Publication Summary

Benefit-Cost Analysis

Based on research and analysis required by RCW 34.05.328(d)(e) the Department of Ecology determines:

The probable benefits of an electronic product-recycling program outweigh the probable costs.

The rule re-states and implements several of the requirements in the law. Three specific cases trigger further economic analysis. These are definitions, registration procedures for manufacturers, collectors and transporters and Ecology′s interpretation of the administrative fee law. The definitions, in and of themselves, do not create costs but define costs by affecting how the rule is implemented.

Benefits

For this program, the estimated benefit is at least $5.3 million per year. This is a low estimate of benefits, including only current levels of returns, and may eventually be higher.

Costs

The fee cost for Phase 1 is $475,000 for the first 18 months and $237,000 annually thereafter. There are two reasons that Ecology expects additional unquantified costs:

1. The largest of these is the potential that manufactures will spend money to provide information that will change their tier assignment for the fee. This first cost is unknown but could be large.

2. The second is that registration will take time. Ecology designed an easy to use electronic registration process. Manufactures can also register over the phone call. Ecology expects registration will take between 5 and 20 minutes per manufacturer. However, if the manufactures have to look up data the cost could be higher. Ecology expects the cost of registration to be small by comparison with the fees.

We also note that this first fee is less than the cost to manufacturers of actually carrying out the program. The added cost from the recycling activity will be determined in the second phase of rule making.

Quantified net benefits

Ecology expects the value of the Phase 1 rule will be $5 million per year when Ecology adopts Phase 2 of the rule.

Least Burden Analysis

Based on research and analysis required by RCW 34.05.328(d)(e) the Department of Ecology determines:

Ecology is adopting the least burdensome version of the rule for those who are required to comply, given the goals and objectives of the law.

Ecology considered a variety of approaches for the fee structure both prior to rule making and during the rule making process. This rule establishes the administrative fees manufacturers will pay to Ecology. The fee provides revenue to cover Ecology′s administrative, oversight and enforcement costs. Ecology hopes the procedures in this rule will allow lower cost but effective implementation of the program.

The legislature chose cost internalization of the recycling program (manufacturers internalize the costs of the program in their overall costs of doing business) over other financing methods because it would have the least impact on in-state retailers and their customers.

The law directed Ecology to: "base this fee on a sliding scale that is representative of annual sales of covered electronic products in the state." ? Ecology decided that unit sales would be the basis for the administrative fee rather than dollar sales based on advice from the regulated community about the relative accuracy of unit and dollar sales. ? Ecology decided to use a fee structure composed of tiers. Advice from the regulated community indicated they did not want Ecology to spend a great deal of money to collect detailed data upon which to base the fee, which they would then have to pay for. Rather, they advised that the cost and the amount of data gathered annually would be less if Ecology used a tiered approach based on generally available market share data.