Enforcement, Penalties, and Implementation

Enforcements and penalty mechanisms are important to “ensure that producers will comply with an EPR program”. Although EPR laws should impose penalties for any kind of violations, Austin states that in the EPR legislations there should always be an enforcement and penalty provisions in order to prohibit producers “to sell or distribute a regulated product unless the producer has submitted” in an EPR program.¹²⁸ Arguably Austin refers to a problem of free riders. Free riders are producers who do not fulfill their responsibilities in properly taking back their products. This way they tend to distort competition by avoiding the costs of recycling by not joining recycling schemes (mostly collective ones organized by PROs) and they do not make investments in the product design.¹²⁹ In addition to free riders, lack of monitoring and government control can encourage to illegal landfilling and transparency issues related to product’s cost and traceability. Compliance issues are more prevalent in collective EPR since responsibility is shared.¹³⁰

The process of implementing an EPR concept has usually three steps. First, a suitable policy instrument containing the EPR principles must be identified after which a legislative

125 Quinn and Sinclair 2006, p. 68.

126 Extended Producer Responsibility OECD 2016, p. 22.

127 Hosoda 2020, p. 58-59.

128 Austin 2013, p. 244 and 248.

129 Kalimo et al. 2015, p. 44.

130 Eastwood et al. 2020, p. 10981.

framework is developed. Second, the legislation is translated into an EPR program. This step should embody detailed operational rules, for example, financing the operations of the program and monitoring the legal compliance of each party involved in the program. Third step of implementing is the actual execution of the EPR program. There are often two crucial facts affecting implementation. On one hand, decisions made in every stage of the implementation process are usually influenced by other factors than environmental concerns:

particularly, economic and financial burden which are shifted from governments to producers. On the other hand, executing legislative objectives can be challenging when considering infrastructure related to collection and recycling operations.¹³¹

According to OECD in its member states most of the EPR systems are mandatory and based on national legislation¹³². In the EU the legal bases for EPR programs can be found either in Article 114 or in Article 191 of the TFEU¹³³. Whereas Article 114 provides legal basis for internal market of the Union, Article 191 sets EU objectives and principles for environment¹³⁴. Article 114 allows the Union “to set both minimum and maximum targets”

by the adaptation of a harmonization measure when it comes to, for example, health and environmental protection¹³⁵ but according to Article 191 the Member States are allowed to have flexibility¹³⁶. Flexibility can be good when “a Member State may be able to increase environmental protection internally” but it can also create problems since “differences in national standards can affect the functioning” of the Union market. “Traditionally”, product standards have been based on Article 114 and targets akin to collection and recycling targets have been based on Article 191.¹³⁷

It has been unclear for the Union which of the two articles it should use for the EPR programs and therefore Ezroj suggests that the Union should use a dual legal basis using both articles.

However, as he states “… a proper legal basis will not ensure that legislation implementing

131 Gui et al. 2013, p. 263.

132 Extended Producer Responsibility OECD 2016, p. 27.

133 Ezroj 2009, p. 200. Ezroj has written the article before the current consolidated version of the EU and therefore he refers to Articles 95 and 174 of EC.

134 Horspool 2018, p. 15, 117, and 133.

135 TFEU art. 114(4).

136 TFEU art. 191(3).

137 Ezroj 2009, p. 203 and 206.

EPR programs is successful”.¹³⁸ Sachs argues that enforcement of the EU directives poses challenges when it comes to implementation: implementation of product-oriented legislation

“is highly dependent on collection of goods from consumers prior to recycling”. If consumers do not cooperate in separating the targeted items, the goals of EPR will be difficult to achieve.¹³⁹ While the Union legislations provide enabling frameworks, national legislation by the Member States specifies the operational aspects and the technical details of EPR schemes: EPR policies are implemented in very heterogeneous ways. In addition to involving consumers and limited influence on redesign of a product, the implementation of EPR scheme causes also other challenges, such as absence of transparent information, inadequacy of control and monitoring mechanisms, and failure to determine costs.¹⁴⁰

138 Ezroj 2009, p. 206 and 210.

139 Sachs 2006, p. 84.

140 Pouikli 2020, p. 501.

3. EPR IN PRACTICE: THE WASTE DIRECTIVE AND THE PACKAGING AND PACKAGING WASTE DIRECTIVE

3.1 The Waste Directive as an EPR Framework

The Packaging and Packaging Waste Directive introduced EPR at the beginning of the 1990’s by stating that “…those involved in the production, use, import and distribution of packaging… become more of aware of the extent to which packaging becomes waste, and that in accordance with the polluter-pays principle they accept responsibility…¹⁴¹”, but EPR became a part of the EU legislation in the Waste Directive in 2008¹⁴². Although the Member States have discretion to decide whether they are willing to establish EPR schemes, such schemes are obligatory in some areas such as packaging¹⁴³. The Waste Directive declares that EPR schemes are an essential part of efficient waste management and therefore “it is necessary to set minimum operating requirements” for EPR schemes¹⁴⁴.

