Developments in Europe: Producer Responsibility, Waste and More

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Developments in Europe Producer Responsibility,
Waste and More
Ken Rivlin Partner, Allen Overy LLP
ALI-ABA Course of Study International
Environmental Law Washington, D.C., April 12-13,
2007
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• Notice
• This presentation is for general information only
  and does not contain legal advice

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Outline

• Section 1 Global Product Regulation Key Themes
• Section 2 WEEE and RoHS Overview
• Section 3 RoHS Key Issues, Scope Recent
  Developments
  
• Section 4 WEEE Key Issues, Scope Recent
• Developments
• Section 5 Waste Regulation

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Section One

• Global Product Regulation Key Themes

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Global Product Regulation Key Themes

• Europe is leading the way
• Increased focus on what we make and how we make
  it less focus on pollution and enforcement (so
  far)
  
• Markets and business relationships enforcing
  compliance
  
• Lack of/need for (i) consistency across
  jurisdictions and (ii) certainty
  
• Impacts on entire supply chain
• Guiding principles
• Precautionary Principle
• Producer Responsibility
• Polluter Pays Principle

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Section Two

• WEEE and RoHS Overview

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WEEE/RoHS Overview

• Two EU directives currently in effect
• Required recycling and recovery program (WEEE)
• Restricts hazardous substances content of
  products (RoHS)
  
• Covers EEE electrical and electronic
  equipment
  

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WEEE Directive Overview

• WEEE waste of EEE
• Recycling and recovery program
• Private sector manages and funds program
• Registration requirements currently effective in
  majority of Member States
  
• Direct legal liability likely for entities that
  
  
• import EEE in the EU
• transfer EEE between individual Member States
• have brand name on EEE sold in the EU

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RoHS Directive Overview

• RoHS Restriction of Hazardous Substances in
  EEE
  
• Pb, Hg, Cd, Cr-VI, PBBs and PBDEs
• Compliance deadline July 1, 2006
• All EU countries have implemented RoHS
• Impacts entire supply chain of products
  ultimately sold into the EU

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Product Cycle From EEE to WEEE
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Overview Global WEEE/RoHS Trends

• 27 EU Member States
• Switzerland
• 3 EEA countries Iceland, Norway and
  Liechtenstein
  
• RoHS in Asia China, Japan, Korea
• California RoHS other US (toys not covered)
• Australia Argentina proposals

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Expanded Geographic Scope of WEEE and RoHS

• Bulgaria and Romania
• Acceded to the EU in 2007
• Bulgarian WEEE took effect on July 1, 2006
  Bulgarian RoHS took effect January 1, 2007
  
• Romanian WEEE registration deadline was April 30,
  2006 Romanian RoHS took effect January 1, 2007
  
• Turkey
• Issued May 13, 2006 in Official Gazette
• Requires related regulations to be issued in the
  future
  
• Regulations are under preparation and will most
  likely grant a 1 - 2 year transition period

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Why Should You Care?

• Penalties
• Import bans
• Litigation risks
• Remaining competitive
• How much of your business goes to different
  global markets?
  
• Spill-over effects

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WEEE/RoHS Penalties

• Monetary fines
• Estonia Maximum EUR 1.5 million
• France Maximum EUR 7,500 per infraction
• Spain Maximum EUR 1.2 million per infraction
• Netherlands and UK No maximum limit
• Prohibition on sales (Ireland, Finland, Poland)
• Revocation of trade licenses (Czech Republic,
  Poland, Spain)
  
• Product recall (Germany, Ireland)
• Imprisonment (in at least 8 jurisdictions,
  including the Netherlands and Ireland)

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US Reporting Obligations

• US Registered Companies
• Obligation to disclose material risks to
  investors
  
• Sarbanes-Oxley obligations
• FASB accounting requirements
• Material Risks?
• Product recall
• Prohibition on future sale
• Liability for WEEE
• Fines and penalties

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The EU One Single Market? In Many Ways, Yes.
One Set of Rules? No

• EU Directives require transposition into domestic
  laws of the Member States
  
• Member States have some leeway in choosing the
  method and means of transposition, allowing for
  Member States differences
  
• European Court of Justice is the only authority
  that may give binding interpretations of EU
  legislation
  
• Consequence Total harmonization often not
  achieved

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Section Three

• RoHS Key Issues, Scope and Recent Developments

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Seven Product Exemptions

• EEE intended for military purposes
• Large-scale stationary industrial tools
• Implanted and infected medical devices
• Medical Equipment (Cat. 8)
• Monitoring and Control Instruments (Cat. 9)
• Certain spare parts
• EEE part of another type of equipment that does
  not fall within the scope of the WEEE Directive

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Maximum Concentration Values

• Published August 19, 2005
• 0.1 by weight in homogeneous materials for lead,
  mercury, hexavalent chromium, PBB and PBDE
  
• 0.01 by weight in homogeneous materials for
  cadmium
  
• Definition of homogeneous materials in the
  Commissions FAQs
  
• No reference to intentional addition of
  substances

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RoHS Enforcement Not Yet, But Soon?

