1. California Integrated Waste Management Board Consideration of a Memorandum of Understanding Between the California Integrated Waste Management Board and the Department of Toxic Substances Control Regarding Enforcement Against Fraud in the Electronic Waste Payment System June Board Item 15 Harllee Branch, Staff Counsel www.ciwmb.ca.gov

2. California Integrated Waste Management Board 2 Issues  Department of Finance (DOF) Recommendations – E-Waste Payment System at High Risk for Fraud – CIWMB Should Institute Prevention and Enforcement – Enter into Memoranda of Understanding (MOU) as Necessary

3. California Integrated Waste Management Board 3 Issues  Overlapping Enforcement Authority – California Integrated Waste Management Board (CIWMB) – Department of Toxic Substances Control (DTSC)

4. California Integrated Waste Management Board 4 Issues  CIWMB and DTSC Staff Find That MOU Is Necessary – Clarify Roles and Responsibilities – Define Working Relationship

5. California Integrated Waste Management Board 5 Options for the Board  Option 1 – Approve the MOU  Option 2 – Do Not Approve the MOU  Option 3 – Provide Other Direction to Staff

6. California Integrated Waste Management Board 6 Staff Recommendation  Option 1 – Approve the MOU and Adopt Resolution Number 2007-140

7. California Integrated Waste Management Board 7 The E-Waste Recycling Act  SB 20 (Sher, 2003) – The Electronic Waste Recycling Act (Act)  Amended by SB 50 (Sher, 2004) – Comprehensive Payment System to Encourage Recycling of Electronic Waste (E-Waste) – Video Display Devices Identified by DTSC as Hazardous When Discarded – Known as “Covered Electronic Waste” or “CEW”

8. California Integrated Waste Management Board 8 The E-Waste Recycling Act  The Act Places Responsibilities on Both CIWMB and DTSC – CIWMB  Management of E-Waste Payment System – DTSC  Management of E-Waste as Hazardous Waste

9. California Integrated Waste Management Board 9 The E-Waste Recycling Act  CIWMB and DTSC Have Concurrent Enforcement Authority – CIWMB – Public Resources Code Section 42475  “The board shall administer and enforce [the E-Waste payment system portions of the Public Resources Code] in consultation with the department.” – DTSC – Health and Safety Code Section 25214.9  “The requirements and other provisions of [the E-Waste payment system portion of] the Public Resources Code are incorporated by reference as requirements and provisions of this chapter.”

10. California Integrated Waste Management Board 10 The E-Waste Recycling Act  The Act Does Not Make Specific How To Handle The Concurrent Enforcement Authority Issue

11. California Integrated Waste Management Board 11 Risk of Fraud  Since Program Inception, Millions of Dollars Have Been Paid to E-Waste Recyclers  550 Approved Program Participants Statewide  Payment Claims Increasing

12. California Integrated Waste Management Board 12 Risk of Fraud  2005 – Over $29 million paid to recyclers – Over 60 million lbs. of E-Waste approved for reimbursement  2006 – Over $59 million paid – Over 123 million lbs. approved  2007 (as of 05/30/07) – Over $8 million paid – Nearly $1 million in claims awaiting approval – Nearly 9 million lbs. approved

13. California Integrated Waste Management Board 13 Risk of Fraud  197% Overall Increase in Claimed Reimbursements from 2005 to 2006

14. California Integrated Waste Management Board

15. 15 Department of Finance Recommendations  November, 2006 Letter to CIWMB  E-Waste Payment System at High Risk of Fraud – Enormous Volume of State Funds – Similarities With Department of Conservation’s California Redemption Value (CRV) Program  CRV Program has experienced fraud since inception  Continued enforcement and vigilance necessary

16. California Integrated Waste Management Board 16 Department of Finance Recommendations  CIWMB - Take Lead in Fraud Detection, Investigation, and Enforcement Development  Enter Into MOUs With Other Agencies As Necessary to Accomplish Recommendations

17. California Integrated Waste Management Board 17 Necessity  CIWMB and DTSC Have Overlapping Enforcement Authority  Potential For Interagency Conflict, Duplication of Activities, Confusion  MOU Will Address These Potential Problems

18. California Integrated Waste Management Board 18 MOU Terms  Roles and Responsibilities – CIWMB  Integrity of E-Waste Account  Fraud Detection/Investigation – DTSC  Management of Hazardous Waste Aspects  Enforcement Investigations/Prosecution

19. California Integrated Waste Management Board 19 MOU Terms  Principles of Agreement – DTSC takes lead role in investigations and prosecutions in consultation with CIWMB  Enforcement personnel, experience, and background  Consults and works in cooperation with CIWMB – Front-loaded mutual decisionmaking by both agencies

20. California Integrated Waste Management Board 20 MOU Terms  Principles of Agreement (cont.) – E-Waste Fraud Team – Free exchange of documents and information – CIWMB may assist DTSC with investigations – Allowance for independent work on fraud detection/investigation  Share information and consult if potential fraud discovered – Tracking fund expenditures in relation to fraud enforcement – Coordinate and share training opportunities

21. California Integrated Waste Management Board 21 Staff Recommendation  Option 1 – Approve MOU As Currently Written and Adopt Resolution No. 2007-140  Staff of both CIWMB and DTSC Support the MOU

22. www.ciwmb.ca.gov