have some measure of responsibility. Accordingly, Goodwill recommends that any solution include incentives for other relevant

stakeholders, like nonprofits, in addition to incentives for manufacturers.

RESPONSE FOR THE RECORD BY JOEL DENBO, CHAIR, INSTITUTE OF SCRAP RECYCLING

INDUSTRIES, INC.

The Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leaching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: ISRI regards the laws that govern the recycling of electronics scrap as

resource conservation measures. According to the testimony provided by the EPA

during the Subcommittee’s first hearing on electronics recycling, there is still insufficient evidence to support the argument that there is a leaching problem for household electronic goods disposed of in Subtitle D disposal facility. Nevertheless, we recognize that potentially toxic components are present in many obsolete electronics;

if properly recycled, however, these components pose no greater threat to the environment than during their original use. Nevertheless, ISRI is concerned about the

materials present in obsolete electronics products because they can affect the ability

to recycle the product, as well as the quality of the recycled materials. ISRI has encouraged manufacturers in all industries to design their products, from the outset,

with recycling in mind. We refer to this as Design for Recycling and promote it

as a way to reduce the use of hazardous materials. By reducing or eliminating hazVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00217 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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ardous materials in the manufacturing of electronics, the materials we recover and

process have more market value and are, therefore, more cost effective to recycle,

and are more environmentally friendly.

In addition, as stated in our written testimony, we respectfully request that electronics destined for recycling be referred to as—recycable materials,’ or ‘‘commodities,’’ and not ‘‘waste.’’ Saddling obsolete electronics with the stigma of ‘‘waste’’ imposes a whole host of unwarranted regulatory burdens that will likely undermine

the ability to make the system work. Therefore, it is eminently important that we

avoid confusing these valuable commodities with ‘‘wastes,’’ especially with hazardous wastes.

Question 2. It seems to me, though, in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: The most significant problem is how to get the general public to pay

a fee for the costs of recycling certain obsolete electronic materials with negative

value, such as monitors with CRTs, rather than disposing of their systems at

curbside or at their local Subtitle D disposal facility, or elsewhere in the environment.

ISRI has put forward two proposals to change the economics of electronics with

negative values. First, we support a producer responsibility model that requires

manufacturers to pay for the costs of collecting, sorting, transporting and recycling

obsolete electronic materials that have a negative intrinsic value until end-use consumer markets are economically sustainable and viable. Second, ISRI supports dedicating a portion of funds generated from the manufacturers’ management plan to

be used for the development of end-use consumer markets for recycled materials,

e.g. technology to recycle computer glass and plastic. Once research and development dollars are spent and end-use electronics markets are economically viable and

can support a sustainable electronics recycling infrastructure, ISRI strongly supports ending producer financial responsibility.

ISRI is not opposed to a grant program if it, too, addresses end-use consumer

markets, promotes Design for Recycling and provides funds to compensate recyclers for handling obsolete electronics with negative values. Should the Congress

wish to proceed with a grant program, it may wish to consider a dual system where

the grant program pays for orphaned systems and a producer responsibility system

pays for legacy equipment.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstance, the state government. Why do you support

a federal solution to an otherwise local program?

Response: ISRI favors a national solution that provides for product stewardship

and promotes Design for Recycling. Creating a level playing across all 50 states

will more quickly and efficiently produce stability in the recycling business. A multiplicity of laws and regulations will understandably inhibit economies of scale and

efficiencies. Although ISRI is concerned that 50 different approaches will hinder the

development of a sustainable recycling infrastructure and thereby slow the development of end-use consumer markets for these materials, we are not opposed to a

state-by-state approach in the absence of federal law.

Question 4. Your testimony states that your group represents 1,260 private, forprofit companies that conduct recycling activities at 3,000 locations world wide, however, only 300 of your members ‘‘a little less than 25 percent—actually handle electronics waste. What percent of all electronic waste that is recycled in this country

do your members handle? Is the trend showing that increasing amounts of e-waste

are becoming available? Do landfill bans of electronic waste components have a material affect, in the jurisdiction of the ban, on the amount of electronic waste being

recycled?

Response: ISRI does represent over 1265 companies the process, broker, and consume paper, glass, plastics, metals, textiles, rubber and electronics materials for recycling. ISRI represents over 300 companies that make up the electronics recycling

infrastructure. Unfortunately, ISRI does not collect recycling data in a manner that

answers your market-share question.

Question 5. In testimony before the Senate Committee on Environment and Public

Works, the GAO stated that in their interviews with eight electronics recyclers

these recyclers ‘‘were unanimous in emphasizing that they could not cover the costs

without charging fees.’’ In addition, testimony that we received in the first half of

this hearing on July 20, 2005 suggested that the economics of private recycling businesses that voluntarily take on the electronics in waste streams were poor. Yet, I

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think your testimony suggests that you think there is money to be made in recycling

consumer electronics products. Could you please set the record straight? Is this a

business your members want to pursue and can make money in a free-market, nongovernmentally subsidizes atmosphere or do you need government to artificially create this market for you?

Response: ISRI and its electronics recycler members believe that there is money

to be made in recycling consumer electronics in a free-market, non-governmentally

subsidized atmosphere. As stated above, under current market conditions, there remain some obsolete electronic products that have a negative value. To recycle these

products, recyclers must charge a fee to cover the cost of recycling. However, economies of scale may mitigate some of the negative value of obsolete electronic products. Bulk recyclers may ultimately charge less to recycle these negative valued materials than smaller recyclers.

Some products already have a positive recycling value, such as CPUs, laptops, cell

phones, and larger copy machines or ‘‘tanks.’’ In lieu of charging a fee, recyclers

could, and in some cases do, pay consumers for these materials.

ISRI believes that to resolve the discrepancy between negative and positive valued

materials, end-use electronics markets must be developed. Increasing the value of

recycled obsolete electronic glass and plastic could have a significant effect on reducing the negative valued costs, thus creating a sustainable infrastructure.

Therefore, to cover the short-term costs of recycling negative valued obsolete electronics, ISRI believes a financial mechanism needs to be put in place. ISRI strongly

supports ending any subsidy as soon as end-use markets are economically viable,

that is, once negative valued recycled materials no longer enter the market place

or have a negative value.

Question 6. Your testimony mentions ISRI’s Recycling Industry Operating Standard is the proper means to address environmental concerns with electronics recycling. Could you please tell me, specifically, what RIOS is and how this applies and

will be helpful to promoting and sustaining electronics recycling?

Response: ISRI developed RIOS, an integrated management system standard designed specifically for the scrap recycling industry, as a means of providing recyclers

of all scrap commodities—including electronics—with an affordable tool to monitor

their quality, environmental, health and safety goals. RIOS seeks to provide consumers with the same assurances of compliance that they have come to expect from

programs like ISO 9001, ISO 14001, and the proposed OSH 18000 standard. RIOS

combines the applicable parts of these types of systems into an integrated system

designed specifically for the recycling industry. Our goal is to assure consumers

that, if they buy from a recycling company that is registered to RIOS, they are obtaining scrap materials that are manufactured consistently, according to a quality

management plan in a facility that has a recognized environmental management

system and safety program. Attached you will find a recent article that explores

RIOS in greater detail (‘‘ISRI at Your Service: Rolling Out RIOS,’’ Kent Kiser, September/October 2005).

Question 7. Your group supports a regime whereby manufacturers of consumer

electronics products should be held responsible for recovering used products and

then recycling them. Since your members would stand to benefit from a consistent

stream of materials under this scenario or would benefit from the California-style

advanced recovery fee, why was it so important for your group to take this policy

position that it did? It seems that the promotion of a producer responsibility plan

really shifts the costs from you to the manufacturer, particularly since it could result in electronics product designs that make recycling less expensive. Do you think

the government should be used in this way to either mandate design or manufacturing activities or to determine economic winners and losers?

Response: To respond to the latter part or your question first, virtually every time

the Congress legislates in the environmental or economic arenas, it chooses winners

and losers. This goes to the heart of legislating for the public good. While it is true

that recyclers of obsolete electronic products are benefiting from California’s advanced recycling fee, or consumer tax, the real issue is how to avoid overwhelming

our landfills with the enormous tonnages of obsolete electronic equipment at reasonable or no cost to the taxpayer. Asking manufacturers to internalize life cycle costs

will, more quickly that any other device, allow the industry to reach a point where

electronics recycling can stand on its own.

If manufacturers internalize all life cycle costs, i.e., cradle to grave costs, they

will, using good manufacturing and business sense, use every tool at their disposal

to minimize the marginal costs of producer responsibility. They likely will do this

by finding solutions to the glass and plastics issues, which currently minimize the

value of obsolete electronics. By building electronic products in a manner by which

it could be easily disassembled, thereby preserving the integrity of the recyclable

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parts, they will also increase the value of their obsolete electronic products. Achieving these objectives will likely assure a positive, rather than a negative, value of

electronic recyclables. Only manufacturers can achieve this.

Question 8. Your testimony encourages Congress and the states to ‘‘end any financial mechanism as soon as markets for recyclable electronics become viable.’’ Under

what conditions would you consider markets for recyclable electronics viable? Do you

consider any of the current state sponsored financial mechanisms for electronic

product recycling to be unconstitutional retrains on trade between states under the

dormant portion of the Commerce Clause in the United States Constitution?

Markets will be viable when the value of electronics recyclables is positive rather

than negative. At that point, the market place will respond without artificial subsidies. With regard to the Commerce Clause, ISRI would refer the Chairman to a

recent case on point in Maine. See attached case. Alliance of Automobile Manufacturers v. Gwadosky, 304 F. Supp. 2d 104, D.Me., 2004.

Question 9. What, specifically, are ways in which manufacturers can be encouraged to adopt Design For Recycling techniques? What are the potential costs to the

consumer? Do you have any advise for ‘‘common sense’’ techniques the manufacturers can take to advance Design for Recycling?

Response: Manufacturers should be asked to address, in the product design stage,

ways to improve environmental and recycling impacts of their products. It is not the

role of government to dictate design engineering or manufacturing behavior. Government can ask manufacturers to report annually on what, if any, design changes

they have made in their products that are intended to minimize adverse environmental impacts and to increase product recyclability at the end of a products useful

life. As an example, we have attached a recent mercury bill (Mercury Switch Removal Act of 2005) that was enacted in Arkansas that contains specific Design for

Recycling language beginning on page 8.

There will likely be little or no increase in consumer cost if manufacturers incorporate environmental recyclability decisions in the design phase of their products.

Recent examples should provide context for your question. Concern for mercury in

the environment and state legislation addressing mercury products have resulted in

significant design changes. Children’s sneakers that contained lights that blinked

when children walked were produced with mercury. Manufacturers no longer use

mercury to cause the sneaker lights to blink. Another mercury design issue involves

HID headlamps currently used in many vehicles. They are produced with mercury.

After many complaints and concerns, Honda asked the lighting manufacturer,

OSRAM, to produce an HID lamp without mercury. OSRAM has now done so, and

Honda will utilize the non-mercury in its next vehicle design change. In addition,

years ago, the house appliance manufacturing industry ended their use of ‘‘Harvest

Gold,’’ and Avocado paints. Those colors were achieved with the use of cadmium,

which is a hazardous substance. This market approach will depend on public scrutiny and consumer choices.

The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: Producer Responsibility/Cost Internalization provides the strongest incentive for manufacturers to implement Design for Recycling policy. It is important

to understand that ISRI has been advocating that manufacturers design their products to increase their end-of-life recyclability since the early 1980’s. Our long standing policy is based on the premise that implementing greater Design for Recycling

will increase recycling productivity that will in return ensure a stronger, more sustainable economic and recycling infrastructure.

ISRI believes that once manufacturers internalize the costs to collect, sort, transport and recycle certain obsolete electronics they will improve product design in

order to maximize the value of the obsolete product, thereby helping to create a sustainable electronic recycling infrastructure. In addition, manufacturers can create a

model that will be less bureaucratic and cheaper to recycle.

Cost internalization utilizes the flexibility that manufactures naturally have in

their production process. It is the manufactures that understand the details of their

production lines, their financial bottom lines, their supply chains and the desires of

their consumers. Unfortunately, although some progress has been made by electronics manufactures to implement Design For Recycling—policy, voluntary measures have largely failed to spur industry wide change in design policy. As a result,

requiring manufactures to internalize the costs is the next appropriate step to encourage greater design policy.

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Question 2. How much does it cost to recycle a cell phone and what is the value

of the materials that can be recovered?

Response: Cell phones have a positive re-sale and intrinsic value. Before cell

phones are scrapped, recyclers analyze factors for re-sale such as, age, model and

the condition of the phone. The re-sale market for current, vintage cell phones is

somewhere between $10 and $20 dollars. If a cell phone can not be resold, recyclers

then scrap or recycle the phones.

Cell phones are at the highest end of the value chain because they contain recoverable amounts of precious metals. Generally, cell phones contain up to 10 ounces

per ton gold (without batteries) and some palladium value as well. Thus, depending

on the gold and palladium markets, recycling cell phones yields a positive value of

approximately $2.90 per pound without a battery and a positive value of $1.80 per

pound with a battery. The recycling cost is roughly $1.00 per pound.

Question 3. At the Subcommittee hearing on July 20, 2005, Mr. Breen of the Environmental Protection Agency testified that a good rule of thumb for the cost of recycling a desktop computer is $15, while the value of the materials recovered is anywhere between $1 and $2.50.

Do you agree with economics of recycling desktop computers as described by Mr.

Breen? If not, please provide your views.