• United Kingdom
• NWML sending letters to certain producers July
  2006
  
• No known enforcement action initiated thereafter
• NWML pulling products off the shelves
• No finding of 100 compliance
• But no enforcement actionyet (!)

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RoHS Enforcement Not Yet, But Soon?

• Belgium rumor (unconfirmed)
• Training on testing methods as per IEC standard
• Products to be collected by end of March
• Testing services contract to be open
• for bidding

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Disclosure of RoHS Violations

• MS requirements to disclose violations
• de minimis threshold?
• MS sharing of information
• Clash of compliance cultures across the pond
• Whats a public US company to do?

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RoHS Application Exemption Status

• 29 application exemptions published so far
• Revision of each exemption after 4 years
• Some limited to certain time, e.g., 28 Cr-VI
  07/01/2007
  
• Commission most recently adopted
• 7 exemptions by written procedure (mid-June
  2006)
  
• 2 exemptions at TAC meeting (June 26, 2006)
• All 9 exemptions published in OJ, October 14,
  2006
  
• Commission currently assessing which additional
  exemption requests to vote on at next TAC
  meeting
  
• 23 exemption requests submitted for stakeholder
  consultation closed on January 10, 2007

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RoHS Take-aways

• Critical to understand potential liabilities
  vis-à-vis government regulators and business
  partners, customers, suppliers, etc.
  
• Beware domino effects
• Assess contractual liability allocations
• Are you compliant? Whats your strategy and how
  do you know if its working? Are you prepared
  for enforcement?
  
• Are you tracking developments that impact your
  products and your customers products? How will
  the RoHS review process impact you?

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Section Four

• WEEE Key Issues, Scope and Recent Developments

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Key Requirements of Producers

• Register with each Member State
• Information requirements
• Financial guarantees
• Financing the collection, treatment, recovery and
  disposal of WEEE
  
• There should be one producer for each product
  sold in the EU
  
• Accordingly, even if your company is not deemed
  to be the producer, someone in the sales
  channel will have to take responsibility for
  these requirements
• Contracts with distributors, financial reserves

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Four (or Five) Information Requirements

• Crossed-out wheelie bin solid bar
• Provide re-use and treatment information for
  each new type of EEE
  
• Report to Member States
• Indicate producer
• Provide WEEE information to
• consumers (in private households)

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Member State Trends

• Five types of Member State approaches
• No WEEE registration system in place yet
• No guidance yet on who can register
• Only domestic entities can register
• Foreign entities can register, but only through a
  local representative, local tax ID number, etc.
  
• Foreign entities can register
• Outcome
• Companies have been continually updating their
  compliance strategies

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WEEE Enforcement Just a Little So Far

• Ireland
• Three penalties under WEEE regulations
• Violation of visible fee requirement
• Spain one penalty issued
• Netherlands
• One penalty issued against a producer that
  refused to register for WEEE purposes
  
• One penalty issued against municipal authorities
  for the failure to establish a municipal
  take-back site

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WEEE Enforcement Against the UK!

• United Kingdom before the European Court of
  Justice (!)
  
• Case C-139/06 - Judgment of the Court (Sixth
  Chamber) of March 1, 2007
  
• Commission of the European Communities v. United
  Kingdom of Great Britain and Northern Ireland
  
• Failure of a Member State to fulfill its
  obligations under the WEEE Directive
  
• Decision not available yet (just the summary)

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WEEE Review Process

• Issues in play
• Scope of WEEE Directive
• Collection targets
• Targets for reuse, recycling and recovery
• Treatment requirements
• Central registration system
• Harmonization of declaration and reporting
• Clarification on definition of producer

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WEEE Recent Developments in Germany

• A number of administrative court decisions in
  effect concluded that the German Clearing House
  had interpreted registration requirements too
  broadly
• Interesting question facing registrants Do I
  challenge? How much will it cost? Do I have
  enough information to do a real cost-benefit
  analysis?

