Pacific NW TPO Project

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Pacific NW TPO Project
2
Background

• Idea from Pilot Program experiences
• One central body could coordinate manufacturer
  input, participation
• Developed proposal through Northwest Product
  Stewardship Council
• EPA seed funding
• Recruited manufacturers to fund and sit on
  Steering Committee to direct process
• Kickoff announcement at EPA National Meeting
• Official project start in May 2005

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Project Structure

• Steering Committee
• 8 contributing manufacturers only
• Decide on project direction, final say on project
  recommendations
• Support Team
• NWPSC government reps, NCER, RBRC, consultants
• Prepare documents, notes, tee up decision items
  for Steering Committee

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Conceptual Business Plan

• Models the TPO directly, using a set of
  assumptions approved by Steering Committee
• Allows for cost scenarios, collection volume
  projections, plans for resources needed
• Sets specific goals, targets, and indicators for
  the TPO

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Major Assumptions

• TPO is industry-led, non-profit entity
• Works under state legislation
• But conceived as serving multiple states OR and
  WA
• Funded via an ARF on retail sale/first sale into
  state
• Covers all eligible sales, and funds all aspects
  of recycling infrastructure (collect, transport,
  recycle, education) via single TPO
• Product Scope Desktops, laptops, TVs, monitors

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Major Findings

• Startup costs needed before fee collection
  begins 1.5 million
• Total Costs first 4 years 29 million
• Fee per unit
• TV unit gt19 6
• TV unit lt19 3
• Desktop PC unit 2
• CRT/large LCD monitor 4
• LCD monitor unit lt22 2
• Laptop unit 1
• Costs cover anticipated collection volumes of
  1.35 lbs per capita Year One ramping up to 2.6
  lbs per capita in Year Four

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Hybrid TPO Model

• State-level quasi-governmental E-Waste
  Commission
• Created in legislation, members appointed by
  Governor (could be majority manufacturers, other
  stakeholders)
• Sets ARF, collects from retailers/first sellers,
  enforces payment
• Oversees program performance
• Creates agreement with private TPO that runs
  collection/recycling system

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Hybrid TPO Model Contd

• Multi-State independent TPO, likely non-profit
  entity
• Provides all collection, recycling,
  transportation services through agreements with
  one or more state E-Waste Commissions
• Competitively contracts with multiple
  consolidation points
• Contractors paid on per-lb basis, with a
  pass-through Collection Incentive Payment

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Why the Hybrid TPO Model?

• Desire for true multi-state administration of
  recycling program to gain economies of scale
• Special purpose state agency has more authority
  on fee collection than wholly private TPO
• Avoid need for existing state agency to add fee
  collection and recycling program management to
  existing responsibilities

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Benefits of Hybrid TPO Model

• Leaves control of funding at state level
• Allows multi-state entity to realize operational,
  administrative, and scale efficiencies
• Involves manufacturers in E-Waste Commission
  and/or independent TPO operations
• Improve information flow in chain of commerce on
  product design characteristics, recycling
  challenges, communication with contracted
  recyclers

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Other Business Plan Highlights

• Collection free, convenient, at least one
  ongoing site in every town over 10,000
• Assumed 15 cents/lb, includes transport to
  consolidation center, 3 cent/lb more for distant
  areas
• TPO contracts with consolidators who compete for
  local collection sites or provide collection
  directly

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Other Business Plan Highlights

• Processing estimates avg 24 cents/lb
• Will be reduced over time through competitive
  contracting
• Contract consolidators obligated to follow ESM
  standards and data reporting
• Education shared between TPO and local
  communities
• Estimated 300k per year TPO costs

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What Resources Does the TPO Need?

• Planning for TPO resource requirements
• Key driver expected volumes from residents,
  businesses, and institutions
• Used existing programs as basis for increasing
  collection volume over 4 years
• From projected Year 1 CA volume to Hennepin
  County current volume
• 81 of TPO costs from collection, transport,
  recycling
• 29M needed for four years, divided among covered
  product sales 1- 6 per product

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Planning for Uncertainty

• What if collection volumes are substantially
  higher?
• E-Waste Commission would be authorized to adjust
  fees
• Sequence plans for revenue collection to have
  cash reserve (i.e. fee collection begins before
  contractor payments due)
• If collection volumes lower TPO can adjust
  Collection Incentive Payment higher

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TPO Staffing

• Strong contracting role, minimal operational
  responsibilities, therefore
• Executive Director
• Contract Manager
• Accounts Payable Manager
• Communications Directors
• Office Manager
• Administrative Support

