Recycling and Personal Property Disposal Requirements

In 2005, Federal agencies requested responses from the General Services Administration regarding recycling and the disposition of property under the personal property rules. Following are the agencies' questions and GSA's responses.

Agency Questions about Personal Property Disposal and Recycling
June 16, 2005

1. Used aluminum cans, discarded paper, spent toner cartridges, and other items at a Federal facility are generally considered recyclables and placed in collection bins or otherwise handled for disposal through recycling to keep them out of landfills. If there is commercial value in such recyclables (that is, someone is willing to pay something for these recyclables as feedstock for new recycled content products), then do such items need to go through the excess process? Note that Public Law 108-199-Jan. 23, 2004, Division F, Title VI, Sec. 607, 118 Stat. 351 (2004 Consolidated Appropriations Act), and the Federal Management Regulation, 41 CFR Part 102-38.295, Disposition of Proceeds (August 26, 2003) provide that Federal agencies may receive and use funds resulting from the sale of materials, including Federal records disposed of pursuant to a records schedule recovered through recycling or waste prevention programs. Are the comments Roman made at the meeting in conflict with these provisions?

With regard to spent toner cartridges, it's my understanding that at least one vendor (small, veteran service-disabled owned business) that collects used toner cartridges and reimburses facilities about $1 per cartridge, depending on type and condition. This company remanufactures toner cartridges and sells them. The company charges no service fee and also pays for transportation of the cartridges.

GSA Answer: Federal Management Regulation, 41 CFR Part 102-38.295 provides that Federal agencies may retain all sales proceeds from the sale of “property related to waste prevention and recycling programs.“

"Property" in this FMR provision refers to material and expendable property. This includes things such as used aluminum cans, discarded paper, spent toner cartridges, carpeting, and steel. Material does not include property that can be refurbished, or remanufactured such as furniture and computers.

Federal Property Management Regulation, 101-25.107 Guidelines for requisitioning and proper use of consumable or low cost items, states that expendables such as pens, staplers, and tape dispensers are generally non-accountable after issue from warehouse stocks. Based on these examples, spent toner cartridges, whether refillable or not, are expendable and non-accountable once issued to the user.

Expendable items are not considered as excess or surplus property. As such, expendable items are not subject to screening, sale, and abandonment and destruction procedures and may be given directly to a recycler after use..

As such, agencies selling material and expendable property to a recycler may retain all sales proceeds for use in programs such as recycling and “other employee programs” specified in Public Law 107-67. But agencies selling surplus property that may be refurbished, repackaged, or remanufactured, or any personal property other than material and expendable property, may keep only that portion of the sales proceeds equal to the direct costs and reasonably related indirect costs incurred in selling surplus personal property unless they meet the exclusions of FMR 102-38.295. These exclusions say that you may retain all sales proceeds when:

• You have statutory authority to retain all proceeds from sales of personal property.
• You sold property was acquired with non-appropriated funds
• You sold surplus Government property that was in the custody of a contractor or subcontractor and the contract or subcontract provisions authorize the proceeds of sale to be credited to the price or cost of the contract or subcontract
• You sold property to obtain replacement property under the exchange/sale authority.
• You sold property related to waste prevention and recycling programs, under the authority of Section 607 of Public Law 107-67.

Spent toner cartridges could also be sold under the Exchange/Sale authority provided in FMR 102-39.50.

2. An agency has computers, monitors, and peripherals that are excess to its needs and are donable under EO 12999 or the Stevenson-Wydler Act because of their poor condition or obsolescence. The agency has determined that this equipment can be designated for abandonment and destruction. In lieu thereof, the agency enters into an agreement or contract with an electronics recycling company (e.g., under the READ GWAC) for the recycling of this equipment. The company determines that there is value in the monitor (in that it can be refurbished and resold) and reimburses the agency $1 per monitor or provides the agency with revenue based on the components (e.g., gold) that it can sell. Given the "commercial value" we now have, does this equipment have to go through the full government-wide excess process?

GSA Answer:

If a computer has no value other than its basic material content, it is scrap and need not be reported to GSA for screening or sale (FMR 102-36.220). The commercial value of scrap due to its material content does not require that it go through the full government-wide disposal process.

If a computer or computer component can be remanufactured, it has value other than its basic material content and is not scrap. It must be exchanged or sold on a one-for-one basis under the exchange/sale authority; reported to GSA as excess for screening and possible transfer or sale as surplus property; or processed as an A&D action.

3. How does this impact an agency's ability to generate and retain recycling revenue?

Proceeds retention will be dependent on the type of property and the relationship between the agency and the recycler.

• If the agency sells scrap material or expendable property to a recycler, the proceeds can be retained under the recyclable materials provision of FMR 102-38.295 for the specific purposes listed in Public Law 107-67.
• If the agency sells surplus equipment , such as a computer to a recycler for $1.00 per item, or any surplus property other than scrap material regardless of its condition, the agency may keep only that portion of the sales proceeds equal to the direct costs and reasonably related indirect costs incurred in selling the equipment or other surplus property item. The remainder of the proceeds must be deposited to the Miscellaneous Receipts of the Treasury.

• If the computer or any other property is given to a recycler as an A/D action, the agency has no ownership of the property and is no longer entitled to any proceeds retention.
• If the agency has made an A/D determination and hires a recycler to destroy the item and sell the residual material on the agency’s behalf, the agency can receive proceeds under the recyclable materials provisions of FMR 102-38.295.

4. Can building demolition materials (from renovation projects), such as the following, be recycled rather than going through dumpster to landfill?

