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Waste Management Responsibilities for Producers and Importers in Russia


I.    Introduction

For 17 years, waste management in Russia has been regulated by the federal law dated June 24, 1998, N 89-FZ, On Production and Consumption Waste. It establishes the basic norms and principles of state policy for waste management, except for radioactive and medical wastes.

On Dec. 29, 2014, the federal law N 458-FZ (hereinafter the ‘‘law’’)1 was enacted, and it imposed substantial waste management obligations, namely recycling requirements, on manufacturers and importers.

A review of Russian waste management legislation before adoption of the law indicated the need for significant updating of the 1998 regulation. According to the Russian government, the main aims of the 2014 law are to encourage companies that manufacture and import goods to maximize the volume of goods that are recycled and reused and to minimize the volume of overall waste generated. In addition, due to limited capacity at existing recycling facilities and a lack of equipment for waste treatment, there is growing demand to refurbish and modernize Russia’s waste management industry, including constructing new facilities.

II.   Recycling Requirements

Most of the amendments introduced by the law, including those related to recycling obligations on producers and importers of goods, came into force Jan. 1. Many of the provisions of the law constitute so-called blanket rules, which refer to certain bylaws.

Currently, the government is reviewing more than 30 draft decrees intended for regulating this area.

These decrees include drawing up a list of specific goods and packing matter subject to recycling; establishing normatives, or standards, for self-recycling; and setting up reporting guidance for compliance.

According to the updated law, the burden of complying with waste management standards today is on companies. They are responsible for the entire life cycle of a product, including its take-back, recycling and final disposal.

The law does not stipulate how they must fulfill their waste management responsibilities, however, so manu facturers and importers can choose one of the following options:

(1)    Companies can perform recycling themselves using their own infrastructure.

If they chose this option, then they must assure the collection, delivery, processing and recycling of corresponding waste, and disclose information about waste collection points. Most of these waste management activities require the manufacturer or importer to have a license.

(2) The second option is for manufacturers or importers to enter into a contract with a waste management operator or a regional recycling operator that will handle specific waste.

(3) Manufacturers and importers also can carry out their recycling obligations by establishing an association (union) that undertakes to enter into agreements with waste management operators or regional recycling operator.

The association (union) also submits reports on compliance of its member in regard to waste management legislation. It is still not clear how the liability for noncompliance with these requirements will be determined, or broken out, for the association (union) and its members.

If companies do not perform the recycling themselves, then they must pay the environmental fee, which is a special non-tax budget payment.

III.    Licensing Requirements

The next issue, which was substantially changed by the 2014 law, is waste management licensing requirements. According to the amendments introduced in the law, waste recycling also is subject to licensing in Russia. As of July 1, a waste management license is required not only for the collection, transportation, processing, decontamination and disposal of hazardous waste for classes 1 through 4, but also for the recycling of such wastes.

Therefore, for licensees that are going to perform recycling activities, all licenses issued before the law entered into force were valid only until June 30.

Another issue regarding licensing came about after the law went into effect: Companies may need a license for recycling waste if it is part of their internal production cycle. The same requirement applies to those manufacturers and importers that want to organize their own waste management process to comply with recycling standards and avoid paying an environmental fee.

At this point it should be mentioned that, according to provisions of the law and effective as of Jan. 1, 2016, payment for negative impact on the environment (not the environmental fee) will be calculated depending on the class of hazardous waste, and starting in 2020 special coefficients for calculating the amount of payment for any negative impact on the environment will be applied.

Companies should be aware of the five hazardous waste classes in Russia:

  • Class 1: extremely hazardous waste
  • Class 2: highly hazardous waste
  • Class 3: moderately hazardous waste
  • Class 4: low hazardous waste
  • Class 5: practically non-hazardous waste

The classification system is based on a set of parameters that take into account both the impact of wastes on the environment and toxic, or related hazardous parameters, that are significant for assessing the potential harmful impact of wastes on human health.

Under the law, the activities of legal entities and individual entrepreneurs resulting in generation of wastes for class 1 through 4 hazards can be prohibited or restricted if they lack the capacity or technical expertise needed to fulfill recycling normatives or to safely process wastes.

Currently, companies are obligated to confirm the classification of waste they generate to a particular hazardous class in order to formalize the passport of waste.

Companies themselves must determine which class wastes fall into by means of laboratory testing to be conducted in a special licensed laboratory according to Federal Classification Waste Catalog (FKKO), approved by Order of Rosprirodnadzor N 445, dated July 18, 20142, (for classes 1 through 4) and the Hazard Classification Criteria of Dangerous Waste approved by Order of the Ministry of Natural Resources N 511, dated June 15, 2001, (for classes 1 through 5).

A passport must be obtained for class 1 through 4 hazardous waste and it should describe the properties of the generated waste. It is not mandatory to secure a formal passport of waste for a Class 5 hazard; however, companies must have certain documents evincing this class, such as records confirming the chemical and (or) the component structure and information on the origin, conditions of waste generation, aggregative state and the physical form.

IV.    Calculating Environmental Fee Rates

According to the law, manufacturers and importers are not limited to a specific territory and can carry out their recycling obligations throughout Russia. Regardless of whether companies choose to manage their own recycling obligations or to contract with a waste management company, they should comply with required normatives for recycling.

Recycling standards are set out by governmental decree on the basis of potential danger to the environment and human health and are subject to review every three years.

The standards, or normatives, apply a percentage, or the ratio of quantity of a certain kind of goods plus its packaging, to the total quantity of a certain kind of goods put on the market within the territory of Russia.

Currently, the draft decree on normatives allow percentages for certain goods to be zero for 2015. This was done because of the requests of certain groups of manufacturers and importers that said they needed a period to prepare to meet their recycling obligations. In the meantime, the relevant bylaws will be finally adopted and appropriate recycling infrastructure could appear. The law classifies the environmental fee as non-tax state budgetary revenue and environmental fee rates are determined by the governmental decree for each category of goods subject to recycling.

The fee is to be paid by all manufacturers and importers if they do not perform recycling in compliance with the established normatives.

The environmental fee is supposed to be used to provide subsidies to constituent entities to assist them in developing their recycling infrastructure.

The funds granted as subsidies to constituencies can be used for a variety of purposes, including financing regional recycling programs and territorial waste management schemes; defraying expenses for the collection, transportation, processing and recycling of waste; building the infrastructure necessary for recycling; treating waste and more.

Therefore, the environmental fee seems to become another type of payment to the state budget for negative impact on the environment. The environmental fee rate is based on the average expenditure for the collection, transport, processing and recycling of a single item or of one unit of mass/weight of a product that is no longer of value to the consumer.

The environmental fee is calculated in the following way:

Fee = Rate x Weight x Norm

Where:

  • Fee is the environmental fee;
  • Rate is the environmental fee rate;
  • Weight is the mass of finished product or number of units of the product or mass of packaging; and
  • Norm is a normative of recycling, i.e. the percentage of goods subject to recycling.

If manufacturers or importers that took on the obligation to independently recycle wastes do not fully comply with the required standards for the recycling normatives, then the environmental fee will be calculated in the following way:

Fee = Rate x Difference x Weight x Norm

Where:

  • Fee is the environmental fee;
  • Rate is the environmental fee rate;
  • Difference is the variance between the required quantity or recycled waste and the actual quantity;
  • Weight is the mass of finished product or number of units of the product or mass of packaging; and
  • Norm is a normative of recycling, i.e. the percentage of goods subject to recycling.

The law also makes it the responsibility of manufacturers and importers to submit compliance reports that meet the requirements of the waste management legislation (on reaching or not the recycling normatives).

The Federal Supervisory Natural Resources Management Service monitors and supervises the calculation and payment of environmental fees.

In Russia, the Federal Supervisory Natural Resources Management Service is the executive authority that supervises environmental management, as well as environmental protection, waste management and state environmental expertise.

It is worth mentioning that pursuant to the law, both goods and packages are subject to recycling upon partial or full loss of their consumer attributes.

The general rule is: In the event the good is ready for consumption, then the full fee must be paid (both in respect to goods and to their packaging).

In cases where it is not ready for consumption, semifinished products for example, then the fee is payable with regard to the packaging of the goods only.

In order to determine the quantity of goods, including packaging, to be recycled in 2015 and to calculate the environmental fee, data will be used on the quantity of goods, including packaging, put on the market within the territory of Russia in the first nine months in 2015. If manufacturers and importers do provide for the recycling of waste, then they will be required to pay the environmental fee for the first nine months of 2015 by Oct.15. The environmental fee for October, November and December 2015 will be subject to payment till Feb. 1, 2016.

V.    Solid Waste Disposal

In regard to Russia’s growing urban population and overall goods consumption, another innovation introduced by the law relates to solid waste disposal. The new rules for municipal solid waste management are outlined in the law and will take effect Jan. 1, 2016. Essentially, solid municipal waste means trash generated in living spaces in the course of consumption by persons, as well as goods that have lost their consumer attributes in the course of their use by people in living spaces for the purposes of satisfaction of personal and daily living needs.

According to the regulation, a special governmental organization, or regional waste management operator will provide for the collection, transportation, processing, recycling and disposal of the municipal solid waste in the territory of constituency of the Russia.

Municipal and regional solid waste operators must be an individual entrepreneur or a legal entity. Producers of solid municipal waste should draw up contracts for the recycling of such waste with regional operators. A regional recycling operator will be selected by the authorities of each constituent entity of Russia in the course of state procurements procedure. Producers of solid municipal waste, as well as residential property owners, will be required to sign contracts with a regional operator for recycling services.

The contract with the regional operator will be public; in other words, the terms of the contract will be the same for all clients, and its price shall not exceed the limits stated by the authorized body. While this minimizes the risk of regional operators gaining a monopoly in waste management, recycling and disposal, it could create obstacles for manufacturers or importers that want to establish their own waste recycling infrastructure.

VI.    Conclusion

In summarizing the latest initiatives in Russian waste management law, several key highlights should be mentioned.

The law imposes additional responsibilities on manufacturers and importers of goods, the so-called producer’s responsibility, which shall substantially affect their business activity and relevant costs planning.

European companies are supposed to be familiar with the concept of producer’s responsibility, which is an environmental policy approach designed to promote the integration of environmental costs associated with goods throughout their life cycles into the market price of the products.

The environmental policy approach takes into account the needed environmental safeguards in the course of a product’s design and shifts the responsibility for proper waste management or recycling to the producer and away from Russian municipalities.

The law also imposes recycling obligations on manufacturers and importers of goods, which can be fulfilled by payment of environmental fee or by satisfying recycling requirements, as well as new requirements regulate solid municipal waste.

It should be noted, however, that the proposed scheme of recycling does not stimulate developing of recycling facilities, but mainly serves a fiscal function by providing for funds for corresponding state, regional and municipal budgets.

Consequently, we see this as the beginning of recycling regulation development in Russia, and only time will tell the workability and effectiveness of the 2014 waste management law and its amendments.

_____

1Federal Law N 458-FZ is available, in Russian, at 102365722&intelsearch=458-%D4%C7http://pravo.gov.ru/proxy/ips/?docbody=&nd=102365722&intelsearch=458-%D4%C7.

2Order of Rosprirodnadzor N 445 is available, in Russian, at http://www.rg.ru/2014/09/19/othody-dok.html.


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