UK: The Legal Meaning Of Waste

Last Updated: 4 November 2007
Article by Vincent Brown

Semple Fraser has, for the past 18 months, been working with the leading UK waste oils recycling company - The OSS Group - on one of the most important legal cases of recent years. The case concerns the notoriously difficult legal complications attending the industrial manufacture of secondary products from hazardous waste.

The core issue is of fundamental importance, with massive industrial and commercial impact - what are the legal criteria that have to be met in order to process a waste stream into a non-waste secondary product or raw material?

Upon the answer to this question hangs the commercial feasibility of sustainable collection and recycling of hazardous waste in the UK. It is fundamental to investment in the waste industry.

The submissions in this case before the High Court and the Court of Appeal could not have been more polarised. OSS was up against both the Environment Agency (EA) and the UK Government (DEFRA), fundamentally disagreeing with each of their differing interpretations of the EU law on this subject.

It is widely known that in November 2006, the High Court came down on the side of the EA.

However, the Court of Appeal, who delivered a robust and unanimous endorsement of the OSS legal position, overturned this on 28th June 2007, ruling that, subject to certain criteria, waste lubricating oil can be recovered to a non-waste fuel product.

Even this clear endorsement by the Court of Appeal has given rise to doubt and confusion in some circles. Even when waste law is clarified it appears not quite clear!

Therefore, it is incumbent on us, as the lawyers intimately involved with the day to day twists and turns of the case, and as co-authors of the ultimately successful legal submissions, to relay the facts, and to clarify both the decision of the Court and the implications of that decision.

The structure of this briefing is, therefore, as follows:-

  • the key "pillars" of EU waste policy and law;
  • the root of the problem: the pre-2007 "shifting sand" of UK interpretation of EU law;
  • June 2007: the Court of Appeal "delivers" – but what, precisely?
  • what now are the key elements of EU law and policy on this matter?
  • what does/should the Court of Appeal decision mean in industrial practice and regulation?

Key "pillars" of EU waste policy and law

There are innumerable industrial residues and other waste materials which emerge from, and have to be handled by, just about every sector of the modern economy.

In some cases, there is little doubt that the materials are waste and remain waste until they are consumed or otherwise disposed of. There is, of course, an entire industry which is geared to operate in the "cradle to grave" management of such material.

However, the "real deal" in terms of environmental sustainability, commercial growth and high level EU policy, is this - that as much as possible of our industrial, commercial and domestic wastes (in UK law these are collectively referred to as "controlled waste") should be the subject of two key (inextricably linked) initiatives:-

  • that the wastes be recycled, re-used or in some other way recovered, and
  • that by so doing, valuable natural resources are thereby conserved.

These are key pillars of EU waste law. Indeed, the Member State governments (and all of the organs of state, agencies and courts of law) are legally obliged to secure these objectives via their domestic legislation and their interpretation of that legislation.

The oss case - court of appeal raise the bar For "end of waste"

Of course, in doing so, the Member States must observe that other key pillar of EU waste law - the protection of human health and the environment.

We have always maintained that the correct legal test for determining cessation of waste status represents a balanced synthesis of these objectives which, when applied correctly and proportionately and in accordance with sound science, are not in conflict.

Until last month’s Court of Appeal ruling, such balanced synthesis was elusive, and commercial investment was feeling the pain.

The root of the problem: the pre-2007 "shifting sand" of UK interpretation of EU law

To be fair, EU legislation, and the case law of the European Court of Justice in Luxembourg, are not always conducive to a clear and certain conclusion. As Lord Justice Carnwath observed in the OSS judgment:

"….a search for logical coherence in the Luxembourg case-law is probably doomed to failure."

Nonetheless, the legal principle of the supremacy of EU law over national law, established a decade before the UK even joined the (then) Common Market, means that the UK regulatory authorities are duty-bound to work out what the European Court is saying in its case law.

That said, the judgments of the European Court tend to lay down broad principles, sometimes challenging in their penetrability, which the national courts have to flesh out and apply to the facts of cases brought before them.

Against this background there has been, since around 1998, something of a "shifting sand" of UK official approach to the question of whether (at all), and if so in what circumstances, it might be legally possible to process, extract or otherwise manufacture a secondary non-waste product from a waste stream in advance of that secondary material being consumed or consigned to ultimate disposal.

