A draft law has been put before The State Duma to reform the system of extended producer responsibility (epr)

Pepeliaev Group advises that on 25 April 2023 a draft law was submitted to the State Duma which provides for significant amendments to Federal Law No. 89-FZ “On production and consumption waste” dated 24 June 1998 with regard to the extended responsibility of producers.[1]

Please be reminded that the essence of the institution of EPR implies that producers and importers who have produced in Russia or imported into Russia, respectively, certain products or packaging are required to ensure that such products and packaging are recycled at the end of the life cycle of such products or packaging. Alternatively, companies may pay an environmental charge to the federal budget. The provisions regarding EPR have been in effect since 2015.

In December 2020, Deputy Prime Minister Viktoria Abramchenko approved a concept for reforming the institution of EPR.[2] Since then the Russian Ministry of Natural Resources has been developing a draft law required to reform the institution of EPR. Public consultation with regard to the draft law that has been drawn up was held from 7 until 20 October 2022.[3]

According to the explanatory note to the Draft Law, its main objective is to develop an efficient state regulation model aimed at bringing the maximum possible amount of physical resources back into business circulation (primarily packaging waste) and reducing the volumes of consumption waste that are disposed of.

The current version of the Draft Law provides for the following key changes in the provisions relating to EPR:

• responsibility for recycling the packaging of products which have been produced in Russia is shifted from producers of such products to producers/importers of packaging.[4] Moreover, according to the current regulation, a producer of packaged products bears such responsibility;[5]

• a 100% waste recycling rate for packaging is being introduced starting from 2027. Therefore, starting from 1 January 2027 producers and importers of packaging will be required to ensure that all volumes of packaging produced in Russia and/or imported into Russia are recycled (or required to pay the environmental charge).

Until 2027, the Draft Law establishes the following packaging recycling rates: in 2024 according to the rates established by the Russian Government; 55% in 2025; and 75% in 2026;[6]

• the obligation to ensure the recycling of product waste, including packaging, is vested in the producer of products from the earliest of the following dates:[7]

• the day on which products have been dispatched/transferred;

• the day on which payment is made in full or in part against forthcoming supplies of products;

• the day on which damaged or defective products are written off.

The obligation to ensure the recycling of product waste and packaging is vested in the importer:[8]

• for products and packaging imported from member states of the Eurasian Economic Union - from the date on which such products and packaging have been recorded;

• for products and packaging imported other than from member states of the Eurasian Economic Union - from the date on which a customs authority releases such products and packaging for internal consumption.

Currently, the obligation to ensure recycling within the framework of the EPR system lies with producers/importers from the moment products are first sold in Russia;

• the methods of fulfilling obligations within the scope of EPR are being limited, namely: the possibility is ruled out of delegating compliance with waste recycling rates to a Russian environmental operator or an association of producers/importers.

According to the new provisions, producers/importers of products ensure that product waste is recycled independently: by creating their own recycling infrastructure or by entering into a contract with a recycler.

In addition, the Draft Law proposes that a new layer of regulation be introduced with regard to the operations of recyclers. Thus, the Draft Law has defined recyclers as legal entities or individual entrepreneurs who perform activities that involve recycling product waste and are included in a special register of recyclers.[9] Only persons who have been included in the register of recyclers may perform work to recycle product waste. The Federal Service for Supervision of Natural Resources (in Russian abbreviated to ‘Rosprirodnadzor’) will be responsible for maintaining the register of recyclers;

• an obligation has been established for recyclers to report to Rosprirodnadzor on a quarterly basis the volumes of products from using which the waste has been recycled, and also about the contracts which have been concluded with producers/importers of products and other persons and about such contracts being terminated in the reporting period.[10] The main goal of introducing such obligation is to exclude the practice of sham contracts being concluded for the recycling of product waste.

