Waste

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The Waste and Contaminated Soil Draft Bill (the “Bill”), subject to the parliamentary approval process, transposes Directive 2018/851 amending the Waste Framework Directive, and introduces significant innovations. The Bill provides a more extensive and comprehensive regulation of extended producer responsibility (“EPR”) than that of the current Waste and Contaminated Soil Act (“LRSC”), i.e., a new regulation of the producers’ obligations (whether financial, organizational or other kind of obligations) to finance and manage the collection and processing of waste from their products.

In particular, the Bill provides the framework, principles and requirements to be fulfilled by the specific EPR schemes for each waste stream governed by regulatory provisions, and it will have a direct impact on several sectors.

As a result of the Bill, producers from sectors in which the currently applicable LRSC’s EPR scheme is already being implemented will have to adapt to the Bill requirements as the relevant implementing regulations are amended. The sectors in this situation include end-of-life vehicles, batteries, packaging or used tires. For these sectors, there is already a specific EPR scheme regulation based on the currently applicable LRSC.

Additionally, the Bill will affect sectors that were not covered by the EPR scheme until now. In fact, the Bill expressly provides that regulations implementing EPR schemes for textiles, furniture and agricultural plastics must be adopted within three years. This means that all textile, furniture and agricultural plastic producers, whether individually or collectively, will have to fulfill any assumed EPR obligations within this three-year period, which will have a significant impact on their production process and business model.

It is worth highlighting five aspects of the new EPR scheme under the Bill:

1- A broader definition of “producer,” including, in addition to developers, manufacturers, processors, importers and sellers (already included in the LRSC definition), producers (i) “backfilling” products; (ii) distance-selling from another country; and (iii) using e-commerce platforms in case of foreign sellers not registered in the EPR Register and not fulfilling the remaining EPR obligations.

2- Obligations of producers. The Bill differentiates between (i) “financial or financial and organizational obligations” established in EPR schemes, which producers may fulfill individually or collectively through a collective EPR scheme (“collective scheme”); and (ii) the remaining obligations, which must be fulfilled individually. Although the Bill does not list these obligations, it provides four obligations that must be fulfilled by any new EPR schemes:

  • Defining the territories in which (a) producers market their products; and (b) the waste from these products is generated.
  • Providing an “appropriate availability” of “efficient” waste collection systems with “appropriate facilities and accessibility” for users.
  • Having the necessary financial or financial and organizational resources to fulfill their obligations.
  • Regarding collective schemes, having “offsetting” mechanisms in case the costs received by the collective scheme “significantly” exceed the amounts covered.

Also, producers can fulfill their reporting obligations to waste holders through the collective schemes.

Therefore, producers must fulfill their remaining obligations directly, including (i) eco-design; (ii) using waste materials for manufacturing products; or (iii) reporting the EPR’s economic impact on the product.

3- The legal nature of collective schemes and producers’ participation. The Bill allows for collective schemes to take the form of an association or any other non-profit legal entity. Regardless of collective schemes’ legal nature, they must meet the following requirements:

  • Transparency, objectivity and non-discrimination when establishing the collective scheme and incorporating new producers.
  • The right of producers to change collective schemes every year.
  • Participation of producers in decision-making.
  • The information rights of producers.
  • The absence of conflicts of interest between “producers or the scheme’s executive bodies and other operators.” 

The existing collective schemes must adapt to the contents of the Bill within one year from its entry into force. Since the new regulation is very comprehensive, the Bill will have a significant impact on the producers’ operation and business.

4- Producers’ contributions to collective schemes. Producers’ financial contributions to collective schemes to fulfill their EPR obligations must cover the costs of (i) separate collection, transport and treatment systems; (ii) reporting obligations to waste holders; (iii) data collection and communication; and (iv) establishing financial guarantees regarding the products “marketed” by the producer. The producer’s contribution must not exceed the costs required for “cost-effective” waste management services from an economic, social and environmental perspective.

5- Compliance. The Bill relies on a threefold system made up of:

  • A self-control mechanism for assessing financial management, the fulfillment of targets and the quality of data collected and reported, supported by regular independent audits performed by verified entities.
  • A transparency and consultation mechanism: schemes must include information on their websites regarding the achievement of targets and audits. Collective schemes must also disclose their structure and composition, as well as information on producers’ participation. Consumers may submit questions, which collective schemes must answer within two months.
  • Administrative oversight. The Waste Coordination Board will be the competent supervisory body. Additionally, the Bill expressly allows for customs authorities to verify compliance with producers’ obligations to prevent fraud in the import of products.

Recently, the Official Gazette of the Spanish Parliament published 742 amendments to the Bill (link). We do not expect major modifications regarding EPR, but it will be necessary to follow and review the implementing regulations adopted by the Government for each waste stream based on the final version of the Bill.

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pablo.cubel@cuatrecasas.com