Complications seen as E.U. updates 'green' rules

By Giles Chappell and Jim Chen
EE Times

06/19/2009 7:28 AM EST
URL: http://www.eetimessupplynetwork.com/218100290

While the U.S. government is struggling with varied approaches to chemical regulatory reform and how to address the growing problem of electronic waste, the European Union is charging ahead with new and revised regulation impacting electronics manufacturers and industries that utilize electrical components.

Specifically, the second half of 2009 will be a key period for companies manufacturing in, exporting to, or distributing in Europe any type of electrical or electronic appliances as new mandatory rules are set to be discussed and agreed upon by the EU.

These new rules will be contained within recast directives on (i) promoting the collection and recycling of waste electrical and electronic equipment ("WEEE") and (ii) restricting the use of hazardous substances in such equipment ("RoHS").

The proposals for recast Directives were originally published by the EU on December 3, 2008 and contain a number of changes that could have potentially significant impact on manufacturers, importers and distributors of regulated products, particularly given the time and resources needed for product redesign and manufacture of products as well as compliance with the extra administrative procedures proposed.

Furthermore, compliance with these proposed laws would be an ongoing process as the list of obligations imposed on manufacturers and other actors in the supply chain is expected to expand over time.

That been said, however, these recasts are still just proposals, and thus there remain opportunities for affected companies and industries to help shape the content of the final texts.

Domestically, changes to RoHS and WEEE are also likely to affect even those companies doing business solely in the United States. For example, California already has RoHS-like laws and may modify them further to take into account any changes in the EU's recast directives.

Other states with similar programs are likely to continue reviewing and refining their programs, while states not as far along are likely to look towards Europe and existing state programs as possible models.

The result will be a hodge podge of U.S. and European regulations that will only complicate compliance in various markets and result in increased compliance costs. In an ironic twist, regulation at the federal level may provide relief in that such new requirements would at least have the potential to override state laws, bringing the United States under a single, unified scheme.

Given the potential for states and the federal government to use the EU programs as models, a review of those programs is prudent. Here are elements of the EU directives:

I. RoHS and proposed changes

The current RoHS directive (2002/95/EC) entered into force on February 13, 2003. Its aim is to reduce the impact of waste from electrical or electronic products by prohibiting the placing on the EU market of such products containing the heavy metals lead, cadmium, mercury and hexavalent chromium or the flame retardants polybrominated biphenyls (PBB) and polybrominated diphenyl ethers (PBDE) in amounts exceeding the permitted maximum concentration values ("MCVs").

The MCVs are: 0.1 percent by weight in homogenous materials for all those substances (except cadmium for which it is 0.01 percent).

RoHS applies to a vast spectrum of products that use electricity, including small and large household appliances, IT and telecommunications equipment, lighting equipment, electrical tools, toys, leisure and sports equipment, automatic dispensers and consumer goods such as radios, TV sets, video cameras and hi-fi systems.

The proposed measures in the recast RoHS Directive would include changes to:

The scope of the directive: The restrictions on the use of substances in electrical equipment would be extended in a staged manner from 2014 to 2017 to cover medical devices and monitoring and control instruments (for example smoke detectors, heating regulators, thermostats, etc.).

Substance bans: Although no additional substances are restricted, the EU would consider as a priority a review of the use of the following four substances with a view to possible inclusion in the list of restricted substances: three phthalate plasticisers (DEHP, BBP and DBP) and a brominated flame retardant (hexabromocyclododecane ("HBCDD")).

Furthermore, a simpler procedure would be introduced into the directive to enable the Commission expand the list of restricted devices in electrical equipment in the future without having to proceed through a completely new legislative process.

The procedure for exemptions: The current 4-year review would be replaced with a 4-year maximum validity period for exemptions with a possibility of requesting renewals; additionally, new exemption criteria have been proposed covering the availability and reliability of substitutes and the inclusion of socio-economic impacts.

Obligations on companies in the supply chain: The proposal would not only place the burden on ensuring compliance with the directive with manufacturers, but would broaden the scope of the directive's rules to include "importers", "distributors" and "authorized representatives"—to be collectively known as "economic operators", meaning the proposed revised directive would place obligations on all of the main actors in the supply chain.

Demonstration of compliance and market surveillance: RoHS would become a CE marking directive; in particular, manufacturers would need to carry out conformity assessments in line with the EU's recently adopted "Marketing of Products" Package (Decision 768/2008 and Regulation 765/2008).

The impact of the proposed changes would be particularly significant for manufacturers, who in addition to designing and producing products that are compliant with the restrictions, would face additional requirements, such as drawing up technical documentation and carrying out internal production control procedures, which would include an EC Declaration of Conformity and affixing the CE marking).

They would also be required to place on their electronic products a type, batch or serial number or other element showing the identification, name, registered trade name or trademark and a contact address.

Importers also would have specific obligations, including ensuring that the appropriate conformity assessment procedure have been carried out by the manufacturer and the related appropriate technical documentation drawn up.

They must also ensure that the EEE bears the CE marking and is accompanied by the required documents and that an indication of their name, registered trade name or trademark and contact address appears on the electronic product.

Under the proposed rules, if a manufacturer or importer inadvertently places a non-compliant product on the market by failing to assess the product correctly, it would be their responsibility to notify the appropriate national authorities and, where appropriate, to recall the product.

These changes, if agreed upon in this form, would have a profound effect on many companies, EU or non-EU based, that are part of a supply chain for European consumers. Others in the supply chain, in particular importers and distributors, may not be able to interpret potentially highly complex technical documents or carry out detailed conformity assessments without significant investment in new resources.

