Preventive medicine: auditing an electronics reycler can help generators and brokers of obsolete materials stave off regulatory headaches. (Electronics Recycling Series).

Environmental issues related to disposal of obsolete electronics are no longer news to corporate environmental and risk managers or the waste management companies that service their facilities. Whether a company hires an electronics recycler directly or relies upon its current waste recycling vendor to provide the service, a challenge for the corporation or its service provider is knowing what to look for when evaluating an electronics recycler (e-recycle, for short) to assure that the company's interests are protected against future regulatory and public relations headaches.

One objective is to assure that systems are in plate that conform with corporate environmental goals and minimize exposure to environmental liability related to improper disposal.

The vast majority of environmental managers auditing electronics recycling operations arrive armed with an audit form designed for a permitted hazardous waste facility. These audits are designed to gather important site, permit, insurance and hazardous material handling and compliance information.

Unfortunately, these auditors often leave the e-recycling facility with an audit form filled with "N/As" and lacking critical information. What these auditors do not realize is that they failed to ask the types of questions that will determine whether the recycler's activities are in conformance with corporate liability protection objectives.

For the purposes of this article, standard audit information, such as business history, site environmental history, permits and insurance, will not be addressed. This information is critical to any audit,m but here we will focus on information specific to electronics recycling.

PREPARING FOR THE AUDIT. Prior to auditing an electronics recycler, the corporation must determine what stan- [Text incomplete in original source.]

Environmental and Legal Affairs departments (or counsel) must determine the minimum performance standards that are acceptable. For example, there have been reports regarding the environmental and social harm that is resulting from the export of electronic scrap to China and other developing nations. Currently, monitors and televisions with cathode ray tubes (CRTs) are defined by the federal Resource Conservation and Recovery Act (RCRA) as a hazardous waste and, therefore, may not be exported without a hazardous waste manifest.

U.S. environmental enforcement authorities have, however, not been especially vigilant toward these "recycling" activities. Although China has officially banned electronic scrap imports, by some accounts this has had little affect on the volume of scrap entering its borders. So generators of electronics materials must decide whether to take advantage of exporting, which is by far the least expensive way to go, or whether to avoid export in order to best protect company interests.

Many large U.S. corporations have determined that exporting electronic scrap is not in line with corporate policy because of the negative environmental and social impacts this can inflict on developing nations. As such, an audit of an electronics recycler must include collection of critical downstream information to determine where scrap goes after the recycler in question has completed its processing.

The Security and Risk departments (or in a small business, officers with control of those functions) must determine what level of plant and information security will be required. To be sure that equipment with residual value is protected, the Security department should provide input as to how to assure protection from theft and other loss. From a data protection standpoint, these departments must determine what the minimum acceptable procedure for erasing hard drives will be.

Even if the corporation's policies dictate that all drives must be erased prior to leaving company property, often some of these drives do, in fact, leave with all data fully in tact. Assuring secure removal of this information is critical and should be qualified by corporate information security experts.

In addition to standard environmental audit information, a pre-audit questionnaire should include the following questions:

* Does the recycler process non-saleable equipment by breaking down or shredding it?

* If not, is this outsourced or is it exported?

* Has downstream information been obtained?

* Does the facility sell non-working monitors, PCs and laptops?

* If so, where are the markets for the electronic equipment?

* What process does the downstream vendor employ?

* How are residuals managed?

* Are permits required?

* Can the reported process be verified?

Once these questions have been answered, your company can proceed onto the actual audit.

CONDUCTING THE AUDIT. During the audit, information to be collected and things to look for include the following:

1. What kind of e-recycler is the recycler?

Since e-recyclers in the U.S. are engaged in many different types of businesses, find out if the recycler is a broker, reseller or processor.

A broker likely acts as a third party arranging for services. If this is the case, get documentation as to where the material is being sent. Remember that anyone with a PC can print you a Certificate of Recycling. This is not a legal document. If you begin with a broker, you must continue the audit process downstream.

If the recycler is a reseller, it is likely that equipment is being triaged to sort out saleable units from scrap; to erase hard drives and to prepare equipment for resale. Many resellers are not interested in processing scrap for recycling and ship all non-saleable scrap to processors or brokers. The environmental audit process must continue downstream to determine how the scrap is being managed.

If the recycler is a processor, facilities for demanufacturing or shredding of electronics will be in place. Many processors also provide resale services, and many also utilize brokers to move commodities.

Demanufacturing areas typically consist of disassembly lines and work benches where fasteners are removed and commodities and hazardous components are sorted. Shredding systems can consist of those that simply reduce volume for transportation efficiencies to those that are also fitted with separation systems that separate different types of metallic and nonmetallic materials. Unless the recycler is in the business of processing batteries, mercury, leaded glass and other hazardous materials, the audit process must still be continued downstream.

2. Is equipment being tested to determine viability for resale?

If the recycling company has an operation for testing equipment for resale, it will probably have the facilities to test equipment for viability and erase data storage devices. Ask about procedures related to these activities. Is equipment that fails testing being sold? Even if broken or obsolete equipment is sold for parts recovery, remember the non-usable components go somewhere.

