Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR SPAC

ORIGINAL DATE

LAST UPDATED

3-05-07

HB

SHORT TITLE Info Technology Producer Responsibility

SB 1184/SPACS

ANALYST Aubel

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

.01*

.01*

*See

narrative Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Conflicts with HB 84 and SB 193 (duplicate)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Environment Department (NMED)

Office of the chief Information Officer (OCIO)

Energy, Minerals, and natural Resources (EMNRD)

Attorney General’s Office (AGO)

General Services Department (GSD)

SUMMARY

Synopsis of Bill

The Senate Public Affairs Committee Substitute for Senate Bill 1184 proposes the Consumer

Information Technology Recycling Act (Act) to develop and implement a state system to recover

computing or display devices. The bill defines “covered device" to include desktop or portable

computers or monitors but excludes televisions, parts of vehicles, personal digital assistants and

telephones. Printing and printing devices are not specified as being covered under the Act. The

Act would apply to covered devices purchased and used by consumers in this state.

The Act would require manufacturers of covered devices to label all devices and establish a

“reasonably" convenient, no-cost recovery system for equipment sold in the state, whether by

sales outlets, catalogs or the Internet. It would also limit retailers to sell any covered device

unless it has the manufacturer’s label and the manufacturer is included on the state list of

manufacturers with recovery plans. The manufacturer must be in compliance with the Act to bid

on any contract with the state.

Under the Act, the New Mexico Environment Department (NMED) is responsible for educating

Senate Bill 1184/SPACS – Page

2

consumers about the recovery program and hosting an informational Web-site for consumers of

the devices and recovery plans. The bill states NMED and the Attorney General, as appropriate,

enforce compliance, with maximum penalties for each violation. NMED will also be responsible

for compiling rules and regulations deemed necessary to clarify the explicit requirements of the

Act, taking into consideration the impact of the rule on public health and safety, the economic

impact of the rule, and whether the rule promotes manufacturer responsibility. NMED must

compile the yearly information provided by the manufacturers, which is reported to the

Legislature by April 1. However, the bill prohibits NMED from assessing fees on the

manufacturer, consumer, retailers, or entities recovering the devices.

FISCAL IMPLICATIONS

Both NMED and AGO indicate that additional staff would most likely be required to implement

and sustain the e-waste recovery program as defined by the SPAC Substitute for SB 1184. In

particular, NMED notes that additional staff may be necessary for administrative, outreach, and

enforcement requirements under the Act. Because no fee of any kind is permitted by the bill,

any operational expansions would necessarily be supported by general fund. However, no

appropriation is included in the bill.

The bill also prohibits manufacturers from charging consumers for its recovery program.

Because of this no-cost provision, GSD points out that the state could see an increase in the

purchase price for devices sold in New Mexico for manufacturers to recover the cost of the

disposal program.

SIGNIFICANT ISSUES

Background

The 2005 task force report regarding e-waste, conducted pursuant to SJM 5, provides

background information, as follows:

The US Environmental Protection Agency (EPA) has defined e-waste as:

“electronic products being discarded by consumers. These include a wide range of

items, such as: televisions; computers and computer peripherals; audio and stereo

equipment; VCRs and DVD players; video cameras; telephones; cellular phones and

other wireless devices; fax machines; copy machines; and video game consoles."

Senate Joint Memorial 9, passed in the 2005 legislative session, recognized that e-waste

is increasing in volume and contains dangerous substances such as lead, mercury, and

polychlorinated biphenyls that can pollute air and water...

In 1998, the EPA estimated that e-waste was approximately 4% of the total solid waste

stream in the United States and was projected to grow two to three times faster than any

other component of the waste stream. In 2002, the EPA estimated that every day

Americans dispose of 3,000 tons of computers alone. According to the Consumer

Electronics Association, in 2003 the e-waste component of the municipal solid waste

stream was 1.5%.

Senate Bill 1184/SPACS – Page

3

The EPA estimates that 57 million replacement televisions and computers are sold

annually to households and businesses in the United States. The EPA also estimates that

20 to 24 million old computers and televisions are added to storage each year, rather

than being discarded. The EPA’s explanation is that consumers tend to store old

equipment rather than discard it.

According to a Consumer Electronics Association study released October 19, 2005,

“most unwanted consumer electronics go to secondary users, not into America’s waste

stream. Nine out of ten computers and PC notebooks, eight out of ten televisions, and

seven out of ten cell phones were donated, recycled or sold in the last 12 months.

