On April 29, 2020, the Standing Committee of the National People’s Congress (“NPC”) approved an amendment to the country’s solid waste statute. The revised solid waste law will take effect on September 1, 2020. The amendment introduces substantial changes, some of which are likely to have significant impacts on enterprises with operations in China. For example, the revision provides a new exclusion from the definition of “waste”; creates a series of new obligations on waste generators; sets out a solid legal basis for bans on waste imports and single-use plastics; increases monetary penalties for noncompliance; and adds other types of penalties for violations.
China enacted the Solid Waste Environmental Pollution Prevention and Control Law (“Solid Waste Law”) in 1995, and the law has since been amended four times (this is the Fifth Amendment). The Solid Waste Law covers the prevention and control of pollution from industrial waste, household waste, construction waste, agricultural waste, and hazardous waste. Over the years, the China Ministry of Ecology and Environment (“MEE”) and other relevant agencies have promulgated numerous regulations, standards, catalogs, and other rules to implement the Law.
In 2017, the Standing Committee of the NPC initiated a three-month oversight investigation on enforcement of the Law and eventually decided to amend the Solid Waste Law. MEE issued a first draft of the amendment for public comment in July 2018, as well as a second draft in August 2019. On April 29, 2020, the revised Solid Waste Law was officially issued with an effective date of September 1, 2020.
Revised Solid Waste Law
The new revision makes substantial changes to the Solid Waste Law. The revision emphasizes the solid waste handling principles of reduction, recycling and harmlessness. It strengthens the supervision and management responsibilities of the government and its relevant departments, furthers efforts to achieve “zero” solid waste imports, and integrates solid waste management into current environmental programs. Below are the key changes that are likely to be of interest to companies doing business in China:
- “Waste” Exclusion. The revision clarifies that a substance or article that would generally be classified as waste is considered as non-waste if it conforms to compulsory national product quality standards and does not endanger public health and ecological safety after being processed harmlessly, or if it is identified as non-waste in accordance with the solid waste identification standards and procedures (Article 124(1)).
This exclusion provides a solid legal foundation for the current program for evaluating the utilization of industrial solid wastes and for further regulatory and policy developments with respect to waste utilization. However, the exclusion remains conceptual and implementation is far from clear. Among the issues that need to resolved are (a) what is considered “processed harmlessly,” (b) what qualifies as “non-harmful to public health and ecological safety,” and (c) how the exclusion operates when compulsory national product quality standards are not available.
- New Obligations on Waste Generators. This revision imposes several new obligations on waste generators, including the following:
- Solid Waste Management System. The revision specifically requires waste generators to establish an industrial solid waste management ledger to faithfully record the types, quantities, flow, storage, utilization, disposal and other information about their industrial solid wastes, so as to facilitate traceability of such wastes (Article 36). Generators will be penalized if they fail to keep the ledger (Article 102).
This change extends the existing management system for hazardous wastes to general industrial solid wastes. Such movement envisions stringent management of industrial solid wastes.
- Legal Liability of Waste Generators. Each waste generator is required to create a responsibility system for the prevention and control of pollution throughout the entire process of solid waste generation, collection, storage, transportation, utilization, and disposal (Article 36). In particular, waste generators must verify the qualifications and technical capacity of their waste vendor(s) and enter into written contracts with their entrusted vendors to transport, use, or dispose of wastes in accordance with environmental control measures specified in the contracts (Article 37). If a waste generator fails to verify the qualifications/capacity of the vendor or does not have a written contract with the vendor, it will be subject to administrative penalties (Article 102) and will also be held jointly liable with the vendor for any pollution caused by the vendor (Article 37).
The revision envisions extended responsibility of the waste generator, such that the waste generator would not only be liable for any environmental damages it creates during the waste generation process, but also may be jointly liable with the vendor for any damages caused by the waste vendor in its waste management processes. Although this newly expanded liability is triggered only if the waste generator fails to properly verify the qualification and technical capacity of the vendor or to have the required contract with the vendor, the risks to the generator may be heightened by the fact that there are no clear guidance or criteria to judge whether the waste generator has properly verified the technical capacity of the vendor.