3. Where does the non-saleable and/or non-working scrap go?

Non-saleable scrap often includes leaded glass, plastics, broken equipment and components and, in the case of recyclers with shredding and separation systems, a nonferrous mix.

Countries that are part of the Organization for Economic Cooperation and Development (OECD, www.oecd.org) have agreed to control exports and imports if hazardous waste to protect from the indiscriminate and uncontrolled traffic in hazardous wastes that are exported to developing countries. These controls dictate high standards for environmental management that involve costs that must be passed along to customers.

In OECD countries, obsolete electronic materials will typically be processed on a fee basis. In developing countries, however, the low labor rates and lack of regulatory restraints enable brokers and exporters to actually pay pennies per pound for these materials. If the e-recycler is selling these materials, it is highly likely that they are being exported to developing nations.

4. How do I confirm that I am getting the whole story?

Ask the recycler how many pounds of electronics are processed on a monthly basis. Then ask to see documentation showing resale activities and scrap shipments for the previous month, which should approximate that amount. If documentation falls short, you are not getting the whole picture. Moreover, outbound documentation helps to determine if more downstream research is required.

5. What physical things should I look for at a facility?

Ask to see the shipping docks and containers. This may require a walk around the outside of the facility where shipping containers are stored. Check trash containers to see if any scrap electronic components are being sent to landfill.

Look for shipping containers designed for export. These look quite different from a typical road trailer in that they are entirely made of steel and sit on a flatbed trailer. Overseas shipping containers have doors that seal tightly with a rubber gasket, and it is apparent that the container is detachable from the trailer.

Within the facility look for indications of how outbound material is shipped. If you see only baled or unprocessed scrap, it is likely that it is being exported to developing countries. Recovery of material prepared this way would not be economical in most OECD countries.

BUYER BEWARE! When conducting an initial search of potential e-recyclers for evaluation, there are, unfortunately, some "tricks of the trade" that some e-recyclers use to boost credibility.

The most common among these is e-recyclers advertising themselves as "EPA Permitted." The EPA has no permit process for electronics recyclers. Many times when these recyclers are asked for copies of their "EPA Permit," they offer a copy of an EPA ID number. This typically begins with three letters, including the state initials (PAD, for example, might be the beginning of an EPA ID number for a Pennsylvania company), followed by nine numbers.

This is merely an EPA-issued number that is required for manifesting hazardous waste for shipment. Anyone who generates hazardous waste must have one to transport material for disposal. It is not a permit to recycle electronics.

Additionally, be wary of state permits. Some states do provide electronics recyclers with state operating permits. This does not necessarily mean they are complying with any standards. In New Jersey, for example, the Department of Environmental Protection provides permits to electronics recyclers, but the qualification process is limited.

Similarly, some recyclers tout their "EPA-Certified" process. Again, the EPA currently has no certification process for electronics recycling.

Another note of caution is to understand just what a Certificate of Recycling actually is. It is the recycler's own certification of, typically, the total weight of material received on a particular date and confirmation that it was processed "in accordance with all state and federal regulations." For record-keeping purposes, it is good to have a Certificate of Recycling for each shipment that a generator sends to be recycled; but, remember, this is a highly unregulated industry, and it is up to you to conduct your own due diligence.

While the auditing process may appear to be complicated, doing some investigative work upfront when selecting your e-reycler can help to streamline the process and provide you with the assurance that you've selected the proper company to meet your needs and to provide you with peace of mind.

The following are some guidelines to consider:

1. Do your homework: Develop a short list of pre-qualified recyclers. State environmental agencies may be able to provide a list of e-recyclers serving your state but that does not mean they are endorsed by the state.

2. Ask the right questions: Don't be shy! This is your company you are protecting.

3. Audit the facility: It is impossible to conduct due diligence without a physical and detailed facility audit.

4. Look under the covers: Get all of the downstream information you require.

5. Ask for references: References from the recycler's current satisfied clients will lend some credibility to the operations and level of service.

With these guidelines in mind, selecting a trustworthy recycler and undertaking periodic audits in order to protect your company from possible ill effects will be less daunting.

HAZARDOUS COMPONENTS IN ELECTRONICS

Most e-recyclers remove these components. An auditor should know
where they go.

LEAD                   CRT (monitor and TV) glass and solder
MERCURY                Sensors, relays, fluorescent backlights in
                       laptops, flat screen monitors, switches in
                       telecom equipment, batteries
CADMIUM                Batteries, resistors, semiconductors, plastic
                       stabilizers
HEXAVALENT CHROMIUM    Corrosion protection, batteries
PBE/PBDE               Brominated flame retardants used in plastics
PCBs                   Found in older electronic capacitors

The author is vice president of marketing for United Recycling Industries Inc. located in West Chicago, Ill. She can be contacted via e-mail at Lroman@ unitedrecycling.com.