In the first case of its kind, a jury in Colorado has found an electronic waste (e-waste) recycling company and two of its executives guilty of illegally exporting e-waste overseas, in addition to other criminal charges. The implications of this case are broad and the convictions could serve as a catalyst for federal regulation of e-waste.
On September 15, 2011, a Grand Jury in the District of Colorado returned an indictment against Executive Recycling, Inc., an e-waste recycling company headquartered in Englewood, Colorado, and two of its executives citing a variety of charges including multiple counts of wire and mail fraud, failure to file a Notice of Intent to Export with the U.S. Environmental Protection Agency (EPA) in violation of the Resource Conservation and Recovery Act (RCRA), smuggling of goods from the United States, and destruction of records. (United States of America v. Executive Recycling, Inc., et al., Case 1:11-cr-00376- WJM, United States District Court for the District of Colorado.) Executive Recycling, Inc. collects e-waste from private households, businesses, and government entities.
The indictment alleged that the company represented on its website that it had “extensive knowledge of current EPA requirements” and that it would safely dispose collected e-waste within the United States. Instead, the company exported over 300 shipments of e-waste overseas, including more than 100,000 cathode ray tubes (CRTs), which are known to contain lead.
On December 21, 2012, after an 11-day trial, the jury rendered a guilty verdict on one count of illegal hazardous waste export, one count of failure to file a Notification of Intent to Export with EPA, and seven counts of wire fraud. The export and wire fraud counts each carry a maximum fine of US$500,000 or twice the gross gain or loss from the offense; the failure to file count carries a maximum fine of US$50,000 per day of violation or twice the gross gain or loss from the offense. The jury also convicted two of the company’s executives on counts of wire fraud, mail fraud, illegal hazardous waste export, and the destruction, alteration, or falsification of records in a federal investigation. Sentencing is scheduled for April.
Executive Recycling, Inc. was featured in a 2008 exposé on CBS’s “60 Minutes” news program on e-waste in developing countries. The “60 Minutes” episode focused on the environmental and health problems believed to be associated with the improper disposal of e-waste in China, Nigeria, and other countries lacking rigorous environmental regulations and enforcement. E-waste contains hazardous substances such as lead, chromium, mercury, polychlorinated biphenyls (PCBs), dioxins, and polybrominated diphenyl ethers (PBDEs). The “60 Minutes” episode showed workers dismantling discarded consumer electronics to reclaim valuable materials, such as lead, gold, and copper, from component parts. Unwanted components were burned or disposed in adjacent drainage ditches, causing concern that hazardous substances from the electronic devices could leach into the environment and impact local water supplies.
RCRA prohibits the export of hazardous waste from the United States without express written permission from EPA and the receiving nation’s competent authority. In addition, EPA promulgated a new rule in 2007 governing the recycling of CRTs and CRT exports. According to a report by the Government Accountability Office (GAO), despite EPA’s export prohibitions, Hong Kong officials intercepted 26 containers of illegally exported CRTs in 2008. By the time of GAO’s report, EPA had only penalized one violator.
To some observers, the fact that the majority of the charges filed in the Executive Recycling case related to fraud and not hazardous waste violations reflects a need for more stringent federal legislation. In contrast to the twenty-five e-waste recycling laws enacted at the state and local level since 2003, there has been no comparable recycling legislation at the federal level.1 Two Congressional bills prohibiting the export of a large category of e-waste (in addition to CRTs) from the United States were introduced in the House and the Senate in 2011, but remain in Committee. Proponents of the bills and broader e-waste regulations are hopeful that the Executive Recycling case will spur federal legislative activity in 2013.
The Executive Recycling verdict provides a useful reminder to manufacturers and retailers of electronic devices to exercise careful due diligence when contracting with e-waste recyclers. Some strategic options that such companies may wish to consider include the following:
- Investigate whether EPA or any other federal, state, or local agency has sanctioned an e-waste recycler for illegal exportation prior to engaging that recycler;
- Add provisions to service contracts with e-waste recyclers prohibiting the exportation of e-waste and indemnifying the customer from liability in the event that e-waste is nevertheless exported;
- Include an assessment of e-waste recycling procedures as part of environmental, health, and safety audits, with an emphasis on verifying that documentation from recycling companies reflects domestic recycling; and/or
- Provide customers and retailers that purchase electronic devices manufactured, assembled, or sold by your company with a list of recycling companies that are willing to certify that they will not export e-waste.