PPWR unpacked - Special: One Law To Rule Them All - updated

While politicians in the European Parliament are intensively discussing which rules should apply in future to the recyclability of packaging, its reuse and minimum quotas of recycled plastics, the environment ministers of the EU member states are currently discussing quite different matters: In the Council, one of the main issues is whether the future packaging rules should be drafted as an EU regulation, as proposed by the Commission, or as an EU directive, as has been the case so far. In addition, the member states are struggling over the legal basis on which the regulations should be based. What sounds like a boring discussion among administrative lawyers is in fact a fierce power struggle over whether uniform EU packaging rules should apply in the internal market again or whether the member states - as in the past years – can continue introducing their own national rules. Since products are mostly transported in packaging, the outcome of the debate has major implications for the future of the EU internal market. Today we examine the different options, their implications and venture a view on how this dispute could be resolved.

Time is pressing: The current Spanish Council Presidency has made it clear to the EU Member States that it wants to adopt a final position for the trilogue negotiations by 18 December 2023 (see on the process: Part 1). However, its form and legal basis has to be clarified since these will determine how much influence the member states will have.

Regulation - One Law to Rule them all

In view of the patchwork of different national packaging rules that have been introduced in the member states in recent years - mainly fuelled by the ongoing plastic discussion - the Commission has presented its proposal in the form of a regulation. This is to replace the previous rules, which are in the form of a directive. The difference is as follows: Regulations are legal acts that apply automatically and uniformly to all EU countries, companies, and citizens as soon as they enter into force, without needing to be transposed into national law. Regulations generally provide for uniform rules; member states may not go beyond them. ?However, it is possible that regulations contain possibilities for the member states to make deviating regulations. In the PPWR, such deviations are provided for e.g. in Articles 4(4) and (5) and Article 45(2).

Directives give member states more options

Directives on the other hand require EU countries to achieve a certain result, but leave them free to choose how to do so. EU countries must adopt measures to incorporate them into national law (transpose) in order to achieve the objectives set by the directive. Obviously, a directive gives member states more leeway. In the case of packaging, however, this leeway is very narrow, because Article 18 of the current EU Packaging and Packaging Waste Directive (PPWD) prohibits member states from banning packaging that meets the requirements of the directive. The Commission - after a long hesitation - has recently been taking action again against such illegal national packaging rules (link).

The struggle for the right legal basis

Those who think that this is already complicated have not yet dealt with the second dimension of the discussion, the legal basis: the legal basis on which every EU measure must be based has also been the subject of a hefty argument about influence. The Commission has based its proposal on Article 114(1) TFEU, which applies to measures aimed at the functioning of the internal market. It did not even consider another legal basis. The PPWD is also based on Article 114 TFEU. Under certain conditions and with the approval of the Commission, national environmental protection measures remain possible even with a regulation (Article 114(4) and (5) TFEU).

However, this is not enough for some Member States. They are arguing for the PPWR to be placed entirely or at least in part (also) on another legal basis, namely Article 192(1) TFEU. This article concerns EU measures to protect the environment and generally allows member states to introduce or maintain "more stringent protective measures" (Article 193 TFEU) that go beyond the EU-rules. The infamous Single-Us-Plastics-Directive (SUPD) of 2019, for example, is based exclusively on this article. These Member States can also refer to the recently adopted EU Battery Regulation, which has dual legal basis (see below).

According to the case law of the ECJ, there can in principle be only one legal basis for a legal act. Where a legal act is based on several purposes or components (e.g. internal market harmonisation and environmental protection) and “one of those is identifiable as the main or predominant purpose or component, whereas the other is merely incidental, the act must be based on a single legal basis” (see Waste Shipment Decision, C-411/06, para. 46). This should be the rule.

Exceptionally, however, according to the ECJ, a dual legal bases may apply, provided that “the act simultaneously pursues a number of objectives or has several components that are indissociably linked, without one being secondary and indirect in relation to the other, such an act will have to be founded on the various corresponding legal bases” (para. 47). In the recently adopted EU Battery Regulation, Member States and the European Parliament have made use of this possibility of derogation and based the provisions on waste management of batteries (Chapter VII) on Article 192(1) TFEU, while the rest is based on internal market competence (Article 114(1) TFEU). However, in the discussion about the PPWR the Commission′s Legal Service considers that two legal bases are incompatible and that there is therefore a risk that the ECJ will annul the entire Regulation, or at least the measures taken by Member States in the area of waste management, for lack of a legal basis.

What does this mean for the PPWR?

It is clear that there is currently no necessary qualified majority in the Council for a regulation based on Article 114(1) TFEU. This is because 55% of the member states, which together make up at least 65% of the total population of the EU, would have to vote in favour of the proposal.

The Commission knows this and is currently investigating what changes it could make: Going back to a directive is not an option: the Commission has already made it clear publicly that it is not willing to change the legal form under any circumstances - also because the project would then be significantly delayed.

It is also clear that, compared to the current PPWD, the proposal for a PPWR contains significantly more specifications on ecological product design and thus on environmental protection - e.g. on product design (e.g. recyclability, use of recycled materials quotas, etc.), on monitoring compliance with these (e.g. through registration) and on waste management - so that it cannot be ruled out from the outset that internal market harmonisation and environmental protection are " indissociably linked" here and that environmental protection is not thereby "only secondary and indirect", as the ECJ demands for a dual legal basis.

The Battery Regulation is in many respects the blueprint for the PPWR proposal: In both regulations, Chapter VII contains broad requirements on waste management, in particular on registration and cost-bearing of producers, reporting obligations and waste collection targets. The agreement on a dual legal basis for the Battery Regulation also shows that product design requirements (e.g. recyclated content quotas) are to be based on the legal basis of Article 114 TFEU only. In the PPWR, these product specifications are mainly found in Chapter II (e.g. recyclability (Article 6), recycled content quotas (Article 7) etc.) as well as in Chapter IV (e.g. reuse quotas (Art. 26), packaging bans (Art. 22) and empty space specifications (Art. 21).

However, there are some differences, e.g. with regard to end-of-life information, which in the PPWR proposal is not regulated in Chapter VII, but in Chapter III (Article 12) - which could still be relevant. Another difference concerns the obligation to introduce deposit systems, which is also found in Chapter VII (Article 44) of the PPWR proposal.

Which solution is most likely?

Given the resistance of the Commission as well as the industry, I think it is unlikely that the Member States calling for a directive instead of a regulation will prevail. It is more likely that certain chapters of the PPWR will also be placed on the legal basis of Article 192(1) TFEU in order to give member states broader scope for their own measures. Differentiation according to individual articles, on the other hand, would hardly be possible in the short time available.

If one again takes the Battery Regulation as a blueprint, then it is likely to be the measures on waste management in Chapter VII of the PPWR. This would at least mean that?the rules on product design would be based exclusively on the legal basis of Article 114(1) TFEU. However, there is still a risk that the ECJ will annul the regulation on the grounds of an incorrect legal basis.

Which solution do you think will prevail in the end? I am looking forward to your comments and feedback.

Next time we will look at the re-use quotas proposed by the Commission. Here you can check the other parts of this blog:

Part 1: Process and People??

Part 2: All packaging shall be recyclable

Part 3: Minimum quotas for recycled plastics in packaging