[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
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

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                    ------------------------------  

                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      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                 HILDA L. SOLIS, California
NATHAN DEAL, Georgia                   Ranking Member
HEATHER WILSON, New Mexico           FRANK PALLONE, Jr., New Jersey
JOHN B. SHADEGG, Arizona             BART STUPAK, Michigan
VITO FOSSELLA, New York              ALBERT R. WYNN, Maryland
CHARLES F. BASS, New Hampshire       LOIS CAPPS, California
JOSEPH R. PITTS, Pennsylvania        MIKE DOYLE, Pennsylvania
MARY BONO, California                TOM ALLEN, Maine
LEE TERRY, Nebraska                  JAN SCHAKOWSKY, Illinois
MIKE ROGERS, Michigan                JAY INSLEE, Washington
C.L. ``BUTCH'' OTTER, Idaho          GENE GREEN, Texas
SUE MYRICK North Carolina            CHARLES A. GONZALEZ, Texas
JOHN SULLIVAN, Oklahoma              TAMMMY BALDWIN, Wisconsin
TIM MURPHY, Pennsylvania             JOHN D. DINGELL, Michigan,
JOE BARTON, Texas,                     (Ex Officio)
  (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)

  


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 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 
jump-start 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 high-tech 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.
    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 e-waste 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.
    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 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 
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 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 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?
    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 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.
    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. 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 different 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.
    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.
    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.
    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 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 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.
---------------------------------------------------------------------------
    \1\ Product Stewardship Institute, http://
www.productstewardship.us/prod_electronics.html
---------------------------------------------------------------------------
    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 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.
---------------------------------------------------------------------------
    \2\ Group of the eight major industrial nations consisting of 
Japan, Russia, UK, France, Italy, Germany, USA, and Canada.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \3\ The 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.
---------------------------------------------------------------------------
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 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. 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.
    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.
    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 in-store 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.
     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 concerns 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.
    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 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.
    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 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 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.
    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.
    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 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 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 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 renewal 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 computer-recycling 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 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-a-week 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 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 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 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 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.
    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 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 e-waste.
    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 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 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.
    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 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.]
    [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 Protection 
                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; 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 African-American 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 non-profits 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 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 e-waste 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 
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 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.
    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 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 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-by-state 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.

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.
    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 low-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: 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 investment, 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 activities. 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 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 low-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?
    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, 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 state-specific 
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 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 e-waste?
    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. 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.
    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 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 long-term 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 [email protected] 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 low-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 currently 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 projections, 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 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.


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.

 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 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 
long-term 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 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 
electronics--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 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.
    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:]
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, Wal-Mart, 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 national 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 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:

 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 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-by-State 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.
    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.

            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 cost-effective 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:

 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 
end-of-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 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-year-old, 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.
    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 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 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 end-of-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 
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 long-standing 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. 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 applications. 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 
market-driven 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.
    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-by-State 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.
    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.
    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 out-of-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 retailers 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 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.
    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.
    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.
    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.
---------------------------------------------------------------------------
    \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.
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                    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 (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
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.

       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.

                 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
---------------------------------------------------------------------------
    \3\ ``Lessons Learned from Multi-stakeholder Dialogues'', Catherine 
Wilt, Resource Recycling, August 2005.
---------------------------------------------------------------------------
    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.

                  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.
    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.
    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 
    Industries of Central Texas, Inc. (Austin), Chairman, Goodwill 
                     Industries International, 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 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.
    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 solutions 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.
    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 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 manufacturers, 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 manufacturer 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.
    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 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 computer-related 
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:

 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 industry, 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.
---------------------------------------------------------------------------
    \1\ This 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.
---------------------------------------------------------------------------
    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.
    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.

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.
---------------------------------------------------------------------------
    \2\ Supporters 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.
---------------------------------------------------------------------------
    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 ARF because an ARF is 
``administratively burdensome for all parties;'' and ``too complicated 
for all parties.'' 3
---------------------------------------------------------------------------
    \3\ See http://www.ceretailers.org/cerc/CERC--Position--on--
eWaste.pdf.
---------------------------------------------------------------------------
    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 [email protected].

    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 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?
    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.
    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.
    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 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 cost-effective 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:

 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 
end-of-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 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 information from the solid waste management 
experts, HP believes and is involved with this issue because it is an 
important resource conservation issue.
---------------------------------------------------------------------------
    \1\ Letter from John Skinner & Bruce J. Parker to the Honorable 
John Thune (Aug. 16, 2005), at 1-2.
    \2\ Id.
---------------------------------------------------------------------------
    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. Localities 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 nation-
wide 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?
    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 RoHS-type 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 electronics-recycling infrastructure. In particular, you 
single out the U.S. EPA's ``Plug-In to e-Cycling'' 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
---------------------------------------------------------------------------
    \3\ For more information, see http://productstewardship.us/
pilot_takeback_staples.html.
---------------------------------------------------------------------------
    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 e-waste 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 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-of-life product management depends on consumer behavior. 
Under HP's approach, manufacturers provide information about how CRT 
devices may be returned via a 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 opportunities for 
improvements over time. HP's market-based, flexible approach offers a 
lower overall system cost, which will result in lower costs for 
consumers.
---------------------------------------------------------------------------
    \4\ Testimony 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).
    \8\ Product 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/
pilot_takeback_staples.html.
    \9\ Murray Testimony, at 7.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \10\ Murray Testimony at 7.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \11\ Some 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.
---------------------------------------------------------------------------
    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 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.
---------------------------------------------------------------------------
    \12\ Product 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/
pilot_takeback_staples.html.
    \13\ 14 Cal. Code Reg.  18660.34(a).
---------------------------------------------------------------------------
    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 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?
    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 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 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 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.
    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:
        . . . 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/
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, state-by-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.
    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 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 ARF-based 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, European-style, 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 market-based solutions that are inclusive of 
nonprofits recyclers/collectors and will aid in the development of a 
reuse infrastructure. We believe the development of a recycling/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 hazardous 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, for-profit 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 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, non-governmentally 
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 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.
    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.
                                 ______
                                 
 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 end-of-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 re-use 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 
environmentally-sound, 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 collection, 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.
 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 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 mail-
in pouches, and have been collected through both industry-wide and 
company-specific initiatives, such as the industry's Wireless . . . The 
New Recyclable TM initiative, 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 building-out 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.

 ``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 by-products 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 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, brand-name 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 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 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.)
    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 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 e-waste 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 non-OECD 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?
    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 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?
    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 state-to-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 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 end-of-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.
    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 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.
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.
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 manufacturers 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 Take-
back'' 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.
    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 business 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 recyclers 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?
    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.
    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 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 environmentally-friendly 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 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 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.

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