Response: If a desktop computer means a central processing unit (CPU), then no,

ISRI does not agree with Mr. Breen’s economic analysis. The recycling industry’s

definition of a desktop computer does not include the monitor, the printer, the keyboard, or the mouse. As with most electronics recycling, the economics vary on

whether the unit can be resold or needs to be scrapped. The resale value is largely

contingent on the processing speed and whether the unit has a CD and/or DVD

player and the capacity of the hard drive. Desk top sales equate to approximately

10 cents a mega hertz, (based on an average 1 gig desktop), which yields a resale

value between $50-$70 dollars. Note: these prices are typically marked up 20-25%

by used computer sellers on the public market.

Domestic recyclers can offset the costs of scrapping CPUs since the units have a

positive intrinsic value. In today’s market, recycling a CPU yields a positive value

of $5 dollars a unit, or 10 cents a pound. Although circuit boards contain 5-10

ounces per ton of gold, they only account for 5-10% of the weight of the unit. Therefore, the entire unit contains only 1 ounce per ton of gold. Residual copper value

can be found in power supplies. And, depending on the age of the unit, there may

be recoverable amounts of steel and aluminum in the chasis.

Question 4. How much does it cost to recycle an average size television and what

is the value of the recovered material?

Response: Unlike cell phones, CPU’s and laptops, average size and larger televisions have a negative value. Recyclers must charge their customers to off-set the

costs of recycling televisions. Recyclers charge between 20-30 cents a pound (based

on truckload bulk equations and an average TV weight: 90-100 pounds). The value

of the recovered material is less than 20 cents a pound.

Question 5. How much does it cost to recycle a laptop computer and what is the

value of the recovered material?

Response: Due to the re-sale value, 99% of laptops are resold in there entirety,

repackaged with value added and then sold or de-manufactured for its parts. Thus,

in today’s domestic market, the vast majority of laptops are not being scrapped. The

resale market yields between $300 and $550 a unit.

The Honorable C.L. ‘‘Butch’’ Otter:

Question 1. I understand that recyclers in California are having a great deal of

difficulty in being compensated for their recycling activities. Can you tell us about

the practical problems being encountered by your members?

Response: The most significant issues for recyclers in California are the amount

of paperwork to process claims and the time delay for compensation.

Burdensome paperwork requirements unnecessarily increase the costs of recycling

electronics. Employees are required to complete forms that track the type and origin

of products, which adds to the costs of recycling operations. When considering the

small margins for these commodities and limited end-use consumer markets, these

costs become even more significant as markets tighten. The delay for compensation

is approximately six months.

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RESPONSE FOR THE RECORD BY STEVE LARGENT, PRESIDENT AND CEO, CTIA-THE

WIRELESS ASSOCIATION

The Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: The wireless industry is committed to the goal of sustainable development and the environmentally-sound management of their wireless products at the

end-of-life. CTIA members continue to reduce the use of various materials through

design for environment (DfE) initiatives and compliance with new legal mandates,

such as the E.U. RoHS Directive. For those reasons, CTIA views resource conservation as the primary drive of industry-led recycling initiatives and legal measures

targeting e-waste.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: CTIA has found that many consumers do hold on to used wireless

phones in anticipation of future use by the original user or future use by a family

member or friend. CTIA believes that the unique attributes of wireless products

(small size and availability of wireless retail establishments) allow used phones to

be collected for re-use and recycling through voluntary initiatives. CTIA would support a grant program for initiatives aimed at raising awareness among consumers

on the benefits and options for the re-use and recycling of mobile phones.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: The wireless industry supports a national solution, in order to avoid a

piecemeal and inconsistent network of state regulatory programs for managing endof-life electronic equipment. Such a state-by-state approach would lead to regulatory

uncertainty, high compliance costs, the inefficient use of resources and less effective

take-back programs. CTIA supports federal legislation that would discourage the

disposal of wireless products in municipal landfills and incinerators as part of a

broader effort to promote re-use and recycling. CTIA does not support legal mandates for the collection of used mobile phones, as programs are currently being implemented by carriers on a voluntary basis that will promote the recycling and reuse of wireless phones. These costs will ultimately be passed on to the consumer.

Finally, having a national program will make it easier for the United States to assume a leadership role in working with other nations in finding environmentallysound, effective, workable solutions to the management of end of life wireless devices.

Question 4. How are you ensuring that the wireless devices are being collected,

managed, transported and reused in a responsible way and in accordance with federal and state environmental laws? What types of organizations do you contract

with to implement these voluntary guidelines?

Response: The CTIA voluntary Guidelines assist companies in ensuring that the

wireless devices are being managed in an environmentally-sound way. Companies

can encourage materials recovery facilities to conduct their operations in a manner

that is protective of both workers and the environment by pledging to send materials only to facilities that satisfy the CTIA Guidelines. For instance, a company

may choose to require an audit of a recycling facility’s environmental management

system, by an independent third party, before the company agrees to send materials

to the facility.

Question 5. Do you have an estimate of what percentage of total U.S. cell phones

in use currently gets reused or recycled? What, in your estimate, is the best way

to increase these numbers?

Response: There is no single source for data on handsets collected, nor is there

a single methodology for collecting it. Carriers, recyclers, and refurbishers are all

in the process of evaluating the best way to assess the success of their respective

recycling and / or refurbishing programs. The wireless recycling market is highly

competitive with many participating organizations, and a multitude of collection

points. CTIA is working with the EPA and organizations such as the National Center for Electronics Recycling to develop a national repository for data on the collecVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00222 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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tion, recycling, reuse, and disposal of electronic waste. With this said, CTIA has

been able to determine the following:

a. ReCellular, a refurbisher, has collected some four million phones in 2004, up from

1.5 million in 2002.

b. Nextel has collected 4.4 million phones since 2002. Nextel also has refurbished

2.3 million phones since 2002.

c. The Wireless Foundation’s take-back programs have collected nearly three million

phones since 1999.

d. Verizon Wireless has collected approximately two million phones through their

HopeLineSM charitable donation program.

e. GRC Wireless Recycling has collected approximately one million phones since

2001.

f. Old Cell Phone Co. of Port St. Lucie, FL, reportedly buys back 30,000 used cell

phones a month, and has been doing so since 2002.

g. RMS Communications Group collected one million phones in 2004, and has been

collecting phones for the past ten years.

h. eBay reportedly sells 130,000 used phones a month on its website, and has sold

approximately four million phones over the past five years.

The key to a successful recycling program is consumer education. CTIA’s

‘‘WirelessThe New Recyclable—’’ program is designed to do just that. The program

focuses on educating the public on the importance and ease of recycling wireless devices and providing useful and simple information on the recycling of wireless products and where consumers can recycle phones.

Question 6. What types of cost to the consumer do you charge, if any, for your

voluntary return programs, whether it be at municipal centers, other retailers, or

mail in returns to manufacturers?

Response: CTIA members take-back used mobile phones at no charge to consumers. In order to encourage consumers to recycle their used mobile phones, all

barriers to recycling must be avoided. Recyling can be encouraged by providing tax

incentives for recycling wireless devices.

Question 7. You stated in your testimony that the size of mobile phones has greatly

decreased over the past 10 years. While the size can certainly have environmental

benefits, just because they are now smaller, does that mean necessarily that less toxic

materials such as lead, mercury, and cadmium are used? Do new technologies; such

as I-pods and LCD screens consist of any other types of toxic metals or materials?

Response: Mobile phones are being constructed in a more environmentally-friendly manner than they were 10 years ago. In addition to reducing the size and weight

of wireless devices (and, therefore, reducing the materials/resources used) manufacturers are maximizing the use of recycled materials and are increasingly designing

for recyclability. For instance, manufacturers of wireless devices are phasing out the

use of cables containing lead and cadmium and PVC from decorative parts of their

products. More importantly, as mobile phone and device manufacturers comply with

the European Union’s Restriction on Hazardous Substances Directive, we are also

seeing a reduction of hazardous materials in wireless phones marketed in the

United States. All mobile phones sold in the European Union are expected to be

RoHS compliant by June 2006. All CTIA members are expecting to deliver RoHS

compliant products to the U.S. on or before the June 2006 deadline.

Question 8. How successful have the for-profit companies, established to collect and

refurbish used cellular phones, been? Can you as an industry trade association do

anything more to encourage your members to participate in your voluntary programs

and add more incentives to these markets?

Response: For-profit companies established to collect and refurbish used phones

have been quite successful, due to the unique attributes of mobile phones (size and

the availability of secondary markets). Mobile phones have a relatively high re-use

value creating an ongoing market for these devices; therefore, the market forces provide incentives for the collection and re-use of these devices. The availability of convenient retail collection points, combined with the portability of mobile phones and

the availability of secondary markets, distinguish mobile phones from other types

of electronic waste.

There are several successful for-profit companies that are in the business of collecting and recycling mobile phones:

• ReCellular, a refurbisher, has collected some four million phones in 2004, up from

1.5 million in 2002.

• GRC Wireless Recycling has collected approximately one million phones since

2001.

• Old Cell Phone Co. of Port St. Lucie, FL, reportedly buys back 30,000 used cell

phones a month, and has been doing so since 2002.

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• RMS Communications Group collected one million phones in 2004, and has been

collecting phones for the past ten years. • eBay reportedly sells 130,000 used phones a month on its website, and has sold

approximately four million phones over the past five years.

Question 9. As technology becomes more advanced and consumers demand newer

and more efficient cell phones or other electronics, do you envision a time where a

mandatory federal regulatory policy could be needed, or do you think products will

get better, last longer, and demand will decrease, therefore lessening need for end

of life cycles?

Response: Although technology will improve the functionality and performance of

products over time, there will always be a need to ensure that end of life mobile

phones are properly managed. In the case of mobile phones, we do not feel that a

mandatory national system will be necessary. Federal agencies can play an important role in working with industry to promote a national system for voluntarily recycling mobile phones. However, due to the unique character of mobile phones and

mobile devices, it will be more efficient and effective, to promote existing voluntary

programs such as CTIA’s ‘‘Wireless...The New Recyclable TM’’ program. The House

Subcommittee on Environment and Hazardous Materials can play a key role in increasing public awareness of ‘‘Wireless...The New Recyclable TM’’ by encouraging

the EPA to designate the initiative as part of the [name?] program. This designation

would reap tremendous benefits to the wireless industry’s recycling efforts and the

environment.

Question 10. Does your industry have bigger plans for industry wide universal recycling? How can you maximize these results?

Response: Carriers, recyclers, and refurbishers participating in the ‘‘Wireless . . .The New Recyclable TM’’ program are constantly evaluating the best way to

expand and assess the success of their respective recycling and/or refurbishing programs. We expect the program to grow substantially as we are able to educate more

consumers, and businesses, about the importance of proper cell phone recycling,

through our public outreach efforts. CTIA believes that consumer education companies will be the key to increasing the collection, re-use and recycling of used mobile

phones in the U.S.

The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: Programs that encourage carriers and Original Equipment

Manufatucturers to collect used mobile phone for re-use and recycling provide market-based incentives for design improvements over time. In fact, a combination of

social and economic incentives already exist for more efficient design of handsets

and accessories, and for the recycling of retired devices. These include the RoHS directive, carrier and manufacturer interest in the more efficient production of wireless devices, as well as consumer demand for environmentally friendly devices.

Question 2. How much does it cost to recycle a cell phone and what is the value

of the materials that can be recovered?

Response: CTIA understands that recycled phones that are run through a smelter

for precious metal recovery net approximately $0.20 per handset. Most LCD screens

are sent through a re-use channel, and increase the value to between $0.25 to $0.30

per phone or $1.25 to $1.50 per pound. Currently, companies collecting phones for

resale pay consumers donating the phones anywhere from $3 a handset to $100 a

handset depending on the model.

Question 3. How many cell phones are discarded each year in the United States

and of that total number how many are collected and recycled?

Response: Most of the available data on reuse or recycling is localized, and there

is, to our knowledge, no single-source that provides reliable national statistics reflecting the number of phones discarded or recycled each year. While approximately

47 million consumers change providers on an annual basis, their phones are not

necessarily ‘‘discarded.’’ In some cases, the phones are provided to family members

or friends, or are retained by the owner. In 2004, approximately 47 million consumers ‘‘disconnected’’ service with a provider. Some 10 million of these disconnections actually reflect the consumption or expiration of prepaid service packages,

which may have been subsequently renewed by the subscribers, without a change

of handset. The remaining 37 million disconnections may reflect either changing

service providers, or simply discontinuing wireless service for at least some time.

ReCellular and RMS Communications Group, alone, collected five million phones in

2004 (ReCellular collected four million phones, while RMS collected one million

phones.) ReCellular’s collections increased 166 percent between 2002 and 2004. As

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previously noted, there are many companies and organizations involved in carrying

out recycling and phone collection programs which have collected more than 17 million phones in the last five years, refurbished more than 2.3 million, and resold

more than four million phones during the same time period. These include phones

collected and recycled by:

a. ReCellular, which collected some four million phones in 2004, up from 1.5 million

in 2002.

b. Nextel, which collected 4.4 million phones since 2002. Nextel also has refurbished

2.3 million phones since 2002.

c. The Wireless Foundation’s take-back programs, which collected nearly three million phones since 1999.

d. Verizon Wireless, which has collected approximately two million phones through

their HopeLineSM charitable donation program.

e. GRC Wireless Recycling, which has collected approximately one million phones

since 2001.

f. Old Cell Phone Co. of Port St. Lucie, FL, which reportedly buys back 30,000 used

cell phones a month, and has been doing so since 2002.

g. RMS Communications Group, which collected one million phones in 2004, and has

been collecting phones for the past ten years.

h. And eBay, which reportedly sells 130,000 used phones a month on its website,

and has sold approximately four million phones over the past five years.