If a recycler does not fulfil a recycling obligation for which a recycling contract provides and if it violates certain recycling requirements, the recycler will become obliged to pay the environmental charge with respect to the waste which has not been recycled (or was recycled with violations);[11]

• the procedure has been regulated of how information regarding recyclers should be introduced in/removed from the register of recyclers, including the possibility being introduced of checking whether recyclers have the necessary capacities (equipment and/or special recycling plants) to recycle the volumes of waste that they have declared.[12] The grounds have been established for a person to be excluded from the register of recyclers (if a waste recycling licence expires or facts are identified that a recycler has not paid the environmental charge (if the recycler assumes such obligation under the new provisions of the law), or a recycler has had administrative liability imposed for committing violations for which article 8.2(9-10) and article 8.51 of the Russian Code of Administrative Offences provides, or otherwise);

• a prohibition is being introduced on discharging the obligation to recycle product waste by recycling other types of product waste (other than those included in the same group);[13]

• it is stipulated that to ensure the recycling of product waste is only possible by using such waste to produce products/goods (but only provided that types of recycled waste and of the products/goods produced correspond to the special lists established by the Russian Ministry of Natural Resources together with the Russian Ministry of Industry and Trade).[14] These requirements should come into effect on 1 January 2025;

• cases have been established when recycling is not recognised as having been carried out, such as when:[15]

• a recycling contract is concluded with a person who is not in the register of recyclers;

• the volume of product waste indicated in the certificate cannot be handled by the recycler since the latter has exceeded the maximum production capacity of its equipment/recycling plants;

• it has been established that a decreasing coefficient will be applied to the recycling rate (the volume of packaging produced) when products are produced in Russia with the use of secondary raw materials. The Russian Government is to establish the size of this coefficient;[16]

• the procedural aspects have been prescribed in detail of how the compliance of producers, importers and recyclers should be checked with regard to the obligation to ensure the recycling of product waste;[17]

• The Draft Law introduces a new approach to determining rates of the environmental charge that is payable when product waste is not recycled independently. In such case, rates of the environmental charge will be applied together with multiplying coefficients which take into account product characteristics (including the difficulty of extracting product waste for subsequent recycling) instead of the established rates of the environmental charge.[18]

It should be noted that a provision regarding an annual increase of recycling rates with respect to products that are not packaging has not been included in the Draft Law. Previously, it had been expected that such rates would be increased by at least 10% per annum.

The Draft Law provides for the amendments to come into effect on 1 January 2024, except for certain provisions for which separate deadlines have been stipulated for coming into effect.

What to think about and what to do

The Draft Law may affect a wide range of companies. The new regulation will primarily take a serious toll on producers and importers of products. The conditions of activities of recyclers and producers of packaging will also undergo substantial changes. In planning their activity producers and importers are required to first take into account the requirement to enter into a recycling contract only with persons who have been included in the recyclers register and the requirement for recycling packaging in the amount of 55% in 2025, 75% in 2026 and 100% starting from 1 January 2027.

Help from your adviser

Pepeliaev Group’s specialists are ready to provide legal assistance to producers and importers of products and to other persons whose activities relate to consumption waste in terms of how the new requirements will be applied to ensuring the recycling of waste, including such issues as:

• drafting contracts with recyclers and drawing up documentation in pursuance of such contracts;

• determining whether the types of waste that is recycled and the types of products/packaging produced (within the framework of recycling) correspond to the statutory lists;

• assessing the environmental charge under the new rules.

[1] Source.

[2] Source.

[3] Source.

[4] Clauses 1, 4 and 8 of new article 24.2 of Federal Law No. 89-FZ “On production and consumption waste” dated 24 June 1998 (the “Law on production and consumption waste”), such new article having been introduced by the Draft Law.

[5] Article 24.2(1.1) of the Law on production and consumption waste.

[6] Article 4(5-6) of the Draft Law.

[7] New article 24^2-1(1) of the Law on production and consumption waste that is introduced by the Draft Law.

[8] New article 24^2-1(2) of the Law on production and consumption waste that is introduced by the Draft Law.

[9] New article 24^2-1(3) of the Law on production and consumption waste that is introduced by the Draft Law.

[10] New article 24^2-2(2) of the Law on production and consumption waste that is introduced by the Draft Law.

[11] New article 24^2-2(3) of the Law on production and consumption waste that is introduced by the Draft Law.

[12] New article 24^2-3 of the Law on production and consumption waste that is introduced by the Draft Law.

[13] New article 24^2-1(4) of the Law on production and consumption waste that is introduced by the Draft Law.

[14] New article 24^2-1(5-6) of the Law on production and consumption waste that is introduced by the Draft Law.

[15] New article 24^2-1(13) of the Law on production and consumption waste that is introduced by the Draft Law.

[16] New article 24^2-1(15) of the Law on production and consumption waste that is introduced by the Draft Law.

[17] New article 24^2-4 of the Law on production and consumption waste that is introduced by the Draft Law.

[18] Article 5(23) and article 24.5(7-9) of the Law on production and consumption waste as amended by the Draft Law.