Before the OSS case came to the Court of Appeal, there had been four previous significant decisions of UK courts, the sum effect of which was a distinct lack of certainty. Indeed, they all were in quite obvious conflict. These cases were:-

  • Mayer Parry Recycling Ltd. v. Environment Agency [High Court, London, 1999] (Mayer Parry [No 1]];
  • Castle Cement v. Environment Agency [High Court, London, 2001];
  • Scottish Power Generation Ltd v SEPA [Court of Session, Outer House, Edinburgh, 2004];
  • OSS Group Ltd and Solvent Resources Management Ltd v Environment Agency [High Court, London, 2006].

The combined result of these cases was to leave UK law on this key question of "end of waste" in utter chaos, and with a sharp conflict of legal approach as between England and Wales, on the one hand, and Scotland, on the other. However, it was worse than that, as became apparent during the appeal submissions in the OSS case: there was a conflict even within England and Wales, as between the Government (DEFRA) and the EA.

In very broad summary:

  • the Mayer Parry (No. 1) decision laid the ground for a sensible doctrine of "complete recovery" to non-waste status;
  • but doubt was cast on the Mayer Parry (No. 1) decision, at least in "waste to fuel" cases, by the later judgment in Castle Cement, which ruled out the possibility of taking a waste stream and converting it to a non-waste fuel product prior to its being burned;
  • for the first time, a UK court then gave an exhaustive analysis of the European Court case law – this came from Lord Reed in the Scottish Power case in Edinburgh, who laid down clear criteria for the legal test of "end of waste" which followed through into OSS’ submissions (see further below);
  • then the High Court in the OSS Group / Solvent Resources Management case endorsed the restrictive approach in Castle Cement in terms, moreover, which were critical of the Scottish Power judgment, which the High Court felt was in some respects "in error";
  • all the while, neither the EA nor DEFRA was able to give industrial operators any clear regulatory steer even when presented with case-specific technical data. Perhaps in retrospect this is hardly surprising, given both the confused position which had emerged from the courts, and the fact that the EA (with the apparent support of DEFRA) fought hard to achieve the restrictive ruling in the OSS Group /

Solvent Resources Management case;

  • in the end, as we approached D-day in the Court of Appeal, DEFRA surprised us all by breaking rank with the EA on the basis that (in DEFRA’s view) the OSS Group / Solvent Resources Management ruling had gone too far – its restrictive approach threatening to undermine meaningful development of UK policy in waste recycling and recovery;
  • crucially also, we were aware that regulatory authorities in key continental Member States (such as the Netherlands, Germany and France) were not adopting the UK approach but were allowing responsible reprocessors of waste streams to achieve product status for their secondary fuel oils.

Not a happy picture for those in the UK market seeking to make or justify significant investment decisions in industrial waste recycling across the UK and in competition across Europe.

June 2007: the Court of Appeal "delivers" – but what, precisely?

What the Court of Appeal has done, in broad terms

The Court of Appeal has restored two things to the UK regulation of waste recycling and recovery:-

  • a degree of certainty as to the legal criteria and framework; and
  • the balanced synthesis of competing EU policy objectives mentioned above.

As for the specifics of what the Court of Appeal actually ruled, read on.

The authoritative nature of the Court of Appeal Ruling

First, it is worth noting three key facts relevant to the UK legal hierarchy and therefore the authority of the Court of Appeal’s ruling

  • The Court of Appeal outranks and therefore supersedes previous (contradictory) rulings of the High Court;
  • The Court of Appeal is outranked by both the House of Lords and the European Court, but neither the EA nor DEFRA have sought leave to appeal to the House of Lords and this effectively kills off any prospect of reference to the European Court (in this case); and
  • The Court of Appeal does not bind the Scottish Courts, but its decisions on matters especially of UK statutory import, and even more so on EU law, are highly persuasive – in this context, the Court of Appeal endorsed the approach of the Scottish Court of Session in Scottish Power.

Therefore, this is a key legal decision, which should form the basis of legal regulation of waste recycling and recovery in the UK for years to come, subject only to such (comparatively minor) adaptations which are engendered by the revised Waste Framework Directive which is imminent (and the general thrust of which is in any event reflected in the Court of Appeal’s judgment).

OSS did not "lose" the original case on the merits of their product

There has been some comment from certain sources, both before and after the appeal process, to the effect that OSS lost the case to have its secondary fuel - "Clean Fuel Oil®" (CFO®) - classed as a non-waste product, and that the judgment of the Court of Appeal did not overrule that "defeat".

