Pacific NW TPO Project
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
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
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
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
Major Findings
• Startup costs needed before fee collection begins: $1.5
million
• Total Costs first 4 years: $29 million
• Fee per unit:
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TV unit >19“ $6
TV unit <19“ $3
Desktop PC unit $2
CRT/large LCD monitor $4
LCD monitor unit <22“ $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
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
Hybrid TPO Model Cont’d
• Multi-State: independent TPO, likely nonprofit 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 passthrough Collection Incentive Payment
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
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
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
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
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
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
TPO Staffing
• Strong contracting role, minimal operational
responsibilities, therefore:
– Executive Director
– Contract Manager
– Accounts Payable Manager
– Communications Directors
– Office Manager
– Administrative Support
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
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
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
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”
Legal Analyses Highlights Cont’d
• 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
Legal Analyses Highlights Cont’d
• 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
Legal Analyses Highlights Cont’d
• WA/OR Legal Issues Cont’d: Private, Non Gov’t
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
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
Stakeholder Feedback
• Major concerns addressed by business plan,
explanation in Appendix E
• Sample Concerns/Preferences:
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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)
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
Spreadsheet Model
• Final report includes spreadsheet
documenting all major cost/collection
volume assumptions
• Stakeholders can verify or provide
feedback