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The industry under threat!

Government Decision 1037/2010 transposing Directive 2002/96/CE into national legislation

March 2011 - From the Print Edition

The Ministry of Environment issued last autumn, a draft decision that was adopted by the Government without any amendments as Government Decision (GD) 1037/2010 regarding waste electrical and electronic equipment (WEEE). In theory, this decision was meant to improve the transposition of the relevant European Directive into national legislation. However, the final result is significantly worse than the law it replaces, i.e. Government Decision 448/2005. It systematically ignores the current European models and practices, as well as the proposals brought forward by the main actors involved in the management of electrical waste.
Furthermore, the new GD 1037/2010 actually paves the way for the European Commission to launch the infringement procedure in this area.
Business analysts and legal advisers had voiced out ample criticism even during the drafting stage. We will only enumerate some of them here, for those interested in the industry and the Romanian business environment, i.e those provisions which become real dangers and threats to the normal economic activity.

A. GD 1037 transfers solely to the producers Romania’s full obligation as Member State to reach collection targets, although local authorities are responsible for the collection and treatment and much of the WEEE is collected through ‘parallel’ channels.
In practice, all producers in the field will work under the menace that their activity may be suspended for failure to fulfil the obligations that actually belong to third parties, the local authorities.
This provision (Art. 5 paragraph 13) leaves the obligation to reach the national collection target entirely on the producers’ shoulders, although they do not and cannot control the waste flows. They have no power to enforce the legislation.
Therefore, there is no reason why they should be responsible for the national collection targets, because:
− producers cannot oblige consumers to hand over old equipment;
− producers cannot stop other operators (such as waste traders or local authorities) collecting and selling old/ discarded equipment for a profit. If discarded equipment does not flow into the producers’ waste management schemes, since it is meant to bring some profit, then it is in fact impossible for producers to reach WEEE collection targets.
The obligation to reach national collection targets rests with the authorities responsible for waste management. This vision has been recently confirmed by the majority vote in the plenary of the European Parliament.
In real terms, although according to GD 1037, local authorities must collect WEEE, the ones further kept responsible for the collection target are the producers, who will be penalised if they fail to reach it. Furthermore, the penalties for failure to comply with collection obligations are obviously disproportionate.
If local authorities do not comply with the obligation to organise the collection, the sanction is just a fine between 10,000 to 20,000 lei (the lowest level of the fines), while producers who fail to reach the collection targets will suffer the highest penalties in this law, i.e. will pay a fine of 40,000 to 50,000 lei, and their activity will be suspended, besides losing the guarantees!
There is no requirement or minimum performance criteria for local authorities regarding collected quantities. They may even organise a mock collection system with zero results in order to show that they have fulfilled their obligations under GD 1037/2010 and avoid all penalties, while electric and electronic equipment manufacturers and importers will be penalised, since there was no waste equipment to take back, and so they failed to reach the target....
The danger becomes critical because the producers remain the only party responsible for the collection of the 4 kg WEEE / inhabitant / year and their activity will be suspended if they fail to collect these quantities. However, the best national collection level so far has not gone over 1.5 kg / inhabitant / year.
Consequently, the entire electric industry will operate on the Romanian market under the threat of being penalised, although producers will never have the means to enforce the legislation (the industry does not and should not control the enforcement of the legislation and cannot sanction local authorities).
While drafting this law, the responsible authorities deliberately ignored the industry representatives’ position papers, describing the reality of WEEE management: many actors are involved in the waste flows and for some of them the income resulting from trading of such waste has become an attractive financial resource, and so they purposefully accessed the WEEE market. It is estimated that over 2/3 of WEEE generated in private households do not reach the producers’ systems to be treated and recycled according to environment legislation.
Despite all this, GD 1037/2010 still sets the full responsibility regarding national targets on the producers registered with the National Environment Protection Agency, as if they were the only ones who can access the WEEE.
The principle of equal treatment should be ensured through a general obligation to have all other operators accessing WEEE register just as the producers do, as well as through spotting down non-compliances and imposing equal sanctions.

B. Only the approved recyclers are severely sanctioned. If they fail to comply with the provisions of GD 1037 their activity may be suspended. There are no sanctions for the recyclers whose activities have not been approved.
GD 1037 sanctions only the approved ‘recyclers’, who are seen by the authorities because they have made themselves known when they registered. The law does not even mention the operators who are not registered and carry out these activities illegally. It also fails to mention the ways to stop and discourage the systematic pollution of the environment with heavy metals, persistent organic pollutants, substances depleting the ozone layer etc., which can be identified even in the case of authorised operators. Art. 13 of the GD which refers to the inspection and control activities and sanctions the infringement of Art 6, paragraph 4 and 5, but infringement of Art. 6 paragraph 3 (“(3) Business operators may carry out WEEE treatment activities only if they have an environment approval according to the legislation in force”) is not sanctioned in any way. Operators who work without an environmental permit can be sanctioned only through the environment protection framework legislation.
The result borders on the absurd. If an approved operator, fully complying with treatment norms, fails to reach the recovery target by 1% (e.g. 79% rather than 80% level of recovery for category 1 WEEE) can be penalised with a fine between 40,000 and 50,000 lei and its activity can be temporarily suspended, in the same time, illegal and non-compliant dismantling, which is highly polluting, can only be penalised according to the Framework Law (Government Emergency Ordinance 195/2005 approved by Law 265/2006) with fines starting from 5,000 lei and the operators are allowed to carry on with their activities which are so obviously dangerous for the environment.

C. The road to a new infringement procedure remains open. GD 1037/2010 does not solve the problems that the European Commission identified in 2009 regarding the transposition of the Directive 2002/96/CE into Romanian legislation Another major deficiency of this piece of legislation regards the guarantees foreseen in Art. 8. The Government Decision fails to transpose the provisions of the Directive into national legislation (so it does not answer the Letter of Formal Notice sent by the European Commission in 2009, which is quoted as main motive for this draft law – sic!) and in addition it encroaches on other national laws. In real terms, Art 8 Paragraph 2 (2-3) of Directive 2002/96/EC requests that: “Member States shall ensure that each producer provides a guarantee when placing a product on the market showing that the management of all WEEE will be financed and that producers clearly mark their products in accordance with Article 11(2). This guarantee shall ensure that the operations referred to in paragraph 1 relating to this product will be financed. The guarantee may take the form of participation by the producer in appropriate schemes for the financing of the management of WEEE, a recycling insurance or a blocked bank account. “ In other words, this guarantee which is compulsory for producers or their collective organisations, has a precise destination and these sums cannot be used for other purposes.
However, GD 1037/2010 includes provisions which go against the letter and the spirit of Directive 2002/96/CE, because in Art 8, paragraph 4 and 7, the Government Decision says that both in the case of producers and collective organisations, the sole beneficiary of the bank letter of guarantee or of the bank account, as well as of the insurance policy is the Administration of the Environment Fund, which is a case of misappropriation of funds.
According to the provisions of the Government Emergency Ordinance 196/2005 regarding the Environment Fund, with subsequent amendments and completions, the Administration of the Environment Fund (Administraţia Fondului pentru Mediu - AFM) is a public institution acting as a legal person, fully self-financed, responsible for the management of the Environment Fund, which is in turn an economic and financial instrument created to support and implement environment protection projects. It is a public fund, fiscally deductible, and its income represents public income that is part of the consolidated general budget and its destination is established by a special law.
On the other hand, WEEE management financing is an obligation, not a project or programme, so it is not included in the Fund’s scope. Furthermore, the Environment Fund is not an authority in charge to implement Directive 2002/96/ EC in Romania, so it cannot establish the compliance or non-compliance with this obligation and it cannot order thatthe guarantee be used. If the sums are retained or are used as income for the Environment Fund, then they will be used for ‘projects and programmes’ which are within the scope of the Fund, while the management of WEEE for which the guarantee was created continues without financing.
Actually, the ‘misappropriation’ of sums which might result from guarantees executed by the Environment Fund was criticised by the European Commission in a new infringement letter sent to the Romanian Government in November 2010. This is a further reason why the recent GD 1037, as well as other relevant laws, must be urgently revised.

The Romanian Recycling
Association – RoRec
Bucharest, February 2011



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