Charities (34%), friends (28%) and family members (26%) were the biggest beneficiaries

of hand-me-down products."

Regardless of the explanation, according to industry and EPA publications it is

anticipated that e-manufacturing and sales exceed the rate of e-waste disposal. These

sources also predict continued growth in the sales of electronic equipment, and therefore

a growing demand on appropriate diversion options. The Task Force concluded that

there is no reasonable or accurate way to discuss the actual volume of e-waste needing to

be managed.

According to the report, businesses and organizations have more stringent requirements for e-

waste management in comparison to household generators. High volume generators are subject

to the federal Resource Conservation and Recovery Act (RCRA), Subtitle C.

Recovery Program

The Act generally prohibits a manufacturer of computers and monitors from selling those

devices in this state unless the manufacturer has labeled those devices with their brand and has

implemented a recovery plan for collecting them from consumers. The Act requires

manufacturers to offer collection services for used devices to consumers at no charge, and must

provide a convenient way for consumers to participate, such as through collection by mail, or

through staffed collection facilities, or through one collection event each year. “Collection" is

not defined with a reference to the purpose of “recovery". “Convenience" is not clearly

designated by reference to the original purchase or specified by being “geographically central" to

the people served. The Act also requires the manufacturer to inform the consumer of its

recovery program.

Manufacturers would be required to report to NMED the weight of covered devices collected and

recovered during the previous calendar year. The report must also include documentation

verifying proper collection and recovery of such material compliant with the sound

environmental management provisions the new Act. NMED is given the authority to access

penalties for noncompliance with the Act.

The collection services may use existing services and all covered devices collected pursuant to

the Act should be recovered in compliance with all applicable federal, state and local laws and

requirements. “Recoverers" are not required to be certified pursuant to the recycling industry

operating standard but must be in compliance with the institute of scrap recycling industries

publication titled “Electronic Recycling Operating Practices."

Senate Bill 1184/SPACS – Page

4

NMED has stated that recycling programs for e-waste (used televisions, computers, audio and

stereo equipment, printers, faxes, copy machines, telephones, etc), household hazardous waste,

and diversion programs are expensive. Only five counties or municipalities have the resources to

implement household hazardous waste collection programs and only a handful of governmental

entities can afford to hold e-waste collection events, which can coast as much as $70.0 thousand

for a one day event. This bill proposes that the e-waste contained in this bill is handled by the

industry, not by the individual landfills.

NMED expresses some concern over the mandatory nature of the bill, as follows:

A memorial passed by the Legislature in 2005 instructed NMED to form a task force to

study the recovery and recycling of electronic waste (e-waste)…A key tenet of the report

was the recommendation that mandatory recovery programs (such as suggested in the

Act) not be utilized in New Mexico. Rather, the task force recommended that a voluntary

system for collecting e-waste should be pursued to encourage the collection of these

items. The bill does the opposite by making manufacturers responsible for recycling, as

opposed to the existing network of public and private entities who recover e-waste.

The task force summary of recommendations, included as Attachment 1, also states, as follows:

Mandatory recycling should be considered if voluntary approaches do not achieve

estimated results. Also, mandatory recycling now is not considered a preferred approach

due to the lack of existing infrastructure to collect the e-waste.

PERFORMANCE IMPLICATIONS

Reducing e-waste in landfills by diverting the devices will reduce hazardous waste exposure to

the environment and public health. However, this bill deals strictly with computers and monitor

and is silent regarding other e-waste, such as stereo equipment, VCRs, DVD players, video

cameras, telephones, cell phones, fax machines, copiers, calculators and video game consoles.

GSD states that the Act would be minimal impact on the Surplus Property Bureau (SPD) of the

Transportation Services Division of the General Services Department, as long as the bureau’s

right of refusal to claim surplus state property is protected.

ADMINISTRATIVE IMPLICATIONS

The AGO notes that the bill’s requirement for the AG to enforce the provisions of the Act

against manufacturers, retailers, and recoverers would necessitate additional staffing resources

and time.

NMED would have additional administrative responsibilities, as detailed above. SPD would have

an increased responsibility to verify that manufacturers have a disposal program.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

The SPAC Substitute for SB 1184 may be incompatible with SB 193/ HB 84 because they offer

competing methods as identified by taskforce stakeholders for the recovery of e-waste.

