Federal government passes new product stewardship legislation - what next?

Key Points:
On 22 June, the Federal parliament passed the Product Stewardship Act (Act). The Act provides the umbrella provisions for product stewardship in Australia. Details of product-specific schemes will be in underlying regulations.

In our article of 5 April, "Getting real about e-waste: new consultation paper on product stewardship", we set out some of the key aspects of the proposed E-Waste Scheme. In this article, we take a more detailed look at the new Act, the implications for the E-Waste Scheme and the future of product stewardship in Australia.

Product stewardship legislation framework

The Act sets out a national legislative framework for product stewardship schemes which may cover any number of types of products.

Specifically, it:

• requires liable parties to be members of an approved "Arrangement" – ie, a set of measures that are implemented in order to meet the product stewardship obligations and requirements of that liable party or group;
• gives the Minister for Sustainability, Environment, Water, Population and Communities powers to assess and approve product stewardship Arrangements as well as monitor and enforce compliance by liable parties and Administrators of Arrangements through applying both civil and criminal penalties; and
• provides liable parties with the right to appeal specified decisions.

The detail of product-specific schemes such as the proposed E-Waste Scheme (discussed in our earlier article) will be contained in the underlying regulations, which we anticipate will be released in August 2011.

Three tiers of product stewardship

The Act sets out three tiers of product stewardship:

• voluntary schemes;
• co-regulatory schemes; and
• mandatory schemes.

The voluntary provisions will provide an accreditation avenue for purely voluntary product stewardship schemes. The Department of Sustainability, Environment, Water, Population and Communities (SEWPaC) has indicated that the tyre industry is being targeted as appropriate for an industry-led, voluntary accredited product stewardship scheme which will aim to increase recycling and expand the market for tyre derived products at the end of their useful life. In addition, existing voluntary schemes, such as those for mobile phones, may seek accreditation under these provisions of the Act.

A co-regulatory approach involves a mandatory requirement for liable entities to join product stewardship schemes and the use of Government regulation to set outcomes and consistent requirements and targets for those schemes. Liable entities will, however, have some flexibility in how those outcomes, requirements and targets are met. The proposed E-Waste Scheme will be a co-regulatory scheme.

Under a mandatory approach, regulations will be more prescriptive than the co-regulatory approach and dictate both the outcome/requirement and how that will be met.

Products to be covered

The Act is silent on the specific products that may be regulated. However the Explanatory Memorandum explains that the "product stewardship criteria" set out in section 5 of the Act are a basic filter to help determine whether the Act should apply to a particular class of product. The "product stewardship criteria" are satisfied in relation to a class of products if:

1. the products are in a national market; and

2. at least one of the following applies:

During consultation on the new product stewardship regime, some stakeholders raised concerns that the criteria were too broad to be an appropriate filter, creating uncertainty for business. This concern was addressed before the legislation was passed by amending the legislation to:

1. require the Minister to publish annually a list of classes of products the Minister is proposing to consider for regulation under the Act in the next financial year; and

2. establish the Product Stewardship Advisory Group to provide advice to the Minister in relation to the list of priority products.

In preparing the priority list of products the Minister may have regard to any relevant matter including whether:

• the product stewardship criteria are satisfied;
• reusing, recycling, recovering, treating or disposing of the products involves a significant cost to governments;
• the consumer is willing to pay for action to reduce the impact of the products (or substances they contain) on the environment or health or safety of humans; or
• taking action to reduce the impacts of the products will offer business opportunities that would make a contribution to the economy.

Penalties for non-compliance

The Act contains provisions for civil penalties, enforceable undertakings and infringement notices. For example, if a liable party fails to join an approved co-regulatory Arrangement, it will be in breach of a civil penalty provision and may be fined up to $22,000 (for an individual), $110,000 (for a corporation) or an amount equal to the total value of any benefits obtained from the failure to join an Arrangement. In addition, the maximum amount of the pecuniary penalty payable may be increased by 10 per cent for each day that the liable party fails to comply with the Act s.

The Minister may accept a written undertaking as an alternative to civil penalty proceedings or criminal prosecution. The Minister may also apply to the Court for an injunction restraining the breach of the Act or requiring a party to comply with the Act.

E-Waste Scheme

The first set of regulations (to be made under the co-regulatory provisions of the Act) will set up the E-Waste Scheme for collecting and recycling televisions, computers and computer peripherals.

Although draft regulations are yet to be released, many of the proposed details are set out in the National Television and Computer Product Stewardship Scheme Consultation Paper that SEWPaC released on 8 March this year, discussed in our article of 5 April. Now that the Act has been passed, we anticipate that draft regulations for the E-Waste scheme will follow quickly in August 2011 with a view to having the E-Waste Scheme up and running by the end of 2011.

The future of product stewardship in Australia

Voluntary product stewardship is not new in Australia. Consumers are familiar with the mobile phone industry's MobileMuster, South Australia's bottle/container deposit scheme or E-Waste "take back" schemes run by local councils.

The Act does, however, lay the foundation for product stewardship on a much larger scale. This has the potential to irrevocably change the way waste is managed in Australia affecting importers, manufacturers, waste service providers and governments at all levels.

Whether individual product-specific schemes will be successful will depend on many factors. These include whether they are voluntary, co-regulatory or mandatory, the willingness of consumers to participate, and the ability of Arrangements and waste service providers to recycle, recover, re-use and dispose of particular products. The development of future product-specific schemes under the Act is likely to depend on the success or failure of the E-Waste Scheme. It will be interesting to see what and how many products are listed on the Minister's first priority product list for regulation.

For further information, please contact Claire Smith and Rebecca Hawke

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.