This is a distortion of the truth.

As the Court of Appeal acknowledged, there had always been factual dispute between OSS and the EA as to whether CFO® met the legal criteria for cessation of waste status. The reason for this factual dispute was because OSS and the EA had never properly discussed the matter.

It had never been put to the test, not least because no-one could ever agree what the test was!

All that had taken place was wasteful litigation. Indeed, the primary reason for embarking on the case in early 2006 was that it was clear then that the legal stance being adopted by the EA (and, it has to be said, by DEFRA at the time) meant there was little point in having such a discussion. The "shifting sands" of UK legal interpretation mentioned above were very much in "midshift" and the EA gave short shrift to any attempt to debate the merits of CFO® - primarily because of their legal stance.

That legal stance was that the conversion of waste streams into fuel products was not possible other than in an exceptional case, which the EA had not by that time devised (and which in any event would not cover either OSS’ process or that of most UK waste recovery operators).

That legal stance was in conflict with EU law and continental regulatory practice, but it was supported by English case law in the shape of the Castle Cement case.

Little wonder then that, until the Court of Appeal set English law back on the correct course (that is, only at the end of June 2007), there had been no proper legal basis for a sound scientific consideration of the merits of the sophisticated and investmentintensive process whereby mixed streams of waste lubricant and fuel oils are converted (by industry-leading screening, deashingdemulsifying, cooling, thermal treatment, flash distillation, settlement and ultrafiltration techniques) into a residual fuel (CFO®) which stands favourable comparison with comparable residual fuels produced and sold on the market by the major oil companies.

That essential dialogue, between operator/manufacturer and regulator has now started.

The Waste Oils Directive (75/439/EEC) (WOD) is Irrelevant

This was a contentious issue and potential turning point in the case.

The WOD is an item of EU law into which certain of the waste oils handled by OSS can stray. It is in fact a directive that imposes duties primarily on the Member States and their organs of state, not on operators as such. Generally speaking, the WOD only covers waste lubricating oils, not waste fuel oils. Therefore, it only covers about three quarters of the waste feedstock relevant in this type of case, and it assumes that the physical infrastructure and legal regime of the Member State is set up so that these distinct waste streams are in fact separable.

As with many directives, it requires the Member States to encourage certain priorities. In the case of waste lubricating oils, the first obligation of the Member State is to maximise what it calls regeneration – that is, production of base oils by refining these waste lubricating oils and removing their contaminants, oxidation products and additives. WOD does not provide a definition for base oils and it does not say that base oils cannot be used as fuel oil. In fact, the EA accepts that base oils are indistinguishable from virgin fuel oils.

The UK has failed in this obligation – and was successfully sued in the European Court by the European Commission in 2004 for its confirmed breach - and as a result there is no physical infrastructure or legal regime in the UK to facilitate such regeneration. Indeed, the different streams of waste lubricating oils and waste fuel oils tend to be inextricably mixed. But this is the inevitable consequence of UK transgression of the WOD - it is not because operators necessarily would choose to have it that way.

The key point about the WOD in this case was the EA’s insistence that the WOD should "override" the main Waste Framework Directive (2006/12/EC) (WFD), to the effect that waste oils which had not been "regenerated" could never cease to be waste.

The Court of Appeal rejected this.

Although the WOD has a degree of precedence in its own terms, it does not override the WFD (which determines whether or not something is waste).

The Waste Incineration Directive (2000/76/EC) (WID) is irrelevant

Similarly, the EA insisted that if waste-derived materials were processed in order to be burned as non-waste fuels, then the objectives of the WID would be undermined.

The basic objective of the WID is to regulate very strictly the common practices of (a) burning of wastes for disposal and (b) the substitution of wastes as fuels to generate energy in production processes.

It was thus necessary, in the EA’s view, to consider the question - of whether something remains a waste or not – in the much wider context of the objectives of EU law as a whole. On this basis, the EA pursued the line that the application of the "precautionary principle" demanded that the WID should take some kind of precedence over general waste law when one was considering the position of waste-derived fuels.

The Court responded by stating that the WID did not have anything to offer in terms of determining the basic definition of "waste".

The answer lies in the Waste Framework Directive (WFD) and the European Court case law on the WFD

The WID is one example of so-called "daughter" directives from the main WFD. These are directives which are subsidiary to the WFD and which apply special rules to particular kinds of waste (e.g. packaging waste, or end of life vehicles) or to particular methods of dealing with waste (e.g. incineration or landfill).

