Benjamin H. Wu
Assistant Secretary for Technology Policy
U.S. Department of Commerce

Before the

House Committee on Energy and Commerce Subcommittee on
Environment and Hazardous Materials

July 20, 2005

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.

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-and-mortar 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.

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 countries² 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.

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