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Tax Collected, Not Disbursed for E-Recycling

BY HILARY POTKEWITZ

Since January, California electronics retailers have been charging consumers an added tax of up to $10 on televisions, computer monitors and laptops.

The money, called an Electronic Waste Recycling Fee, is supposed to be passed on to recyclers to help subsidize the collection and proper handling of e-waste, which contain toxic metals and other substances unsafe for landfills.

But nearly three months into the program, the state has yet to receive a dime from retailers, nor has it paid out any money to recycling firms. While state officials say this is by design, some e-waste processors are becoming skeptical.

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“I don’t think we’re going to see anything for six months at least, and that’s really being optimistic,” said Wayne Omokawa, e-waste recycling program manager for Los Angeles. Omokawa said the city’s six e-waste recycling centers have already submitted claims for 65,000 pounds of waste collected since January.

Under the program, payments are supposed to be disbursed after the first quarter of the year, which ends March 31. But retailers have until April 30 to send in the fees they’ve collected, minus a small administrative fee, according to Anita Gore, a spokeswoman for the Board of Equalization.

The board estimates it will collect $30 million from retailers in the fiscal year ending in July, and $60 million for the following fiscal year.

The money collected will be handed to the California Integrated Waste Management Board, which parcels out the claims to recyclers. The waste management board has taken out a $10 million loan from the state’s general fund to jumpstart the program, so it can begin making payments early this month. The board has authorization to pay out $31 million through July and to pay out $64 million for the coming fiscal year.

All of the income and payout plans are based on estimates. If claims exceed receipts, the board must go back to the legislature to get authorization to increase the payouts.

Before the new law, it was not uncommon for dumps to charge $20 to $45 to recycle a television set or a computer. The goal is to encourage recycling of computers and television sets by making it free for residents. The cathode ray tubes contain toxic substances like lead that must be handled by certified toxic waste disposal companies.

There are 33 companies in Los Angeles alone who claim to offer e-waste recycling, running the gamut from start-ups to scrap metal shops. “We’ve taken away the financial disincentive for consumers to do the right thing,” said Mark Murray, executive director of environmental group Californians Against Waste.

But the system for paying recycling firms has led to complaints. Organizations that simply receive e-waste from consumers are considered “collectors,” entitled to about 20 cents of the 48-cents-a-pound the state pays out. “Recyclers,” who break apart glass and crunch television sets, are entitled to the rest and are the only ones that can collect from the state.

Thus, collectors , even government agencies like the city of Los Angeles , must rely on recyclers to pay them their share.

“It’s a nightmare for everybody,” Omokawa said. Even if the city collects all it is owed, he added, it doesn’t come close to paying for the city’s costs of the program.

The system puts collectors in a bind because they are reliant on recyclers for payment. If one goes bankrupt or disappears for some reason, the collector has no way to get paid.

While payments are scheduled to begin next week, cumbersome paperwork could slow things down much of it from the California Integrated Waste Management Board, which is concerned that collectors would bring in computers from Nevada or Arizona to illegally cash in.

In order to qualify for reimbursement, recyclers and collectors must prove the television or computer originated in California or was used here. Collectors are required to submit their customer lists to recyclers, who must then submit lists to the state for verification.

“The first round of payment claims has taken considerable time and the documentation we have received has been inadequate,” said board spokesman Lanny Clavecilla.

Randy Lewis, founder of Harbor City-based SoCal Computer Recyclers, said some collectors are reluctant to share their client lists with recyclers for fear of having their customers poached. “You really have to trust your recycler,” Lewis said.

One firm that’s banking on the program is Hallstead, Pa.-based Envirocycle Inc., which has opened facilities in Rancho Cucamonga and San Diego in January.

“That’s one of the reasons we’re here,” said Clarence Alford, West Coast sales manager. The company usually charges customers to dispose of a television set, but has been doing it for free in anticipation of state payments. Envirocycle is both a recycler and a collector, so it has the potential to keep all 48 cents per pound.

Alford said the company collected and recycled 100,000 pounds of material in March alone, and expects to receive close to $50,000 for those claims. He said he’ll probably have to wait anywhere from 30 to 60 days for the state to pay up, but he’s not worried. “Our company is financially strong enough that we could absorb this,” he said.


Hillary Potkewitz writes for the

Los Angeles Business Journal.

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