Beveridge & Diamond
 

Federal Criminal Conviction For Illegal Exportation of Electronic Waste

Beveridge & Diamond, P.C., January 31, 2013

A U.S. recycler has been successfully prosecuted for exporting e-waste containing lead to foreign countries.  In December of 2012, a federal jury convicted Executive Recycling, its CEO, and Vice President of Operations on multiple criminal counts, including seven counts of wire fraud, the illegal export of hazardous waste to developing countries, smuggling and obstruction of justice.  Executive Recycling was the exporter of record in more than 300 exports from the United States between 2005 and 2008, including the export of over 100,000 cathode ray tubes (“CRTs”) containing lead.  CRT disposal is regulated in the United States under the Resource Conservation and Recovery Act (“RCRA”).  The Defendants were found to have falsely advertised to customers that they would dispose of e-waste in an environmentally friendly manner, in the United States rather than overseas.  Contrary to such representations, the company was found to have sold e-waste to brokers for export overseas to China and other countries. 

Sentencing is scheduled to take place in April.  The individual defendants will face a maximum sentence for each wire fraud count of up to 20 years imprisonment and a $250,000 fine, while the company will face up to a $500,000 fine per count or twice the gross gain or loss.  The other criminal counts also carry serious penalties.

Statements by EPA officials, including Cynthia Giles, Assistant Administrator for the Office of Enforcement and Compliance Assurance, suggest that this conviction is part of a growing enforcement trend regarding e-waste exports.  Companies managing used and end-of-life consumer electronics and IT equipment would be wise to carefully review their disposal practices, including the practices of any entities retained to handle the recycling of e-waste.  Companies may want to consider (1) reviewing company advertising and promotional materials to ensure the accuracy of claims regarding the disposal and/or recycling of electronics,  (2) reviewing e-waste recycling procedures as part of their audit programs, (3) selecting recyclers who are certified as using environmentally responsible practices under programs such as R2 or e-Stewards, and (4) including a provision in contracts with electronics recyclers that prohibits the export of e-waste. Companies doing business with an errant disposal contractor could face civil or criminal liability for conspiracy to engage in unlawful disposal practices. 

Electronics recyclers should be careful to identify and comply with applicable federal waste exports laws, analogous states laws, as well as the requirements of importing countries, many of which impose more stringent regulation on transboundary movements of e-waste for recycling than the United States.  In addition, recyclers should closely monitor legislative proposals in the United States and abroad that would expand upon existing prohibitions on E-waste exports.  For example, it is anticipated that a new version of the Responsible Electronics Recycling Act, which would establish criminal penalties for the export of certain categories of e-waste from the United States, will be introduced in the 113th Congress.  For more background on the Executive Recycling case, visit http://www.justice.gov/usao/co/news/2012/dec/12-21-12.html

For more information about Beveridge & Diamond’s e-waste related litigation and compliance practice, contact leaders of Beveridge & Diamond’s White Collar Practice Group, Nadira Clarke at (202) 789-6069, Lily Chinn at (415) 262-4012, and Pete Anderson (704) 372-7370, or leaders of the firm’s work with clients in the electronics sector, Paul Hagen at (202) 789-6022, or Dan Eisenberg at (202)789-6046. 

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