In the Waste Directive EPR is a mean of ensuring that the principle of polluter pays is applied. Article 14 states that “in accordance with the polluter-pays principle, the costs of waste management… shall be borne by the original waste producer or by the current or previous waste holders”. In the case Criminal Proceedings v Paul Van de Walle et al in 2004 the court had to consider the meaning between the concepts of a holder and a producer: the court ruled that “a holder means a producer of the waste”¹⁴⁵. This also goes the other way, the producer of the waste means the holder of the waste¹⁴⁶. The current Waste Directive defines waste producer as “… anyone whose activities produce waste (original waste producer) or anyone who carries out pre-processing… or other operations resulting in a change in the nature or composition of this waste¹⁴⁷”. Waste holder, on the other hand, is

141 Preamble on Packaging and Packaging Waste Directive 94/62/EC.

142 Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives para 27 and art 8.

143 Packaging and Packaging Waste Directive art. 7(1).

144 Waste directive preamble 21.

145 C-1/03 Criminal Proceedings v Paul Van de Walle et al ECRI-7613 points 3 and 57.

146 Van Calster 2015, p. 28. However, a waste producer refers to producing waste which differs from a producer of a product.

147 Waste Directive art. 3(5).

defined as “…the waste producer or the natural or legal person who is in possession of waste¹⁴⁸”.

Many Member States of the Union provide markets for waste collection. In such systems the holder as a person responsible for the material at the point when it becomes waste pays for the costs of waste collection, treatment, and disposal. This usually requires either payment in a form of individual contract with the waste collector or municipal taxes.¹⁴⁹ However, EPR is involved when producer responsibility is required like in the Packaging and Packaging Waste directive, and very often it is about covering costs of waste management.

The Commission has highlighted costs of waste management as an important part of the principle of polluter pays¹⁵⁰: in the Member States waste management is paid by either through taxes or producers through EPR schemes. But from the legal definition point of view, as can be noticed in the subchapter 4.2.3, the word producer is rather problematic: it can, for example, refer to holder, manufacturer, and importer of a product. This can raise a question of who actually is responsible for what under EPR measures when multiple stakeholders are involved and in relation to historical waste¹⁵¹.

The Waste Directive indicates the paying of waste management costs very clearly by stating that “in accordance with the polluter-pays principle, the costs of waste management… shall be borne by the original waste producer or by the current or previous waste holders¹⁵²”.

Nonetheless, the Directive does not indicate how Article should be applied, and solutions may differ at national levels. At the very early stage of the Union’s waste legislation the principle covered waste disposal, but the current Directive refers to, for example, to infrastructure as a part of waste management¹⁵³. In the case of Futura Immobiliare SRL, Hotel Futura and others v Comune di Castoria¹⁵⁴ the preliminary ruling dealt with polluter pays principle and waste disposal costs. The court ruled that a Member State can provide a tax or a charge based on an estimate of the volume of waste generated by users. It essentially

148 Waste Directive art. 3(6).

149 Hogg et al. 2020, p. 10.

150 See e.g. Development of Guidance on Extended Producer Responsibility (EPR) 2014, p. 7.

151 Steenmans 2019, p. 120. Historical waste refers to waste for which there is no longer a producer available due to, e.g. finishing in business.

152 Waste Directive art. 14(1).

153 Waste Directive art. 14(1) and Van Calster 2015, p. 77.

154 C-254/08 Futura Immobiliare SRL, Hotel Futura and others v Comune di Castoria.

found that there are no premises based on the polluter pays principle for the Member State to introduce new costs for certain waste holders, in the case they were hotel establishments, which are disproportionate to the volumes or nature of the waste that they are liable to produce.¹⁵⁵

The Waste Directive states of EPR schemes that they are “…measures taken by Member States to ensure that producers of products bear financial responsibility or financial and organizational responsibility for the management of the waste stage of a product’s life cycle¹⁵⁶”. Article limits EPR clearly to economic responsibility. Recital 14 of the Directive explains Article more by stating that the waste stage of a product can include “separate collection, sorting, and treatment operations”. Although there can be different types of ERP schemes in the Union the common element of all schemes is financial responsibility. Most of the schemes are established as collective in forms of PROs which can have financial responsibility either themselves or share the responsibility with municipalities, or PROs can have a financial responsibility and either partial or full organizational responsibility¹⁵⁷.

