of Old Computer Equipment
A Mounting Environmental Problem
Michael J. Meyer, Waleed Abu El Ella, and Ronald M. Young
have been collecting obsolete computers for years. The U.S.
Environmental Protection Agency (EPA) has estimated that 45
million computers will become obsolete annually by 2005. California,
Massachusetts, and Minnesota have already outlawed the disposal
of computer waste in landfills; in 2003 alone, 23 states initiated
legislation to address the mounting problem of computer waste
of the environmental concerns with computers lie with the
monitor, specifically its cathode ray tube (CRT). Each color
monitor contains, on average, four to five pounds of lead,
considered hazardous waste when disposed of, according to
EPA standards. Computers also contain other hazardous materials,
including mercury, cadmium (a known carcinogen), and hexavalent
chromium (shown to cause high blood pressure, iron-poor
blood, liver disease, and nerve and brain damage in animals).
The Utah Department of Environmental Quality estimates that
314 million computers will be thrown away by the end of
2004, containing 1.2 billion pounds of lead, 2 million pounds
of cadmium, 1.2 million pounds of hexavalent chromium, and
400,000 pounds of mercury.
a worst-case scenario: Groundwater near a landfill becomes
contaminated. In a search for potentially responsible parties,
a company that had disposed of computers at the site (identified
by a control tag or manufacturer’s number) could be
subject to potentially costly criminal and civil litigation
(i.e., SARA, formerly CERCLA, litigation). All of this could
happen even if the organization had donated the equipment
to a charity or paid a company to recycle it.
Resource Conservation and Recovery Act (RCRA) has been updated
recently to include guidelines regarding the disposal of
computer monitors. Computer monitors are different from
most computer equipment because of the concentration of
lead: 27% of the weight of a CRT monitor is due to its lead
content. The threshold for establishing refuse as hazardous
waste is the toxicity characteristic leaching procedure
(TCLP) of the waste. The EPA guidelines indicate that waste
having a TCLP of 5mg/l of lead qualifies as hazardous waste.
Color monitors have on average 18.5mg/l of lead—more
3 Qs times this threshold.
RCRA classifies waste generators into four categories: households;
conditionally exempt small quantity generators (CESQG);
small quantity generators (SQG); and large quantity generators
(LQG). In general, all households are exempt from federal
EPA rules regarding computer disposal (although state regulations
often include households). Organizations disposing of less
than 100 kg (220 lbs) of hazardous waste in a month are
classified as CESQG; those dumping between 100 kg and 1,000
kg (2,200 lbs) are classified as SQG; and those dumping
more than 1,000 kg are classified as LQG.
organizations are exempt from most of the RCRA disposal
standards. If a company disposes of more than seven to eight
monitors in a given month, it may exceed the threshold and
be classified as an SQG. In that case, the organization
will be required to follow many of the hazardous waste standards
set forth in the RCRA. These standards include documentation
of proper recycling (including manifesting each disposal),
which can be expensive. LQG organizations face the most
restrictions and costs.
an example of the documentation requirement set forth by
the EPA, in 2000 AT&T agreed to pay a penalty of $195,000
for not properly responding to an agency request for information
about its computer-disposal practices. An investigation
by the EPA was initiated by a tip that a New Jersey plant
was incinerating hazardous waste, including computers and
other equipment. Although AT&T eventually provided all
of the information requested, the EPA believed that the
company did not fully answer inquiries about how it managed
waste computers and electrical equipment in a timely manner.
is important to note that the RCRA rules regarding computer
disposal are restricted to landfilling. Disposal usually
does not include recycling, donations, or trade-ins. An
organization, therefore, comes under the auspices of the
RCRA only if it chooses to throw away its old equipment.
regulations regarding computer equipment disposal vary considerably.
Some states (e.g., California, Massachusetts, and Minnesota)
have made it illegal to landfill computer monitors, and
nine states have proposed legislation to ban landfill disposal
of all computer equipment. Most states have no regulations
to date, though in 2003, 23 states had proposed some form
of legislation regarding the disposal of computer equipment
(see the Exhibit). Besides banning landfill disposal, some
states have considered additional taxes, called advanced
recycling fees, ranging from $5 to $50, on purchases of
computer equipment. Furthermore, some states have imposed
restrictions on computer sellers, requiring them to have
trade-in programs in place before doing business. States
are clearly sensitive to the issue, and additional regulation
is almost certain in the coming years.
a Disposal Plan
ensure that they do not find themselves in violation of
RCRA, organizations should develop a plan for the proper
disposal of computer equipment.
first step is to realize that most computer equipment that
is stored “for a rainy day” will almost certainly
never get used. By the time this equipment is finally disposed
of, its value will have been greatly diminished. So it is
necessary for an organization to take a full inventory of
all computer equipment. Any equipment not likely to be used
again should be tagged for disposal. The used equipment
that can be sold or given away should be sold or given away
immediately. Equipment with little or no value (e.g., dot
matrix printers, broken monitors, pre-Pentium computers)
should be sent to a reputable recycler. Some municipalities
have a disposal center where obsolete computer equipment
can be disposed of. When planning to upgrade to new computer
equipment, take advantage of manufacturer trade-in programs,
which can reduce the combined cost of acquiring new equipment
and responsibly disposing of old equipment. This assessment
should be done regularly to ensure that old computer equipment
does not pile up.
addition to its environmental benefits, a well-defined plan
for disposing of computer assets can help a company financially.