The Honorable Tammy Baldwin

While we all enjoy cell phones, personal laptops, and other gadgets that help us

be able to communicate and be more efficient, it is clear from these e-waste hearings

that we must be vigilant in making sure the toxic substances in these electronic devices are properly disposed of and safely recycled.

Overall, I believe the manufacturers of these products should have the primary

responsibility for the cost of collecting, transporting and recycling of electronic products, not consumers or taxpayers. If manufacturers do not have a financial stake

in their products at the end of their useful life, then they will never have an incentive to design them to have longer life spans, to be easier to recycle, and to contain

less toxic materials in the first place.

Let me give you an example of why I believe this. I have authored legislation in

this Congress that would help encourage the safe disposal of recycling of the toxic

element mercury, which is found in dozens of household and industrial products, including many electronic devices. As you probably know, exposure to mercury can

have serious health effects to a person’s liver, kidneys, nervous system, and brain

functions. Small children and pregnant mothers are most at risk to the harmful effects.

One provision in this bill is a nationwide ban on the sale of thermometers that

contain mercury. As communities have become more aware of the harmful impact

of mercury on the public health and the environment, more and more state and local

governments have passed their own legislation banning the sale of mercury thermometers.

Manufacturers have since responded to these laws and now make and sell more

digital thermometers, which are just as effective but much safer. State and local

laws may have pushed them to make a less dangerous product, but they also found

it made good business sense that improved their bottom lines.

As the amount of e-waste grows, I believe we are not doing enough to give manufacturers the primary responsibility for managing the toxic substances in their products. This is thwarting the development of a strong private market for the safe recycling of these products and the development of products that contain nontoxic alternatives and that are easier to recycle.

Question 1. Mr. McCurdy, Mr. Largent, and Mr. Vitelli—As representatives of

these industries, do you agree with this, and if not, how can you justify making consumers and/or taxpayers shoulder most of the burden?

Response: CTIA member companies have voluntarily taken responsibility for reducing the presence of various materials in their products, and will continue to do

so, through design for environment (DfE) initiatives and compliance with new legal

mandates, such as the E.U. RoHS Directive. The wireless industry shoulders its fair

share of the cost of such programs. In fact, the take-back and recycling programs

managed by most major service providers, manufacturers, and third-party recyclers

of which we are aware, do not charge consumers for the collection or recycling used

handsets. Indeed, a number of programs pay consumers for the return of some wireless devices. Wireless devices may be returned at many retail locations, or via mailin pouches, and have been collected through both industry-wide and company-specific initiatives, such as the industry’s Wireless...The New Recyclable TM initiative,

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as well as the efforts of third-party organizations such as local school groups or

charitable organizations. Such voluntary initiatives are not obligatory, and supplement the collection activities of wireless providers of all sizes, as well as the initiatives of manufacturers and for-profit recyclers.

The wireless industry is highly-competitive, and consumer demand for its products and services is price-sensitive. (Over the past year, several studies have noted

the extent to which wireless is already subject to taxation, and the extent to which

increases in prices reduce demand. It has been estimated that for every one percent

increase in price, consumer demand is reduced by as much as 1.29 percent.) In a

highly-competitive environment, wireless carriers cannot simply absorb the cost of

additional mandates. The wireless industry in 2004 paid $14.6 billion in federal,

state and local sales and transactions taxes and surcharges, $900 million in sales

taxes on handsets, and contributed $2.6 billion in universal service funding.

Moreover, as of 2004, the wireless industry had already paid more than $24 billion to the Treasury for spectrum, and invested more than $174 billion in buildingout networks to deliver service to consumers. This year the industry made another

$13 billion in additional infrastructure investment.

RESPONSE FOR THE RECORD BY DAVE MCCURDY, PRESIDENT AND CEO, ELECTRONIC

INDUSTRIES ALLIANCE

The Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: EIA believes it is essential to consider the science related to electronics

products as part of any public policy discussion regarding recycling. Compounds

such as lead and mercury are present in some electronics products because they provide clear safety, performance and energy efficiency benefits. As our industry and

others have developed viable substitutes, manufacturers have successfully incorporated them into our products. However, these compounds cannot yet be replaced

in all applications. For example, the European Union (EU) Directive on the Restriction of Hazardous Substances (the RoHS Directive) provides narrow exemptions for

specified uses of these materials to provide for product safety or energy efficiency,

or when no technically or environmentally suitable alternatives exist.

Nonetheless, these compounds can and should be appropriately managed at the

end of life. The U.S. Environmental Protection Agency (U.S. EPA) shares this view,

and has consistently stated that used electronics products, when properly managed,

do not represent a human health or environmental concern. The agency considers

electronics recycling as fundamentally a solid waste management and resource conservation issue. Likewise, our member companies recognize that reusing and recycling electronics at the end of life is the most environmentally preferable option, and

we support reasonable efforts to develop the recycling infrastructure.

In regards to whether or not compounds in electronics pose a leaching concern in

landfills, I will refer to the testimony delivered to the Subcommittee in the first part

of this hearing by Barry Breen, Deputy Assistant Administration for U.S. EPA’s Office of Solid Waste and Emergency Response. Mr. Breen clearly indicated that the

agency believes that electronics can be safely managed in properly permitted and

operated municipal solid waste (MSW) landfills. In 1991, EPA updated the MSW

landfill criteria to ensure that these landfills are protective of human health and

the environment, even if they accept household hazardous waste or conditionally exempt hazardous waste. Furthermore, recent studies indicate that landfill leachate

is very unlikely to impact drinking water due to low levels of metals present in the

leachate of MSW landfills, and due to leachate collection and treatment systems. In

fact, the National Solid Wastes Management Association (NSWMA) and the Solid

Waste Management Association of North America (SWANA)—two leading professional organizations in the waste management field—maintain that electronics can

be safely managed in municipal landfills.

Additionally, in September 2004, the U.S. EPA, Office of the Inspector General

released a comprehensive evaluation of the agency’s various electronics recycling

programs. The report is entitled Multiple Actions Taken to Address Electronic Waste,

but EPA Needs to Provide Clear National Direction. The report includes several

noteworthy statements from U.S. EPA’s Office of Solid Waste regarding electronic

waste.

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• ‘‘Regardless of how much E-waste that may exhibit a hazardous characteristic

finds its way into municipal landfills, EPA does not believe that this will pose

an environmental risk’’ (page 30).

• ‘‘Our primary interest in focusing on increasing recycling of E-waste is based on

resource conservation and minimization of the environmental insults that result

from materials extraction rather than on environmental risks from landfilling

the waste in properly managed landfills’’ (page 30).

• ‘‘We do not agree that there is any need to define contingency plans regarding

volumes of e-waste discarded in landfills because we strongly believe MSW

landfill management practices consistent with our requirements are protective

of human health and the environment’’ (page 31).

In short, while compounds such as lead and mercury are present in some of our

products, their mere presence does not translate into risk to human health or the

environment. While our products can and should be properly managed at the end

of life, an impact could only occur if there were to be a completed exposure pathway

to a substance of concern at a high enough dose and for a long enough duration for

a negative outcome to result. This is clearly not an issue when our products are

properly used and safely managed.

As an aside, it is also important to recognize that even recycling generates byproducts that must themselves be properly managed. Many resource recovery techniques, including plastic and metal recovery, may result in the generation of secondary materials such as ash and slag that is often disposed of in landfills.

To reiterate, the high-tech and electronics industries recognize that reusing and

recycling electronics at the end of life is the most environmentally preferable option,

and we support reasonable efforts to develop the recycling infrastructure. By developing a viable and self-sufficient recycling infrastructure, many of the perceived

risks posed by the use of compounds of potential concern in electronics can be mitigated. However, we also believe that it is critical for policymakers to consider these

products in their proper scientific context.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: EIA and our members believe that the primary issue with electronics

recycling is the potential confusion arising from competing state and local laws and

regulations. The lack of national consistency, combined with numerous initiatives

under consideration at the state and local levels, threatens to create a costly, inefficient and perhaps conflicting set of requirements that will only raise costs to consumers for electronics products.

That said, the handling of orphan and legacy wastes is also an important challenge under any electronic recycling program. Orphan devices—those used products

for which there is no longer a viable brand owner—should be fairly addressed in

any comprehensive system. As noted in our testimony, EIA and our member companies support the principle of shared responsibility. When applied to orphan products, shared responsibility means that all the major stakeholders—not just the manufacturers—should combine to address this portion of the recycling stream.

Legacy wastes are indeed a major part of the challenge. Since older products are

generally larger and heavier than contemporary devices, it costs more to collect and

transport them for recycling. The goal of any national recycling approach should be

to address these legacy wastes—which, by definition, are ready to be collected and

recycled now—but to also establish a viable and comprehensive infrastructure to collect used products over the long term. EIA would support grants to states and municipalities as part of a coordinated approach to developing such a permanent infrastructure. Grant money could be used for collection and recycling activities, public

education and to aid in the purchase of new capital equipment for recycling. Grant

funding could also be used to advance the technology of recycling by supporting research into methods to make the processes more efficient, for example, or to maximize the nature and types of materials that can be recycled.

Our members have also expressed interest in exploring the approach embodied in

the Wyden-Talent legislation (S. 510). This proposal would provide tax incentives to

consumers and recyclers to stimulate the development of recycling capacity. While

grants and tax incentives can be pieces of the solution, national consistency and

shared responsibility are required to ensure reliable funding for appropriate electronics recycling activities.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

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local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: The problem is that various states and municipal governments are

choosing to handle this issue differently, mandating different fees, programs and results, thus creating a competitive imbalance. This patchwork is already beginning

to develop. Three states—California, Maryland and Maine—have enacted recycling

laws for certain electronic wastes, but each of these laws establishes a significantly

different financing and compliance system. This confusion of state laws, with several

more states poised to enact new laws or regulations, is adding significant new costs

and is confusing consumers. A federal solution will harmonize a system for the financing of an electronic recycling infrastructure and operation of the program.

In addition, the financing approaches that have either been enacted or are being

considered by various states primarily focus on assessing a fee on each sale of a covered product made in the state, or on determining each manufacturer’s market/return share in the state. Focusing on the sale of products elevates the debate from

a solid waste issue to one regarding interstate commerce and market competitiveness, thus warranting federal involvement. Furthermore, used electronics must

often be transported across state borders to qualified recycling facilities. If separate

states regulate the transport of used products differently, this will cause artificial

regulatory burdens that will lead to inefficiencies and increased costs. Finally, national involvement is necessary to make sure that products imported by foreign

manufacturers that otherwise have no U.S. presence are included in the system.

EIA supports a national approach that would provide balance and consistency and

pre-empt the various inconsistent state approaches.

Question 4. In your testimony you stated EIA member companies use significant

quantities of recycled materials, including glass, metals, and plastics, in new generations of their products, thus creating demand that helps sustain markets for

these materials. This statement addresses a fundamental problem with domestic recycling infrastructure in this country and the ability of a recycler to make a profit

when other viable options, such as exporting to China exist. How do you think the

electronics industry can build on this market demand and create a competitive domestic recycling market?

Response: There are three major elements of an electronics recycling system: collection, transportation and the actual disassembly and recycling. The physical collection of used electronics represents arguably the biggest single economic barrier to

recycling. With millions of televisions and computers spread out across urban, suburban and rural areas, collection becomes an enormous and costly logistical challenge.

With this in mind, it is likely that recycling will remain an overall cost. As detailed above, collection and transportation costs each represent a significant part of

the overall expense. Even with greater markets for products and the establishment

of a viable recycling infrastructure, these costs will still remain fixed within a range.

The value of the resulting commodities still won’t pay for the overall costs of collecting and recycling products, at least not at the present time.

Question 5. Are there any ways the numerous small producers and generic brand

manufacturers that cannot necessarily be compelled to participate in a recycling

program can be overseen in our current free market? Have there been any ideas

generated within your industry regarding this anti-competitive imbalance in your

ideas for a requested federal solution? What are these?

Response: EIA and our member companies continue to have serious concerns over

whether states can effectively compel small market participants to play by the rules.

For instance, two separate California agencies have issued conflicting opinions regarding whether the state can impose a fee collection obligation on out-of-state retailers that have no physical presence in the state. While the state of Maine does

not implement its recycling program until 2006, EIA members already have significant doubts over whether state officials can take effective enforcement actions

against small foreign producers or generic manufacturers to pay their fair share of

recycling costs. While individual manufacturers in these categories are usually

small, they nonetheless collectively represent a noteworthy segment of the market.

In fact, Maine is proposing to release companies with a smaller share of the current

recycling stream from certain financial obligations that will apply to larger, brandname producers. This will clearly benefit small foreign and generic producers in the

intense competition over market share.

The financing mechanism aside, a national approach to electronics recycling

would resolve many of these issues. First, it would prevent small domestic manufacturers from selling into regulated markets while escaping responsibility or enforcement. Second, a national system could address products manufactured by foreign

companies with no physical presence in the U.S. Some foreign producers frequently

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change brand names; their products then end up designated as orphans even though

the company is still in business and selling products under yet another temporary

brand. Manufacturers with no U.S. presence could be required to provide some financial security in order to sell into the U.S. market. Alternately, the importer of

these products could be considered the responsible party.