For completeness, the Court also rejected analogous arguments from the EA seeking to apply a tighter, "special" set of end-ofwaste criteria to waste-derived fuels. These arguments were based on special definitions of "recycling" which are to be found in a couple of these daughter directives, most notably the Packaging Waste Directive (94/62/EC) and the End-of-Life Vehicles Directive (2000/53/EC).

It was important that the Court looked at this, especially because one of the leading European Court cases was specifically concerned with the definition of "recycling" in the Packaging Waste Directive and any relationship to the wider, more general issue of "end of waste" - the case of Mayer Parry Recycling Ltd. v. Environment Agency and Secretary of State for the Environment, Transport and the Regions (Mayer Parry (No. 2)) [European Court, Luxembourg, 2003].

The Court of Appeal not only dismissed any connection between the special definition of "recycling" in these daughter directives, but in fact took the opportunity to place the Mayer Parry (No. 2) case firmly in context -- that context being that it dealt with the special case of metal packaging waste recycling and therefore did not have general application. This becomes especially significant in the context of DEFRA’s arguments in the case (see further details below).

In summary, the Court of Appeal, by dismissing arguments trying to limit the general definition of "waste" by reference to other more restrictive daughter directives, robustly reinforced the "autonomy" and overriding application of the basic general definition of "waste" in the WFD. More especially, it reinforced those key elements of the European Court case law which interpret the WFD, and it sought to articulate the EU’s concept of "complete recovery" leading to secondary non-waste product status of recovered materials.

For the record, the three key European Court cases on this issue are:-

  • (primarily) the leading judgment in the ARCO Chemie Nederland case [European Court, 2000]
  • (supporting role) the judgment in the Palin Granit Oy case [European Court, 2002]
  • (supporting role) the judgment in the European Commission v Germany case [European Court, 2003].

The ancillary European Court cases of Mayer Parry (No. 2) [see above] and Niselli [European Court, 2004] are just that – ancillary, and not clear authorities on waste recovery outside the specialist field of metal recycling.

The Court of Appeal analysed the diverging legal propositions of the EA, the UK Government and OSS in the light of these leading European Court cases.

The three diverging legal propositions on criteria for "end of waste" secondary product status

OSS criteria

  • material deliberately produced to a specification;
  • processed so as to be suitable for an identified use without further processing;
  • secondary material recovered from the process can be used under same conditions of environmental protection as "virgin" materials it will replace;
  • secondary material sufficiently "analogous" to the virgin product/raw material so that (a) it can genuinely replace it and (b) its environmental risk under such use is no worse than that of the virgin product/raw material;
  • secondary material is certain to be put to the relevant identified use.

EA and High Court criteria

  • no general legal test submitted as such, but rather a focus on the special case of "combustion after-use";
    • if intended end-use of a waste-derived material is combustion – then material remains waste until combustion completed (irrespective of any prior treatment);
    • identical substances, following completion of the same recovery processes, may be waste OR NOT depending on what they are to be used for;
    • the legal basis for this (as per High Court) – even if complete recovery is achieved, where the next use is combustion, then such use is another recovery operation which is the same as discarding, therefore the material remains waste until burned;
    • one exception (EA special case) – where the original waste is a waste fuel oil recovered for after-use as fuel oil, may be no longer waste provided that the material (a) is chemically and physically identical to the original fuel and (b) requires no further processing.

    DEFRA criteria

    • material recovered from waste lubricating oil which is burned as a fuel (or as a component in fuel) is not waste IF it is a material which has the same characteristics as a virgin material for which such use is normal use;
    • however - "has the same characteristics as" is a strict test: it must be hardly distinguishable from the virgin material.

    The EA and High Court propositions are wrong in law

    There are a number of strands to the Court of Appeal’s analysis of the EA propositions (as had been followed by the High Court) and the Court of Appeal’s rejection of them. The key points are as follows:-

    • it is settled EU law (repeatedly pointed out by the European Court) that the mere fact that any material is destined for (after) use as a fuel does not mean that it is automatically categorised as waste, even if "use as a fuel" happens to be one of the examples of a "waste recovery operation";
    • therefore, it does not follow at all that a completely recovered secondary material, which passes the legal criteria for end of waste, "falls at the last hurdle" simply because its next intended use happens to be combustion;
    • there was no need to deal with the EA’s "special case" -- the "fuel-to-fuel" exception -- because it was conceived to get round a specific issue with the EA’s more general legal proposition, and as such we have concluded that the Court of Appeal simply ignored it and deemed it superseded by their restatement of the true legal test (where there is no real need for any "special case").