Senate Bill 1184/SPACS – Page

5

SB 193 and HB 84 seek a $1 million appropriation for helping communities – especially rural

ones – with collection programs for e-waste and household hazardous waste.

TECHNICAL ISSUES

The AGO offers potential technical issues, as follows:

•

Because the Act defines “retailer" as any person that owns or operates a business that sells

covered devices to a consumer, including through sales outlets, catalogs or the internet,

whether or not the seller has a physical presence in this state; and also regulates persons who

manufacture “covered devices" for sale within this state, it appears that the Act will have

some impact on the interstate sale of those devices. Its provisions may therefore implicate the

Interstate Commerce Clause of the United States Constitution, Article I, Section 8, Clause 3,

as a possibly unconstitutional burden on interstate commerce. The Courts will generally

examine the impact of this Act to determine whether it discriminates against out-of-state

manufacturers or retailers, and if not, then they will balance the burden on interstate

commerce against the state’s interests in order to determine whether the interstate impacts are

infrequent or insignificant in relation to the alleged benefits to the state. See Pike v. Bruce

Church, Inc., 397 U.S. 137 (1970), Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520 (1959),

and Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945).

•

The Act provides that it is “deemed repealed" if a federal law takes effect that establishes a

national program for the collection and recycling of covered devices that substantially meets

the intent of that act. This would require a determination by unknown persons as to the

continued validity of the Act. It would constitute “repeal by implication", without affirmative

action by the State Legislature actually repealing the Act. Repealing state laws in that manner

is not favored by the Courts. See Stennis v. City of Santa Fe, 2006-NMCA-125 (Ct. App.

2006).

•

Further, the Legislature appears to be improperly delegating its power to repeal state laws to

unknown individuals. See Article IV Section 1 of the New Mexico Constitution, vesting the

legislative power of the state in the Senate and House of Representatives.

GSD suggests that the preference to manufacturers that have programs to recover other

manufacturer’s devices is not clearly defined.

OTHER SUBSTANTIVE ISSUES

According to NMED, many device manufacturers (Hewlett-Packard, Dell, IBM, Sony and

Apple) currently offer programs whereby consumers can mail back their obsolete e-waste.

While this is a viable recycling scheme for anyone wishing to recycle their e-waste, consumers

must pay for shipping costs. Under this bill consumers will not bear any costs.

The terms “manufacturer" and “retailer" are broad enough to include small custom computer

assemblers, anyone who assembles a computer and sells it to another person or resells a used

computer, and small business computer resellers. Those individuals would also have to

implement and maintain the collection services required by this bill.

Senate Bill 1184/SPACS – Page

6

The Economic Development Department also expresses concern for the expense the bill may

layer on the smaller business, which traditionally operates with very thin profit margins. In

addition, EDD points out that if the expense of implementing a recovery program causes

business to withdraw from the New Mexico market, the state could lose gross receipts tax. On

the other hand, GSD assumes that the manufacturer or responsible party will simply increase the

purchase price of the products to cover the recovery programs.

It is a policy decision to weight these indirect costs against the costs to the environment and

public health of improper e-waste disposal for computing and display devices.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Without a program for recycling e-waste, hazardous materials will accumulate in landfills and

pose significant health and environmental risks.

POSSIBLE QUESTIONS

1.

Do “telephones", as defined in the Act, include cell phones.

2.

Could a program to properly handle “exploding" televisions be included, since cathode

ray tubes contribute lead to the environment when crushed. (Cathode ray tubes are

installed “under pressure" in televisions and pose a more difficult disposal protocol.)

3.

Why are printers and printing devices not included as a “covered device".

4.

How can this program be integrated into a voluntary program that would cover more

devices.

5.

Will NMED and the AGO require additional full-time-equivalent (FTE) staff to

administer the program.

6.

What will be the cost to the state for implementing the program using general fund for

additional FTE. Would including more devices make the return on this investment and

program more economical.

MA/nt

Attachment

Senate Bill 1184/SPACS – Page

7

T

ASK

F

ORCE

R

ECOMMENDATIONS

The Task Force recommends a voluntary statewide e-waste collection and recycling program be

implemented, first as a pilot program, then statewide. Mandatory recycling should be

considered if voluntary approaches do not achieve estimated results. Also, mandatory recycling

now is not considered a preferred approach due to the lack of existing infrastructure to collect the

e-waste.