The federal government should consider requiring all manufacturers of certain

electronics devices to include their brand label on their products. This would serve

to reduce the volume of ‘‘orphan’’ products which other parties must finance. While

this is already a requirement in certain states, it has limited effect. The major manufacturers already place their brand names on their products. The small and foreign

producers who are the real target of these provisions are largely outside state jurisdiction. In addition, the federal government could consider a registration requirement for all manufacturers of certain electronics devices. All manufacturers (or importers of products) would provide basic contact and business information to make

sure they stepped up and participated in any national system.

Question 6. Given the fact that shared responsibility is one of your goals and developing a recycling infrastructure that is convenient for the residential consumer,

how do you envision manufacturers being involved in the process other than environmental design and product stewardship? What, in your view is a fair contribution from each industry, and how do you pass along the costs to the consumer?

Response:

Manufacturers

The EIA manufacturers are leading innovators in environmental design and product stewardship; since we design and manufacture the products, our single largest

contribution is in this arena. On the whole, every year our products become more

energy efficient, use fewer materials of potential environmental concern, and become

easier to upgrade, disassemble and recycle.

In addition, our member companies see their roles as also including the following:

• Participating in a shared responsibility approach with the other key stakeholders

to resolve the challenge; • Continuing the broad industry effort to drive environmental innovations throughout the global supply chain; • Working to educate the public regarding the benefits of recycling and to provide

them with recycling resources, such as EIA’s Consumer Education Initiative

(www.eiae.org); • Using recycled materials, including glass, metals and plastics, in new generations

of products; • Continuing to handle our own used electronics responsibly, for reuse, recycling,

or refurbishment; • Offering refurbishment programs where we buy-back used products, or where one

product can be traded-in for another, and marketing refurbished products to our

consumers; • Designing newer more environmentally-preferred technologies/materials/parts into

older products which are still being marketed; • Continuing to participate in recycling partnerships with retailers, recyclers, government (including U.S. EPA’s Plug-in to eCycling campaign) and non-governmental organizations to develop a recycling infrastructure and expertise; • Funding brand sort and data collection projects to help better understand the context of the recycling challenge; and, • Participating in U.S. EPA’s effort to establish standards for electronics recyclers

to make sure that used equipment is properly and safely managed.

While manufacturers are a key partner in the process, it is also important to recognize that our role is ultimately limited.

Retailers

Retailers also have a critical role to play within a properly structured and funded

recycling system. The vast majority of electronics products are sold through traditional distribution and retail channels. In this system, retailers serve as the intermediary between manufacturers and consumers, and transfer the product to the

end-user in exchange for financial consideration. In general, manufacturers sell

products in bulk to distributors, who sell them to retailers (although many large retailers buy directly from manufacturers). Retailers in turn sell them to consumers

through a network of thousands of retail locations. These products then have years

of useful life, and are often re-sold, passed along to friends or family members, or

donated to schools or charities. In most cases, manufacturers do not have a direct

relationship with the end user at the time of initial sale, let alone years later when

the product is ready to be placed into the recycling stream. (According to the nonVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00229 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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profit National Center for Electronics Recycling (NCER), the average life of a television is about 17 years, and the average life of a computer is about 11 years.)

Unlike any other stakeholder in the process, retailers have millions of face-to-face

interactions with consumers every year. When consumers come into a retail store

to purchase a new computer or television, it is often to replace an older unit that

is ready to be collected and recycled. Many large retailers have already participated

in successful recycling events—often in partnership with manufacturers, NGOs and

government—that include collecting used devices at major, usually company-owned

retail locations. Because retailers have a direct and special relationship with the

public, and maintain numerous stores as well as transportation and distribution

networks, they can play a vital role in educating consumers and partnering with

others to provide recycling solutions.

Manufacturers also act as retailers in some cases. In those instances, they must

also share the responsibility of retailers.

Recyclers

Recyclers need to provide their services in a safe, cost-effective and environmentally-sound manner. EIA is working with the U.S. EPA, recyclers and other

stakeholders to help develop appropriate standards and a certification process for

electronics recyclers.

Consumers

As noted in our testimony, the combined goal of the institutional stakeholders

should be to develop a recycling infrastructure that is convenient for the residential

consumer. Ultimately, recycling can only succeed if citizens themselves participate

by turning used products in to the system. According to the non-profit National Center for Electronics Recycling (NCER), the average life of a television is about 17

years, and the average life of a computer is about 11 years. These products are purchased by consumers and provide benefits to the consumer for years. It is also important to remember that these products, once sold to distributors, retailers or consumers, no longer belong to the manufacturer. They become personal property, just

like all other goods, and no one can compel consumers to properly manage their personal property at the end of its useful life.

Costs

As noted above, recycling will remain an absolute cost on the system for the foreseeable future. Consequently, whether recycling costs are paid for by a point-of-sale

fee, are internalized in the cost of new products or are addressed in some other

manner, the consumer will ultimately end up paying the difference.

Question 7. Do you think, because demand for market driven environmental design is growing, that the free market could best handle this issue of e waste? Or

do you feel because states are acting, and so many others have legislation under

consideration, there is no choice but to pursue federal legislation?

Response: Since the total costs of recycling exceed the value of the commodities

recovered, it is already difficult enough to try and develop a free market solution

to this challenge. If states continue to enact distinct and possibly conflicting statutes

and regulations, the obstacles will be even more insurmountable. As noted in our

testimony, there is clearly a federal role. The federal government should focus on

removing artificial regulatory barriers to encourage the free movement of these

products for safe and appropriate recycling. If the federal government can ensure

a level playing field, and if all stakeholders can resolve the funding challenge, it is

possible that a free market solution will emerge.

Question 8. What, in the industries that you represent, should be the definition

of e-waste? Should it remain fluid? Or should it be defined by products or by toxic

components that make up the product? How much debate is there going on within

your industry about this term and are certain states defining the term differently?

Response: Any definition of e-waste or e-scrap should initially focus on a limited

number of products. It is our belief that the solution should start with an identifiable and manageable subset of devices, rather than attempting to address the universe of all electronic equipment at once. We are currently discussing this very issue

within our membership, and would be happy to provide an update to the Subcommittee in the future.

Also, the EIA member companies would prefer that any recycling approach apply

only to household products. However, we recognize the challenges in differentiating

between consumer products and certain non-household products, both at the point

of sale and at end-of-life. Electronic devices from non-households (i.e., businesses,

institutions and government) are typically required to be appropriately managed at

the end of life by the entity disposing of the equipment. However, in certain cases,

non-household electronic devices are re-sold and ultimately end up in the household

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waste stream. Any approach needs to consider options to ensure that businesses

handling their end-of-life devices responsibly as required by law are not penalized

by paying for recycling services they are not able to use, while ensuring that devices

that eventually become household waste finance the collection mechanism that they

will use. EIA and our members are willing to work with the Subcommittee on mechanisms to differentiate household from non-household products.

On the second part of the question, states are indeed using different definitions

of electronics scrap or covered electronics devices. Maine’s approach covers all televisions and computers, including laptop computers, regardless of the technology involved. California started with cathode ray tube (CRT) televisions and computer

monitors, and LCD monitors and laptop computers. The state has since expanded

the list of covered devices to include plasma and LCD-screen televisions. Maryland’s

new statute applies only to computers.

The Honorable Tammy Baldwin

Mr. McCurdy:

Question 1. Do you or any of the companies you represent currently export ewaste to other countries?

Response: In response to this first question, please refer to EIA’s statement on

electronics recycling, which is attached as the last two pages of this document. This

statement includes our position on the export of end-of-life electronics.

Question 2. If so, how much do they export?

Response: We are not aware of any EIA member company that sends end-of-life

electronics anywhere but to appropriate facilities in North America or other developed countries. EIA does not have statistics regarding the volume of end-of-life electronics that our members may send to appropriate facilities in developed countries.

Please note that electronics devices exported for reuse or refurbishment are not considered electronic waste because they still have value as products.

Question 3. Where do they export this waste?

Response: Please see the response to Question 2.

Question 4. Do they demand any safety standards or safety gear for their employees when processing this waste?

Response: Per our statement on electronics recycling (included below), our member companies require that any facility that manages their end-of-life electronics

meets stringent requirements that include appropriate worker health and safety criteria.

Question 5. Do they plan to continue exporting this waste to other countries?

Response: Please see the response to Question 2.

Question 6. How would federal legislation banning the export of e-waste impact

the companies that are currently doing so?

Response: First, it is important to note that the 30 member governments of the

Organization for Economic Co-operation and Development (OECD) have concluded

an agreement that governs cross-boundary shipments of wastes destined for recycling within the OECD. See OECD Council Decision C (2001)107/Final. In addition,

the U.S has concluded bilateral accords governing waste exports to Canada and

Mexico. These international accords have been in place for some time, and exports

of end-of-life electronics to these OECD or ‘‘developed countries’’ raises few, if any,

issues. A prohibition on exports to these developed countries would significantly disrupt current trade and recycling practices.

Second, it is our understanding that exports of end-of-life electronics to non-OECD

countries are primarily being made by numerous small recyclers. Federal legislation

banning the export of electronic scrap would likely minimize this practice, assuming

aggressive enforcement. However, such an approach could also discourage future investment in needed recycling infrastructure in non-OECD countries. Rather than an

outright ban on exports, EIA recommends that Congress and EPA consider actions

to ensure that exports of end-of-life equipment for recycling are only allowed where

the receiving facility can ensure safe and environmentally sound management. Appropriate recycling facilities that can safely and properly manage electronic scrap

should not be excluded from the market simply because they are located in nonOECD countries.

Question 7. As the amount of e-waste grows, I believe we are not doing enough

to give manufacturers the primary responsibility for managing the toxic substances

in their products. This is thwarting the development of a strong private market for

the safe recycling of these products and the development of products that contain

nontoxic alternatives and that are easier to recycle.

Mr. McCurdy, Mr. Largent, and Mr. Vitelli—As representatives of these industries, do you agree with this, and if not, how can you justify making consumers and/

or taxpayers shoulder most of the burden?

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Response: EIA does not agree that the materials content of our products is

‘‘thwarting the development of a strong private market for the safe recycling of

these products.’’ As noted above, compounds such as lead and mercury are present

in some electronics products because they provide clear safety, performance and energy efficiency benefits. As manufacturers and others develop appropriate and innovative alternatives to these compounds, we readily incorporate them into our products. Used products that contain these compounds can and are being safely recycled.

As discussed in our response to question #4 from Chairman Gillmor above, collection

and transportation costs each represent a significant part of the overall expense.

These costs have virtually nothing to do with the materials content of the products

themselves. The real obstacle to the development of a viable, comprehensive recycling infrastructure is that the value of the resulting commodities does not currently

cover the overall costs of collecting, transporting and recycling products. In other

words, even if all applications of compounds of concern could somehow be replaced

tomorrow, there would still be a major economic barrier to the development of a free

market recycling infrastructure.

We also do not agree that more needs to be done to ‘‘give manufacturers the primary responsibility for managing the toxic substances in their products.’’ As manufacturers, we already recognize that we have primary responsibility for product design. On the whole, every year our products become more energy efficient, use fewer

materials of potential environmental concern, and become easier to upgrade, disassemble and recycle.

Finally, we do not agree that any perceived lack of manufacturer responsibility

is thwarting ‘‘the development of products that contain nontoxic alternatives and

that are easier to recycle.’’ Some stakeholders promote onerous design mandates by

claiming that manufacturers ‘‘choose’’ to include compounds such as mercury and

lead in our products. This is a fundamental misstatement of fact. As materials technology has improved and viable substitutes have become available, manufacturers

have made enormous progress in reducing the presence of compounds of potential

concern in our products. We are continuing to make advances towards minimizing

or eliminating the use of these compounds. However, that is not yet possible in all

instances.

To give just one example, mercury lamps, which typically contain only a few milligrams of mercury, are used for illumination in a variety of electronic products due

to their high energy efficiency. While technically there are substitutes, such as

CRTs, that do not contain mercury, these alternative lighting sources vastly increase the energy demand of the product. Increased energy demand results in increased power plant emissions, which are the single largest source of mercury in the

environment. Out of recognition of the greatly enhanced energy efficiency provided

by mercury lamps, the European Union has exempted the use of mercury lamps in

backlighting for LCD monitors from the RoHS Directive. The European Union has

granted similar exemptions, for example for high-temperature lead solder, out of

recognition that no technically or environmentally-preferable alternatives currently

exist. In short, the uses of these compounds for certain specified purposes are dictated by necessity, not by choice.

Also, please see our response to question #1 from Congressman Dingell below that

details the broad market forces that drive our manufacturers to constantly improve

product design. These improvements translate directly into products that are smaller, lighter, and more efficient, and are easier to upgrade and recycle.

The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: The competitive marketplace continues to be the primary driver behind

improvements in product design, efficiency and performance. The electronics industry continues to achieve significant and sustained environmental progress throughout the entire product lifecycle: from design, through beneficial use, to end-of-life.

In fact, many of our companies have long-standing design-for-environment or product stewardship programs that pre-date the adoption of the European Union Directive on the Restriction of Hazardous Substances (the RoHS Directive) by several

years. On the whole, every year our products become more energy efficient, use

fewer materials of potential environmental concern, and become easier to upgrade,

disassemble and recycle. This process of continuous evolution—driven by market demand and competition—can be readily observed by comparing today’s products to

similar products that were manufactured just a few years ago.

