A law has been adopted on the handling of secondary raw materials

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Pepeliaev Group advises that, on 14 July 2022, a law [1] was published that determines the legal regime for secondary resources, secondary raw materials and industrial by-products (the “Law”). 

With the law being adopted, the legislature intends to reduce the amount of waste that is transported to disposal sites and to stimulate the commercialization of useful components of waste.

The document amends four federal laws [2] and comes into force on 1 March 2023 (save for individual provisions). 

Let us consider the new developments to come.

Secondary resources

The law introduces the concept of secondary resources as a special category of waste and introduces specifics for handling these resources.

Secondary resources are waste that complies with two criteria:

  • they may be used for the second time to produce goods, perform work, supply services or receive energy; and

  • have been obtained as a result of the separate accumulation, collection or processing of waste or formed during production.

Secondary resources include, for instance, ferrous and non-ferrous scrap metals.

Inasmuch as secondary resources are waste, the handling of such resources is regulated by the Law on Waste. At the same time, the specifics of secondary resources is that it is prohibited to bury them, unlike other resources. The law requires that such waste [3] should be recycled.

If secondary resources have been formed as a result of a legal entity’s operations it must ensure that such waste is recycled (either on its own or by transferring it to another entity).

If secondary resources have been formed as a result of an individual’s consumption of certain goods, then such individual must ensure that they are accumulated separately in places (at sites) where solid domestic waste is accumulated.

It is planned that the specified rules will only start to apply starting from 1 January 2030, given that infrastructure has to be created for recycling secondary resources that will enable compliance with the prohibition on burying secondary resources.

Secondary raw materials

One other term introduced by the Law is secondary raw materials. These are understood as products obtained from secondary resources:

  • directly (without processing); or

  • in accordance with technological processes, methods and ways stipulated in documents applying in Russia in the sphere of standardisation.

Companies that will use secondary resources when manufacturing products and performing works will be able to claim tax and other benefits, as well as subsidies from the state budget. The federal executive body will additionally determine the types of products and works that will be covered by the relevant stimulus measures [4].

Industrial by-products

In terms of regulating the issues of handling industrial by-products it was established in the law that such products are not recognised as waste. Exceptions are established by the Russian Government, which must determine what substances/items cannot be classified as industrial by-products.

The provisions of the Law take account of the existing practice when a by-product obtained during production is used as a raw material for one's own production, as well as consumed or sold as a finished product.

Industrial by-products include substances and/or items that:

  • are formed during the production of the principal product, including in the course of the performance of work and provision of services;

  • are not the purpose of this production or performance of work or services;

  • are suitable as raw materials in production or for consumption as products under Russian legislation.

The law grants to business entities the right to use their own discretion in classifying the resulting substances and items as waste or industrial by-products, regardless of whether they are included in the FCCW [5].

The new rule is likely to be able to eliminate the well-established practice of the Federal Service for Supervision of Natural Resources (known as ‘Rosprirodnadzor’): once it identifies, during an audit, the items / substances included in the FCCW, it classifies them as waste and assesses a charge for an NEI [6] in connection with the placement of such waste. This is the practice, for instance, for overburden soils that are unpolluted soils formed during mining work. 

There are two established exceptions to this rule. Namely, industrial by-products will be recognised as waste if:

  • they have been placed within waste disposal facilities;

  • they have not been used for a person’s own production and nor have they been transferred to other persons upon the expiry of the three-year term after the date when they were classified as industrial by-products.

If industrial by-products are recognised as waste the legal entity or individual entrepreneur whose activity resulted in such by-products being formed must calculate and pay a charge for the NEI. Moreover, an additional coefficient equal to 52 will apply to the rates of the charge for NEI.

It is provided that the booking of industrial by-products must be kept separately from the booking of waste and the principal product.

In addition, the Programme of IEC [7] and the report on the company and on the results of IEC being exercised will have to reflect the following information:

  • on the types and volumes of industrial by-products;

  • on the dates of their formation and the planned timeframes of their use;

  • on the transfer to third parties;

  • on the results of their use or transfer to third parties.

What to think about and what to do

Given that individual provisions of the Law will soon come into force, companies are advised to become familiar with the new regulation, analyse the composition of the items / substances that are formed during production and examine whether they may be classified as industrial by-products to make sure such products do not fall under the rules for handling waste.

Help from your adviser

The lawyers of Pepeliaev Group are ready to provide the necessary legal assistance to companies on any matters of handling waste, secondary raw materials and industrial by-products.

[1] Federal Law No. 268-FZ “On amending the Federal Law ‘On waste of production and consumption’ and individual items of Russian legislation” dated 14 July 2022.
[2] Federal Laws No. 89-FZ “On waste of production and consumption” (the Law on Waste) dated 24 June 1998, No. 7-FZ “On environment protection” dated 10 January 2002, No. 99-FZ “On licensing individual types of activities” dated 4 May 2011 and No. 488-FZ “On industrial policy in the Russian Federation” dated 31 December 2014. 
[3] The disposal of waste is understood as the use of waste for manufacturing goods (products), performing work, or providing services, including the secondary use of waste, which covers the use of waste for the intended purposes (recycling), the return of waste into the production cycle after adequate preparation (regeneration), retrieval of useful components for secondary use (recuperation), as well as the use of solid utility waste as a renewable source of energy (a secondary energy resource) after all the useful components have been retrieved at the processing facilities (article 1 of the Law on Waste).
[4] The rule comes into force on 1 March 2024
[5] FCCW means the Federal Classificatory Catalogue of Waste.
[6] NEI means negative environmental impact.
[7] IEC means Industrial Environmental Control.

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