Equipment Leasing and Finance Association - Equiping Business for Success

Electronic Recycling and ELFA

As of January 2011, twenty-four (24) states have passed electronic recycling legislation. California remains the only state to adopt an Advanced Recovery Fee (ARF) to finance electronic recycling by imposing a fee on the purchase or lease of new electronic devices. All other states that have passed electronic recycling legislation instituted a form of Extended Producer Responsibility (EPR) in which responsibility for funding recycling is imposed upon the producer, typically through an apportioned share of the yearly cost of electronics recycling within the state attributed to each manufacturer. Electronic recycling laws tend to cover televisions, computer monitors, computers, computer peripherals, or some combination of the four.

ARF model electronic recycling legislation is opposed by the Equipment Leasing and Finance Association (ELFA) due to the difficulties that have arisen in California for lessors attempting to properly collect the recycling fees. California has adopted a three-tier fee system based on the viewable diagonal screen size of the covered equipment sold or leased. This has resulted in lessors providing funding for an acquisition, who have never seen the equipment in question, suddenly forced to determine which fee to collect based on the physical characteristics of a machine they never had in their direct possession. Fee collection based on physical characteristics, burdensome enough to standard retail sellers, creates unique difficulties for equipment leasing and finance companies as:

  • Commercial leased equipment flows from multiple points of origin through interstate commerce.
  • Lessors do not maintain a stock of inventory. Commercial leased equipment is shipped directly from supplier's (albeit manufacturer, vendor or distributor) inventory directly to lessees. Lessor ownership of the equipment is contingent with physical receipt and acceptance by a lessee.
  • Lessors do not have physical possession of equipment until end of the lease nor its descriptive manuals.
  • Equipment supplier invoices provide only general descriptions and often lack details necessary to determine if and how an E-Waste fee may apply.
  • Consumer models present equipment lessors with a risk of multiple fees on equipment that is released or resold in refurbished or existing condition.
  • Most leases provide for 'quiet possession by lessee' and lessors can not access equipment for inspection or gain descriptive details.

ELFA has engaged ARF model legislation across the United States, most recently in South Carolina. In 2010 no ARF model electronic recycling bills were introduced in the state legislatures, marking a possible turning point in the debate on electronic recycling.

However, the patchwork of producer responsibility laws being enacted is beginning to raise concerns, especially as states contemplate clauses requiring sellers and lessors of covered electronics to provide specific information at the point of sale concerning where and how to recycle electronics. This would create enormous difficulties for lessors unlikely to have access to local information on equipment collection and recycling opportunities, especially in situations where equipment is intended for delivery or use in multiple locations. ELFA has also expressed its concern that a requirement to supply recycling information when entering into a lease agreement can be both difficult and counterproductive; there is no true "point -of-sale" as described in many examples, and the provision of information on recycling opportunities in a lease agreement could result in a lessee incorrectly disposing of equipment that is still the property of the lessor.

The ELFA State Government Relations Committee has identified the following guidelines for ELFA advocacy:

  • ELFA endorses Extended Producer Responsibility models as the preferred method of electronic recycling.
  • ELFA advocacy will only engage leasing related provisions of legislation.
  • ELFA will not differentiate between commercial equipment categories.
  • ELFA policy relating to Advanced Recycling Fee legislation shall continue to call for uniformity of covered equipment between states, the scope of equipment covered certain and identifiable to lessors, clarity of collection responsibilities and a provision allowing vendors to collect the fee on behalf of lessors.

ELFA provides in-depth information on the impact of California's Electronic Recycling law on equipment leasing and finance companies, including the vendor collection amendment and guidance from California regulatory agencies on collection issues unique to leasing. For more general information on electronic recycling, visit one of the sites below:

Outside Information Resources on Electronic Recycling: