Lidings experts Counsel Vadim Konyushkevich and Associate Irina Dyubina authored an article on Waste Management Responsibilities for Producers and Importers in Russia published in Bloomberg BNA. International Environment Reporter

1. Reproduced with permission from International Environment Reporter, Insights, 07/29/2015. Copyright ஽ 2015 by
The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
R E C Y C L I N G
C O R P O R AT E R E S P O N S I B I L I T Y
Russia’s new federal law on waste management encourages companies to maximize the
volume of goods that are recycled and reused and to minimize the waste generated.
Waste Management Responsibilities for Producers and Importers in Russia
BY VADIM KONYUSHKEVICH AND IRINA DYUBINA
I. Introduction
F
or 17 years, waste management in Russia has been
regulated by the federal law dated June 24, 1998, N
89-FZ, On Production and Consumption Waste. It
establishes the basic norms and principles of state
policy for waste management, except for radioactive
and medical wastes.
On Dec. 29, 2014, the federal law N 458-FZ (hereinaf-
ter the ‘‘law’’)1
was enacted, and it imposed substantial
waste management obligations, namely recycling re-
quirements, on manufacturers and importers.
A review of Russian waste management legislation
before adoption of the law indicated the need for sig-
nificant updating of the 1998 regulation.
According to the Russian government, the main aims
of the 2014 law are to encourage companies that manu-
facture and import goods to maximize the volume of
goods that are recycled and reused and to minimize the
volume of overall waste generated.
In addition, due to limited capacity at existing recy-
cling facilities and a lack of equipment for waste treat-
ment, there is growing demand to refurbish and mod-
ernize Russia’s waste management industry, including
constructing new facilities.
II. Recycling Requirements
Most of the amendments introduced by the law, in-
cluding those related to recycling obligations on pro-
ducers and importers of goods, came into force Jan. 1.
Many of the provisions of the law constitute so-called
blanket rules, which refer to certain bylaws.
Currently, the government is reviewing more than 30
draft decrees intended for regulating this area.
These decrees include drawing up a list of specific
goods and packing matter subject to recycling; estab-
lishing normatives, or standards, for self-recycling; and
setting up reporting guidance for compliance.
According to the updated law, the burden of comply-
ing with waste management standards today is on com-
panies. They are responsible for the entire life cycle of
a product, including its take-back, recycling and final
disposal.
The law does not stipulate how they must fulfill their
waste management responsibilities, however, so manu-
1
Federal Law N 458-FZ is available, in Russian, at
102365722&intelsearch=458-%D4%C7http://pravo.gov.ru/
proxy/ips/?docbody=&nd=102365722&intelsearch=458-%
D4%C7.
Counsel Vadim Konyushkevich represents
international clients in legal matters relating
to cross-border transactions, local corporate
and regulatory issues at Lidings, a leading
independent national law firm with a broad
base of clientele in Russia and the Common-
wealth of Independent States.
Associate Irina Dyubina advises on a range of
corporate and commercial law matters for
Lidings, a member of the International Law-
yers Network.
The opinions in this article do not represent
the views of Bloomberg BNA, which welcomes
other points of view.
COPYRIGHT ஽ 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN 0149-8738
International Environment
Reporter™

2. facturers and importers can choose one of the following
options:
(1) Companies can perform recycling themselves us-
ing their own infrastructure.
If they chose this option, then they must assure the
collection, delivery, processing and recycling of corre-
sponding waste, and disclose information about waste
collection points. Most of these waste management ac-
tivities require the manufacturer or importer to have a
license.
(2) The second option is for manufacturers or import-
ers to enter into a contract with a waste management
operator or a regional recycling operator that will
handle specific waste.
(3) Manufacturers and importers also can carry out
their recycling obligations by establishing an associa-
tion (union) that undertakes to enter into agreements
with waste management operators or regional recycling
operator.
The association (union) also submits reports on com-
pliance of its member in regard to waste management
legislation. It is still not clear how the liability for non-
compliance with these requirements will be deter-
mined, or broken out, for the association (union) and its
members.
If companies do not perform the recycling them-
selves, then they must pay the environmental fee, which
is a special non-tax budget payment.
III. Licensing Requirements
The next issue, which was substantially changed by
the 2014 law, is waste management licensing require-
ments.
According to the amendments introduced in the law,
waste recycling also is subject to licensing in Russia. As
of July 1, a waste management license is required not
only for the collection, transportation, processing, de-
contamination and disposal of hazardous waste for
classes 1 through 4, but also for the recycling of such
wastes.
Therefore, for licensees that are going to perform re-
cycling activities, all licenses issued before the law en-
tered into force were valid only until June 30.
Another issue regarding licensing came about after
the law went into effect: Companies may need a license
for recycling waste if it is part of their internal produc-
tion cycle. The same requirement applies to those
manufacturers and importers that want to organize
their own waste management process to comply with
recycling standards and avoid paying an environmental
fee.
At this point it should be mentioned that, according
to provisions of the law and effective as of Jan. 1, 2016,
payment for negative impact on the environment (not
the environmental fee) will be calculated depending on
the class of hazardous waste, and starting in 2020 spe-
cial coefficients for calculating the amount of payment
for any negative impact on the environment will be ap-
plied.
Companies should be aware of the five hazardous
waste classes in Russia:
s Class 1: extremely hazardous waste
s Class 2: highly hazardous waste
s Class 3: moderately hazardous waste
s Class 4: low hazardous waste
s Class 5: practically non-hazardous waste
The classification system is based on a set of param-
eters that take into account both the impact of wastes
on the environment and toxic, or related hazardous pa-
rameters, that are significant for assessing the potential
harmful impact of wastes on human health.
Under the law, the activities of legal entities and indi-
vidual entrepreneurs resulting in generation of wastes
for class 1 through 4 hazards can be prohibited or re-
stricted if they lack the capacity or technical expertise
needed to fulfill recycling normatives or to safely pro-
cess wastes.
Currently, companies are obligated to confirm the
classification of waste they generate to a particular haz-
ardous class in order to formalize the passport of waste.
Companies themselves must determine which class
wastes fall into by means of laboratory testing to be
conducted in a special licensed laboratory according to
Federal Classification Waste Catalog (FKKO), approved
by Order of Rosprirodnadzor N 445, dated July 18,
20142
, (for classes 1 through 4) and the Hazard Classi-
fication Criteria of Dangerous Waste approved by Or-
der of the Ministry of Natural Resources N 511, dated
June 15, 2001, (for classes 1 through 5).
A passport must be obtained for class 1 through 4
hazardous waste and it should describe the properties
of the generated waste. It is not mandatory to secure a
formal passport of waste for a Class 5 hazard; however,
companies must have certain documents evincing this
class, such as records confirming the chemical and (or)
the component structure and information on the origin,
conditions of waste generation, aggregative state and
the physical form.
IV. Calculating Environmental Fee Rates
According to the law, manufacturers and importers
are not limited to a specific territory and can carry out
their recycling obligations throughout Russia.
Regardless of whether companies choose to manage
their own recycling obligations or to contract with a
waste management company, they should comply with
required normatives for recycling.
Recycling standards are set out by governmental de-
cree on the basis of potential danger to the environment
and human health and are subject to review every three
years.
The standards, or normatives, apply a percentage, or
the ratio of quantity of a certain kind of goods plus its
packaging, to the total quantity of a certain kind of
goods put on the market within the territory of Russia.
Currently, the draft decree on normatives allow per-
centages for certain goods to be zero for 2015. This was
done because of the requests of certain groups of manu-
facturers and importers that said they needed a period
to prepare to meet their recycling obligations. In the
meantime, the relevant bylaws will be finally adopted
and appropriate recycling infrastructure could appear.
The law classifies the environmental fee as non-tax
state budgetary revenue and environmental fee rates
are determined by the governmental decree for each
category of goods subject to recycling.
2
Order of Rosprirodnadzor N 445 is available, in Russian,
at http://www.rg.ru/2014/09/19/othody-dok.html.
2
7-29-15 COPYRIGHT ஽ 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. INER ISSN 0149-8738

3. The fee is to be paid by all manufacturers and import-
ers if they do not perform recycling in compliance with
the established normatives.
The environmental fee is supposed to be used to pro-
vide subsidies to constituent entities to assist them in
developing their recycling infrastructure.
The funds granted as subsidies to constituencies can
be used for a variety of purposes, including financing
regional recycling programs and territorial waste man-
agement schemes; defraying expenses for the collec-
tion, transportation, processing and recycling of waste;
building the infrastructure necessary for recycling;
treating waste and more.
Therefore, the environmental fee seems to become
another type of payment to the state budget for negative
impact on the environment. The environmental fee rate
is based on the average expenditure for the collection,
transport, processing and recycling of a single item or
of one unit of mass/weight of a product that is no longer
of value to the consumer.
The environmental fee is calculated in the following
way:
Fee = Rate x Weight x Norm
Where:
s Fee is the environmental fee;
s Rate is the environmental fee rate;
s Weight is the mass of finished product or number
of units of the product or mass of packaging; and
s Norm is a normative of recycling, i.e. the percent-
age of goods subject to recycling.
If manufacturers or importers that took on the obli-
gation to independently recycle wastes do not fully
comply with the required standards for the recycling
normatives, then the environmental fee will be calcu-
lated in the following way:
Fee = Rate x Difference x Weight x Norm
Where:
s Fee is the environmental fee;
s Rate is the environmental fee rate;
s Difference is the variance between the required
quantity or recycled waste and the actual quantity;
s Weight is the mass of finished product or number
of units of the product or mass of packaging; and
s Norm is a normative of recycling, i.e. the percent-
age of goods subject to recycling.
The law also makes it the responsibility of manufac-
turers and importers to submit compliance reports that
meet the requirements of the waste management legis-
lation (on reaching or not the recycling normatives).
The Federal Supervisory Natural Resources Manage-
ment Service monitors and supervises the calculation
and payment of environmental fees.
In Russia, the Federal Supervisory Natural Resources
Management Service is the executive authority that su-
pervises environmental management, as well as envi-
ronmental protection, waste management and state en-
vironmental expertise.
It is worth mentioning that pursuant to the law, both
goods and packages are subject to recycling upon par-
tial or full loss of their consumer attributes.
The general rule is: In the event the good is ready for
consumption, then the full fee must be paid (both in re-
spect to goods and to their packaging).
In cases where it is not ready for consumption, semi-
finished products for example, then the fee is payable
with regard to the packaging of the goods only.
In order to determine the quantity of goods, including
packaging, to be recycled in 2015 and to calculate the
environmental fee, data will be used on the quantity of
goods, including packaging, put on the market within
the territory of Russia in the first nine months in 2015.
If manufacturers and importers do provide for the recy-
cling of waste, then they will be required to pay the en-
vironmental fee for the first nine months of 2015 by Oct.
15. The environmental fee for October, November and
December 2015 will be subject to payment till Feb. 1,
2016.
V. Solid Waste Disposal
In regard to Russia’s growing urban population and
overall goods consumption, another innovation intro-
duced by the law relates to solid waste disposal. The
new rules for municipal solid waste management are
outlined in the law and will take effect Jan. 1, 2016.
Essentially, solid municipal waste means trash gener-
ated in living spaces in the course of consumption by
persons, as well as goods that have lost their consumer
attributes in the course of their use by people in living
spaces for the purposes of satisfaction of personal and
daily living needs.
According to the regulation, a special governmental
organization, or regional waste management operator
will provide for the collection, transportation, process-
ing, recycling and disposal of the municipal solid waste
in the territory of constituency of the Russia.
Municipal and regional solid waste operators must be
an individual entrepreneur or a legal entity. Producers
of solid municipal waste should draw up contracts for
the recycling of such waste with regional operators.
A regional recycling operator will be selected by the
authorities of each constituent entity of Russia in the
course of state procurements procedure. Producers of
solid municipal waste, as well as residential property
owners, will be required to sign contracts with a re-
gional operator for recycling services.
The contract with the regional operator will be pub-
lic; in other words, the terms of the contract will be the
same for all clients, and its price shall not exceed the
limits stated by the authorized body. While this mini-
mizes the risk of regional operators gaining a monopoly
in waste management, recycling and disposal, it could
create obstacles for manufacturers or importers that
want to establish their own waste recycling infrastruc-
ture.
VI. Conclusion
In summarizing the latest initiatives in Russian waste
management law, several key highlights should be
mentioned.
The law imposes additional responsibilities on manu-
facturers and importers of goods, the so-called produc-
er’s responsibility, which shall substantially affect their
business activity and relevant costs planning.
European companies are supposed to be familiar
with the concept of producer’s responsibility, which is
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4. an environmental policy approach designed to promote
the integration of environmental costs associated with
goods throughout their life cycles into the market price
of the products.
The environmental policy approach takes into ac-
count the needed environmental safeguards in the
course of a product’s design and shifts the responsibil-
ity for proper waste management or recycling to the
producer and away from Russian municipalities.
The law also imposes recycling obligations on manu-
facturers and importers of goods, which can be fulfilled
by payment of environmental fee or by satisfying recy-
cling requirements, as well as new requirements regu-
late solid municipal waste.
It should be noted, however, that the proposed
scheme of recycling does not stimulate developing of
recycling facilities, but mainly serves a fiscal function
by providing for funds for corresponding state, regional
and municipal budgets.
Consequently, we see this as the beginning of recy-
cling regulation development in Russia, and only time
will tell the workability and effectiveness of the 2014
waste management law and its amendments.
4
7-29-15 COPYRIGHT ஽ 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. INER ISSN 0149-8738