If your company uses or sells electrical or electronic equipment, then you need to know about the Waste Electrical and Electronic Equipment (WEEE) Regulations 2006, which were created in an effort to reduce the environmental impact of equipment disposal. If you are the user of the equipment, the Regulations may help you dispose of it more cheaply. If you are the producer, you need to understand what your obligations are under the Regulations, to avoid fines levied by the Environment Agency and to keep your customers happy. It’s a red-tape bonanza, and there is no escaping it.

INTRODUCTION

The Waste Electrical and Electronic Equipment Regulations (‘the Regulations’) allocate responsibility for the environmental impact of the disposal of electrical and electronic equipment (EEE or ‘equipment’) between various players in the supply chain. The Regulations most impact producers, but also affect distributors, importers, households and businesses. They have created a cottage industry around the collection and recycling of EEE.

The Regulations create obligations in relation to both new equipment that producers make (at its end of life), and to waste equipment that is superseded when the new equipment is put on the market. It is important to know the type of equipment and the dates involved because this can change who bears the burden under the Regulations. There are also obligations relating to new equipment at its start of life, such as marking it and providing information on the environmental impact.

There is no need under the Regulations to get your hands dirty actually handling waste equipment, but the Regulations do set the default position for who is financially responsible. Businesses should be aware of the costs, especially when negotiating new contracts and procurements.

THE PLAYERS

The Regulations are full of counter-intuitive labels for the various parties: voluntary schemes with no choice, compulsory schemes with a choice, producers who don’t produce, and commercial consumers, let alone the new national bodies created and three letter acronyms used. It is important to keep the right definitions in mind because they are not always obvious.

Environment Agency, Scottish Environmental Protection Agency and Northern Ireland Environment Agency

The Regulations are enforced by the Environmental Agency (EA) in England and Wales, the Scottish Environment Protection Agency (SEPA) in Scotland and the Northern Ireland Environment Agency (NIEA) in Northern Ireland. These agencies also coordinate liaison groups with industry, produce further guidance and updates, and are a useful resource to answer specific queries. The EA website is www.environment-agency.gov.uk and is a good first port of call for further information.

Producers

A ‘producer’ is anyone who, whatever the selling technique used (including distance communication) manufactures and sells equipment under its own brand, sells someone else’s equipment under its brand, or imports or exports equipment on a professional basis into an EU country.

Distributors

A ‘distributor’ is anyone who provides equipment on a commercial basis to the party who is going to use it. This encompasses equipment hire and leasing companies, wholesalers and distance sellers. (Note that a business can be both a producer and a distributor at the same time, for example by manufacturing equipment and selling it directly to people who will use it. If so, you must comply with both the producer and the distributor obligations.)

Consumers

Members of private households have certain rights but no obligations under the Regulations. These rights also extend to small operations that, because of their nature and size, are similar to private households.

Approved Authorised Treatment Facilities and Approved Exporters

Collected waste equipment must be treated in the UK, or exported to be treated. Approved Authorised Treatment Facilities (AATFs) and Approved Exporters (AEs) are the approved bodies that do this, either by parties providing waste equipment directly to them, or by collecting it themselves from a designated collection facility site and then processing it. The AATF or AE then issues evidence that it has taken on the waste equipment and that it is being handled in line with the Regulations.

Distributor Take-back Scheme/Valpak

The Distributor Take-back Scheme (DTS) is run by the private firm Valpak. Distributors can satisfy their main obligations by joining Valpak’s scheme, who then authorise, organise and fund Designated Collection Facilities (see below).

Designated Collection Facilities

Designated Collection Facilities (DCFs) are a national network of collection facilities, run either independently or by Local Authorities. To be a DCF, a collection facility must satisfy a Code of Practice that includes accepting household WEEE for free and passing on all WEEE to a producer compliance scheme. In exchange for these restrictions, the DCF is entitled to free clearance of WEEE by the Producer Compliance Scheme.