In addition to waste management costs, the targets of circular economy highlight, for example, product design as a part of EPR schemes¹⁵⁸. The purpose of the Commission is encouraging better product design by differentiating the financial contribution paid by producers under EPR schemes which “…should create a direct economic incentive to design products that can be more easily recycled…”¹⁵⁹. Whether this has been happening might be worth for a new study. According to the Commission it is essential to enhance requirements regarding EPR in order to reduce total waste generation: in the context of circular economy the Commission has confirmed the strategic importance of waste prevention¹⁶⁰. Prevention of waste is on the top of the waste hierarchy following by reuse, recycling and other recovery possibilities ending up to disposal as the least favorite option¹⁶¹.

155 C-254/08 Futura Immobiliare SRL, Hotel Futura and others v Comune di Castoria point 58.

156 Waste Directive art. 3(21).

157 Development of Guidance on Extended Producer Responsibility (EPR) 2014, p. 21.

158 SWD(2019) 92 final , p. 14.

159 COM(2015) 614 final, p. 4.

160 COM(2020) 98 final, p. 14 and Preventing plastic waste in Europe 2019, p. 10.

161 Waste Directive art. 4(a).

Binding waste prevention targets in the EU law have been a long-running ambition of the Commission, however, the Member States have never been embraced EU initiatives for such binding targets¹⁶². In the joint cases Criminal proceedings against Euro Tombesi and others the Advocate General stated that in general, it is fine according to the Waste Directive to examine recovery processes of goods but to some extent it must be the Member States choice to develop more detailed criteria on those processes in forms of practical rules and guidelines¹⁶³. The Commission has stated that it “…will put forward waste reduction targets for specific streams…” in order to “…significantly reduce total waste generation…”. This is done by EPR schemes.¹⁶⁴ Article 10 of the Waste Directive delegates the recovery processes to the Member States but it declares that different waste streams must be collected separately.

3.1.1 Article 8 for General Requirements

Article 8 sets general requirements for EPR schemes referring to minimum operating requirements since the effectiveness and performance of the plans differ between the Member States¹⁶⁵. Whereas general requirements of Article 8 apply to all EPR schemes, whether collective or individual, Article 8a provides minimum requirements for the schemes to function. Article 8 provides a possibility for the Member States to execute actions for EPR as the Member States “…may take legislative or non-legislative measures to ensure...¹⁶⁶” those actions. The Member States are not obligated to do so but Article presents an opportunity to do so. Since waste prevention is regarded as “the most efficient way to improve resource efficiency and to reduce environmental impact of waste” the Member States need to implement measures¹⁶⁷.

162 Van Calster 2015, p. 50.

163 Opinion of AG in cases C-304/94, C-330/94. C-342/94, and C-224/95 Criminal proceedings against Euro Tombesi and others point 56.

164 COM(2020) 98 final p. 14.

165 Waste Directive preamble 21.

166 Waste Directive art. 8(1).

167 Waste Directive preamble 29.

The measures ensure that any natural or legal person has extended producer responsibility, however, this person needs to fulfill certain requirements which are then defined as a producer of the product. The producer of the product as having EPR must be a professional who either “…develops, manufactures, processes, treats, sells or imports products”.¹⁶⁸ The producer of the product, in other words, bears the “financial responsibility for the management of the waste stage of the product’s life cycle” as stated in Article 3(21) of the Waste Directive. The same Article also refers to financial and organizational responsibility of the waste management of the product. Article 8(1) explains the responsibility by affirming that a Member State’s measures whether legal or non-legal “may include acceptance of the returned” product and waste stream of the product including financial responsibility of these activities. In addition to these actions, measures may include “an obligation to provide information” for public of the reusability and recyclability of the product. If there is a PRO for the products involved Article 8a of the Waste Directive shall apply for minimum requirements: a Member State can choose which of the requirements it wants to cover as measures for EPR¹⁶⁹.

