In an earlier post, we outlined the proposals put forward by the Scottish government to introduce its "deposit return scheme" in 2020. This post is a follow on, to note that the implementation of the scheme has been delayed until 2022, explain the finalised regulations which were published by the Scottish government recently, and to draw out the changes that have occurred following the period of public consultation and parliamentary scrutiny.
A reminder – what is the DRS?
Under the proposals, every time a drink in a single use container is sold in Scotland a 20 pence deposit will be added to its price. Every retailer which sells drinks in single use containers (subject to limited exceptions) will then have to offer a return point where the empty container can be exchanged for the deposit. Producers of these drinks will have responsibility for collecting empty containers from return points, and will have mandatory recovery targets put in place by government. The enforcement powers will lie with the Scottish Environmental Protection Agency.
The key takeaways
Much of the scheme in its original form remains intact. However, following discussions with stakeholders and industry bodies, there have been some changes to the final form regulations. Some of the key takeaways from the finalised regulations include:
- Date – industry bodies indicated that they'd have difficulty in getting the scheme in place prior to the proposed 2021 implementation. This, coupled with the COVID-19 outbreak, led the government to delay implementation of the scheme until 1 July 2022.
- Scheme articles – despite significant pushback during the consultation phase about the inclusion of glass as a 'scheme article' (that is, an item that is included in the DRS). However, the Scottish government has confirmed that the scheme will apply to glass, PET plastic, aluminium and steel containers, as was initially envisaged.
- Return points – every 'retailer' under the scheme must provide a return point for scheme articles, where they will store the scheme articles until the producers collect them. This includes, for example, online grocery retailers. Scottish Ministers will have the power to exempt certain retailers from acting as a collection point, and also of approving other persons to act as a return point. It is envisaged that this will be designed to help smaller retailers. Furthermore, the exemptions have been furthered in the finalised regulations to allow for an exemption on the basis that it won't 'significantly impair' the ability of a producer to meet collection targets. This should protect smaller retailers, particularly in more remote locations.
- Collection targets – due to the delay in the implementation, the collection targets for producers have been amended. In 2023, the collection target is 70%; in 2024, it is 80%; and in 2025, the target is 90%.
- Producer registration – all producers must register with SEPA by 1 March every year and pay a registration fee of £360. A producer is either: the brand owner (for drinks produced in the UK) or the importer (for drinks made overseas). If the producer does not register with SEPA then retailers will be prohibited from selling or marketing the product.
- Scheme administrators – producers are entitled to appoint a scheme administrator to manage the ongoing compliance measures in the legislation. Every application must be submitted to the Scottish Ministers for approval.
Producers, retailers and scheme administrators
The regulations set out obligations for each of the above parties. Responsibility for enforcing these regulations lies with SEPA.
- Meet the annual registration requirement and pay the annual registration fee, as mentioned.
- Reimburse retailers for the deposit money that they have paid out to consumers in respect of the collection of scheme articles, as well as paying a 'reasonable handling fee' (that is a fee paid by the producer to the retailer to cover the costs of temporarily holding scheme articles).
- Comply with the annual recovery targets.
- Maintain records of the number of scheme articles supplied to retailers along with details about the material of these articles, the number of items returned.
- Offer a return point at any point where scheme articles are marketed.
- Clearly display information on how a deposit can be redeemed.
- Store returned scheme articles, pay the deposit sum to the consumer and store the returned scheme articles for collection from the producers.
- Scheme administrators step into the shoes of producers and help manage their ongoing regulatory requirements under the regulations.
- An application for approval must be made to the Scottish Ministers following criteria set out in the regulations, including proving that they are likely to subsist for a period of five years.
SEPA has wide-ranging powers under the scheme to ensure compliance. The measures contemplated include enabling SEPA to enter premises to inspect them for compliance; to inspect documents and computers for evidence; and to question individuals they reasonably believe have evidence. They can also apply to the courts for warrants to enter premises.
The regulations also provide for criminal penalties to be levied against both individuals and bodies corporate where there has been a breach of the obligations. An individual found guilty under the legislation is liable to a fine.
Expected Future Timeline
Spring/summer 2020 – the legislation is expected to pass.
1 January 2022 – producers/scheme administrators can begin registering with SEPA.
1 July 2022 – the DRS scheme goes 'live'.
For more information on this matter, please contact one of our experts below.