Used Equipment and E-waste: Mitigating Compliance, Business Disruption and Enforcement Risks Thursday, July 11, 2013 ACC Paul E. Hagen Beveridge & Diamond, P.C. phagen@bdlaw.com www.bdlaw.com The purpose of this presentation is to provide general information. It is not intended as, nor is it a substitute for, legal advice. You should consult with legal counsel for advice specific to your products and circumstances. 1
Agenda E-Waste Challenge and Take-Back At-a-Glance Basel Convention Drivers U.S. Legal Framework E-waste Enforcement Trends
Expanding Regulation Throughout Product Life-Cycle Raw Materials Sourcing Manufacture and Design Distribution / Logistics Market Access Conflict Minerals, Timber/Wood Products Manufacturing impacts, Material Restrictions, Energy Efficiency Dangerous Goods Rules, Packaging, Labeling Material Restrictions, Energy Efficiency, Safety Standards, Chemical Notifications, REACH Collection, Reuse, Recycling EPR Laws, Export Bans, Movement of Used / EOL Equipment 3
The E-Waste Challenge ICT has a critical role in sustainable development 2012: 1.75 billion mobile phones sold 2014: 470 million PCs to be sold Economic and social benefits of technology Rapidly growing and complex waste stream Mismanagement of e- waste, particularly in developing countries Rapidly evolving legal landscape Managing end-of-life equipment
EPR Map for Electronics 5
International Context Most countries have established waste laws applicable to e-waste. New take-back laws and scrutiny of incountry management. Great variability among countries on waste and hazardous waste classifications. Focus on e-waste exports. 6
Compliance Challenges Collection and recycling targets Waste classification: varies by country Management plan approval & licensing Facility permitting and in-country consolidation Export controls on equipment sent for recycling and increasingly for repair/reuse Trade bans 7
Evolving International Waste Shipment Regimes The Basel Convention (global) OECD Council Decision C(2001)107/Final Other Article 11 Agreements EU Waste Shipments Regulation and WEEE Recast National and subnational laws 8
The Basel Convention Presently, 180 countries and the EU are party to the Convention (U.S. is a non-party) Establishes global prior notice and consent system governing waste shipped for disposal or for materials recycling Provides framework for hazardous waste classifications with implications for international shipments and domestic management Parties have identified e-waste as a priority waste stream 9
Basel Convention Trade Bans Ban on trade in covered wastes with non-parties (e.g. U.S.) Article 11 Agreements can supersede trade ban and Convention requirements Parties must ensure Environmentally Sound Management Many countries have enacted national bans on hazardous waste imports Pending Basel Ban Amendment will prohibit shipments from developed to developing countries EU has enacted Basel Ban on Shipments to non-oecd/eu countries
Hazardous Wastes Convention defines hazardous waste Wastes containing Annex I constituents (e.g., lead, cadmium, zinc, mercury, beryllium, antimony, arsenic) or falling within an Annex I waste stream, unless they do not exhibit Annex III hazardous characteristics (e.g., corrosive, toxic) Some types of e-waste listed on Annex VIII (presumed hazardous) and some types listed on Annex IX (presumed nonhazardous) Wastes defined as hazardous under national legislation National definitions and testing procedures govern Many developing countries have national waste legislation that key off Basel listings
Exports of Used and EOL Products Basel Convention parties moving to classify many types of e-waste as hazardous wastes. Proposals to manage used equipment intended for reuse as waste unless fully functional (narrow exemptions) E-waste technical guidelines debated but not adopted at COP-11(May 2013). New trade bans and compliance costs for managing used and end-of-life electrical and electronic equipment world-wide. 12
Negotiations on E-waste Technical Guidelines High risk of new waste controls and trade bans impacting shipments related to: Non-warranty repairs Off-lease equipment Service arrangements Refurbishment operations Product recalls Intra-company equipment transfers EU, Brazil, India moving ahead with new restrictions on shipments of used equipment for repair 13
U.S. State Electronics Take-Back Legislation 14
U.S. Context Some e-wastes may be subject to regulation as hazardous wastes. Federal Regulations: Resource Conservation and Recovery Act ( RCRA ) State Regulations: Generally at least as stringent as the federal RCRA regulations California takes a broader view 15
U.S. Context When are electronic devices wastes? When are waste electronics hazardous? What requirements apply to hazardous wastes? Are there any exemptions that apply to e- wastes? 16
CRT Rule Establishes conditional exclusions from RCRA hazardous waste requirements for CRTs that are destined to be recycled. The exclusions vary depending upon: Used or unused; Intact or broken; Type of recycling; Inside or outside of the U.S. Establishes similar exclusions for CRTs undergoing recycling and CRT glass. Exports for reuse and repair: notice to EPA and recordkeeping. Exports for recycling: prior notice and consent of receiving country.
Expected Legislative Proposals U.S. Congress Reintroduction of bills to restrict e-waste exports from U.S. to non-oecd countries Focus will be on scope of covered equipment and available exceptions to export ban (e.g., warranty, repair) Mercury-containing products legislation possible Proposals in last Congress likely to be reintroduced New Mercury Convention could prompt expansion of targeted products and new waste export controls 18
EPA Civil Enforcement July 2008 Present: ongoing enforcement of CRT export rules Examples: Aug. 2009 EPA fines Supreme Asset Management and Recovery (New Jersey) nearly $200k for illegally exporting nonworking computer monitors to Hong Kong Feb. 2011 EPA fines Metro Metals Corp and Avista Recycling $31k for attempted export of 913 discarded CRTs from Minnesota to Vietnam 19
U.S. Criminal Enforcement Dec. 2012: USA -- Executive Recycling, its CEO, and its VP of Ops. convicted of wire and mail fraud and illegal export of e- waste to developing countries including China March 2013: Discount Computers Inc. and owner convicted for violations of RCRA related to CRT exports to Middle East and Asia 20
California Enforcement California has been actively enforcing against retailers for allegedly mishandling hazardous wastes (including e-wastes) Key allegations include: Failure to determine whether customer returns are hazardous wastes at the facility/retail location accepting the return Failure to make similar determinations for wastes generated by facility operations (e.g., from tire centers, the use of cleaning/maintenance products, and/or from spills). Penalties ranged from ~$3 - $17 million, plus $325,000 - $2.5 million for supplemental environmental products and $264,000 - $3 million for reimbursement of attorney s fees and investigation costs 21
INTERPOL Operation Enigma March 2013 First INTERPOL operation targeting the illegal trade of electronic waste in Nov Dec 2012 Seizure of more than 240 tonnes of electronic equipment and electrical goods Launch of criminal investigations against some 40 companies involved in the shipments Participation of police, customs, port authorities and environmental and maritime law enforcement agencies in seven European and African countries. 22
Reducing Enforcement Risk Review: Waste/ hazardous waste determinations E-waste management practices Protocols for exports of used and EOL products California operations Impact of Basel negotiations Consider updates: Company policies and advertising Vendor specifications Recycling contracts Limits on exports Certified recyclers 23
Outlook Effective dates in 2013 for many new or updated e-waste take-back laws (particularly in Latin America) Legal requirements are evolving quickly at the local, national and international level When are used products waste What types of e-waste are hazardous Expect inconsistencies Enforcement of laws governing e-waste exports will remain a priority for many governments Watch for U.S. e-waste export legislation 24
Thank You Paul E. Hagen Beveridge & Diamond, P.C. phagen@bdlaw.com www.bdlaw.com (202) 789-6022 25