California Governor Signs ELA Vendor Legislation

Legislation sponsored by the Equipment Leasing Association (ELA) that amends California's Electronic Waste Recycling Act to recognize vendor relationships in leasing transactions has been signed into law by California Governor Arnold Schwarzenegger. Assembly Bill 575 (Chapter No. 59, Statutes of 2005) establishes a voluntary framework by which vendors can bill equipment lessors for the recycling fee and remit directly to the state. ELA State Government Relations Committee Chair Valerie Pfeiffer, CIT Group, summed up the signature by Governor Schwarzenegger as "a significant victory in efforts to gain recognition of equipment leasing when states enact electronic waste legislation."

Assembly Bill 575 authored by Assemblywoman Lois Wolk (D-8th District) establishes a voluntary framework by which a vendor and lessor can elect for the vendor to bill and collect the recycling fee from the lessor and remit directly to the state. This legislation will have no effect on the amount of or a lessor's obligation to pay the recycling fee established by current law. A leasing company electing to be billed for the recycling fee by a vendor will assume the expense of the fee and may not bill it to the lessee as it can only be passed through as part of the cost. Lessors must provide a written statement to a lessee that they absorbed the fee expense on behalf of the lessee. Rather than determining the amount of fee to bill, the lessor can defer to the vendor's invoice to determine the amount of fee to include in the financed amount.

The revised statute implemented by Assembly Bill 575 is limited to vendors participating with lessors who voluntarily elect to take advantage of its provisions in the context of a purchase transaction for purposes of a lease. The amended California Electronic Waste Recycle Act now allows lessors to satisfy their obligation to pay advanced recovery fees by remitting payment to their vendors if the following specified conditions are complied with:

  • the vendor must be registered with the State Board of Equalization to collect and remit the recycling fee;
  • the lessor and vendor must agree that the vendor will collect and remit the recycling fee;
  • the invoice between the lessor and the vendor must separately identify the fee and the lessor must pay the vendor the fee;
  • the lessor must notify the lessee in writing that the fee has been paid on their behalf. Rather than determining the amount of fee to bill, the lessor must determine the amount of fee to include in the financed amount.

The California Board of Equalization will be sending out a notice about the changes relating to the Electronic Waste Recycling Act brought by enactment of Assembly Bill 575 as a stuffer in the 3rd Quarter return mailing. The latest information from the Board on the Electronic Waste Recycling Fee collection program, including the retailer/lessor registration form, fee remittance deadlines and the Electronic Waste Recycling Fee Return, is available at:
http://www.boe.ca.gov/sptaxprog/ewaste.htm

Maneuvering the legislation over the past eighteen months ELA Vice President of State Government Relations Dennis Brown consulted with opinion leaders in the public and private sector to fashion legislation acceptable to all interest groups. While ELA drafted legislative language that eased apprehensions of industries expressing concern about the vendor amendment, the California Board of Equalization worked cooperatively to ensure the final text adhered to mandates of the California Electronic Waste Recycling Fee law.

Passage through the Legislature was guided by Assemblywoman Lois Wolk (D-8th District), who represents ten cities in Solano and Yolo counties including Benicia, Davis, Dixon, Fairfield, Rio Vista, Suisun City, Vacaville, West Sacramento, Winters, and Woodland. She chairs the Water, Parks and Wildlife Committee and also serves on the Budget, Natural Resources and Local Government Committees. Assemblywoman Wolk was a founding member of the Bipartisan Group, a partnership of legislators from both parties working on bipartisan solutions to the state budget and political reform issues.

To forestall objections raised last year that the leasing provision might apply in traditional retail environments, Assembly Bill 575 was limited to lease transactions. To preclude opposition from those concerned that it might force fee collection upon manufacturers, the bill allows for a bi-lateral election between equipment supplier (vendor, wholesaler or manufacturer) and lessor to pay the fee at point of purchase rather than point of lease. A manufacturer acting as vendor can simply elect not to participate as may a lessor who prefers to calculate and collect the fee from a lessee. The California Board of Equalization is expected to issue additional guidelines for the implementation of Assembly Bill 575 in the near future.