Two years ago, the European Union issued two environmental directives applying to electrical and electronic equipment ("EEE"). The impact on companies doing business in Europe will not go unnoticed.
The so-called RoHS and WEEE Directives aim at harmonising throughout the Member States both the laws on the recycling of waste from electric and electronic equipment ("WEEE") and the laws regulating the maximum contents of certain hazardous substances ("RoHS") in this equipment.
These Directives are now in force. Since 13 August 2005 manufacturers have been subject to recycling obligations, and a ban on certain hazardous substances comes into effect as of 1 July 2006.
Although most Member States have not yet adopted the corresponding final implementing measures (e.g. details for national organisation of recycling or disposal of WEEE), some of the main obligations deriving from the Directives (such as WEEE marking) are already binding on EU businesses.
Each of the Directives was intentionally drafted for the most part in broad, conceptual terms. Consequently, and unfortunately, they lack precision and clarity in some important respects. It is contemplated that implementing national laws within the various EU countries will provide necessary details, such as the further interpretation of significant terms and specific penalties for non-compliance. However, it is anticipated (and is already happening) that national legislations may adopt different practical methods as to the recycling obligation, making it compulsory for companies doing business in more than one country in Europe to have a co-ordinated approach to the implementation of their RoHS/WEEE compliance activities.
This article aims at presenting an overview of the legislation in force, as well as providing practical advice for businesses that may be liable for waste and/or contents in the products they manufacture, sell, import, export or lend.
1. To reduce hazardous substances and waste
Both Directives have ecological aims:
"To preserve, protect and improve the quality of the environment, protect human health and utilise natural resources prudently and rationally". In the case of RoHS, the obvious objective is to limit, if not ban, the following hazardous substances in EEE: lead; mercury; cadmium; hexavalent chromium; polybrominated biphenyls ("PBB"); and polybrominated diphenyl ethers ("PBDE").
Trace amounts of the banned substances are allowed but cannot exceed a concentration value of 0.1% by weight in "homogenous materials" for lead, mercury, hexavalent chromium, PBB or PBDE, and not more than 0.01% for cadmium.
This list of substances, as well as their corresponding maximum concentration values, must be monitored on a regular basis, as they will be reviewed from time to time.
The objective of WEEE is twofold:
first, to co-ordinate national management of WEEE (unlikely to be achieved since the Directives are very broad and let Member States adopt measures which may differ from one another);
secondly, to impose recycling targets within the EU of a minimum of 80% (or less, according to the type of appliance under consideration) of recovered EEE placed on the market (in weight). This must be met by the end of 2006.
2. The producer is liable
As regards RoHS, a person who puts EEE on the market as of 1 July 2006 is responsible for compliance with the hazardous substance ban. This may seem logical, but in some situations, such as where the seller is not t he manufacturer or components are sourced from a multitude of suppliers, it may be difficult to ensure full compliance. This may also entail a company auditing the products it sells and/or the equipment supplied by its suppliers. Some EEE producers have had their suppliers sign a document certifying that the supplied equipment is compliant. Although this may provide a contractual solution for indemnification and evidence to authorities that a product is compliant, it does not remove the obligations imposed on the person who actually puts the final product on the market.
As regards waste recycling, a person who puts new EEE on the market is responsible for the waste created. This is a far-reaching liability, entailing a take-back obligation of scrap EEE, which in turn requires significant logistics and storage facilities. It also entails the obligation to choose the most appropriate recycling option for the WEEE: separate collection, reuse or selective and sound disposal. It also means that, as a general rule, the WEEE producer is responsible for financing the entirety of these operations, from take-back to disposal. The producer has the choice of organising the recycling himself for his customers. However, this option may prove complicated and very costly. Another option is the possibility of joining a collective recycling organisation. Such organisations may be set up by a consortium of producers; they may also be professional recycling organisations specialising in WEEE. Not all Member States have yet reached the stage where such collective organisations are in place and fully operational.
2.1 Obligation to provide guarantees
Producers of EEE will have to provide financial guarantees to cover both the cost of the waste management system and the possible penalties in case they incur sanctions for non-compliance with either of the Directives. The guarantee may take the form of participation by the producer in appropriate schemes for financing the management of WEEE, a recycling insurance or a blocked bank account.
2.2 Obligation to inform and to affix logo
Together with general customer information to be provided with the product on how to dispose of it, there is an obligation to affix a logo (a crossed-out wheelie bin, shown below) on the product itself. This logo identifies equipment that has been put on the market after 13 August 2005 and that is subject to separate collection.
2.3 Obligation to register and to report
A national register must be put in place which will identify the responsible producers. Not all Member States yet have such a register. Where such registers are in place, deadlines for registration have been decided (e.g. 20 July 2005 in Ireland).