There is intense competition in the consumer electronics marketplace, and therefore any manufacturing efficiencies that a company achieves can result in increased

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output while simultaneously decreasing per-unit production costs. In addition, technological advancements that extend product life increase the marketability of the

products while creating opportunities to sell more product extensions and upgrades

after the initial purchase. These market-driven innovations on the production side

directly translate into benefits for reuse and recycling. Please consider the following

examples:

1. Manufacturers have a clear incentive to streamline and simplify product assembly by, for instance, using fewer screws and connectors. Not only does this improve production efficiency, but it makes these products easier to service during

their useful lives. It also makes these products easier to upgrade, disassemble

and recycle at the end of life.

2. To achieve valuable economies of scale, manufacturers are increasingly purchasing larger volumes of a single plastic, instead of smaller amounts of different plastics. The use of a uniform type of plastic makes these products easier

and less expensive to recycle at the end of life.

3. Larger and heavier products cost more to transport. Accordingly, our companies

strive to use lighter-weight materials as they become available in order to control transportation costs for distribution and sale. To achieve production efficiencies and meet market demand, our members are also constantly innovating

to create smaller products without sacrificing functionality or performance.

Since transportation costs represent one of the single largest expenses associated with recycling, these ongoing innovations directly result in products that

are less expensive to recycle.

4. Metals and certain other compounds are present in electronics products because

of their important safety, performance or energy efficiency characteristics. However using these materials can add costs to the manufacturing process, as companies may need to implement additional measures to ensure proper management. As technically and economically viable substitutes become available, EIA

member companies have worked to reduce or eliminate the uses of these compounds. These efforts also facilitate the recycling of electronics products.

EIA member companies have also gained invaluable knowledge by recovering

products themselves and by working with independent recyclers. Understanding the

requirements for recycling also helps manufacturers factor in end of life management considerations into the design of new products.

Question 2. At the Subcommittee hearing on July 20, 2005, Mr. Breen of the Environmental Protection Agency testified that a good rule of thumb for the cost of recycling a desktop computer is $15, while the value of the materials recovered is anywhere between $1 and $2.50.

Do you agree with the economics of recycling desktop computers as described by

Mr. Breen? If not, please provide your views.

Response: First, it is important to note that the EIA member companies are manufacturers, not recyclers. Our member companies contract with independent recyclers to manage their own used equipment. In addition, many EIA manufacturers

have been involved in recycling partnerships with retailers, government and NGOs

where used equipment is collected and sent to qualified private recyclers. Consequently, the vast majority of our members have little or no direct experience conducting recycling activities themselves. Some EIA member companies that are directly involved in recycling activities cited confidentiality concerns regarding recycling costs.

However, the non-profit National Center for Electronics Recycling (NCER) has developed the following estimates for the costs related to electronics recycling:

• Processing costs: 24 cents/lb.

• Collection costs: 7 cents/lb.

• Shipping costs: 5 cents/lb.

• Recycling system administration: 3 cents/lb.

Under California’s electronics recycling statute, qualified collectors and recyclers

are eligible for total payments of 48 cents per pound. A general rule of thumb in

the recycling industry seems to be approximately 50 cents per pound. Regarding materials value, EIA does not maintain information on prices in the commodities market

Please note that recycling can also include extending the useful life of various

components and subcomponents of a computer system. For example, the hard drive,

optical drive and various other parts have potential resale value in the secondary

electronics market. The parts recovered in this recycling process have a much higher

value than the commodities grade materials.

Question 3. How much does it cost to recycle an average size television and what

is the value of the recovered materials?

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Response: EIA does not maintain information on recycling costs, or on prices in

the commodities market. We are in the process of checking with appropriate sources

in those markets, and we will share with the Subcommittee whatever information

they are able to provide. Costs will likely differ from recycler to recycler and stateto-state due to different processing requirements.

Question 4. How much does it cost to recycle a laptop computer and what is the

value of the recovered materials?

Response: Please see the response to Question 3.

Question 5. Will your Member companies be able to comply with the waste electrical and electronic equipment (WEEE) directive of the European Union, which requires the elimination of mercury, cadmium, lead, chromium, and other substances

by July 1, 2006?

Response: (For questions #5 and #6, we believe you are referring not to the WEEE

Directive but to the RoHS Directive. It is this latter Directive that addresses the

restriction of metals and other substances, and is scheduled to take effect on July

1, 2006.)

First, it is important to note that the RoHS Directive does not require the elimination of the listed compounds; rather, it limits their concentration in certain products, and also provides broad exemptions for certain applications when there are no

technically or environmentally-preferable alternatives available.

The EIA manufacturers are fully committed to complying with the RoHS Directive

when it takes effect next year. However, there are still several major areas of uncertainty regarding the Directive which make compliance difficult to measure. First,

the EU has yet to establish the uniform testing procedures that will be used to determine whether products and components are in compliance. As a result, there is

still no formal way to demonstrate that a given device is (or is not) within the regulatory requirements. Second, the EU has yet to rule on several dozen proposed exemptions to the Directive. Consequently, even at this late date manufacturers do not

know whether they will be allowed to use these compounds in certain critical applications. We understand from recent discussions with representative from the EU

and from the United Kingdom’s Department of Trade and Industry that final decisions on these exemptions may not be made until 2006. This leaves virtually no

time for the global supply chain to make any needed changes in electronics components. Finally, the EU has yet to issue any guidance on compliance and enforcement

requirements under the RoHS Directive. Manufacturers throughout the global supply chain therefore do not know what certifications, declarations or other paperwork

requirements may be needed. In short, RoHS is a moving target. The EIA member

companies have been working diligently to comply with those elements that are already established, and will also comply with additional requirements once they are

finally set.

Question 6. After July 1, 2006, will your Member companies discontinue selling

electronic products, such as computers or televisions, in the United States that contain mercury, cadmium, lead, or chromium and other substances covered by the

WEEE directive?

Response: Owing to the uncertainties in the process detailed in our response to

the previous question, there are still numerous questions regarding what will constitute a ‘‘RoHS-compliant’’ product. Regardless, the EIA member companies are

driving the RoHS requirements throughout the global supply chain. In short order,

we expect that all components used in our products worldwide will meet the RoHS

requirements (once all the RoHS requirements are established).

Many of our member companies have indicated that they will only be selling

RoHS-compliant products worldwide as of next July 1st. Other companies have

noted that, until current inventories are depleted, there may still be some products

sold in U.S. and other markets that do not meet the RoHS requirements. This will

be limited both in terms of time and number of products affected. From that point

forward, and assuming that all RoHS requirements are finalized by the EU, our

members will be manufacturing and distributing only RoHS-compliant products

throughout the entire global marketplace.

July 26, 2005

EIA STATEMENT ON RECYCLING

General Statement

The electronics industry continues to make significant advances in minimizing the

environmental impacts of electronic products throughout their lifecycle: from design,

to use, to end-of-life. This progress results from a commitment to sustainability as

our companies consistently design for environment, reuse and recycling. On the

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whole, every year our products become more energy efficient, use fewer materials

of potential concern, last longer and become easier to disassemble and recycle.

Electronics Recycling

EIA and our member companies recognize that reusing and recycling electronic

products at the end of life is the most environmentally preferable option, and we

support the proper management of these products through public education, grant

programs, public-private partnerships and voluntary industry initiatives. Through

these approaches, we support efforts to reduce the volume of electronic products

being disposed of in landfills and to increase the beneficial reuse of materials.

EIA promotes shared responsibility for the management of used electronic products. Shared responsibility involves a system in which all stakeholders (including

designers, producers, governments, suppliers, consumers and recyclers) accept collective responsibility and participate in a system for the end-of-life management of

electronics depending on their particular expertise and role. National consistency is

essential in electronics recycling. EIA and our member companies have been working closely with U.S. EPA and members of Congress to try and find a common solution to the electronics recycling challenge.

Implementing a system based on shared responsibility principles will increase the

efficient collection of electronics and ensure economies of scale by taking advantage

of existing infrastructure. Manufacturers effectively contribute to shared responsibility through the design phase by enhancing ongoing efforts to limit the use of compounds of concern in electronic products, increasing their energy efficiency and making them easier to recycle. Our member companies are also involved in numerous

recycling initiatives—individually, collectively and/or in collaboration with U.S.

EPA, state and local governments, retailers, recyclers and charitable organizations.

Exports

EIA member companies strongly support the safe and environmentally-sound

management of used electronics. EIA shares the concerns expressed by many stakeholders over the export of used electronics to facilities that lack the capacity and

expertise to properly and safely manage these products, and we do not condone this

practice.

In fact, our member companies require recyclers to satisfy strict requirements to

be eligible to manage end-of-life electronics. This includes a verifiable commitment

that all used products will be properly managed in appropriate facilities in developed countries.

Other actions that EIA members typically take to ensure proper recycling of endof-life products include:

• Site visits;

• Independent auditing;

• Proper insurance;

• Written operational procedures for proper handling of materials;

• Proper record keeping;

• List of all subcontractors; and

• ISO 14001 certification or an equivalent environmental management system, or

compliance with the OECD Environmentally Sound Management (ESM) guidelines for recycling, or International Association of Electronics Recyclers (IAER)

certification.

Once the used devices are appropriately processed, materials such as cleaned CRT

glass, scrap metal, and sorted and baled plastics become commodities that should

be permitted to move unencumbered for beneficial reuse in new products.

RESPONSE FOR THE RECORD BY MARK MURRAY, EXECUTIVE DIRECTOR, CALIFORNIANS

AGAINST WASTE

The Honorable Paul Gillmor

Question 1: Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Murray Response 1: Testing of electronic devices by the California Department of

Toxic Substances Control has demonstrated that virtually all electronic devices possessing a circuit board or batter exhibit the characteristics of toxic under both state

and federal law. We believe that obsolete electronics pose a very real threat to public health and the environment, and their disposal in Solid Waste facilities should

be uniformly prohibited.

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Having said that, the primary motivation of Californians Against Waste in addressing the need for and potential of e-waste reduction and recycling policies is the

desire to conserve resources and reduce pollution associated with the raw materials

extraction and processing in the manufacturer of electronics.

Gillmor Question 2: It seems to me though in listening to your comments that the

biggest problem with e-waste right now is the question of what to do with all the

‘‘orphan’’ and legacy waste that is sitting in peoples’ homes. Do you agree with that

assessment? If so, would a grant program of some sort, for states and local communities, help finance and build the infrastructure areas need to address this waste

stream?

Murray Response 2: The term ‘‘orphan’’ waste as it is used in the e-waste policy

arena generally refers to those electronic devices carrying a brand name for a company that no longer exists. The continued existence of these ‘‘manufacture-less orphans’’ has been identified by some as a limiting vulnerability for some public policy

approaches, such as direct manufacturer takeback or a Maine style producer responsibility approach.

The fact that many households and small businesses have been stockpiling obsolete electronics represents both a significant component of the problem, as well as

an opportunity. Clearly the e-waste management ‘‘problem’’ is greater than the current rate of obsolescence. At the same time, the fact that these long obsolete devices

have yet to be illegally disposed presents policy makers with a ‘‘second chance’’ for

policies and programs to catch up with market realities.

Worse than doing nothing to address the e-waste problem would be to rely on ‘‘tail

pipe’’ waste managers to collect and process devices for recycling, as well as to finance those efforts with back-end disposal fees. We know that back-end fees have

a tendency to drive illegal disposal, be it on the side of the road leading to a transfer

station, or stuffed in a garbage can or dumpster.

While local government and private sector waste managers can and should play

a role in the collection and processing of obsolete devices for recycling, the costs of

that management must separately financed, either through front-end ‘‘Advance recycling fees’’ or similarly internalized into the price of the product by manufacturers.

As a tax payer, I would object to the notion of providing general fund or some

unrelated special fund dollars to address this problem.

In terms of the actual mechanics of providing ‘‘front-end’’ collected funds to collector/processers, it is our experience that performance based payments (i.e. payments for materials actually collected/processed) is vastly superior to a speculative

‘‘grants-based’’ approach. Grants are notoriously expensive to administer, and, in

our opinion, should only be used to supplement a direct payment program.

Gillmor Question 3: Collecting of household waste, whether solid waste or waste

that qualifies under the household hazardous waste exemption, is governed mostly

by local officials or in limited circumstances, the state government. Why do you support a Federal solution to an otherwise local problem?

Murray Response 3: The regulation and enforcement of wastes, including hazardous electronics wastes, has long been a responsibility of state’s, and we are supportive of that status quo. Californians Against Waste is not advocating, nor holding

our breath for, a Federal solution to the e-waste problem.

We have simply called for agencies and facilities of the Federal government to

support and cooperate with state and local governments in the implementation and

enforcement of state and local solid and hazardous waste policies when operating

in jurisdictions. To date, some Federal agencies have ignored California’s e-waste recycling law.

Gillmor Question 4: I am very interested in the involvement of your group in the

passage of California’s e-waste law. As I understand it, many environmental groups

pulled their support from the final bill, but your group did not. Why? What lessons

do you think our panel should know about obtaining or maintaining support from

environmental groups that will still allow for meaningful e-waste legislation to become law?

Murray Response 4: Californians Against Waste was the sponsor of Senate Bill

20, the legislation which enacted California’s first in the nation e-waste recycling

law. In this capacity, we worked with and negotiated with a broad spectrum of

stakeholders representing electronics retailers, electronics manufacturers, private

and non-profit e-waste collectors and recyclers, local governments, as well as local,

state and national environmental organizations.