Producer Compliance Scheme

Producers must join a Producer Compliance Scheme (PCS) through which they discharge some of their obligations. The PCS arranges the treatment and recycling of the equivalent waste (for household) or the specific waste (for non-household) equipment to satisfy the obligations of its collective membership. Each producer must join a PCS for each compliance period (though a producer can join one PCS for household waste equipment and one for non-household waste equipment). Each PCS is an accredited private entity that can set its own fee structure and membership criteria: for example, only large or small producers, or certain categories of waste equipment. Producers are also allowed to set up their own private PCS of which they are the only member.

Vehicle Certification Agency

The Vehicle Certification Agency (VCA) is an agency of the Department for Transport and enforces distributor obligations and producer obligations relating to marking equipment with the ‘crossed out wheeled bin symbol’.

WHAT IS EEE AND WHAT DO THE REGULATIONS COVER?

It is clearly important to understand exactly what ‘electrical and electronic equipment’ means for the purposes of the Regulations. The starting point is that EEE is any equipment that is dependent on electric currents or electromagnetic fields in order to work properly, or equipment that generates, transfers or measures such currents and fields.

Not all EEE is within the scope of the Regulations, though. The Regulations only apply to equipment that falls within one of 10 broad categories, such as ‘large household appliances’, ‘small household appliances’ and ‘IT and telecoms equipment’ (see Figure 12.1 for the full list). Illustrative lists of what comes within those categories are provided in schedule 2 of the Regulations.

There are also exemptions that should be taken into account. For example, equipment that does not need electricity for its primary function, and equipment whose main power source is not electricity, are exempt from the Regulations.

There are also geographical limitations on the equipment covered by the Regulations. The Regulations only apply to EEE that is put on the market in the UK. ‘Placing on the market’ is the initial action of making a product available for the first time in that market, with a view to distribution or use in that area. This takes place as the product is transferred from the manufacturing stage, with the intention of distribution or use on the market. The notion of putting on the market relates to each individual unit, and not the type of product, or the product line as a whole.

Why is this relevant? Unfortunately, this kind of non-obvious distinction can completely change the nature of the obligations under the Regulations. As an illustration, consider the case of a leasing company that leases out photography equipment in the UK. That company’s obligations will depend entirely on where the equipment was originally ‘placed on the market’.

Figure 12.1 WEEE categories

• If the equipment was purchased in New York, the leasing company is the importer of the equipment, and would be regarded as the ‘producer’ of the equipment, with responsibility for the cost of handling when it becomes waste.
• If the equipment was purchased in Paris, the leasing company would bear the costs in the UK, but should be able to recover those costs under French law from the French producer (any single unit has a ‘producer’ for each member state it has been put on the market in).
• If the equipment was purchased in London, the leasing company would not be regarded as the producer.

Similarly, someone who refurbishes and sells old televisions is the producer if they bought them in Sofia, but not if they bought them in London, and not if the television was ever sold in the UK in the past, no matter what countries it has since passed through.

There are also separate categories of EEE that require separate reporting: any display equipment, cooling appliances containing refrigerants and gas discharge lamps should be separately dealt with and considered.

From here on, for simplicity the terms ‘EEE’ and ‘equipment’ will refer just to items that the Regulations place obligations on.

Household and non-household equipment

For equipment that is covered under the Regulations, a further key distinction is whether it is ‘household’ or ‘non-household’ equipment. The obligations and scheme setup for producers and distributors differ greatly based on this question. The requirements for businesses that sell to private households (or businesses similar to private households) are very different from those for business that sell to non-households.

An interesting issue lies within this distinction: while the Regulations refer to equipment used in private households (or equivalent to private households), which is a question of fact, it is not always possible at the point of sale to know how equipment will be used, and it is not feasible at end of life to track the history of each item’s use, so equipment needs to be categorised in some way.

The Department for Business Innovation and Skills (BIS) has set out guideline criteria that indicate when an item of equipment relates to non-households. For example, one indicator that a particular item is ‘non-household’ is that there is a signed contract that assigns end-of-life responsibilities and ensures that equipment will not be disposed of through municipal waste streams. Another indicator relates to the features of the equipment itself: equipment that requires specialised training, licences, special configuration, a professional environment, or is unsafe for the public or particularly large or heavy, will generally not be household equipment. Alternatively, statistical evidence that equipment does not end up in municipal waste streams can be used (BIS stresses, however, that common sense should also be applied, as well as these guidelines.)