• black iron
• mild steel
• metal pan ceiling
• ductwork
• light fixtures
• partitions (gypsum wallboard, light gauge steel, gypsum block, etc.)
• BX wire
• Carpet
• Glass
• Conduit

GSA Answer: Reuse or recycling is always preferable to disposing of an item in a landfill.

5. Can we accept proceeds from recycling of materials listed above?

GSA Answer: See the answers to 3 above.

Although it is not mandatory, scrap steel should be reported to GSA because it has potential reuse as material among Federal agencies. The provisions of FMR 102-38.295 govern giving steel to a recycler, and the holding agency may retain all sales proceeds.

6. Can recycling proceeds be rolled back into the renovation project or applied to similar future projects?

GSA Answer: No, unless the exceptions of FMR 102-38.295(b)(3) are met. Public Law 107-67 allows recycling proceeds to be rolled back into recycling programs or to be used for "employee programs." See the answer to Question #7

7. Can these recycling proceeds be applied to recycling, waste prevention or employee programs authorized by Section 607 of Public Law 107-67, e.g. employee childcare programs?

GSA Answer:

Public Law 107-67 allows recycling proceeds to be rolled back into recycling programs or to be used for “ other employee as authorized by law or as deemed appropriate by the head of the Federal agency.” Also according to Public Law 107-67, recycling proceeds “shall be available until expended.” As stated in FMR 102-38.295, consult your General Counsel or Chief Financial Officer for guidance on use of this authority.

8. Are there any quantity limits for recycling proceeds and if so what are they (e.g., value of 1000 sq. ft. carpet vs. 1,000,000 sq. ft.)?

GSA Answer:No. There are no quantity limits on recycling proceeds.

9. Can we donate useable demolition materials such as doors, light fixtures, millwork, and hardware to charitable organizations such as Habitat for Humanity?

GSA Answer:No. Federal agencies cannot donate property directly to a donee. Property donated via GSA’s Federal Surplus Personal Property Donation Program is transferred to State Agencies for Surplus Property (SASPs), established by law in each State, territory, and the District of Columbia. The SASP, in turn, makes distribution to donee recipients within the state.

Being a charitable organization by itself does not qualify an organization as eligible to participate in the donation program. Using guidelines established by GSA, the SASP determines if an applicant is eligible to receive property for most public and nonprofit activities (FMR 102-37.385 (a)). Guidelines identify donee eligibles as a public agency, a nonprofit educational or public health institution, a program for older individuals, providers of assistance to the homeless, and providers of assistance to impoverished families and individuals (FMR 102-37.385 (a), FMR 102-37.390, and FMR 102-37.380). The Department of Defense determines eligibility) to receive surplus property through the SASP as a service educational activity (SEA) for organizations that offer courses of instruction devoted to the military arts and sciences such as the Boy Scouts of America. (FMR 102-37.385 (b))

As a provider of services to the impoverished, Habitat for Humanity may qualify to participate in the donation program. However an organization must apply to the SASP to establish eligibility in each State in which it operates and may want to use property.

10. Can used furniture be sold and proceeds be used for replacement? (41CFR ch 101 part 101-46 and part 102-39)?

It appears from our discussion at the EOIAG meeting that, in accordance with 41 CFR 102-36.240, the condition code of broken and torn chairs should be "X" Salvage. The definition for “Salvage” is property that has value in excess of its basic material content, but repair or rehabilitation is impractical and/or uneconomical. According to policy, the items are reportable to GSA. Although, 99.99 percent of the time, after approximately 125 days, such items remain in storage, GSA will issue the agency a notice for abandonment/destruction. This is truly a waste of Government time and resources.

GSA Answer:

Yes. Furniture may be exchanged or sold under the Exchange/Sale authority (FMR 102.39). However, proceeds must be applied on a one-for-one basis and used for replacement furniture during the fiscal year in which the property was sold or for one fiscal year thereafter.

An agency may make an A&D determination for furniture in salvage condition if the property has no commercial value or the estimated cost of its continued care and handling exceed the estimated proceeds from its sale (FMR 102-36.305). However, if the furniture is given to a recycler, as an A/D action, the agency releases ownership of the furniture and is no longer entitled to any proceeds retention.

An agency selling surplus furniture to a recycler to be refurbished may keep only that portion of the sales proceeds equal to the direct costs and reasonably related indirect costs incurred in selling surplus personal property unless they meet the exclusions of FMR 102-38.295.

Furniture in scrap condition should not be reported to GSA for screening or sale. However, the perception that screening furniture for reutilization is a waste of time and takes forever is not supported by GSA statistics.

Our statistics show the following for the period of FY2001 thru FY2004:

Our current average utilization and donation cycle time – i.e., from the time property is reported to GSA until it is referred for sale action is 19.15 days. Our current average sales cycle time is 38.8 days. Total GSA cycle time – i.e., from the time property is reported to GSA until it is sold or released for abandonment and destruction is 57.95 days. GSA continues to further reduce its total cycle time.

11. Can used furniture with no particular resale value be donated to charitable organizations such as Habitat for Humanity?

No. Donation in lieu of abandonment and destruction can be made only to a public body. FMR 102-37.560 defines a public body as “any department, agency, special purpose district, or other instrumentality of a State or local government; any Indian tribe; or any agency of the Federal Government.”

If an agency becomes aware of an interest from an eligible non-profit organization, the agency must contact the regional GSA Personal Property Management office and implement donation procedures (FMR 102-36.320).

Title 40 USC does not authorize direct transfers of furniture to charitable organizations.