The Task Force believes a voluntary collection program should be based on a regional concept

taking into consideration population densities, housing units, and proximity to major

transportation routes.

The Task Force recommends that the legislature fund a voluntary e-waste collection pilot

program. The pilot program would: 1) identify collection sites, 2) enable the Solid Waste

Bureau of the NMED and communities to standardize e-waste collection operations, 3) establish

a best practices procedure, 4) develop an educational package tailored to rural and urban

communities, 5) validate that a regional “hub and spoke" approach is most functional, 6)

determine if volumes and participation match previous collection events, 7) help evaluate if

computer e-waste stored throughout the region is reduced, 8) provide an opportunity to query

participants (and perhaps non-participants) on a wide-range of e-waste collection issues, 9)

generate data and statistical information that will be used to establish a baseline for subsequent

collections, and 10) help identify unanticipated problems and provide time to implement

solutions.

Voluntary e-waste recycling can be implemented quickly and is supported by professional solid

waste and recycling businesses and organizations such as the Solid Waste Association of North

America and the New Mexico Recycling Coalition. Voluntary e-waste recycling already is

established in New Mexico. It could be expanded efficiently with the cooperation of the above-

mentioned organizations and those businesses involved in e-waste collection/processing.

Currently most e-waste collection events are associated with city sponsored Household

Hazardous Waste collection events and special events arranged specifically for e-waste (e.g.,

City of Albuquerque).

The Task Force recommends that the amount of e-waste recycled through the voluntary program

be reported via the Solid Waste Bureau Annual Report Questionnaire. This questionnaire is an

established reporting process for all permitted and registered solid waste facilities in the state.

The Task Force recommends that an educational component accompany the pilot voluntary e-

waste recycling program and that the Solid Waste Bureau manage the education activity. The

Solid Waste Bureau, through its Outreach Section, conducts community education and regional

summits for a variety of solid waste disposal options. With additional FTEs, the Outreach

Section could develop and coordinate the education efforts and provide oversight of the e-waste

program. The Task Force recommends that the Legislature fund this educational activity.

The Task Force recommends that the Hazardous Waste Bureau of the Environment Department

provide a guidance document for local public bodies clarifying hazardous waste rules related to

the collection and management of e-waste destined for recycling and resale. Such a document

Senate Bill 1184/SPACS – Page

8

may help diminish local communities’ concerns regarding the collection and transportation of

hazardous components in e-waste.

The Task Force recommends that electronic retailers (local and national corporations)

provide their customers with information regarding the voluntary e-waste recycling program.

Further, some members of the Task Force suggested that computer manufacturers might be able

to assist in various ways such as informational and financial.

The Task Force recommends that state purchasing rules and regulations be revised to enable

recycling as a statewide disposal option.

The Task Force recommends that a state e-waste recycling contract be developed by the General

Services Department (Purchasing Division). This contract would enable local public bodies,

State agencies, school districts and other governmental entities to participate in

e-waste recycling using one contract. This will relieve local communities from having to

undergo the cost of researching and developing specifications of a recycling contract. It would

provide standardization and a means of accurate reporting throughout the state for

e-waste recycling. A single state contract may also provide the means to negotiate more

favorable contract terms.

Applicable Rules and Regulations

•

Title 40 Code of Federal Regulations, parts 258, 260, and 273 et al.

•

New Mexico Statutes Annotated (NMSA) 1978, Chapter 13 - Public Purchases

and Property, Article 6, Section 1 thru Section 4, Disposition of obsolete, worn-

out or unusable tangible personal property, NMSA 1978, Chapter 74-9, Articles

4 (Hazardous Waste Act) and Article 9 (Solid Waste Act).

•

New Mexico Environment Department (NMED), Solid Waste Management

Regulations 20 NMAC 9.1, October 27, 1995, Subpart II.

•

NMED, Hazardous Waste Management Regulations 20.4.1 through 20.4.3, 1995-

2003.

P

REPARED BY

N

EW

M

EXICO

E

NVIRONMENT

D

EPARTMENT

,

S

OLID

W

ASTE

B

UREAU

,

FOR THE E

-

WASTE MEMORIAL TASK FORCE

,

N

OVEMBER

21,

2005.

C

ONTACT

:

E.

G

IFFORD

S

TACK

,

A

CTING

B

UREAU

C

HIEF

,

827-2653