Extended Producer Responsibility (EPR) schemes enter uncharted waters | Fieldfisher
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Extended Producer Responsibility (EPR) schemes enter uncharted waters



On 26 October 2022, the European Commission published two legislative proposals (Directives) to update the EU's water legislation regarding: (i) urban wastewater treatment and (ii) surface and groundwater pollutants. The proposal on urban wastewater treatment provides that companies placing cosmetic and pharmaceutical products on the market should be liable for the costs incurred by Member States in upgrading urban water treatment plants. This is the very first time that an EPR scheme is proposed by the EU in the field of EU water policy.

And EPR is catching on in other places – while not included in the Commission's initial proposal on surface and groundwater pollutants, the European Parliament voted, at its plenary session on 12 September 2023, to support a new provision requiring the Commission to investigate the possibility of introducing EPR for substances subject to monitoring requirements under that legislation.

EPR in the field of water policy – What's the big deal?

The introduction of EPR schemes in the field of water policy represents a major evolution in their use. Up until now, EPR schemes have mainly been used by the EU to manage the post-consumer stage for packaging, batteries, and waste electronics.

However, EPR schemes aimed at addressing water pollution are significantly more complex. This is because of the wide array of potential sources of water pollution, the fact that pollutants are identified at the chemical level (which are subject to variations and transformations) and the difficulties in tracing responsibility. There is also scope for a much wider range of products placed on the EU market to be caught.

Given the additional financial and administrative burdens EPR schemes represent for industry, and the potential business opportunities to switch to substances perceived as less harmful, we strongly recommend that affected companies follow these developments closely.

(i) Urban Wastewater Treatment Directive (UWWTD)

Under this proposal, companies placing cosmetic and pharmaceutical products on the market would be liable for the costs incurred by Member States in introducing quaternary treatment at urban wastewater treatment plants.[1] Quaternary treatment is an additional level of water treatment, intended to address the presence of micro-pollutants in wastewater before it is released into the environment.

What does EPR mean for affected companies?

While the details of the EPR initiative are left up to the Member States, producers (including importers and distributors) would be required to form/join producer responsibility organisations in each Member State where they place such products on the market.

Such producers would also be required to report the quantities of products that they place on the market annually, as well as their hazardousness in wastewaters, and make a financial contribution based on those factors. The way in which contributions are calculated would be intended to create incentives for producers to switch to more environmentally favourable substances, when designing their products.

Exceptions from EPR are nevertheless foreseen for: (i) producers placing less than two tonnes of product on the market annually and: (ii) products that do not generate micro-pollutants in wastewaters at the end of their life.

Will companies be required to cover the full costs of upgrading to quaternary treatment?

In an interesting and recent development, the European Parliament voted, at its plenary session on 5 October 2023, to support the introduction of EPR, while at the same time taking the view that industry should not necessarily bear the full costs of upgrading to quaternary treatment. The amendments adopted by the European Parliament, foresee that EPR schemes may be complemented by a maximum contribution of 20% from national funding. The motivation for this leeway is to try to avoid any unintended consequences on the availability, affordability, and accessibility of vital products, in particular medicines.

The amendments adopted also foresee the possibility for producers to be exempted from the EPR obligation if they can demonstrate that their products are rapidly biodegradable in wastewater, or the substances in their products are rapidly biodegradable in aquatic conditions.

Could sectors other than cosmetics and pharmaceuticals be potentially caught in future?

The Commission's decision to restrict the scope of EPR to cosmetics and pharmaceuticals has been a major source of controversy. According to the Commission, 92% of micro pollutants found in receiving waters come from pharmaceuticals and cosmetics. However, the pharmaceutical and cosmetic sectors, and also environmental groups, have been quick to raise concerns about the exclusion of other sectors (such as pesticides, biocides and textiles) apparently generating appreciable amounts of micro-pollutants.

The European Parliament agrees with the decision to restrict EPR to pharmaceuticals and cosmetics but has also introduced a new amendment expressly requiring the Commission to prepare a report by 1 January 2030 and every five years thereafter, assessing the need to extend its scope, in particular, to products containing microplastics and Per-and Polyfluoroalkyl Substances (PFAS) (taking into account any restrictions on PFAS).

(ii) Surface and groundwater pollutants

The Commission proposes to make several amendments to the Water Framework Directive (WFD), the Ground Water Directive and the Environmental Quality Standards (EQS) Directive. Among those amendments is the introduction of revised lists of chemical pollutants in groundwater and surface water. Several new substances are added to these lists for the first time, including PFAS, and several pesticides, biocides and pharmaceuticals.

Member States are obliged to continuously monitor and report on the presence of listed substances and take any necessary measures to meet accompanying EQS (maximum concentration limits) set for each substance.  

What role may EPR play?

On 12 September 2023, the European Parliament voted in favour of the ENVI Committee's Report, which foresees the Commission presenting, within one year of the legislation's entry into force, an impact assessment and legislative proposal (if appropriate) on the introduction of EPR.

EPR would be intended to ensure that producers that place on the market products containing any of the substances or compounds listed in the WFD's priority substance list, as well as substances of emerging concern included in the WFD's watch list, contribute to the costs for monitoring programmes.

What companies may be impacted by such a proposal?

Producers of hundreds of thousands of diverse products could potentially be affected, including those containing widely used substances like nickel and PFAS, as well as different pesticides, biocides, and human and veterinary medicinal products. Given the sheer scale of products and producers concerned, there is an obvious risk that the administrative costs of adhering to and managing an EPR scheme for all substances concerned could quickly become disproportionate. The scope and design of any scheme would need to put those concerns front and centre, and provide clear de minimis thresholds.

Next steps

The Council has yet to finalise its position on either the recast UWWTD and revisions to the WFD and Groundwater Directive. Once this occurs, interinstitutional negotiations (trilogues) are expected to take place with a view to agreeing on a final legislative text for each Directive, most likely sometime in the first half of 2024.
If you need legal advice assessing the ongoing legislation against your product portfolio, and how to potentially mitigate any risk, do not hesitate to reach out to us.

[1] See Articles 9 and 10 of the proposal.

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