Electronics Recycling Policy and the “White Box” Industry

One of the biggest impacts on the white box market may be coming from the unlikeliest of places - the trashcan. Across the US, policymakers at the local, state, and federal levels are examining the challenge of handling unwanted electronic products. High tech products have brought remarkable economic growth and productivity, as well as enhancing our personal entertainment. The information technology revolution has changed the way we live, work and play in less than a generation. On average, each U.S. household has more than 24 different pieces of electronic equipment covering a range of devices such as televisions, computers, monitors, cell phones and PDAs. Average life spans for these products vary greatly from less than 2 years for cell phones to more than 14 years for televisions. But these products do wear out, become obsolete and are disposed over time – and according to U.S. EPA it is the fastest growing portion of the municipal solid waste stream, currently at 1.5% and growing. In response to the very visible concerns posed by the volume of end-of-life electronics and component materials, state governments have begun experimenting with different solutions.

What does all this have to do with makers of white box computers, value-added resellers, and other small to medium size technology companies? These policies will impact all manufacturers and retailers of electronic products, white box products included. Depending on the state in which you are located – or sell into – your company may be required to do one or more of the following:

o  Affix and clearly label a brand on the device;

o  Collect an advance recycling fee and remit it to a state agency;

o  Submit a collection plan and pay for the recycling of your branded products returned in the state for recycling; and

o  Submit a report documenting your company’s use of materials in covered products such as lead, mercury, and cadmium.

One requirement in each of these state laws specifically targets the traditional “white-box” maker. If your company sells products in California, Maine, or Maryland, you will no longer be able to sell a white-box computer or monitor without affixing a brand label. Following is a short description of the current electronics recycling laws in each of these states and the outlook for future laws and regulation.

California

California was the first state to establish a mandatory program for recycling used electronics. The program is funded through a mandatory advanced recycling fee on the sale of new televisions (CRT, LCD, and plasma), laptops, and computer monitors (CRT and LCD) to pay for electronics collection and recycling in that state. There are five main obligations for white box makers and sellers depending on whether your company manufacturers, sells, or both manufactures and sells covered products.

  1. If your company sells any covered devices to a customer located in California, you are obligated to collect and remit a fee of $6, $8, or $10 to the state Board of Equalization depending on the screen size. As compensation for administering this fee, the state allows retailers to keep 3% of the total fee amounts submitted on a quarterly basis.
  2. If your company is considered a manufacturer of a covered product, you are also required to submit a report to the State on the number of electronic devices sold in the state and other information regarding certain specified materials (such as use of lead, mercury, and recycled content) in those devices.
  3. A manufacturer is also be required to make information available to consumers that describes where and how to return, recycle, and dispose of the electronic device and opportunities and locations for the collection or return of the device.
  4. Beginning in January 2007, monitors, laptops, and televisions must comply with the European Union requirements[1] restricting the use of certain chemicals, such as lead, mercury, and cadmium. The biggest impact will likely be for lead use in solder on printed circuit boards, which is banned by the EU directive with limited exceptions.
  5. Since January 1, 2005 it has been illegal to sell a covered product in California unless it is labeled with the name of the manufacturer or the manufacturer's brand label so that it is readily visible.

For more information, see: http://www.ciwmb.ca.gov/Electronics/Act2003/

Maine

Maine has enacted an electronics recycling program quite different from California’s known widely as “producer responsibility.” Maine now requires all manufacturers selling televisions and computer monitors in that State to submit a plan for financing recovery of their branded products at end-of-life. The requirements for financing the recycling of a company’s products collected at consolidation points in the state begin in January 2006, but manufacturers and brand owners should have submitted plans to the state by March 2005. The Maine law requires manufacturers of computer monitors, laptops, and televisions (both CRT and flat panel) to pay for their branded products returned by Maine households, and a portion of the costs from brands for which the manufacturer is no longer in business (“orphan products”). Although computer manufacturers are not required to pay for recycling of their products, like California the Maine law does require all computers sold in the state have a visible, permanent label clearly identifying the manufacturer of that device affixed to the product. If your company is a manufacturer or brand owner of computer monitors, laptops, or televisions that are currently or were sold in Maine, your responsibilities under the Maine law include:

  1. Submitting a collection and recycling plan to the State, including annual sales data for the preceding 5 years
  2. Paying invoices from 5-10 consolidation points to be approved by the State for the cost of recycling your branded products plus a pro rata portion of orphan products received at the consolidation points
  3. Submitting an annual progress report starting in July 2007 on the amount collected and recycled

Retailers and manufacturers are prohibited from selling any manufacturer’s products that are out of compliance with these requirements. For more information, see: http://www.maine.gov/dep/rwm/ewaste/index.htm

Maryland

Maryland has passed a law that establishes a 5-year pilot program for computer recycling beginning in January 2006. Under the program, manufacturers of desktop computers, laptop computers, and computer monitors are required to submit a registration to the State if they manufacture more than 1000 of those items per year (but not necessarily sold solely in Maryland). The main requirements of this program for white box manufacturers are:

  1. Label computer with the manufacturer’s name or the manufacturer’s brand label.
  2. Submit an annual registration by January 1st (beginning in 2006) with a fee of $5000 for the first year, and $5000 for each subsequent year, unless the manufacturer implements a takeback program. If the manufacturer has a takeback program, the annual registration fee is reduced to $500.

For more information, see: http://www.mde.state.md.us/programs/landprograms/recycling/specialprojects/ecycling.asp

Outlook for the Future

As each of these programs is significantly different than the other, the U.S. is increasingly developing a patchwork of regulation on electronics recycling. This increases costs and regulatory hurdles for manufacturers and sellers of electronics, particularly for smaller companies with few resources to track these requirements. Many stakeholders from the across the spectrum are calling for a consistent, harmonized national approach to tackling the challenge of electronics recycling, and in July, 2005 Congress held its first hearings on the subject. While this national program may take a few years to develop we can expect states to continue to work on their own approaches. Several states are expected to introduce legislation in 2006 that is slightly or wholly different than the three current programs in place. One encouraging sign is that some states are choosing to work together to tackle this issue instead of pursuing separate strategies. In the Northeast, legislators from ten states will be releasing model legislation in October, and other states in the Midwest are beginning to work on a similar project. The National Center for Electronics Recycling is working on several projects that aim to get the U.S. infrastructure ready for a national program. While these recent developments suggest that the U.S. is embarking on a path towards national consistency, it will take the involvement of all stakeholders, including the white box industry, to make this a reality.

Prepared by: National Center for Electronics Recycling * Jason Linnell, Executive Director *

304-699-1008 *

[1] The Restriction on Hazardous Substances or “RoHS” Directive.