During the final weeks of the 2003 legislative session, Senator Byron Sher and

Californians Against Waste had succeeded in organizing the support of recyclers,

local governments, environmental groups and retailers around a ‘‘hybrid’’ proposal

that would cover 100% of the cost of collecting and recycling covered electronics

through a front end fee, while allowing manufacturers to opt out of that system

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upon demonstration of a system to takeback devices. It is worth noting that this

‘‘producer takeback’’ option allowed manufacturers to takeback an amount of any

brand of covered devices equal to 50% of sales. While electronics manufacturers

were uniformly opposed to the proposal at this stage, the industry was split on their

rationale. For simplicity I’ll categorize these divergent perspectives as Hewlett Packard (HP) vs IBM and the TV makers.

While California has historically been a leader in the enactment of forward thinking environmental policies, California is also the home of the Silicon Valley and the

headquarters of much of the hi-tech industry, and as such we faced considerable political pressure to forge a final proposal with at least some support from electronics

manufacturers.

Without getting into a blow-by-blow of those final negotiations, I will say that

there was a real desire by Senator Sher, CAW, and other supporters, to try to reach

an accommodation with HP around the concept of ‘‘direct producer responsibility’’.

However, the stumbling block then (and now) is HP’s unwillingness to accept responsibility—financial or otherwise—for the collection of covered devices, as well as

their recycling. A preliminary analysis by the State of California indicates that collection costs—which fall predominantly on local governments and non-profit thrifts

(Goodwill), 40-45% of total program costs. Senator Sher and our coalition could not

accept allowing this cost burden to fall on local governments and other collectors,

so we forged an agreement with the IBM/TV Manufacturer coalition which was willing to support a proposal covering both collection and recycling costs.

As part of this agreement, Senator Sher agreed to drop the ‘‘manufacturer opt

out’’ language. As I recall, this change caused three environmental supporters—Silicon Valley Toxics Coalition, Computer Take-back Campaign, and Basil Action Network—to remove their support for the legislation. Californians Against Waste, along

with most of the major State and National environmental groups, including: Sierra

Club, Natural Resources Defense Council, League of Conservation Voters,

CALPIRG, Planning and Conservation League, and many others; remained in support of the final legislation.

Gillmor Question 5: One of the more prominent problems in addressing e-waste

disposal is the problem of people who illegally dump their electronics into landfills.

Your testimony mentions that the California law will: ‘‘reduce/prevent illegal dumping’’. Could you please tell us if you consider illegal dumping a problem and why

do you think the California law will be able to successfully prevent it?

Murray response 5: Because covered electronic devices are hazardous, their disposal in California’s municipal solid waste stream is prohibited. The bulk of ‘‘illegal

dumping’’ of covered devices occurred when residents and businesses disposed of devices in trash cans and dumpsters, with some devices being dumped on roadsides

and open spaces.

There are three primary factors that prompt illegal disposal:

1) Lack of consumer information regarding the disposal ban and opportunity for recycling;

2) Lack of opportunities for recycling; and

3) Presence of back end disposal/recycling fees that create a financial disincentive

for generators to properly managed covered electronic wastes.

California’s e-waste recycling policy helps address each of these factors. The program provides direct resources for public education—approximately $1million in

program funds for the current year. The program creates an incentive for private

sector collectors and recyclers to provide information to the public in order to drive

volume. The program provides expanded opportunities for collection/recycling—to

date more than 300 collectors are providing ‘‘free and convenient’’ recycling opportunities at more than 500 locations in the state. While some collectors continue to

charges fees—mostly for additional service such as at home pick-up, consumers no

longer face the choice of ‘‘pay as you throw’’ recycling vs ‘‘free’’ illegal disposal.

Gillmor Question 6: The California e-waste law makes the consumer electronics

retailers, who produce a minor quantity of electronic products, the collector of the

advanced recovery fee, even though they are merely a conduit of commerce; while

direct internet sales treated differently. Why was this choice made to use the retailers? With California’s budget situation, how can you be sure that advance recovery

fees will actually go to e-waste recycling activities rather than to other state funding

priorities?

Murray Response 6: Retailers were designated as fee ‘‘collectors’’ under the California law for three basic reasons:

1) Retailers already pay sales tax to the state of California, and it was determined

that the most efficient, lowest cost fee collection mechanism would ‘‘piggy-back’’

on this existing system.

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2) Assessing the fee directly on manufacturers may prove problematic in some instances where a manufacturer is unable to make a determination as to where

devices delivered to distributors and ultimately retailers are actually sold.

3) California retailers (via the California Retailers Association) specifically supported the assessment of a ‘‘retailer’’ based fee in SB 20. This was undoubtedly

based on the generally positive experience California retailers have experienced

with other, similar environmental fees.

The term ‘‘retailer’’ as it is used in the context of the California e-waste law may

need some explaining. The definition reads:

‘‘Retailer’’ means a person who makes a retail sale of a new or refurbished covered electronic device. ‘‘Retailer’’ includes a manufacturer of a covered electronic

device who sells that covered electronic device directly to a consumer through

any means, including, but not limited to, a transaction conducted through a

sales outlet, catalog, or the Internet, or any other similar electronic means.

Many actual ‘‘fee payers’’, including most ‘‘computer retailers’’ are in fact not traditional ‘‘brick and mortar’’ electronics retailers, but rather electronics manufacturers—Dell, HP and IBM are among the largest, computer resellers, and others selling

over the internet or through other channels. Because most of these entities are currently obligated to pay sales tax on these sales—including most internet sales, the

addition of the California e-waste recycling fee has proven to be substantially less

problematic than some critics anticipated. The California Board of Equalization has

thus far identified just under 2400 ‘‘fee payers’’ who account for better than 85 percent of California sales.

The California E-waste Recycling fee is legally an environmental mitigation ‘‘fee’’

and as such the state is constitutionally prohibited from expending fee revenue for

any purpose unrelated to that for which the fee was collected.

Gillmor Question 7: Your testimony mentions that the drafters and supporters of

the California e-waste law made a clear decision to avoid a California-specific ban

on certain electronics components and their constituents and rather adopt a European directive on prohibiting certain wastes? Why was the choice made to mirror

European legislation as opposed to creating a California solution for Californians?

Considering the size of the California market, did you consult with Federal trade

or commerce officials regarding the impacts of your state’s action on larger domestic

economic issues?

Murray Response 7: Our researched revealed that the European Union, in developing the ROHS directive, had developed more than simply a listing of prohibited

toxic materials, but rather an interactive stakeholder process for identifying and

phasing out a range of toxic materials. We recognized that California had neither

the time nor the resources to replicate this process.

It should be noted that part of our motivation in tracking the EU directive—rather than being silent on the issue—was to help ensure that California not become

the dumping ground for toxic devices that could no longer be sold in Europe.

Gillmor Question 8: Maine and Maryland have both enacted state e-waste laws

that are widely different than your own state law. Do you think that their laws are

effectively protecting the environment and promoting recycling? Do you think it is

wise for our country to have many states with different plans and processes, especially, if contrary to the construct in the Solid Waste Disposal Act, there is no Federal set of minimum standards underpinning it all?

Murray Response 8: The e-waste policy adopted in Maine, while different from the

California law in its scope and approach, represents a valid and responsible policy

maker response to the e-waste problem. Our only issue with the Maine law is that

its ‘‘shared responsibility’’ approach leaves an unfunded cost burden on local government. To the extent that generators are required to pay the cost of device collection

at point of ‘‘disposal’’ rather than at the point of purchase, this may discourage participation and result in some level of ‘‘illegal’’ disposal.

I’m not sure that the Maryland law in its present form actually represents any

kind of meaningful solution to the e-waste problem.

Whether it is wise or not for the country to have a patchwork of state e-waste

policies, it is decidedly irresponsible for policy makers and the public to allow the

wasting of valuable resources and the continued disposal of toxic materials in facilities incapable of safely containing those materials.

While we welcome the attention that this committee and some members of congress have provided to the e-waste issue, the Federal government’s abdication of any

interest or responsibility over materials recovery policy has been made evident by

the lack of any meaningful Federal action on any problem waste issue over the last

15 years.

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The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Murray Response to Dingell: Both the California Advanced Recycling Fee and

Maine Shared Producer Responsibility approach provide manufacturers with a direct financial incentive to design their products for recycling.

Under the California policy, the front end fee on devices sold is adjustable based

on the system costs of recycling. Whether paid directly by manufacturers or by their

customers through third party retailers, manufacturers want to keep the cost of

their product down. By designing for recycling, manufacturers can lower the cost of

recycling, thereby lowering the front-end fee.

The Maine policy works similarly in that manufacturers, whether taking direct

physical responsibility for the recycling of their devices, or contracting with a third

party recycler, will need to internalize the cost of recycling. By designing for recycling, manufacturers can lower the cost of recycling, thereby lowering the internalized cost.

RESPONSE FOR THE RECORD BY DAVID A. THOMPSON, DIRECTOR, CORPORATE

ENVIRONMENTAL DEPARTMENT, PANASONIC CORPORATION OF NORTH AMERICA

Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: Our Coalition’s view is consistent with the position of the U.S. Environmental Protection Agency. In its testimony delivered to the House Energy and Commerce Subcommittee on Environment and Hazardous Materials, EPA Office of Solid

Waste Assistant Administrator Barry Breen noted that the real issue is resource

conservation, not hazardous waste disposal. In fact, Breen pointed out that of the

2,000 operating municipal solid waste landfills in the U.S., most meet 1991 standards for leachate collection. He added that the typical landfill Ph is about neutral

and would not lead to large leaching of metals by landfills.

Similarly, the Solid Waste Association of North America (SWANA) concluded in

a 2004 report that municipal solid waste landfills can provide safe, long term management of products containing heavy metals such as electronics. SWANA’s report

found that ‘‘the natural processes that occur within a MSW landfill, such as precipitation and absorption, effectively inhibit heavy metals from dissolving into the

leachate or being released from the landfill in the form of landfill gas.’’

Nonetheless, The Electronic Manufacturers Coalition for Responsible Recycling

believes that proper management of the growing electronics waste stream represents an important policy objective. By supporting an advanced recycling fee as

a viable, long-term financing solution to the challenge of electronics waste, our Coalition welcomes a uniform, proactive approach from the Congress.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: Certainly, ‘‘orphan’’ and ‘‘legacy’’ wastes represent a challenge to any

comprehensive approach to the management of electronics products at their useful

end of life. The challenge, however, is not so much the volumes awaiting proper recycling or processing. Rather, our real task is the development of an equitable approach to financing that does not disproportionately burden long-time product manufacturers to the benefit of market newcomers, who, it might be noted, employ relatively few, if any employees in the United States.

Maine’s approach to orphan products, however, is especially arbitrary and capricious in that it relegates financial responsibility for these products to historical

manufacturers. It is not clear that any economic analysis has been done to justify

making one subset of the current sellers in the marketplace (i.e., those who have

been in business long enough to actual have a waste stream share) versus making

all current sellers responsible for a share of the orphan products. After all, neither

historical manufacturers nor market newcomers are responsible for creating the orphan problem. Indeed, the return share approach to allocating financial responsibility may serve to exacerbate the orphan problem as marginal historic manufacturVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00239 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
236

ers are driven from the market by this arbitrarily imposed competitive disadvantage.

Instead, any approach should be advocated with an eye toward the potential for

greater market development of the recycling industry. Our Coalition views the ARF

as the simplest way to accomplish this objective.

Grant programs designed to stimulate and develop collection and recycling infrastructure have long been supported by many of our Coalition companies. Since 2001,

JVC, Panasonic, Sharp and Sony have supported an innovative program called the

Shared Responsibility Program (SRP). Under SRP, we selected a number of recyclers and arranged with them to develop and operate collection events for electronic

products. Our contribution was to cover the cost of recycling our own branded products. The rationale behind SRP was to 1) develop actual data on collection volumes

and costs; 2) stimulate the development of local collection events and programs by

subsidizing costs; and 3) provide these recyclers with increased volumes of materials

needed to justify new investments in technology and develop new markets for the

materials contained electronic products. SRP, over the years, supported over 1,000

events in more than 20 states and has collected almost 10,000 tons of products.

While SRP has stimulated collection and infrastructure development, the program

has not been as effective as we had hoped due to the difficulty of counting brands

in order to apportion contributions.

Thus the Coalition believes that a well-designed grant program will be productive

in stimulating recycling collection and infrastructure.

We also note that perhaps the most important challenge is not just historical

waste, but to assure that present and future products are increasingly more recyclable. Our challenge is to design a recycling program that harnesses the ability of the

free market to create competitive pressure on manufacturers to design products that

are ever more easily recycled. Contrary to what the names ‘‘Manufacturer Takeback’’ and ‘‘Cost Internalization’’ might imply, because of the long lives of products

such of televisions, little, if any, real market pressure is imposed on manufacturers

to improve the recyclability of their products. The recycling process does not occur

until many, many years after the product is manufactured and sold. Only an approach such as Advanced Recovery Fee, which is very visible to the consumer, can

make consumers critically aware of the importance of recycling.

The sure result of this visibility will be that manufacturers will use recyclability

as a way to gain competitive advantage.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: Traditionally, as you note, the collection of household wastes has been

the purview of municipal governments, with many communities around the country

already operating permanent drop-off sites or hosting frequent collection events.

This governmental service has been funded through locally generated tax revenues,

which clearly link the individual household costs to a public service. However, in

today’s era of tighter local budgets, some municipalities are looking for financial assistance to address a growing source of solid waste: end of life electronics.

The main problem posed by locally financed collection of waste electronics is that

some communities may elect not to collect the products, thus reducing consumers’

options for disposal. This disparity in collection availability on a community by community, and state by state basis, could be averted through federal legislation. A federal ARF would in effect level the playing field by providing all consumers with an

expanded opportunity to properly dispose of their electronics products. From a manufacturers’ perspective, avoiding a patchwork of differing state electronics recycling

laws is highly desirable.

