The current PRC Law on the Prevention and Control of Environmental Pollution by Solid Wastes (“Current Solid Waste Law”) first came into force in 1996. It was revised in 2015 and has played an important role in working to safeguard the environment in the PRC. In order to better protect the environment, on 29 April 2020 the Standing Committee of the National People’s Congress further revised to a substantial extent the Current Solid Waste Law (the new revision being the “2020 Revision”), which came into force on 1 September 2020. The 2020 Revision implements stricter rules on environmental protection in respect of the import of solid wastes. This alert will highlight the key changes in the 2020 Revision and propose some practical suggestions to carriers and importers.
I. Key changes of the 2020 Revision
The key changes of the 2020 Revision including the following:
1. Delineation and layering of responsibility of various authorities
Article 9 of the 2020 Revision sets out the responsibilities of the State Council, departments of the State Council and local people’s governments for the supervision and administration of the nationwide law for the prevention and control of environmental pollution by solid wastes. This requires the various departments to take responsibility for the prevention and control of environmental pollution within their respective administrative areas. For example, Article 25 of the 2020 Revision permits the customs authorities to commission a specialized institution to perform attribute identification and exercise management according to the law if it suspects that imported goods are solid wastes.
2. Implement various measures on controlling different types of solid wastes
The 2020 Revision imposes environmental pollution and prevention regimes on various types of solid wastes - such as industrial solid wastes, construction wastes and agricultural solid wastes, and hazardous wastes (Chapters III, V and VI of the 2020 Revision). Relevant provisions have been enacted to strengthen the entire process in dealing with the above solid wastes, including the classification, recycling and comprehensive utilization of solid wastes.
It is important to note that for hazardous wastes, Article 99 of the 2020 Revision provides that an entity that collects, stores, transports, utilizes or treats hazardous wastes shall purchase environmental pollution liability insurance in accordance with the relevant provisions issued by the state.
3. Amend the liability regime to make the carrier and the importer bear joint and several liability
A. Liability of environment pollution
Compared to the Current Solid Waste Law, the 2020 Revision enlarges the scope of the responsible parties for environmental pollution to include not only the producer, seller, importer and user, but also the entities responsible for collection, storage and carriage of solid wastes. Article 37 provides that where the producer of industrial solid wastes commissions another person to transport, utilize or dispose of industrial solid wastes, that party shall verify the eligibility and technical capabilities of the commissioned party, enter into a written contract and stipulate the requirements for pollution prevention and control in the contract, failing which the relevant parties shall be jointly and severally liable for causing pollution and ecological damage.
B. Liability of returning and disposing of prohibited solid wastes
According to Article 78 of the Current Solid Wastes Law, the carrier shall bear the liability for returning or disposing of prohibited solid wastes only if the carrier is unable to identify the importer. However, the 2020 Revision imposes joint and several liability on both the carrier and importer for returning and disposal of solid wastes. It is accordingly essential to understand that the carrier may be liable even where the importer is known after the 2020 Revision comes into force. For solid wastes that cannot be returned, or where the customs authorities decide not to authorise return, such wastes shall be disposed of by the relevant authorities and again, the carrier and the importer will bear joint and several liability for the costs incurred (Article 115 of the 2020 Revision).Given the joint and several liability regime for the carrier and the importer, it is recommended the carrier confirm that cargos are permitted to be imported and ensure the importer has obtained all the required certificates, including the import license.
4. Tighten the restrictions on the import of solid wastes
In general, the Current Solid Waste Law prohibits the import, dumping and disposal of both solid wastes (unless exempt with a specific import license) and hazardous wastes. The licensing regime has been in effect in the PRC from 1 August 2011 in accordance with the Administrative Measures for the Import of Solid Waste. It is therefore the practice of carriers, prior to accepting any cargo of solid wastes for carriage to the PRC, to require consignors to provide various certificates for the import of the solid waste to ensure the cargo can be imported to the PRC.
However, as noted in Article 24 of the 2020 Revision, the PRC shall gradually achieve zero solid waste imports. In this regard, it is understood that a new regime and/or reforms of the current laws governing the importation of solid waste will be introduced to achieve the goal of zero solid waste imports. According to the latest announcement from the Ministry of Ecology and Environment, the current licensing regime will be in place until the end of the year, meaning that the ban on the importation of all solid wastes will become effective from 1 January 2021.
5. Significantly increase the penalties for violation
The 2020 Revision significantly increases the penalties for violation of the provisions:
A. Setting up new penalties. For example, if an entity that produces industrial solid wastes fails to keep a solid waste management journal and maintain truthful records, it may face a fine of RMB 50,000 to RMB 200,000, confiscation of the illegal income and suspension of business or close-down if the circumstances are deemed serious (Article 102 of the 2020 Revision).
B. Substantially increase the existing penalties. For example, under the 2020 Revision, where a carrier transports prohibited solid waste into the PRC, a fine of between RMB 500,000 and RMB 5,000,000 may be imposed on the carrier and the importer. This is in addition to an order from the customs authorities to return the solid wastes to the place of export (Article 115 of the 2020 Revision).
C. Extending the penalties to cover the legal representative or persons in charge, etc. of the relevant parties. The measures include fines and administrative detention (e.g. Articles 114, 118 and 120 of the 2020 Revision).
6. Other new measures
The 2020 Revision also provides for the establishment of an extended producer responsibility system for electrical and electronic products, lead storage batteries, and automotive traction batteries. This requires the producers of such products to set up a used product recovery system for achieving effective recovery and utilization (Article 66 of the 2020 Revision).
Arguably in response to COVID-19, the 2020 Revision has strengthened the rules regarding the management of medical waste, especially during major infectious disease epidemics (Article 90 of the 2020 Revision).
Garbage sorting is another key highlight of the 2020 Revision. Local governments at or above the county level are required to expedite the setting up of a household waste management system to collect, transport and dispose of household waste (Articles 6, 11 and 43 of the 2020 Revision).
In addition to the abovementioned measures, the 2020 Revision also encourages e-commerce, couriers and other sectors to use recyclable packages to curb the use of plastics (Articles 68 and 69).
II. Conclusion and practical suggestions
The 2020 Revision brings many significant changes to the current regime for the prevention and control of environmental pollution by solid wastes. With a much stricter regime in place, the relevant parties are encouraged to consider following the below suggestions:
(1) Importers establish and/or improve their compliance systems for dealing with solid wastes, including the prompt application for a pollutant discharge permit;
(2) Importers should verify the eligibility and technical capabilities of the other parties involved in handling the solid wastes when contracting with them, as well as ensuring that proper insurance for potential environmental pollution has been obtained by the relevant party in accordance with the laws and regulations;
(3) Carriers and shippers must ensure that the parties’ responsibilities for solid wastes are clearly set out in the relevant contract of carriage; and
(4) All relevant parties should keep informed of the latest announcement and policies relating to solid wastes published by the PRC government.