Registration fees may be imposed and penalties for failure to register, or failure to register before the deadline, are incurred, although the primary sanction is that the producer may be prohibited from placing his EEE on the market. Producers also have a duty to provide the national relevant authority (sometimes an enforcement agency) with information, including substantiated estimates, on an annual basis, on the quantities and categories of electrical and electronic equipment put on market, collected through all routes, reused, recycled and recovered within the Member States, and on collected waste exported, by weight or, if this is not possible, by numbers. This entails a reporting obligation and consequential internal feedback systems - relating to 25 Member States, if the company sells EEE everywhere in the European Union.
Penalties for failure to comply with the provisions of the Directive, as transposed into national law, will be decided at the national level. They may vary from one Member State to another.
Products covered by the RoHS and WEEE
Nearly all EEE that operate by using commonly used levels of electricity and are imported into or placed on the EU market are covered, with a few exceptions:
1. Equipment designed for use with more than 1000 volts for alternating current or more than 1500 volts for direct current
2. Large-scale stationary industrial tools
3. Equipment covered by specific European Community waste management legislation, such as batteries and packaging waste
4. Equipment which is part of another type of product that belongs to this list of exceptions
Reused equipment falls outside the scope of WEEE and corresponding national legislations. Three additional categories of products are exempted from RoHS:
1. Spare parts for the repair or reuse of EEE put on the market before 1 July 2006
2. All medical devices
3. Monitoring, measuring and control instruments
Military equipment is also outside the scope of the RoHS and WEEE Directives. This does not, however, apply to products which are not intended for specifically military purposes.
Dealing with returned products
Non-business customers: take-back of the return products is compulsory for every new purchase made. Retailers have the same obligation to take back WEEE but the producer must contribute to the financing of the recycling. This contribution is calculated according to the producer's product market share in the Member State if the returned EEE was sold prior to 13 August 2005 (so-called 'historic products'), or in relation to the absolute amount of waste in the case of returned equipment sold after 13 August 2005 (so-called 'new products').
Business customers: if the returned product was sold after 13 August 2005, take-back is, by default, compulsory for every purchase of new EEE. For products sold prior to 13 August 2005, take-back may be made compulsory although national legislation may decide upon another default responsibility system - e.g. it may be the user's responsibility to dispose soundly of WEEE.
Either way, Member States may allow that contractual arrangements explicitly provide otherwise and transfer responsibility to either the purchaser or to the producer of the scrap equipment when replacement EEE is purchased. EEE producers may derive revenues from the treatment of EEE or offer such services as a commercial gesture.
Membership fees for adherence to collective recycling systems, where such exist, will vary according to Member States and recycling organisations.
Compliance in practice
• establish an internal due diligence system to check whether EEE you sell in the EU contains prohibited levels of the banned substances. It may be necessary to liaise with and obtain relevant certificates from your suppliers to that effect;
• with respect to any EEE that contains prohibited levels of one or more banned substances, manufacture or obtain substitute products for sale into EU countries;
• your record retention programme to retain, for four years from the date of sale, all documents needed to identify an EEE sold to a customer in an EU country, together with the documents that confirm the EEE in question does not contain a prohibited level of any banned substance;
• contact your local enforcement authorities for more details on national implementation requirements and sanctions incurred in case of infringement;
• provide for account accruals to cover the cost of the above adjustments.
• audit your stocks, identify the products sold that constitute EEE and ensure that all EEE sold after 13 August 2005 is marked with the crossed wheelie bin symbol and certain other information;
• organise the take-back, collection, transport, sorting, treatment, recovery and the environmentally sound disposal of WEEE yourself or contract with a WEEE collective management scheme where it exists;
• register as a producer of EEE with the relevant authority in each EU country in which you may have customers;
• provide for sufficient account accruals to cover the cost of WEEE recycling;
• participate in financing the collection, treatment, recovery and environmentally sound disposal of WEEE; this may require the provision of a financial guarantee;
• maintain appropriate documents to evidence your transactions with EU customers involving EEE and arrangements you have made with any third party to fulfil obligations under the Directive;
• periodically provide data relating to the amount of produced WEEE to the enforcement authorities of the EU countries in which you are registered;
• ensure that the necessary information is provided to each customer who purchases your EEE;
• review your supply and sales agreements to cater for all parties' WEEE related obligations.
In March the European Commission launched a consultation with stakeholders with a view to possible amendments to the annex to the RoHS Directive, which lists materials exempted from the Directive's requirements. This consultation is in response to industry requests for various additional applications to be exempted. The requested additional exemptions range from the highly precise - "gaskets of butyl rubber material vulcanised with chinondioxin and lead tetraoxide, for use in aluminium electrolytic capacitors" - to the relatively general - "cadmium mercury telluride" without limitation as to its applications, or "electronic equipment where the reliability, durability and longevity of the equipment is paramount". The consultation therefore comprises a list of questions in respect of each request, including a request for suggestions for the precise wording of the relevant exemption if it is accepted.