Question 4. Your testimony strongly supports the use of an advanced recycling fee

being charged to consumers when they purchase their electronics device. I have

three questions. First, you suggest that a third-party group govern the use of this

funding—is there a precedent for this type of arrangement? Second, aren’t you really suggesting creation of a marketing and educational ‘‘check-off’’ program shifts the

‘‘check-off’’ fee from producers to consumers? Third, how can you be certain that all

the money you raise will be available for the programs you envision rather than

used for other governmental spending?

Response: Our broad-based manufacturers’ coalition supports an advanced recycling fee because our experience suggests that it is the simplest way to achieve an

efficient, environmentally sound, and sustainable system for the collection and recycling of electronic products. We are proposing that collected funds be managed by

a private third-party organization (TPO) utilizing multi-stakeholder governance.

237

While we are not aware of direct precedent, we do think Congress could place the

ARF funds in a special recycling account that would be used by US EPA to contract

with responsible Third Party Organizations (TPO) capable of operating collection

and recycling programs for electronic products that are covered by the program. Several members of our Coalition are now engaged in a US EPA led project in the Pacific Northwest to research the development of such a TPO and would be happy to

report in more detail as the project develops.

It is our understanding that so-called ‘‘check-off’’ programs used to promote farm

products are funded through assessments based on product sales, production, or imports. The collected funds can be used to finance a variety of programs including

advertising, consumer education, marketing research, and foreign market development.

In contrast, an advanced recycling fee is intended to fund all facets of electronics

collection and recycling and is therefore more akin to a ‘‘user fee’’ commonly associated with used oil and tire recycling, and just recently increased funding of airport

security. The visible fee itself serves as the primary consumer education vehicle. We

also think a visible fee will enable consumers to exert pressure on manufacturers

and government to minimize the cost of collection and recycling. The fee is NOT intended for marketing purposes but rather to provide a specific service to consumers

of electronics products as well as to support environmental objectives of resource

conservation and preservation.

Experience has shown there is no absolute way to guarantee a federally raised

source of revenue will not in part be used for unrelated purposes. Spending of the

social security trust fund for other purposes is perhaps a prime example of this.

However, we are confident that the Congress can adequately ‘‘firewall’’ funds earmarked for electronics recycling, just as funds derived from the federal gasoline tax

are used only for transportation-related initiatives.

Question 5. Your testimony mentions how Panasonic and other companies in the

Manufacturers Coalition for Responsible Recycling have been leaders in the redesign

of your products to address environmental concerns as well as have taken efforts

to promote the use of recycled materials. What was the motivation for Panasonic

and these other companies to take these steps? What roles did perceived or actual

governmental action, either in this country or abroad, have in propelling these decisions and practices?

Response: Our Coalition members have been actively redesigning our products in

recent years to place a greater emphasis on energy efficiency, hazardous materials

minimization, and to make them easier to recycle. Panasonic alone has spent about

$850 million in the last 5 years on eco design improvements for our products. Many

of our Coalition companies have attempted to incorporate environmental design

achievements into our marketing programs.

Upon examination of published environmental reports of our Coalition members,

you will find similar commitments to sustainability and environmental preservation.

Quite simply, leading global electronics manufacturers including all members of our

Coalition, recognize that our future business success is literally dependent upon

meeting society’s demands placed upon us. These societal demands include the expectation that manufacturers develop and market products that are less burdensome to the environment.

Response: It is accurate to conclude that far-reaching laws such as Europe’s Restriction on Hazardous Substances (RoHS) Directive have served to hasten product

evolution toward global redesigns with a lesser environmental footprint. However,

such broad mandates are often enacted without the benefit of a basis in sound

science and can serve to unnecessarily inhibit the development of new technologies.

All members of our Coalition market products on a global basis so laws governing

product content in one region can have a great impact on our design practices.

Question 6. As you know, our full committee has jurisdiction over telecommunications policy in this country and many of us are aware of the global nature of telecommunications equipment and electronics equipment sales. As such, I noticed two

things in your testimony: a call for fair play among all entities involved in the manufacture, sale, and recycling of electronics products and a reference in your testimony to the European Union’s Waste Electrical and Electronic Equipment Directive

(WEEE). Since Panasonic and all the other electronics producers in your coalition,

minus IBM, do not have their company headquarters based in the U.S., are your

companies seeking a legal construct on e-waste in the United States that would economically advantage their positions while at the same time financially disadvantage

hi-tech American based companies?

Response: Due to the global nature of the electronics business, there are no large

manufacturers that market exclusively to one geographic region. This includes U.S.

based manufacturers who are as dependent upon overseas markets for their busiVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00241 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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ness success as they are on the domestic marketplace. Given that all of our Coalition’s members have a substantial employment presence in the U.S., this issue

should not be viewed as a means by which to advantage ‘‘foreign’’ manufacturers.

There exists no sound basis upon which to support the claim that an advanced

recycling fee approach to financing the disposition of waste electronics hurts ‘‘domestic’’ manufacturers. What an ARF does ensure, however, is equitable treatment for

all manufacturers, regardless of where their primary headquarters is located. It is

competitively neutral, serving to level the playing field for all companies including

those without a presence in the historical waste stream.

Question 7. Your testimony calls for a ‘‘system of consistent laws and regulations

that do not burden commerce in new products and recyclable materials unnecessarily.’’ Could you please expound on this statement as to what you mean and provide the subcommittee specific instances of where you see a problem and what recommendations you have to remedy that problem?

Response: A high profile example of the need for regulatory relief has been the

struggle to get a so-called ‘‘CRT rule’’ enacted by the U.S. EPA. Over the past seven

years, industry has worked closely with the U.S. EPA seeking the enactment of a

Cathode Ray Tube rule that in essence removes current hazardous waste designations as they apply to shipments of intact waste CRTs across state borders. By removing the hazardous designation, shipments and treatment of waste CRTs can be

safely done at substantially reduced costs and by additional recycling facilities, thus

contributing to the future economic vitality of this nascent industry.

Through an EPA-convened, multi-stakeholder dialogue known as the Common

Sense Initiative, the CRT-rule was developed and ultimately approved by all stakeholders. The rule, although garnering support from EPA, has unfortunately languished pending extended internal reviews at the agency and by the Office of Management and Budget. It is unfortunate a rule that all relevant parties agreed was

needed and would have a beneficial impact on the recycling of waste electronics has

yet to reach fruition despite being conceived back in the 1990s.

Question 8. Your testimony calls for new and expanded research on the scope the

electronic waste as well as an investigation of and what can be done from an economic and technical feasibility standpoint. With the voluntary programs at EPA,

such as EPEAT, Plug-In to e-Cycling; work by the Department of Commerce to analyze the current situation; regional and national stakeholder meetings on electronic

waste; and now this hearing; could you please tell me what you seek to obtain

through your ‘‘support of a national study to be conducted by U.S. EPA’’ that is not

already being discussed or debated in these other forums?

Response: The initiatives and studies you cite have all provided pieces of invaluable information and contributed toward increased recycling of waste electronics in

the U.S. Despite this, there remains a strong need to learn more about the issue.

Frankly, no one really has a good handle on how many products are really out

there awaiting recycling and the oft-cited data from the National Safety Council

study is now over six years old—a lifetime ago in the world of high technology. We

also need to better understand the capacity for recycling electronics products in the

U.S. in order to better plan needed facilities. We also have information gaps concerning the adequacy of secondary markets to promote growth in the electronics recycling sector.

Perhaps our greatest single need is for a better understanding of the economics

of different recycling systems. Under manufacturer mandated take-back and cost internalization, recycling costs will be marked up as the product moves through distribution to the final consumer. What will this mark-up cost consumers? Allocating

financial responsibility to manufacturers based on return or waste stream share requires sorting by brand at every recycler, with significant, ongoing administrative

costs? What will this cost consumers? Implementing the ARF approach is often portrayed as resulting in a costly new bureaucracy, but it frankly is unknown which

approach is most efficient economically in getting the job done.

We need an objective and comprehensive focus on the economics of different approaches to the finance of waste electronics collection and recycling. Absent this detailed analysis, we are left to choose between various options, many of whom we

have little information on and no existing precedent upon which to make an educated decision.

Finally, the materials contained in electronic products all require energy inputs

to create, and contain an imbedded energy value. It is quite possible that collecting

and recycling them—essentially reclaiming this imbedded energy value—will consume less energy than would be required to mine and produce new virgin materials.

If so, this would result in a net reduction of greenhouse gas emissions. In the Coalition’s view it would be very useful to document this saving with a view to developing a greenhouse gas emission / imbedded energy credit trading system that recyVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00242 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
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clers could utilize to market the energy savings obtained through recycling electronic products.

The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: Electronics manufacturers always have and will continue to design

products based on customers’ wants and needs. This process has produced dramatic

improvements to our lives and lifestyles as new technologies both entertain and inform to levels unimaginable even a few short years ago. However, with the many

benefits associated with use and enjoyment of new technologies comes a responsibility we share a manufacturers. Our Coalition members continue to advocate the

sustainable and environmentally sound management of electronic products at their

end of life. We firmly believe it is our societal obligation to develop an environmentally conscious plan to recycle our end of life products.

At present, there exists several ‘‘models’’ for electronics collection and recycling.

Based on our members’ collective experience recycling used electronics products and

in developing product recycling systems in the U.S., Japan, Europe, and other countries, we have concluded that a system financed through an advance recycling fee

is the optimal approach.

Our Coalition supported ARF legislation in California that became effective in

January 2005. The California legislation embodies our concept of a shared responsibility system based on a consumer user fee, where all stakeholders have defined

roles of responsibility. . To date, the California law has proven to be successful at

diverting waste CRT-containing products from the waste stream. The law also has

boosted the growth of the recycling industry in the state.

It is erroneous, though popular to conclude that manufacturer takeback mandates

will drive meaningful product redesign. Most manufacturers endeavor to design

products where the value of the materials contained within will cover the cost of

collection and recycling. However, these design changes will not benefit the recycling

process until the newly improved designs are received back into the waste stream,

which in the case of TVs is about 15 years out.

This significant time lag calls into question the belief that takeback mandates will

drive product redesign. In fact, mandatory takeback requirements could result in

the unintended consequence of limiting the amount of design resources available to

implement design improvements in order to comply with otherwise well-intentioned

laws. There simply is no supporting evidence of any design improvements being

driven by takeback requirements.

Under the California statute, manufacturers are tasked with designing products

that are more environmentally sound. Manufacturers must comply with the RoHS

requirements as well as submit detailed reports on the amount of designated chemicals contained in our products, our use of recycled content materials and our plans

to make products easier to recycle. Interestingly, manufacturers that achieve RoHS

compliance do not have to report on chemical content, unless the subject chemicals

are contained in a RoHS exempt component, such as CRTs. This so-called reporting

exemption represents a strong incentive to achieve RoHS compliance in advance of

the deadline.

Still another incentive system can be seen in the fledgling Electronic Product Environmental Assessment (EPEAT) Tool Project. EPEAT is a system that scores products based on environmental performance criteria for computers. This information

will be made available to government and large scale purchasers who can then

evaluate which products are environmentally preferable. An incentive that takes

place at the time of sale will be much stronger than one delayed 15 years into the

future.

Question 2. How much does it cost to recycle an average size television and what

is the value of the recovered materials?

Response: While costs will vary by recycler and will be dependent up commodity

market conditions, we understand that costs to dismantle and process the materials

for shipment to reclamation or recycling facilities for an average television range

from $0.16-$0.22 per pound. Commodity values for the materials contained in an average TV range from $0.03-$0.05 per pound.

The average television now weighs about 60 pounds

Question 3. Will your company be able to comply with the waste electrical and

electronic equipment (WEEE) directive of the European Union, which requires the

elimination of mercury, cadmium, lead, chromium, and other substances by July 1,

2006?

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Response: Panasonic will comply with the WEEE Directive. Other Coalition members also will comply with the European law as enacted by individual nations in the

European Union.

Question 4. After July 1, 2006, will your company discontinue selling electronic

products, such as computers or televisions, in the United States that contain mercury, cadmium, lead, or chromium and other substances covered by the RoHS directive?

Response: Panasonic will comply with the RoHS Directive both in Europe and in

all other markets including the United States upon its effective date.

RESPONSE FOR THE RECORD BY MICHAEL VITELLI, SENIOR VICE PRESIDENT, BEST

BUY, ON BEHALF OF CONSUMER ELECTRONIC RETAILERS COALITION

Questions from The Honorable Paul E. Gillmor

Question 1. Do you consider the issue of electronic waste one that is generated

from real concerns about the impacts to the environment from the leeching of hazardous materials used in the construction of electronics products or does your company or organization regard e-waste laws as resource conservation measures?

Response: We do not have a position on the nature of environmental impacts of

electronic waste. We understand that many are concerned about the potential of

hazardous materials and that many others are concerned with the size and space

issues of such waste in landfills. What we do know is that regardless of the nature

of the issue, the surest way to reduce the overall costs associated with electronic

waste is to involve manufacturers in the processes required to deal with the waste.

Only manufacturers can reduce the toxicity of the products. Only manufacturers can

reduce the costs of dismantling these products. And it is only in a system where

the costs of recycling are set by the market (and not mandated by government) that

the costs of recycling are reduced over time.

