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Electronics Manufacturers Challenge New York City E-Waste Law

August 12, 2009

Two trade associations for the electronics industry are seeking to block implementation of a New York City e-waste program that requires manufacturers to finance and implement the collection and recycling of covered electronic products, in many cases directly from a person’s home.[1] The plaintiffs filed their complaint a week before a July 31, 2009 compliance deadline for manufacturers to submit plans and commitments to implement the program, alleging that the program is overly burdensome, unconstitutional, arbitrary and capricious, and enacted in violation of state and local environmental review laws.

New York City is the first municipality to enact an e-waste law, but nearly 20 states have e-waste laws on the books, including Washington State, whose law became effective at the start of this year. Although aspects of the New York City program have the potential to be more aggressive than existing state laws, nearly all state e-waste laws contain components that are similar to the New York City program. Because of the breadth of the allegations in this complaint, the outcome of the lawsuit may impact electronic waste recycling across the United States.

Background to E-Waste Laws

“E-waste” generally refers to discarded electronic equipment, such as computers, monitors, televisions, computer accessories, cell phones, and some personal electronic devices. Concern over the disposal of e-waste – which contains lead, mercury, and other metals – has grown in recent years, as rapid technological change and plunging prices have made replacing electronic equipment more and more popular.[2] Due in large part to the proliferation of state and local e-waste laws, the electronics industry and some retailers have pressed for federal regulation of e-waste, but without success.[3]

Over half the states have passed or are currently considering e-waste legislation.[4] State e-waste laws set up financing systems for their collection and recycling programs (often placing the cost on the manufacturers), establish criteria for the collection and recycling of e-waste, and restrict the terms under which electronic products are sold and disposed of state-wide.[5]

With the exception of California, which assesses a fee to consumers at the point of sale of electronic devices to fund the recycling program, all existing state e-waste laws include some form of what is known as a “producer responsibility” or “producer pays” law, where producers or manufacturers of electronic products are required to fund and/or implement the collection of e-waste.[6] For example, Washington State’s e-waste law covers televisions, monitors, laptops, and desktop computers, and requires each manufacturer to register with the state, meet labeling requirements on covered electronic products, and pay for its “return share” of the costs of the collection, transportation, and recycling of covered equipment.[7] The “return share” for each manufacturer is identified in either the state-wide “standard plan” or in approved individual plans, based on the percentage, by weight, of all covered electronic products that are recycled under the law.[8] The standard and individual e-waste plans must provide for collection services in each county, and must include at least one collection site or alternative collection service in each city or town with a population greater than 10,000 residents.[9]

New York City’s E-Waste Program

New York City’s e-waste program is unique not only because it is the first such law passed by a municipality, but also because of its rigorous collection requirements and performance standards. The program is comprised of a pair of City laws passed in 2008, one of them over Mayor Bloomberg’s veto. The City’s Department of Sanitation published implementing regulations for the program this past April. The program covers “manufacturers,” which are defined as any person who has or does assemble, manufacture, sell, import or own a brand name licensed to others for any “covered electronic equipment.”[10] “Covered electronic equipment” includes computers and computer devices, cathode ray tubes or devices, computer parts, televisions, printers, computer monitors, and portable music devices.[11]

New York City’s program requires manufacturers to finance and implement methods to retrieve covered electronic equipment from City residents, government offices, and many businesses in a manner that is “convenient” for consumers.[12] The initial July 31, 2009 compliance deadline under the program requires manufacturers to develop and submit e-waste management plans for the “convenient” collection, handling, and recycling or reuse of covered electronic equipment and orphan waste.[13] Failure to submit this plan or annual reports thereafter subjects manufacturers to a $1,000 penalty per day of violation.[14]

Initially, six months after approval of a manufacturer’s electronic waste management plan, that manufacturer will be required to accept devices on a one-to-one basis with the purchase of the same “type” of electronic products that it sold – even if the returned product is “orphan waste,” where the actual manufacturer is unknown or insolvent.[15] However, starting on July 1, 2011, manufacturers will be required to retrieve such waste, including orphan waste, at the request of any City resident, regardless of whether that resident purchases a new piece of equipment.[16] The program also includes mandatory performance standards for the collection of e-waste, which is the portion of the law that Mayor Bloomberg vetoed. Starting on July 1, 2012, manufacturers will be required to collect waste that is at least 25% of their share of the weight of covered equipment sold annually. This requirement jumps to 45% by July 1, 2015, and to 65% by July 1, 2018.[17] Each percentage point that a manufacturer falls below this standard will equate to a $50,000 penalty, and a $2,000 penalty will be imposed per piece of equipment that a manufacturer fails to accept.[18]

Although the New York City law states that collection methods specified in manufacturers’ e-waste management plans shall be “convenient,” it does not specify what manufacturers must do to meet this requirement.[19] The Sanitation Department clarified in the implementing regulations that “convenient” means a combination of direct collection from residences and the establishment of mail-back programs and/or drop-boxes throughout the City. For “portable” items and/or items that weigh 15 pounds or less, manufacturers are obligated to arrange for packaging and mail-back of the equipment, or to provide what could be at least 59 drop-off locations across the City.[20] For all other covered products, manufacturers are required to provide collection services directly to the person’s residence at no cost.[21]

The Complaint

The plaintiffs include the Consumer Electronics Association (CEA), a trade association comprised of over 2,200 companies within the domestic consumer technology industry, the Information Technology Industry Council (ITI), a trade association of 42 companies consisting of manufacturers and suppliers of computers, telecommunications, business equipment, software, and information technology services, and ITAC Systems, Inc., a small electronics manufacturer.

