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New York's Electronic Equipment Recycling and Reuse Act

InfoLawGroup LLP

Little covered other than by environmental and waste industry trade journals, New York's legislature earlier this year passed the NYS Electronic Equipment Recycling and Reuse Act (the “Act”), which was signed into law by Governor Paterson. The Act amended various provisions of the NY Tax Law as well as adding Article 27, Title 26, Electronic Equipment Recycling and Reuse, to New York's Environmental Conservation Law.  It contains some potential surprises for manufacturers, retailers and consumers of "covered electronic equipment." The manufacturer's internet website must, in addition to any other required information, provide a listing of locations within New York where consumers may return electronic waste as part of the manufacturer's electronic waste acceptance program. Further, those manufacturers providing computers, hard drives and other "covered electronic equipment" containing internal memory where personal or other confidential data can be stored, must provide consumers with instructions for destroying such data before they surrender the product for reuse or recycling.

The bulk of the Act, effective as of April 1, 2011, serves to impose various new mandates on “manufacturers” [ECL §27-2601(11)] and ”retailers” [ECL §27-2601(16)] geared toward increasingly stringent goals for recycling of “covered electronic equipment” (“CEE”) [ECL §27-2601(5)] , as well creation of associated systems for the collection and recycling/reuse of electronic waste at no cost from consumers under NYS Department of Environmental Conversation ("DEC") oversight.  To this end ECL §27-2605 requires manufacturers to register with the DEC, at a one-time cost of $5,000, and supply detailed information on the sales and total weight of CEE sold by the manufacturer in New York.

Manufacturer Requirements:

The Act defines “manufacturers” broadly to include any person or entity that: "(a) assembles or substantially assembles covered electronic equipment for sale in the state; (b) manufactures covered electronic equipment under its own brand name or under any other brand name for sale in the state; (c) sells, under its own brand name, covered electronic equipment sold in the state; (d) owns a brand name that it licenses to another person for use on covered electronic equipment sold in the state; (e) imports covered electronic equipment for sale in the state; or (f) manufactures covered electronic equipment for sale in the state without affixing a brand name.” ECL §27-2601(11).

Excluded from the sweep of "manufacturer" are those persons and entities who sell “less than one thousand units of covered electronic equipment annually” in New York or “whose primary business is the sale of covered electronic equipment which is comprised primarily of rebuilt, refurbished or used components.”

The Act also imposes joint and several responsibility and liability on those that jointly manufacture a product qualifying as a CEE, noting “any such person may assume responsibility for obligations of a manufacturer of that brand under this title. If none of those persons assumes responsibility for the obligations of a manufacturer under this title, any and all such persons jointly and severally may be considered to be the responsible manufacturer of that brand for purposes of this title.” ECL §27-2601(11).

In addition, ECL §27-2605(5)(b) requires a manufacturer, as part of its required electronic waste acceptance program (“EWAP”), to provide “information on how consumers can destroy all data on any electronic waste, either through physical destruction of the hard drive or through data wiping,” while ECL §27-2605(5)(c) mandates as part of the EWAP a public education program to inform consumers about the manufacturer's electronic waste acceptance program, including at a minimum:

"an internet website and a toll-free telephone number and written information included in the product manual for, or at the time of sale of, covered electronic equipment that provides sufficient information to allow a consumer of covered electronic equipment to learn how to return the covered equipment for recycling or reuse, and in the case of manufacturers of computers, hard drives and other covered electronic equipment that have internal memory on which personal or other confidential data can be stored, such website shall provide instructions for how consumers can destroy such data before surrendering the products for recycling or reuse.”

The manufacturer's internet website must also, in addition to any other required information required above, provide a listing of locations within New York where consumers may return electronic waste as part of the manufacturer's EWAP.