- Solid Waste and Pollutant Emission Permits. The revision incorporates solid wastes into the pollutant emission permit system (Articles 39) and penalizes solid waste generators operating without a permit (Article104).
These changes reinforce the core function of the pollutant emission permit in the regulation of facility environmental emissions. China has been striving to develop a system in which controls for different pollutant emission categories are integrated into one single permit. Following air and water pollutants, solid wastes become the third type of pollutant added to the pollutant emission permit system.
- Clean Production Audit and Credibility System. The revision adds waste generators to the clean production audit program (Article 38). In addition, a credibility system for waste generators will be established and integrated into the National Credibility Sharing platform (Article 28).
This revision sets out a legal basis for further development of the clean production audit program, under which each waste generator is expected to perform a production auditing process by itself or through a third-party to identify the reasons for heavy pollution, propose solutions for reducing and recycling wastes, and select and implement a technically, economically, and environmentally feasible clean production scheme. It also builds on the corporate environmental behavior credit evaluation system, under which a waste generator would likely be negatively affected in its future applications for financing, and in future environment-related approvals and enforcement, for any violations of the Solid Waste Law. Additional implementation measures at the national and local level are expected to provide practical guidance for waste generators on compliance.
- Prohibition of Solid Waste Imports. China currently allows the import of limited types of solid wastes as raw materials. The amendment requires gradual movement toward the achievement of “zero” imports of solid wastes (Article 24). Illegal importers will face a fine of RMB 50,000 to 5 million, and carriers will be held jointly liable for the smuggling of solid wastes (Article 115).
This change reflects China’s recent policy movement on solid wastes and provides a firm legal basis for the ban on imports of solid wastes. Since 2017, the Chinese government has acted robustly against solid waste smuggling. The government adjusted the solid waste import management catalogs several times to significantly limit the scope of solid wastes allowed for import.
The considerable increase of penalties and incorporation of the carrier into the sanction mechanism is expected to result in a significant decrease in solid waste smuggling. In light of these changes, the assessment of whether certain materials qualify as solid wastes will be more crucial than ever for ensuring imports are compliant.
- Enforcement. The amendment significantly increases monetary penalties for improper handling of solid waste (e.g. Articles 102, 103, 104, 109, 111, and 112). It also introduces a number of other penalty measures, such as penalties for consecutive daily violations (Article 119) and sealing or seizure of facilities, equipment, tools, and articles involved in unlawful solid waste practices that cause or potentially cause environmental harm (Article 27). Further, the revised law establishes a whistleblower policy, under which whistleblowers will be rewarded, and shielded from retaliation by their employers (e.g., termination of employment or changes to labor contracts) (Article 31).
- Product Stewardship. The revision introduces several product-related programs to further the development of Chinese circular economy policies and regulations. For example:
- Extended Producer Responsibility (EPR). The amendment requires the establishment of EPR programs, primarily for electronic and electrical products, lead batteries, and power batteries for vehicles. Each producer of such products is required to establish a system for recycling used/end-of-life products (in an amount that matches the producer’s sales volume), either by itself or by engaging a third-party. The producer must also provide information to the public about the recycling system (Article 66).
- Product and Packaging Recycling. The revision envisions the development of a catalog for identifying products and packaging subject to mandatory recycling. Manufacturers, sellers and importers will be required to recycle the products and packaging included in the catalog (Article 68). In addition, e-commerce, express delivery and fast food industries will be required to prioritize the use of reusable and easily recyclable packaging materials and reduce the use of packaging (Article 68).
- Plastics Ban. The production, sale and use of non-biodegradable plastic bags and other single-use plastic products will be prohibited or restricted (Article 69). Retailers, e-commerce platform enterprises, express delivery enterprises, and fast food enterprises will be required to report the use and recycling of single-use plastic products to the competent authorities (Article 69). The hospitality industry will be prohibited from proactively providing single-use supplies (i.e., providing the supplies unless specifically requested by customers/guests) (Article 70).
What is Next?
The revised Solid Waste Law updates the legal framework for the prevention and control of pollution from solid waste and consolidates recent Chinese policies on solid waste imports, plastics, EPR, etc. In the next few months, we expect to see the development of implementing regulations/measures to provide practical guidance to companies for compliance with the new requirements of the Law.