    The DEFRA proposition is wrong in law

    Actually, the DEFRA intervention was to be welcomed. It is a fairly simple general proposition which, on the face of it, seems not that far removed from what OSS had been asserting for the previous two years – namely that material recovered from waste lubricating oil which is burned as a fuel (or as a component in fuel) is not waste IF it is a material which has the same characteristics as a virgin material for which such use is normal use.

    As ever, the devil in the detail was the sticking point. So much so, that the Court of Appeal considered DEFRA’s approach as unworkable and with no legal basis. As observed above, it was going to be well nigh impossible for industry to meet DEFRA’s criteria for "same characteristics as a virgin material". In all cases, DEFRA would require the secondary material to be hardly distinguishable from its virgin comparator. Even the term "hardly distinguishable" is fraught with interpretative difficulty.

    The Court of Appeal dismissed this notion, and with it DEFRA’s attempt to use the Niselli ruling of the European Court to sustain it.

    In a memorable statement, which puts paid to arguments which require industry to achieve the impossible, the Court of Appeal stated that:

    "The objectives of the Directive [WFD] do not include mimicry."

    Court of Session analysis is correct

    As observed above, one of the key UK cases came in 2004 in the Court of Session. In that Scottish Power case, Lord Reed carried out an exhaustive analysis of the European Court case law, from which he derived the following core principles:

    • the decision on end-of-waste must be taken on the basis of the circumstances of the individual case, and in the light of the aims of the WFD;
    • the danger which is typical of waste is a danger of harm to human health or the environment caused by the manner of its disposal - the WFD seeks to address that danger by making waste subject to supervision designed to ensure that it is recovered or disposed of in a manner which is controlled so as to protect human health and the environment – therefore, once a material has been classified as waste, it remains subject to that supervision at least until that objective has been achieved, but it is then that the material may cease to be waste within the meaning of the WFD;
    • when it is claimed that what was waste has ceased to be waste as the result of a complete recovery operation, and has become a material which can and will be used in the same way as a material which is not waste, and that it need therefore no longer be subject to such supervision, it is accordingly necessary to assess whether that claim is well-founded;
    • such an assessment is based on whether the material in question can and will be used both (a) without further processing in the same way as a non-waste material, and (b) under the same conditions of environmental protection as the non-waste material with which it is otherwise comparable, without any greater danger of harm to human health or the environment.

    The Court of Appeal’s verdict on this was as follows:

    "I would also pay special tribute to the exhaustive review and analysis of the relevant source material, European and domestic, in the judgment of Lord Reed in the Court of Session."

    " Lord Reed’s judgment…seems to me an impressively thorough example of the required approach [to the application of the legal definition in practice]."

    " The [Lord Reed] judgment contains a painstaking review of the European case-law."

    Although the Court of Appeal went on to expound its own views on the legal test for cessation of waste status, the Court of Appeal judgment is just as valuable for its endorsement of the more analytical Lord Reed’s Scottish Power judgment, upon which the Court of Appeal was content to rest.

    Key elements in the proper legal test

    The Court of Appeal observed that the key weaknesses in Scottish Power’s attempt in the Scottish case to achieve "end of waste" status for its sewage pellets substitute fuel were:

    • the pellets could not, on the evidence, be used under the same conditions of environmental protection as the coal they would otherwise replace;
    • the operation to "recover" or make the pellets was neither a listed WFD "recovery operation" nor analogous to one;
    • there was no distinct substance reclaimed from the sewage sludge;
    • the entire project was driven by the need to find an onshore disposal route for sewage sludge after the ban on disposal at sea.
    • Therefore, on the contrary, it was clear that "end of waste" status IS achievable where you have:-
    • a true "recovery operation" which reclaims a distinct substance;
    • that substance can and will be used without further processing in the same way as a non-waste material; and
    • that substance can and will be used under the same conditions of environmental protection as the non-waste material with which it is otherwise comparable, without any greater danger of harm to human health or the environment.