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TPO Viability Analysis

• Performed to model scenarios where TPO has less
  than 100 participation
• TPO not responsible for managing entire system or
  meeting entire collection goal
• 1st Scenario companies opt-out but TPO admin
  and education costs fixed
• Impact fixed costs 2 higher with 85 TPO
  participation, 10 higher at 50 participation

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TPO Viability Scenarios

• 2nd Scenario single state implementation
• Impact fixed admin costs 22 cents per household
  higher in WA, and 70 cents higher in OR / equals
  3 cents/lb and 10 cents/lb of collected
  electronics, respectively
• 3rd Scenario Fewer economies of scale if TPO
  manages only 85 of system
• Impact Per unit costs for TVs 5.25 instead of
  4.50, monitors 4 instead of 3.50

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Legal Questions with a TPO

• Legal analysis performed for project on the
  following topics
• Anti-trust issues associated with manufacturer
  participation
• Liability concerns for participating
  manufacturers
• Need for Interstate Compacts
• Types of prohibited speech for TPO
• Legal precedents/constraints for TPO structure in
  WA and OR

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Legal Analyses Highlights

• Antitrust Issues
• State legislation would exempt TPO from antitrust
  
• Need to prevent improper info disclosure through
  antitrust policy adoption
• Avoid activities that would exclude competitors
• Liability concerns
• Piercing doctrine for corporations limits
  liability for any shareholder or member (i.e.
  manufacturer in TPO)
• State legislation could also provide protection,
  but well managed program should have limited
  exposure
• Federal Superfund exemption for arranging for
  recycling of recyclable material

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Legal Analyses Highlights Contd

• Interstate Compacts
• Congressional approval not necessary when it does
  not increase political power of states could be
  possible to write E-Waste Commission Compact
  without Congressional action
• Prohibited Speech
• WA Apple Commission case where members were
  compelled to support objectionable speech
• Conclusion TPO needs government control or have
  limited advertising role to avoid 1st amendment
  challenges

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Legal Analyses Highlights Contd

• Legal Issues Gave law firm with 2 strawmen TPO
  models quasi-government, and private
• Research any legal constraints on models
• Quasi-Government Apple Commission model
• WA/OR legislatures could assess tax or fee on
  sales/distribution to fund this special-purpose
  state agency (SPSA)
• Unclear whether SPSA could assess fee on
  manufacturers/distributors need justification
  that it compensates burden from their activities
• Manufacturers could have input and control of
  Commission/SPSA, with government oversight
• Multi-state Commission/SPSA unlikely, need Compact

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Legal Analyses Highlights Contd

• WA/OR Legal Issues Contd Private, Non Govt TPO
• Ensuring universal funding participation
  problematic
• Could be funded like Commission if existing state
  agency collects/enforces fee TPO then contracts
  with agency OR
• Require OEMs/distributor to join/fund private
  entity as condition of sale in state/s
• If funded by fee/tax imposed by govt agency,
  industry cannot have control over level of
  fee/tax
• Private org more flexible for multi-state
  operations, but need to ensure legislatures
  coordinate

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Incorporating Other Stakeholder Concerns

• Parallel to NWTPO project, National Center for
  Electronics Recycling MSTPO committees formed
• General stakeholders
• Recyclers Committee
• Separate due to contractual nature with potential
  TPO
• Produced TPO Fact Sheet, Matrix of TPOs in
  existing/proposed programs, and survey on TPO
  preferences

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Stakeholder Feedback

• Major concerns addressed by business plan,
  explanation in Appendix E
• Sample Concerns/Preferences
• Strong desire for multi-state TPO
• Need to see precedent issues resolved
• Fear of monopolistic TPO, cuts out local actors
• Criticism that TPO allows manufacturers to escape
  responsibility
• Desire for transparency in TPO operations,
  contracting decisions (recyclers)
• Preference for multiple TPOs (NGO, but not govt)

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Addressing Stakeholder Feedback

• Government oversight role addresses most concerns
• Others dealt with in provisions of legislation
  under which TPO operates
• Other stakeholders assumed to be represented on
  TPO Board
• Goals set to ensure manufacturers are engaged in
  recycling process, aware of design challenges
• TPO leaves many infrastructure decisions at local
  level contracts but does not direct

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Spreadsheet Model

• Final report includes spreadsheet documenting all
  major cost/collection volume assumptions
• Stakeholders can verify or provide feedback