Trash Talk

New regulations could make E-waste disposal hazardous to corporate pocketbooks.
John EdwardsMay 15, 2006

By the time your company’s computers
are ready for the scrap heap, they aren’t just worthless,
they’re liabilities. Businesses spend about $30 to retire
an out-of-date PC, according to figures compiled by
technology research firm Gartner. Add to that the cost of
backing up and “sanitizing” (that is, erasing) each
machine’s hard drive and the administrative expenses
associated with selling, donating, trading in, or recycling
a system, and the final bill may be double or even triple
that figure.

Yet companies may one day look back on 2006 as a
time when they could dispose of so-called E-waste relatively
cheaply and easily. That’s because proposed legislation,
as well as a growing list of rules and regulations,
promise to drive the cost of dumping E-waste—including
PCs, printers, copiers, and phone systems—much
higher in the years ahead.

While Europe and many Asian countries have
national laws that govern E-waste, the United States does
not. Not yet, anyway. Congress is currently considering
at least four bills that address tech trash. Two of the
measures, the Computer Hazardous Waste Infrastructure
Program Act and the National Computer Recycling
Act, would impose a recycling fee of up to $10 on PC
and monitor sales. Another bill, the Electronic Waste
Recycling Promotion and Consumer Protection Act,
would ban from landfills all electronic devices with display
screens measuring more than four inches, but create
tax incentives to encourage businesses and consumers
to recycle those products. Finally, the Tax Incentives
to Encourage Recycling Act would give consumers
tax credits for recycling electronic products through
manufacturer-developed programs.

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While Congress debates these bills, many states and
municipalities have already enacted increasingly stringent
E-waste laws, some of which impose heavy fines
and other penalties on companies that flout recycling
and disposal requirements. The impact of these widely
varying mandates is particularly hard on businesses that
operate in multiple states.

In addition to current and pending laws, businesses
also risk violating various regulatory mandates. The Federal
Solid and Hazardous Waste Regulations, for example,
prevent most E-waste from being simply thrown out
or sent to regular recycling centers. The guidelines make
it the disposer’s responsibility to discover
whether or not a product contains any
landfill-polluting toxic components — information that’s not readily disclosed by
equipment manufacturers. Gartner
points out that penalties specified in both
the Gramm-Leach-Bliley Act and the
Health Insurance Portability and
Accountability Act could be levied if discarded
PCs were found to house customer
or patient data.

Frances O’Brien, vice president of
research at Gartner IT, says this regulatory
patchwork exacts a toll, yet many companies
remain unaware of their vulnerabilities.
“There’s a lot more risk out there
than people are talking about, because
much of it is getting settled out of court,”
she says. “I talk to clients every day that
have been fined or are in the process of
settling a fine.”

Another way businesses run afoul of
the law is by transferring E-waste to recyclers
without fully assessing the equipment’s
functional condition. “If you do
that, you are essentially contributing to
what is called ‘sham recycling’ or ‘sprinkling
waste,’” says Jim O’Grady, director
of technology, financial solutions, Americas,
for Hewlett-Packard Financial Services.
Such equipment often winds up in
the hands of black marketers, which illegally
send the gear to domestic or foreign
landfills rather than legitimately recycling
the products. “It can be tempting for
some companies, but it’s also a good way
to get into trouble,” he says. The Environmental
Protection Agency will fine any
company that fails to properly classify or
dispose of its E-waste.

As a result, businesses are beginning
to take the matter of E-waste disposal
more seriously. “Our clients are becoming
increasingly aware of the exposures
relative to asset disposition,” says Kathy
Ferguson, business-unit executive at IBM
Asset Recovery Solutions. “More are
adopting corporate strategies to ensure
that they’re dispositioning their assets in
an appropriate manner.”

Perhaps just in time, given not only
the number of laws coming into existence,
but the number of gadgets. “We’re
just a wasteful society, and we throw away
everything,” says Paul Baum, president
and CEO of PlanItroi, an E-waste recycling
firm. As a result, the stream of old
PCs and monitors is now being joined by
obsolete cell phones, PDAs, servers, video
projectors, telecom systems, and an array
of other gear.

Many companies deal with the issue
just as families do: by letting the stuff pile
up. Gartner estimates that as many as one
in three companies in the United States,
Europe, the Middle East, and Africa stockpile
E-waste in offices, warehouses, and
other locations. “That may be an effective
short-term tactic,” says O’Brien, “but the
costs build the longer you hold on to the
equipment.” Additionally, since stored gear
must still be carried on the company’s
books, the inventory will continue to
affect—often adversely—things like depreciation
schedules and, potentially, PC software
licenses. “‘Out of sight, out of mind’
doesn’t apply here,” says O’Brien. “Companies
must view E-waste disposal as much
more important than simply taking out
the garbage.”