Furthermore, the burdens are only expected to increase as the list of restricted substances is very likely to be extended in the future. As a result of these changes, all companies involved in the supply chain of electrical products would have to factor into their budgets increased compliance costs.

In particular, manufacturers may face the choice between leaving the EU market or switching to potentially more expensive suppliers who are able to supply RoHS-compliant alternatives to any restricted harmful substance.

II. WEEE and proposed changes

The current WEEE Directive (2002/96/EC) also entered into force on February 13, 2003. It requires, inter alia, manufacturers and importers that place electronic products into the European market to register as WEEE producers and provide take-back systems for that waste.

In comparison to the RoHS recast, the proposed changes to WEEE would have less of an impact on non-EU companies, especially if they are not located in the EU. Nevertheless, notable changes would include the following:

where appropriate, permitting EU Member States to require producers to finance all the costs of separate collection;

including recovery and recycling/re-use targets for medical devices;

allowing producers to show to consumers the cost of collection, treatment and disposal of products at the time of sale; and

Harmonizing the registration and reporting requirements for producers and making national registers of producers inter-operational. This would mean that producers doing business in more than one EU member state would be required to just register and report in one EU member state only.

III. Timing and opportunities for impact

In order for the RoHS and WEEE recasts to become law, the European Parliament, the European Commission and the 27 EU member states have to reach an agreement on the texts of the directives.

Discussions between these institutions are expected to take place between September and December. The directives are then likely to be adopted in their final form during the course of 2010. Once the new directives are published in the EU's official journal, member states would have up to 18 months to implement the directive's new provisions.

Thus, it is likely that the provisions would apply to companies, at the earliest, from the beginning of 2012.

Although the draft texts have already been discussed by stakeholders and EU authorities, there remain opportunities for interested parties to provide input into the process.

In fact, now would be a key moment to act as the principal actors in the decision-making process are currently finalizing their own negotiating positions ahead of the September discussions on the content of the texts.

Stakeholders interested in impacting the final texts should consider making potential approaches to the appropriate EU decision-makers, in particular European Commission officials, members of the European Parliament ("MEPs") and national government officials, as well as other WTO governments (such as the U.S.) who are able to make representations on their behalf.

IV. U.S. legislation/regulation and EU influence

To date a number of U.S. states have enacted restrictions on certain hazardous substances in electronic products with California having the most extensive restrictions under SB 20: the Electronic Waste Recycling Act of 2003 ("EWRA").

Under SB 20, manufacturers are prohibited from selling or distributing electronic devices that are not in compliance with the EU RoHS Directive due to the presence of certain heavy metals.

This law took effect for sales of affected electronic products after January 1, 2007, but unlike RoHS the California regulation has a narrower scope of impacted products that generally includes liquid crystal displays (LCDs) of a certain size, cathode ray tubes (CRTs), and similar products. Moreover, SB 20 only covers the four heavy metals restricted by RoHS (i.e. lead, cadmium, mercury and hexavalent chromium)—it does not cover the flame retardants.

Other U.S. states have enacted laws restricting the use of substances in LCDs, CRTs and other electronic products. Most notably, a number of states have restrictions on mercury through legislation intended to phase-out, label and eventually ban mercury in certain electronic products.

Founded by the Northeast Waste Management Officials' Association, states including Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont established the Interstate Mercury Education and Reduction Clearinghouse (IMERC) to provide:

ongoing technical and programmatic assistance to states that have enacted mercury education and reduction legislation;

a single point of contact for industry and the public for information on mercury-added products and member states' mercury education and reduction programs Since its inception, additional states have joined the IMERC effort, including California, Illinois, Louisiana, Minnesota, North Carolina and Washington.

Other state efforts include the establishment of electronic waste take-back programs and/or bans that restrict where electronic waste can be disposed.

Covered products tend to include such items as desktops and laptop computers, computer monitors, printers, keyboards, mice, digital music players, and TVs. State programs tend to involve different categories of requirements such as producer responsibility laws where manufacturers take some level of responsibility for collection and disposal of covered e-waste.

Other possible state programs include consumer fee laws where purchasers pay a fee for the proper disposal of covered products; landfill disposal fees where disposal costs are spread between a number of parties; and states with an outright disposal ban.

Currently, the number of states with some type of e-waste law impacts nearly 50 percent of all consumers in the United States. The problem with these programs is that manufacturers face compliance with four different classes of regulatory regimes, each with its own nuances and complex set of requirements.

The burden of compliance with multiple differing regulatory regimes has not gone unnoticed and several efforts have been underway to develop comprehensive e-waste legislation at the federal level.

While no bill has gained traction and Congress appears unlikely to pass such legislation in the near term, the efforts in Europe should not be ignored as RoHS and WEEE could very well serve as models for eventual federal regulation. Certainly some states, such as California, have already looked to Europe as a possible model.

Using EU regulation as a model is certainly not without precedent as recent efforts to reform chemical regulation in the United States has been spurred on, in part, by the EU's recent enactment and implementation of the Registration, Evaluation, Analysis, and Restriction of Chemicals ("REACH") legislation. No doubt, similar efforts are likely in the area of e-waste regulation.

James "Jim" Chen is a partner in the Washington, D.C. office of Crowell & Moring, LLP. As an environment, health and safety attorney, Jim currently co-chairs the firm's Product Risk Management practice and is a member of the firm's Environment & Natural Resources Group. He also works closely with the Public Policy practice.

Giles Chappell is an associate in the Brussels office of Crowell & Moring where he specializes in EU Environmental & Regulatory law and International Trade law.