Lastly, manufacturers must also maintain records on site to demonstrate compliance with the Act, and make them available upon request by the DEC for a period of three years. See www.dec.ny.gov/chemical/66845.html

For purposes of the Act, “personal or other confidential data” is not expressly defined in the otherwise very detailed definitions section. For example, the definition of “covered electronic equipment” under ECL §27-2601(5), includes a wide variety of equipment, notably all of the following:

The definition of "covered electronic equipment" expressly excludes a:

“motor vehicle or any part thereof; camera or video camera; portable or stationary radio; household appliances such as clothes washers, clothes dryers, refrigerators, freezers, microwave ovens, ovens, ranges or dishwashers; equipment that is functionally or physically part of a larger piece of equipment intended for use in an industrial, research and development or commercial setting; security or anti-terrorism equipment; monitoring and control instrument or system; thermostat; hand-held transceiver; telephone of any type; portable digital assistant or similar device; calculator; global positioning system (GPS) receiver or similar navigation device; a server other than a small-scale server; a cash register or retail self checkout system; a stand-alone storage product intended for use in industrial, research and development or commercial settings; commercial medical equipment that contains within it a cathode ray tube, a flat panel display or similar video display device, and is not separate from the larger piece of equipment; or other medical devices as that term is defined under the Federal Food, Drug and Cosmetic Act.”

Interestingly, as can be seen above, “telephone[s] of any type” and “portable digital assistant[s] or similar device[s]” are expressly exempted from the definition of CEE. As a result, the mandates of the Act do not apply to any PDAs, cellphones or smartphones, all of today generally can and do contain gigabytes of personal and potentially confidential data. Such devices are, however, otherwise within the scope of the New York State Wireless Recycling Act, effective January 1, 2007, which specifies that all wireless telephone service providers offering cell phones for sale in New York are required to accept at no charge to consumers cell phones for reuse or recycling.

Retailer Requirements:

A different section of the Act, ECL §26-2607, imposes new requirements on "retailers," as defined under ECL §26-2601(16).  As of April 1, 2011, retailers of CEE must “at the location of sale” provide buyers of CEE information “about opportunities for the return of electronic waste that has been provided to the retailer by a manufacturer.” ECL §26-2607(1).

All New York “retailers” are flat-out banned by this new section 26-2607 from the sale or offer for sale in New York of any CEE unless the “the manufacturer and the manufacturer's brands are registered with the NY Department of Environmental Conservation” as specified in ECL §27-2605. This is a significant and burdensome requirement on retailers, who have no ability to force manufacturers to conform with the mandates of the new Title 26 of Article 27, other than as may be specified in the parties' supply contracts or purchase order terms and conditions.

In partial recognition of the onerous results that may befall retailers due to this section, sub-section (2) provides a safe harbor of sorts where any CEE purchased by a retailer from a manufacturer who “fails to register by [] [Jan. 1, 2011], or prior to the date the manufacturer withdrew its registration or the registration was revoked by the department” may continue to be sold until 180 days after April 1, 2011 or 180 days from date the manufacturer's registration was withdrawn or revoked. Continued sales of CEE, that may not otherwise be offered for sale in New York pursuant to this section, to retailers or others outside of New York are arguably not effected, as such a blanket ban applied to non-New York parties in interstate commerce could potentially implicate dormant commerce clause issues beyond the scope of this posting.

Penalties:

According to the DEC, the Act “except to the extent otherwise required by law” immunizes manufacturers and the owners/operators of any electronic waste collection site, electronic waste consolidation facility or electronic waste recycling facility from “any responsibility or liability for any data in any form stored on electronic waste surrendered for recycling or reuse, unless such person misuses or knowingly and intentionally, or with gross negligence, discloses the data.” http://www.dec.ny.gov/chemical/66845.html

Manufacturers: However, manufacturers that fail to comply with the data security notification requirements in the Act may receive a civil penalty of up to $1,000 for a first violation; up to $2,500 for a second violation; and up to $5,000 for the third and any following violations within a 12-month period. §71-2729(1)(c)(ii). Manufacturers are also potentially subject to a separate fine of $1,000 per day for any failures to submit required reports, registrations, fees or surcharges. §71-2729(1)(c)(i).

Retailers: Retailers that violate the Act may be fined up to $250 for a first offense; $500 for a second offense; and up to $1,000 for a third and any additional offense within a 12-month period. §71-2729(1)(d).

Owners/operators of a electronic waste collection site, electronic waste consolidation facility or electronic waste recycling facility are liable to $250 fines for each offense of the Act, with no maximum aggregate fine. §71-2729(1)(b).

Finally, consumers who violate the provisions of the Act are subject to a civil penalty up to $100 maximum for each violation. §71-2729(1)(a).