California Integrated Waste Management Board 1 Discussion of the Continuing Implementation of the Covered Electronic Waste Recycling Program CIWMB Board Meeting - Item 18 (Presented at the Market Development and Sustainability Committee) January 23,

California Integrated Waste Management Board 2 This item will cover: Program background Current operational successes / challenges Fund condition / financing considerations Near-future uncertainties Open discussion

California Integrated Waste Management Board 3 CA’s Recent E-waste History March 2001, DTSC’s “Clarification” –CRTs are hazardous when disposed Fall 2003, Electronic Waste Recycling Act –Video displays subject to fee, recycling payment Fall 2004, Cell Phone Recycling Act –Retailers must accept old phones for recycling February 2006, Universal Waste Ban –Residential generator exemption expires Fall 2006, Rechargeable Battery Recycling Act –Retailers must accept batteries for recycling

California Integrated Waste Management Board 4 Electronic Waste Recycling Act Addresses recycling of video displays –“Covered Electronic Waste” or CEW Financial relief to responsible parties Fosters convenient recycling opportunities Eliminate stockpile of waste monitors/TVs Decrease hazardous materials in products

California Integrated Waste Management Board 5 Electronic Waste Recycling Act System to fund the recycling of covered electronic waste: –Cathode ray tubes (CRT) televisions and computer monitors); –Liquid Crystal Display (LCD) televisions and monitors; –Laptop computers; –Gas plasma display televisions –Personal DVD players (July 1, 2007)

California Integrated Waste Management Board 6 Payment System at a Glance

California Integrated Waste Management Board 7 Who’s Participating? ~ 60 approved recyclers ~ 600 approved collectors Unknown number of “handlers” –Self-authorized with notification to DTSC –No preclusion on supplying the system –Creates some audit challenges

California Integrated Waste Management Board 8 Revenue, Payments & Volumes FY 2004/05 - $31 million –$11.4 million claimed (~24 million lbs) FY 2005/06 - $78 million* –$45.9 million claimed (~95 million lbs) FY 2006/07 - ~$78 million – ~$75 million claimed (>150 million lbs) FY 2007/08 - ~$83 million projected – ~$105 million projected (>210 million lbs)

California Integrated Waste Management Board 9 Claim Volume Since January 1, 2005

California Integrated Waste Management Board 10

California Integrated Waste Management Board 11 Operational Concerns Program Staff Perspective –Net Cost Reporting Compliance –Application Information Maintenance –Documentation: Collection - Claim –Designated Approved Collectors –Un-Authorized Handlers –Due Diligence –Compliance - Enforcement

California Integrated Waste Management Board 12 Operational Concerns Program Participant Perspective –Cost of Managing Non-CEW –Recovery Payment Premiums –Un-Restricted Export –Collector-Recycler Relations –Impacts on Reuse –Uncertain Future Markets

California Integrated Waste Management Board 13 Compliance CIWMB & DTSC share responsibilities –CIWMB authority over payment system Enforcement through denial of payment Enforcement through approval revocation –DTSC authority over hazardous materials Facility inspections Enforcement action for HW violations –Joint efforts to detect and deter fraud CIWMB/DTSC MOU Cooperation on investigations

California Integrated Waste Management Board 14 Financial Considerations Fund Condition: –At current rates, depletion in FY 08/09 –CIWMB has authority to adjust Revenue Source: –$6, $8, or $10 fee on retail sales of CEDs –List of CED will expand in time Cost Demands: –CIWMB, DTSC, BOE operations –Recovery and Recycling Payments ($.48/lb)

California Integrated Waste Management Board 15 Net Cost Report vs. Payment Rate CIWMB must reconsider “payment schedule” on or before July 1, 2008 –Should rates change? –If so, how much? Net Cost Report informs CIWMB Regulation governs what is reported –Report is only one source of information Statute limits what costs to consider

California Integrated Waste Management Board 16 Recovery Payment PRC (a) … on July 1 every two years thereafter, the board in collaboration with the department shall establish an electronic waste recovery payment schedule for covered electronic wastes generated in this state to cover the net cost for an authorized collector to operate a free and convenient system for collecting, consolidating and transporting covered electronic wastes generated in this state.

California Integrated Waste Management Board 17 Recycling Payment PRC (a) … on July 1 every two years thereafter, the board, in collaboration with the department, shall establish a covered electronic waste recycling payment schedule for covered electronic wastes generated in this state to cover the average net cost for an electronic waste recycler to receive, process, and recycle each major category, as determined by the board, of covered electronic waste received from an authorized collector. …

California Integrated Waste Management Board 18 Commodity Prices

California Integrated Waste Management Board 19 Net Cost Reporting Approved participants must submit annual reports as/if directed by CIWMB Next report due March 1, 2008 –Too much non-compliance on past reports –Vital that information is timely –CIWMB will discipline scofflaws Guidance available through web

California Integrated Waste Management Board 20 Net Cost per Pound (2005) Weighted AverageMeanMedian Percentage Below Standard Payment Rate Recovery Revenue NA Cost NA Net Cost % Recycling Revenue NA Cost NA Net Cost %

California Integrated Waste Management Board 21 Net Cost per Pound (2006) Weighted AverageMeanMedian Percentage Below Standard Payment Rate Recovery Revenue NA Cost NA Net Cost % Recycling Revenue NA Cost NA Net Cost %

California Integrated Waste Management Board 22 Comparison of Weighted Average Net Cost (Preliminary) Difference Recovery % Recycling %

California Integrated Waste Management Board 23 Revenue Considerations Program funded by Covered Electronic Waste Recycling Fee –$6, $8, or $10 assessed on CED sales CIWMB has obligation to adjust fee for fund solvency –Statute establishes adjustment factors –Connection between devices sold and waste recovered is nebulous

California Integrated Waste Management Board 24 Revenue Considerations “42464(f) 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…”

California Integrated Waste Management Board 25 Revenue Considerations “… The board shall base an adjustment of the covered electronic waste recycling 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... (2) The sufficiency of revenues in the account for the board and the department to administer, enforce, and promote the program…”

California Integrated Waste Management Board 26 Revenue Considerations If adjustments are necessary: What is the appropriate mechanism? –Adjusting fee would be a regulation –Program and Legal evaluating process What are the options and limitations? –Current fee levels tightly grouped –Are we locked into a 3-tier rate structure? –Can fee levels be more equitable?

California Integrated Waste Management Board 27 Future Challenges OTA Digital Broadcasting Transition –15% to 20% of households rely solely on over-the-air (OTA) for reception –February 17, 2009 change to digital –Analog receivers obsolete w/o converter –Cable and satellite unaffected –Volume of discards uncertain, large FCC / NTIA coupons for signal converters New technology cheaper, more attractive

California Integrated Waste Management Board 28 Summary CEW recovery / recycling has been substantial Several converging trends –Continuing program growth –Cost of recovery and collection less than payments –Looming fund depletion –Future discard rate unclear CIWMB has authority to make adjustments –Payment rate adjustment will slow depletion May also slow CEW recovery; impact participants –Fee adjustment can cover shortfall How much revenue will be required for solvency?

California Integrated Waste Management Board 29 Next Steps Continue to evaluate need and options for payment rate and/or fee adjustments Develop and refine models to assess impacts of any adjustments Convene forums and focus groups to inform recommendations Return to Board for additional discussion and direction Propose changes as warranted