KEY OBLIGATIONS ON IT BUSINESSES

The Regulations will affect businesses in different ways depending on the type of products sold, how they are sold and to whom they are sold. The basic breakdowns are producers versus distributors, and household equipment versus non-household equipment. Business managers should know both their obligations as producers and distributors, as well as their rights as users of non-household equipment.

Producers

As noted above, you are likely to be regarded as a ‘producer’ for the purposes of the Regulations if you are selling the equipment under your brand or importing/exporting it. The main producer obligations are as follows:

• Producers must join a PCS. The PCS will collect and recycle the right amount of equipment to satisfy the regulatory requirements of all its members. To do so, they require information about the amount of equipment the producer sells, along with the category it falls in and whether it is for household or non-household use.

  PCSs are free to charge as they want for their services, which include registration, administration, collection, treatment, recovery and recycling of waste equipment. They also collect and pass on the Environment Agency registration fee (which varies from £30 to £445, based on the size of the business). Basic prices usually relate to business turnover and tonnes of waste equipment recycled, because this affects the proportion of waste in that category that must be handled. Like any business, PCSs compete to offer a complete package including additional services such as web-based monitoring, audits of WEEE compliance and Europe-wide solutions.

  It is well worth shopping around and speaking to various PCS schemes to see which would be most appropriate for your business. The Environment Agency lists all the approved PCSs on their website (as of 2011, 36 schemes in England, Wales and Scotland). The three most used schemes (WEEECare, Valpak and B2B Compliance) are used by over 40 per cent of signed up producers. By 15 November of each year, producers should be signed up for a PCS for the next calendar year (or two PCSs: one for household equipment and one for non-household). Producers that only start producing after this deadline have a 28-day window to arrange membership.

  For household equipment, the PCS covers the cost of collecting, treating, recovering and disposing of a volume of waste equipment in proportion to their clients’ UK market share for that category. For non-household equipment, the PCS covers the cost of collecting, treating, recovering and disposing of the actual waste equipment that the producer sold on or after 13 August 2005, when it becomes waste. (If the producer sells equipment that replaces pre-13 August 2005 equipment, then they have to also handle the pre-13 August 2005 waste equipment that their new product is replacing.)

  Alternative arrangements can be made for both household and non-household equipment, but these are the default positions.

• Producers must add the ‘crossed out wheeled bin’ logo to their equipment, along with their producer identifier mark and producer registration number. This must be added in a visible, legible and indelible form to each piece of equipment. Details are available in BS 50419. The black bar beneath the logo represents that the product was first put on the UK market after 13 August 2005.
• Within one year of placing a new type of equipment on the market, producers must make available information concerning its reuse and environmentally sound treatment. This includes the materials and components, and the location of any dangerous substances used.
• Producers are also given a producer registration number by their PCS, which they must provide to distributors. This allows accurate equipment reporting generally, but is particularly important for non-household equipment where the distributor will pass this number on to the user. For non-household equipment, all the recycling obligations lie with the producer, and none with the distributor. The user, equipped with a producer registration number can therefore identify and contact directly the original producer.

Distributors

The Regulations create different obligations for distributors of household and non-household equipment. Only distributors of household equipment have waste handling obligations. Distributors of non-household equipment must pass information between the producer and user (such as telling the user who the registered producer is, and telling the producer details of non-household sales for their own reporting), but have no obligations in the actual handling of waste.

Distributors of household equipment also have a role as the information link between the producers and the users of the equipment. This involves providing information about the environmental impact of waste equipment, the benefits of recycling, and the arrangements available to them for free disposal of their waste equipment.