With appropriate measures a Member State is able to encourage producers to have less impact on environment by emboldening producers to design their products environmental friendlier. Measures can also recommend to prefer circular economy by encouraging producers to keep in mind the waste hierarchy introduced in Article 4.¹⁷⁰. However, the waste hierarchy has raised some critique, for example, of hierarchy’s priority order and of not having a positive impact on dematerialization and decoupling¹⁷¹. Article 4(3) states that

“Member States shall make use of economic instruments and other measures to provide incentives for the application of the waste hierarch…”. Examples of the measures are introduced in the annex part of the Directive and they can include, for example, pay as you throw schemes where producers are being charged on the basis of the actual amount of waste they generate and EPR schemes for various types of waste and measures to increase their effectiveness, cost efficiency and governance¹⁷². Pay as you throw schemes can be problematic as discussed in the subchapter 2.1.2 since the lack of causal connection between

168 Waste Directive art. 8(1).

169 More of the requirements in the subchapter 3.2.2.

170 Waste Directive art. 8(2).

171 Behrens et al . 2007, p. 445 and 449, Van Ewijk 2016, p. 124-125.

172 Waste Directive Annex IVa points 2 and 4.

environmental harm and producer. What happens, for example, for historical products which no longer have a producer in business?

An EPR scheme must “take into account the technical feasibility and economic” viability¹⁷³. The technical feasibility refers to the fact that a Member State cannot ask for more than can be executed by producers when it comes to measures. Article 8a(1) declares that producers must be treated equally regardless of, for example, their sizes. The Waste Directive encourages Member States to take measures which support EPR, however, the final responsibility rests in Member States. The “allocation of responsibilities for waste management between public and private actors” aim to circular economy and “decision on the allocation of responsibilities frequently depends on geographical and structural conditions” in the State¹⁷⁴. Economic viability refers to financial responsibilities but at the bottom of economic viability is the principle of polluter pays.

Article 8(4) expresses even clearly the responsibility of the Member States since EPR

“…shall not be applied without prejudice to the responsibility for waste management as provided for in article 15(1)…”. Article 15 states of waste management responsibility.

Member States must “take necessary measures that an original waste producer or a holder carries out the waste treatment himself or has the treatment be handled by” someone else, for example, a public waste collector¹⁷⁵. The responsibility – referring to financial and financial and organizational responsibilities – lays within the producer but operational functions of waste management can be delegated: the Directive does not take a stand whether the operator is public or private. Member States can “decide in which cases the original producer is to retain responsibility for the whole treatment chain and in which cases the responsibility” can be delegated¹⁷⁶. If there is product specific legislation available application of EPR in certain areas must consider lex specialis¹⁷⁷: otherwise the Member

173 Waste Directive art. 8(3).

174 Waste Directive preamble 7.

175 Waste Directive art. 15(1).

176 Waste Directive art. 15(2) and art. 15(3).

177 Waste Directive art. 8(4).

States are able to choose which products the EPR requirements are covering as long as they take into consideration the waste hierarchy¹⁷⁸ and environmental protection¹⁷⁹.

The final point in Article 8 deals with “exchanging of information between the Member States and the Commission”. If there are PROs involved exchanging of information concerns also them accordingly to Article 8a(1)(c). Based on the gathered information the Commission can provide guidelines on waste management.¹⁸⁰ For avoiding “distortion of internal market the Commission can adopt implementing acts” regarding collective fulfilment of financial EPR obligations as ruled in Article 8a(4)(b).

3.1.2 Article 8a Provides General Minimum Requirements for EPR Schemes

Whereas Article 8 provides a possibility for the Member States to establish EPR schemes, Article 8a rules how the schemes need to function in the union. Article 8a recognize some of the key issues and challenges that need to overcome for implementing EPR schemes successfully¹⁸¹. As the financial burden rests within producers or holders of the waste certain actions need to be taken as indicated in Article 3(21). Article 8(5) states that the Commission shall publish guidelines concerning EPR schemes. The Commission believes that the complete and correct transition of the legislation, referring to Article 8a, is essential to guarantee that the objectives of the waste legislation, such as protecting environment and increasing resource efficiency, are achieved¹⁸². However, there are no guidelines¹⁸³, and “in the absence of appropriate guidance, there is a risk that elements of Article 8a are implemented in divergent ways across the Member States”¹⁸⁴.

Article 8a starts by declaring Member States’ obligations when EPR schemes are established in the country. Roles and responsibilities of all relevant actors including those who place

Article 8a starts by declaring Member States’ obligations when EPR schemes are established in the country. Roles and responsibilities of all relevant actors including those who place

In document Extended Producer Responsibility in Theory and in Practice: Requirements of EPR for Fibre-Based Packaging Sector in the EU Legislation (sivua 33-0)