The plaintiffs allege that the program is the most onerous, draconian, and expensive e-waste program in the United States, will cost manufacturers over $200 million per year, and that, on a per pound basis, the cost of the direct collection alone will be “10 times more expensive than the total cost of collection and recycling of other E-waste programs in California and Maine.”[22] The plaintiffs also allege that the program “departs dramatically from programs embraced by other state governments by imposing a direct collection obligation on manufacturers,” whereas other states that obligate manufacturers to manage e-waste allow manufacturers “sufficient flexibility in how [manufacturers] implement the program, so as to avoid the extraordinarily excessive burdens that the City’s E-waste Program imposes on interstate commerce.”[23]

The complaint alleges eight causes of action, including claims under the federal and state constitutions, administrative procedural law, and local and state environmental review laws. The plaintiffs claim that the program violates the dormant commerce clause, because the program “has an extraterritorial reach that has the practical effect of controlling manufacturers’ conduct beyond the boundaries of New York City,” and has a “discriminatory effect against manufacturers that lack facilities in the City to accommodate the collection process.”[24] Additionally, the plaintiffs allege that “the burdens imposed by the program on interstate commerce far outweigh the local benefits to City residents, by, among other things, mandating that manufacturers collect used electronics directly from residents’ homes at a cost to be borne solely by manufacturers and eventually passed along to consumers everywhere in the form of higher product prices.”[25] The plaintiffs also allege that that the program violates the manufacturers’ equal protection rights by targeting only certain types of electronic equipment while excluding from coverage other types of electronic equipment that contain the same types of potentially harmful substances, and that the program violates the plaintiffs’ substantive due process rights, constitutes a regulatory taking, and violates the contracts clause of the U.S. Constitution.

The plaintiffs also allege that the City failed to conduct an appropriate environmental impact review under New York City and State laws. Such an environmental review, according to the plaintiffs, would have shown that “retrieving more than 3,000 electronic devices per day will require hundreds of new trucks on City streets,” which will “increase[e] traffic congestion, exacerbate[e] air and noise pollution, and release[e] additional carbon-dioxide emissions.”[26] The plaintiffs are requesting the court to strike down the law, and to enjoin the City from enforcing the law while the lawsuit is pending.

Briefing on the plaintiffs’ preliminary injunction is due in early fall.[27] Mayor Bloomberg’s administration remains critical of the law, and representatives from the Sanitation Department have stated that the department has “always preferred a state-wide solution for e-waste,” which is still under consideration in New York’s legislature.[28]

[1] Complaint, Consumer Electronics Association v. New York City, No. 09-6583 (S.D.N.Y., July 24, 2009) [hereinafter “Complaint”].

[2] See CRS Report for Congress, Managing Electronic Waste: An Analysis of State E-Waste Legislation (August 29, 2007).

[3] See Industry Pushes for Federal Electronic Waste Recycling Program in Response to Increased State Regulation, Marten Law Group Environmental News (June 20, 2007).

[4] See Electronics Takeback Coalition, State by State E-Waste Law Summary (updated May 1, 2008).

[5] See CRS Report for Congress, Managing Electronic Waste: An Analysis of State E-Waste Legislation (August 29, 2007); Electronics Takeback Coalition, Brief Comparison of State Laws on Electronics Recycling (updated June 16, 2009).

[6] See Electronics Takeback Coalition, Brief Comparison of State Laws on Electronics Recycling (updated June 16, 2009).

[7] Chapter 70.95N RCW; Chapter 173-900 WAC. For a description of the Washington program, see B. Marten, Washington Legislature Mandates Mandatory Recycling of Consumer Electronics: Bill Sent to Governor, Marten Law Group Environmental News (Mar. 15, 2006); B. Marten, Washington State Set to Issue Aggressive Rules for Recycling Electronic Waste, Marten Law Group Environmental News (Aug. 2, 2006); Washington State Electronic Waste Recycling Rules Go Into Effect, Marten Law Group Environmental News (Nov. 7, 2007).

[8] RCW 70.95N.190.

[9] RCW 70.95N.090.

[10] Chapter 4-A of Title 16 of the Administrative Code of the City of New York [hereinafter “Code”] § 16-421(g).

[11] Id. § 16-421(d).

[12] Id. § 16-423(d)(1).

[13] Id. § 16-423; 16 RCNY § 17-03(a).

[14] Code § 16-427(d)(1).

[15] Id. § 16-422(b)-(c).

[16] Id. § 16-422(d).

[17] Id. § 16-424(a).

[18] Id. § 16-427.

[19] See id. § 16-423(d)(1).

[20] See 16 RCNY § 17-03(h)(2)(i)(A); Complaint ¶ 71.

[21] 16 RCNY § 17-03(h)(2)(i)(B).

[22] Complaint ¶¶ 13, 117.

[23] Id. ¶ 13.

[24] Id. ¶ 113.

[25] Id. ¶ 14.

[26] Id. ¶ 12.

[27] Electronics Makers Sue New York City to Block Law on Collection, Recycling, 40 Environmental Reporter 1864 (July 31, 2009) [subscription required].

[28] See id.; Jennifer 8. Lee, Electronics Industry Sues to Block Recycling Law, N.Y. Times (July 24, 2009).

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