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WEEE To-Do List

• In each Member State where your products are
  sold
  
• Assess the status of your products ( )
• Assess your position and register ( )
• Join a compliance scheme/take ind. responsibility
  ( )
  
• Arrange for WEEE management ( )
• Meet financial obligations ( )
• Inform users and treatment facilities ( )
• Take care of reporting ( )
• Take care of labeling ( )

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AO Compliance Website
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Section Five

• EU Waste Regulation

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EU Waste Management

• WEEE/RoHS Derived from EU Waste Management
  Policy
  
• Policy Aims
• Waste Prevention
• Recycling and Reuse
• Improving Final Disposal and Monitoring
• Underlying Principles
• Precautionary Principle
• Producer Responsibility
• Polluter Pays Principle

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EU Waste Legislation

• Three Subcategories
• Framework Waste (Dir. 2006/12/EC), Hazardous
  Waste (Dir. 91/689/EEC) and Waste Shipments (Reg.
  259/93 / reg. 1013/2006)
  
• Specific Waste Streams incl. RoHS (Dir.
  2002/95/EC), WEEE (Dir. 2002/96/EC), ELV (Dir.
  2000/59/EC), Batteries (Dir. 2006/66/EC),
  Packaging Waste (Dir. 94/62 EC)
• Waste Management Operations incl. Landfills
  (Dir. 99/31/EC), Waste Incineration (Dir.
  2000/76/EC)
  

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EU Waste Legislation (contd)

• Mostly EC Directives
• Require transposition into national legislation
• Enforcement is on a Member State level
• Different powers, sanctions, enforcement
  procedures, enforcement policies
  
• Considered to be one of the most complex pieces
  of EU Environmental Law
  
• Definition of waste (substance or object which
  the holder discards or intends or is required to
  discard)
  
• Distinction between waste and raw materials,
  etc.
  
• Related areas of EC law REACH, Soil and Water
  Protection, Environmental Liability Directive
  (Dir. 2004/35/EC)

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Waste Shipment Regulation

• Regulation directly binding throughout Member
  States
  
• Control of waste shipments within, into and out
  of the EU mainly procedural requirements, yet
  certain shipments are prohibited
  
• Legal requirements depend upon
• Type of waste (Green, Amber, Red)
• Country of origin/destination (EU EFTA OECD
  Basle Convention 3rd party multilateral
  agreements)
  
• Disposal / recovery
• Requirements range from carrying the appropriate
  shipment letter to lodging a notification and
  obtaining prior approval

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Waste Shipment Regulation (contd)

• July 12, 2007 Regulation 1013/2006 will replace
  current Waste Shipment Regulation
  
• Simplified procedures
• 2 instead of 3 types of waste

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Waste Shipment Regulation (contd)

• Why should US companies care?
• US
• OECD country
• Did sign the Basel Convention, but did not ratify
  (!)
  
• No 3rd party multilateral agreement
• Waste shipments US-EU/EU-US allowed for recovery,
  not for disposal
  
• Procedural requirements apply, depending on type
  of waste
  
• Example WEEE shipped from EU to US for recovery
• How about defective EEE shipped for repair
  discarded?

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Environmental Liability Directive

• Prevention and Remedying of Environmental Damage
  
  
• Based on Polluter Pays Principle
• Recovery of costs of preventive or restorative
  measures from operator causing (imminent threat
  of) damage
  
• Includes damage from Waste Management Operations
  (collection, transport, recovery and disposal of
  waste and hazardous waste)
  
• Only competent authorities are entitled to cost
  recovery
  
• No right of compensation for private parties
• But national liability laws may grant such rights
  to private parties
  
• Private parties/NGOs may request the competent
  authorities to take preventive or restorative
  measures
  
• Transposition date April 30, 2007

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• Ken Rivlin
• Partner, Global Environmental Law Group
• Head, US Environmental and Regulatory Law Group
• Allen Overy LLP
• 1221 Avenue of the Americas
• New York, NY 10020 USA
• ken.rivlin_at__at_allenovery.com
• Telephone [phone]
• Direct 212.610.6460
• These are presentation slides only. The
  information within these slides does not
  constitute definitive advice and should not be
  used as the basis for giving definitive advice
  without checking the primary sources.
• Allen Overy means Allen Overy LLP and/or its
  affiliated undertakings. The term partner is
  used to refer to a member of Allen Overy LLP or
  an employee or consultant with equivalent
  standing and qualifications or an individual with
  equivalent status in one of Allen Overy LLP's
  affiliated undertakings.