Distributors also have ‘take-back’ obligations when they sell household equipment. These can be discharged in one of three ways:

• The distributor can provide a free service to take back, on broadly a ‘like for like’ basis, equipment they sell. The obligation exists where the waste equipment is of an equivalent type and has fulfilled the same function as the new equipment. Government guidance gives examples such as taking back a cassette player for an MP3 player, or a VCR for a DVD player. Distributors may offer additional services, such as collection from the user’s home, but this does not itself satisfy their obligations, and any costs should cover just the collection and handling.
• The distributor can join the national Distributor Take-back Scheme (DTS). This scheme funds collection facilities that consumers can take their waste equipment to. Unlike joining a PCS, there is no market in the DTS, there is just one operator called Valpak. The membership fee for the DTS is banded by equipment sales value during the period 1 October 2008 to 30 September 2009. A new joiner with sales value of under £100,000 would pay £200 to cover membership up to December 2012. Distributors with an equipment sales value over £1.5 million during the period pay a membership fee based on the actual numbers of different types of equipment they sold. For example, each fridge or freezer sold between 1 October 2008 and 30 September 2009 attracts a membership fee of 16 pence, and each television a fee of 6.16 pence. There are various tiers and levels of membership for the ‘phase 2’ period that covers up to December 2012, the specifics of which are available on the Valpak website.
• The distributor can also provide an alternative free take-back service that is accessible to the customer. This applies most usually for distance sellers such as internet retailers. A pre-paid return envelope for example would satisfy this.

Once the distributor has received household waste equipment, they are obligated to handle it in a way that optimises the reuse and recycling of the equipment. There are generally two options for this: either to pass it on to a PCS who must take it for free (though can charge to collect it) or to arrange themselves for it to go to an AATF. If a waste management licence is needed for this transport and the distributor does not have one, then they should use a registered waste carrier.

Distributors also have record keeping obligations. These do not relate to individual sales, but to the number of returned units they receive and the number of units they pass on to PCSs. Distributors should keep these records for four years.

KEY COMMERCIAL ISSUES

The burden of the cost of processing non-household equipment is very different from that of household equipment. For non-household equipment, the position is set out in the flowchart shown in Figure 12.1.

Cost burden

A key point to note is, in the default position, the double disposal required where equipment is produced that replaces pre-13 August 2005 equipment. The producer must bear the financial cost of handling both the equipment being replaced (at the time of sale), and the cost of handling the equipment he has produced (at its end of life). PCS membership will cover this, but it is producers that fund the PCSs.

Even with non-household equipment put on the market on or after 13 August 2005, the default position passes the financial burden of its end-of-life handling to the producer (via their PCS). It is accordingly critical that producers are aware of their obligations, and factor in the costs of PCS membership and other waste equipment handling at the time of negotiations. If no alternative arrangement is made, these costs should be included in the producer’s financial models and this burden made clear to the other side in negotiations.

On the other hand, purchasers of non-household equipment may well be best served staying quiet on waste equipment arrangements. If nothing else is arranged, then the producer of any new equipment purchased (or their PCS) will bear the costs of handling it when it becomes waste.

This is the case whether or not they are aware of this obligation, and so some producers might offer prices that do not factor in these hidden costs. Of course, negotiations should always be conducted with the bigger picture in mind, and the risk that this stealth might harm commercial relations or fetter future partnership opportunities should be considered.

In practice, these subtle legislative distinctions are normally overridden by alternative contractual arrangements. This does not make them irrelevant though: they represent the default, and if you make a concession from them you should be looking for something back in return.

Collection v. disposal

The legislation is not clear exactly what the ‘collection’ of waste equipment entails. While the legislation refers to a producer’s obligation to finance collection, government guidance says this can be satisfied by providing an appropriate system, such as collection points. There is clearly scope for ambiguity, and there can be a huge difference in cost. Take for example the cost of ‘collecting’ the network cabling installed in an office building, versus the cost of collecting it once it has been placed in a skip outside. Each party should consider its expectations at the negotiation stage to prevent disputes later down the line.

FURTHER INFORMATION

Department of Business, Innovation and Skills: www.bis.gov.uk/weee

Valpak: www.valpak.co.uk/dts

Environment Agency: www.environment-agency.gov.uk/business/topics/waste/32084.aspx