Question 2. It seems to me though in listening to your comments that the biggest

problem with e-waste right now is the question of what to do with all the ‘‘orphan’’

and legacy waste that is sitting in peoples’ homes. Do you agree with that assessment? If so, would a grant program of some sort, for states and local communities,

help finance and build the infrastructure areas need to address this waste stream?

Response: Orphan and legacy waste are not the only or the biggest problem with

e-waste. We do think, however, that there might be some solutions that haven’t yet

been discussed if the policy debate can separate the discussion between orphan

waste, legacy waste, and future waste. There may need to be a couple of solutions,

especially if we want to find a solution that drives to least cost and efficiency. If

there were a funding mechanism or a tax incentive program for existing orphan/legacy waste, it could go a long way to provide an immediate incentive to deal with

that waste over the next few years. If coupled with a program of manufacturers’ responsibility for future products, the end result could be a total solution that drives

to least cost and maximum efficiency over time and provides the right, limited incentives to jump start and capitalize recycling programs in the near term.

Question 3. Collecting of household waste, whether solid waste or waste that

qualifies under the household hazardous waste exemption, is governed mostly by

local officials or in limited circumstances, the state government. Why do you support

a Federal solution to an otherwise local problem?

Response: Ultimate passage of differing solutions in each of the 50 states would

present real compliance challenges and costs for retailers and manufacturers. In addition, differing solutions in each of the 50 states will cause great confusion for consumers. Products purchased in one state with a fee added at the time of sale, may

need to be recycled in another state where the solution may be a charge at the time

of recycling. The potential confusion for customers presents the most compelling reason for a consistent solution. Without consistency, recycling programs’ success could

be limited.

Question 4. In searching for a national solution, have you looked to past Federal

policies or examples of recycling, such as batteries, for guidance and the lessons

learned from them in seeking policy options at the Federal, state, or local level?

Response: We have looked at a number of different solutions. In short, the vast

majority of successful recycling programs are those where the collected product or

its residual parts have a market value that exceeds the costs associated with recycling of that product. Unfortunately, that is not the case with a majority of e-waste

products. The recycling of electronic waste will probably always cost more than

value of the residual scrap. Thus a system that provides an incentive to reduce the

costs of recycling through design of the product has the greatest potential to ultimately provide the least cost solution to this issue.

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Question 5. How is the industry currently reacting to the implementation of state

e-waste laws, particularly in California? Have you needed to change your business

models and strategic planning in certain areas of the country? What problems have

you encountered along the way and what do you expect to face?

Response: Compliance with the California e-waste recycling law has been costly for Best Buy. Best Buy has spent nearly $1 million in California to update our

point-of-sale systems, to educate our store personnel and consumers, and to ensure

compliance going forward. Since these point-of-sale fees are not added to all products, like a sales tax often is, but rather added to only some products (and not even

all products in a given category of products,) the cost of compliance is high. In addition, each time changes are made to the fees and to the list of applicable products,

these systems must be updated, adding costs. Finally, if different states implement

differing schedules of fees, the costs of compliance will increase.

A significant issue resulting from the California e-waste recycling law is that not

all retailers are treated equally under the law. Retailers who do not have a physical

presence in the state cannot be compelled by the state to either collect or remit the

fee on the products they sell into the state. This establishes an unfair price advantage for those retailers and lets some consumers avoid paying for the recycling process established by the state and funded by the fee. This advantage is in addition

to the similar advantage afforded by sales tax laws in each state. This issue can

only be remedied by federal action and only an act of Congress can satiate the requirements of the U.S. Supreme Court’s Quill decision which controls states’ ability

to compel compliance.

A final reason to be concerned about the use of advance recovery fees, such as

those charged in California, is that it lets renegade or foreign producers ‘‘off the

hook’’ for the costs associated with the recycling of their product. Under such a system, these manufacturers have no requirements to develop environmentally friendly

products or to simplify the recycling requirements of their products. The result is

that their products will drive the cost of recycling up.

Question 6. Although the retailers have a limited role in the lifecycle of the products you sell, how do you envision a ‘‘shared responsibility’’ approach that will encompass the access that you have to the consumers without imposing all the costs?

How much does product stewardship really shift the burden of end of life management from the public sector to include the private sector, especially in light of other

international policies and product directives such as those in the European Union?

Response: Under any solution, they consumer ultimately pays the cost of recycling

products. If the government provides the solution, consumers pay in the form of additional taxes. If the government mandates a fee, the consumer pays. If the manufacturer must include recycling in their product costs, the consumer pays. But it is

only in this last solution—where the costs of recycling are part of the cost of the

products—that there is an inherent incentive to reduce both the need to recycle and

the long term costs of recycling. Given the reality that the consumer will pay under

any scenario, it seems best to find the solution that will drive efficiencies and reduce

costs over time.

In the manufacturer responsibility model, manufacturers are responsible for working with consumers to properly recycle their product. This can mean that they provide direct recycling, work with a recycler or in some instances, fund a recycling system. Retailers are responsible for the education and outreach of consumers, working

with manufacturers to ensure that they are carrying product from manufacturers

who are compliant with the law. Retailers are also responsible as a manufacturer;

if they produce private label brand products (Best Buy brands include Insignia and

Dynex.) Consumers are responsible for the proper disposal of products and recyclers

must meet environmentally sound practices when working with consumers and

manufacturers.

The role of the public sector in this solution can be as large or as small as the

government determines. There will always be some compliance role for government

if it mandates a system.

Question 7. Does the producer responsibility solution you advocate change the cost

of each electronic device if each manufacturer has to raise its price by the same

amount, how is it different than having the retailer collect it or having the tax levied? Where is the incentive?

Response: In the manufacturer responsibility model, manufacturers are responsible for working with consumers to properly recycle their product. This can mean

that they provide direct recycling, work with a recycler or in some instances, or fund

a recycling system. Under the manufacturer responsibility model, the manufacturer

is ultimately responsible for their product at end-of-life which provides the double

incentive to both develop environmentally-friendly products and to find the most

cost effective ways to recycle product. Ultimately consumers will pay for recycling

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through either higher taxes, fees at the time of purchase, or additional costs included in the cost of the product by the manufacturer. Only the latter offers an economic incentive for improvements.

If the government mandates the cost of recycling and requires that each product

be assessed a certain fee, the incentive either for developing more environmentallyfriendly products or for reducing the costs associated with recycling does not exist.

Under such a system we could almost guarantee that the costs of recycling will increase over time, not decrease, as the bureaucracy of such a system grows. In addition, the funds raised through the collection of such fees could be easily ‘‘raided’’

when budget issues threaten, thus completely hindering the original intent of providing a solution.

Question 8. You state that BestBuy has helped consumers nationwide recycle over

2.6 million pounds of electronics. Just to get a sense of the problem, how many

pounds of electronics has BestBuy sold in the same time period?

Response: The 2.6 million pounds of electronics we have helped recycle is a very

small fraction of the number of products we have sold. We do not sell products based

on weight and cannot estimate the weight of the products we have sold during this

time.

Questions from The Honorable Tammy Baldwin

While we all enjoy cell phones, personal laptops, and other gadgets that help us

be able to communicate and be more efficient, it is clear from these e-waste hearings

that we must be vigilant in making sure the toxic substances in these electronic devices are properly disposed of and safely recycled.

Overall, I believe the manufacturers of these products should have the primary

responsibility for the cost of collecting, transporting and recycling of electronic products, not consumers or taxpayers. If manufacturers do not have a financial stake

in their products at the end of their useful life, then they will never have an incentive to design them to have longer life spans, to be easier to recycle, and to contain

less toxic materials in the first place.

Let me give you an example of why I believe this. I have authored legislation in

this Congress that would help encourage the safe disposal of recycling of the toxic

element mercury, which is found in dozens of household and industrial products, including many electronic devices. As you probably know, exposure to mercury can

have serious health effects to a person’s liver, kidneys, nervous system, and brain

functions. Small children and pregnant mothers are most at risk to the harmful effects.

One provision in this bill is a nationwide ban on the sale of thermometers that

contain mercury. As communities have become more aware of the harmful impact

of mercury on the public health and the environment, more and more state and local

governments have passed their own legislation banning the sale of mercury thermometers.

Manufacturers have since responded to these laws and now make and sell more

digital thermometers, which are just as effective but much safer. State and local

laws may have pushed them to make a less dangerous product, but they also found

it made good business sense that improved their bottom lines.

As the amount of e-waste grows, I believe we are not doing enough to give manufacturers the primary responsibility for managing the toxic substances in their products. This is thwarting the development of a strong private market for the safe recycling of these products and the development of products that contain nontoxic alternatives and that are easier to recycle.

Question 1. Mr. McCurdy, Mr. Largent, and Mr. Vitelli-As representatives of these

industries, do you agree with this, and if not, how can you justify making consumers

and/or taxpayers shoulder most of the burden?

Response: As a representative of a company that sells many of these products and

a company that commissions the design and products of private label products, I

agree with your assertion that manufacturers need to be responsible for the end of

life issues of their products.

One of the driving reasons this issue requires government action is that the recycling of electronic waste will probably always cost more than value of the residual

scrap. Thus a system that provides an incentive to reduce the costs of recycling

through design of the product has the greatest potential to ultimately provide the

least cost solution to this issue.

A complicating factor is that there is currently a significant amount of historic

waste waiting for a solution. These products were manufactured without the expectation that they would need to be recycled. This adds a ‘‘hurdle’’ of initial cost to

any new system. If the issue of historic waste could be handled through a different

program than the ultimate, ongoing program, the solutions might be easier to

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achieve. The Talent-Wyden approach provides a significant incentive to tackle this

initial cost ‘‘hurdle’’ and could help start a recycling process that ultimately does not

need the incentives provided through the Talent-Wyden approach. This is a limited

government role, providing the necessary incentive to reach the ultimate goal of a

non-governmental program.

Questions from The Honorable John D. Dingell

Question 1. Please provide your views as to which approach to electronic recycling

creates the strongest incentives for manufacturers to design their products for recycling and indicate the reasons for your views.

Response: There are 3 central points I want to make regarding electronics recycling:

1. A Federal solution is far preferable to 50 differing state solutions. This issue

needs Federal leadership. Of course I believe this because it simplifies our participation. I also think a federal solution in required because it will simplify the

process for consumers and will ensure that no state is either disadvantaged by

a system or left with a large amount of the waste. The Federal Government

needs to actively study this issue, thereby providing assurance to states that a

federal solution may be found and potentially reducing the number of individual

state actions. Many states are acting only because they do not see a federal action.

2. This issue is complicated. There is the waste that is currently waiting to be recycled. There are the products that are still in use but will need recycling in the

near future. Neither of these categories of products—historic waste—was produced with the understanding that they would have to be recycled. And then

there are the products that will be produced the future. It may be helpful in

finding a solution to think about these two categories of waste separately.

3. In any scenario, the public will pay for the recycling of electronic waste. If the

government provides the solution, consumers pay in the form of additional

taxes. If the government mandates a fee, the consumer pays. If the manufacturer must include recycling in their product costs, the consumer pays. But it

is only in this last solution—where the costs of recycling are part of the cost

of the products—that there is an inherent incentive to reduce both the need to

recycle and the long term costs of recycling. Given the reality that the consumer

will pay under any scenario, it seems best to find the solution that will drive

efficiencies and reduce costs over time.

It is the combination of points 2—that there may need to be a couple of solutions—and 3—that the best solution in the future is one that drives to least cost

and efficiency—that drives CERC to support the concepts of the Talent Wyden approach. This tax credit proposal could go a long way to provide an immediate incentive to deal with the historic waste over the next few years. If coupled with a program of manufacturers’ responsibility for future products, the end result could be

a total solution that drives to least cost and maximum efficiency over time and provides the right, limited incentives to jump start and capitalize recycling programs

in the near term.

The Honorable C. L. ‘‘Butch’’ Otter

Question 1. I understand that retailers have spent a great deal of money in administering the California fee program, and that the 3 percent retained by the retailers does not cover the costs. Can you describe the requirements and problems

you have encountered?

Response: Compliance with the California e-waste recycling law has been costly

for Best Buy. Best Buy has spent nearly $1 million in California to update our

point-of-sale systems, to educate our store personnel and consumers, and to ensure

compliance going forward. Since these point-of-sale fees are not added to all products, like a sales tax often is, but rather added to only some products (and not even

all products in a given category of products,) the cost of compliance is high. In addition, each time changes are made to the fees and to the list of applicable products,

these systems must be updated, adding costs. Finally, if different states implement

differing schedules of fees, the costs of compliance will increase.

A significant issue resulting from the California e-waste recycling law is that not

all retailers are treated equally under the law. Retailers who do not have a physical

presence in the state cannot be compelled by the state to either collect or remit the

fee on the products they sell into the state. This establishes an unfair price advantage for those retailers and lets some consumers avoid paying for the recycling process established by the state and funded by the fee. This advantage is in addition

to the similar advantage afforded by sales tax laws in each state. This issue can

only be remedied by federal action and only an act of Congress can satiate the reVerDate 11-MAY-2000 07:31 Nov 09, 2005 Jkt 000000 PO 00000 Frm 00247 Fmt 6601 Sfmt 6621 22988.TXT HCOM1 PsN: HCOM1
244

quirements of the U.S. Supreme Court’s Quill decision which controls states’ ability

to compel compliance.

A final reason to be concerned about the use of advance recovery fees, such as

those charged in California, is that it lets renegade or foreign producers ‘‘off the

hook’’ for the costs associated with the recycling of their product. Under such a system, these manufacturers have no requirements to develop environmentally friendly

products or to simplify the recycling requirements of their products. The result is

that their products will drive the cost of recycling up.

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