Assets not contributing to productivity should be disposed
of, because they can become a drag on return on investment
(ROI). Not only does disposal reduce the average investment
(denominator of ROI), it can also improve net income through
gains on sales or reductions in tax payments (numerator
upgrading computer systems, most organizations store their
old computers, which serve as backup equipment in case newer
computers break down. These old computers often sit in storage
well beyond their potential useful life. At some point,
a decision must be made about disposal of this equipment.
Continuing to store it is often not a viable option, because
it eventually takes up a considerable amount of space. The
least desirable option is to throw old computers in the
garbage. Not only are there the potential liabilities and
disposal costs imposed by state and federal environmental
agencies, there is also the possibility of someone removing
hard drives and recovering sensitive data. There are three
better options available: reuse, recycle, and trade-in.
The term “reuse” refers to giving (or selling)
computers to someone or some other organization to use.
Computers are often sold on a secondary market, given (or
sold) to employees, or donated to charitable organizations
and schools. Selling computers on a secondary market can
become a burden. The most popular options include selling
through advertising or an Internet auction site. Regardless
of the method, an organization must carefully assess whether
the employee time and effort necessary to sell these computers
is worth it. In most cases, the value of a used computer
is far less than managers perceive. The original purchase
price should be viewed as a sunk cost, leaving as the only
relevant consideration the marginal benefit versus the marginal
are several advantages to giving (or selling at a significant
discount) older computers to employees. In an age of job-hopping,
this additional benefit may reflect a commitment by management
to employees, garnering greater employee loyalty. Employers
should be careful, in documenting the exchange, to avoid
creating a taxable benefit.
computers to charitable organizations and schools provides
a company with tax benefits that may exceed the expected
realizable value from selling the computers via a secondary
market. There are many private and public organizations
willing to help businesses donate their computers. Valuing
computer equipment for tax purposes requires using fair
market value; guidelines can be found in IRS Publications
561 and 526. Also, secondary market auction sites, such
as eBay and Amazon.com, can provide support for valuing
computers for tax purposes. Federal and state tax credits
are available for certain donations of computers by corporations
Depending on the state, recycling computers can be simple
or difficult. In states that have bans on landfilling (California,
Massachusetts, and Minnesota), recycling programs are well
organized. In most states, however, finding a place to recycle
old computer equipment can be difficult. Moreover, reputable
recycling companies usually charge a fee for pick-up and
the requisite documentation to show that the computers were
appropriately recycled. The savings from using a nonreputable
recycler, however, are generally not worth the attendant
risk if the computers are not properly disposed of.
is the best option for computers that are extremely old
(pre-Pentium) or broken, especially monitors. In states
that have voluntary recycling programs, local municipalities
are in charge of setting up convenient drop-off locations
for computers. Some municipalities have monthly, quarterly,
or annual computer recycling days in which they provide
for the collection or pick-up of old computer equipment.
Most major computer manufacturers (e.g., Dell,
Gateway, HP/Compaq) have trade-in programs. For example,
Dell has a program (DellExchange) that facilitates Dell
customers donating, trading, or selling used Dell computers.
Gateway’s program provides individuals who donate
their used computer a $25 to $50 cash refund. HP/Compaq’s
trade-in program provides a refund check for the value of
a computer, if the computer is traded in on the purchase
of a new HP/Compaq computer.
proposed state legislation has forced manufacturers to implement
trade-in programs. For example, California has proposed
legislation that would require manufacturers that sell any
computer within California to develop, finance, and implement
an “e-waste recovery system” for the collection,
handling, transportation, processing, recovery, reuse, and
recycling of the devices sold by that producer.
of how old computers are disposed of, there are several
important steps to take before handing them over. First,
remove the hard drive or reformat it. Simply deleting files
does not prevent them from being recovered from the hard
drive; sometimes, files can even be retrieved from reformatted
drives. Next, evaluate software license agreements to determine
if they preclude transfer of the software along with the
is important to remove all company insignia and inventory
control tags from computers to be disposed of. Removing
company insignia and control tags can hamper hackers from
identifying to which company any recovered information belongs.
possible, have the recipient of the used computer equipment
sign an agreement accepting responsibility for its proper
disposal. This is necessary whether it is sold, given to
an employee, or donated. In the event of future litigation,
this documentation supports the position that the recipient
has accepted responsibility for the equipment’s disposal.
companies should also provide written documentation of the
proper disposal of computer equipment. If a recycling company
cannot or will not provide such documentation, this could
be a sign that it is not a reputable company. Finally, a
written record of all disposed-of computers should track
the serial number, description, method of disposal, and
date of disposal. This information should be kept with all
other documentation regarding computer disposal.
J. Meyer, DBA, is an assistant professor at the University
of New Orleans. Waleed Abu El Ella is a graduate
student at the University of New Orleans. Ronald M.
Young, CPA, PhD, is an associate professor at the
University of New Orleans.