    Court of Appeal statement on "end of waste" criteria

    In wrapping all this up, the Court of Appeal approved our reliance on a decision of the Administrative Law Division of the Dutch Council of State (May 2003), in the case of Icopower BV v Secretary of State.

    That Dutch decision exemplifies the approach on continental Europe, in that it allowed "end of waste" status to "energy pellets" which were produced from a very mixed bag of industrial wastes by being subjected to a recovery operation, the sole aim of which was to produce these pellets into material "equivalent to regular fuels", able to be used in the same way as regular fuel with no special precautionary measures needed to protect the environment.

    The Court of Appeal commented as follows:

    " I see no reason to doubt [the Dutch decision]…It seems to me a practical and common sense approach to the issue, which is consistent with the letter and spirit of the Directive [WFD] and with the case-law. It is also consistent with the objective of encouraging the recovery of waste materials for uses which replace raw materials."

    " It should be enough that the holder has converted the waste material into a distinct, marketable product, which can be used in exactly the same way as an ordinary fuel, and with no worse environmental effects. It cannot be said that such a material is being "discarded" [i.e. a waste in law] in any ordinary sense of the term, and there is nothing in the objectives of the Directive which requires any fictitious assumption to that effect."

    Rather neatly, the Court of Appeal also clearly relied in part on the European Court’s leading judgment in the Palin Granit case, which it said introduced the "useful concept" of the "secondary product" which is to be exploited rather than discarded and which concept easily transfers to "end of waste" cases.

    What does/should the Court of Appeal decision mean in industrial practice and regulation?

    (1) Time to recognise that (at last) we now have a clear and certain legal test and that we must apply it responsibly (see (2) and (3) below)

    Under EU law, the "competent authorities" of the Member State are legally obliged to procure the objectives of the EC Treaty and its principal directives. In this case, this means specifically the key objectives or "pillars" of the WFD noted above - that every encouragement be given to recycling, recovery of secondary materials and means whereby wastes are channelled into useful functions in order to conserve valuable natural resources, provided of course that this takes place in a manner which ensures protection of human health and the environment. This regulatory duty is enshrined in Article 10 of the Treaty of Rome and is an unequivocal legal obligation on public authorities.

    A key element in fulfilling this duty is in redressing the imbalance caused by the sterility of the past decade, whereby the "shifting sands" of UK interpretation have lead to lost opportunities for genuine complete recovery of secondary products and raw materials which conserved valuable natural resources without any adverse impact on human health or the environment.

    The legal test is now reasonably clear. There are no longer any excuses for not applying it with fairness and sound scientific rigour in those cases where operators can demonstrate that they have taken steps to follow the legal criteria.

    In most cases, that in fact will be quite a demanding ask - because the sort of investment required rarely comes cheap, quick or easy and even then it needs to be properly policed by the competent authority with little if any reliance on self regulation.

    (2) The Court of Appeal has raised the quality bar, not lowered it

    It would compound the mistakes of the past to view the Court of Appeal’s ruling as in some way lessening the standards of environmental protection which apply in cases of recovery of waste. In fact, it is quite the opposite.

    The ruling provides no room for any lowering of the standards. It creates certainty.

    It has been the lack of certainty that has undermined environmental protection. It had created a situation where no amount of investment in genuine recycling and recovery technology could succeed. The result of this was the "lowest common denominator" – where there was no incentive to invest in the technology and expertise necessary to process hazardous wastes into the quality of secondary materials that actually meet the test now affirmed by the Court of Appeal.

    Ironically, the Scottish Power ruling is probably the clearest and most authoritative statement of law which we now have in the UK precisely because it has been unequivocally endorsed by the Court of Appeal as being a "thoroughly impressive" reflection of the EU law on the matter.

    The significance of this lies in the fact that even a major waste recovery initiative, operated jointly by such heavyweights as Scottish Power PLC and Scottish Water, LOST the case even on the basis of the legal criteria now affirmed by the Court of Appeal. According to Lord Reed, they failed on the evidence to pass the test for "end of waste", precisely because it is an exacting test.

    The test requires the following:

    • a true "recovery operation" which reclaims a distinct substance;
    • that substance can and will be used without further processing in the same way as a non-waste material; and
    • that substance can and will be used under the same conditions of environmental protection as the non-waste material with which it is otherwise comparable, without any greater danger of harm to human health or the environment.

    As we have already observed, the Court of Session found, on the evidence, that the pellets could not be used under the same conditions of environmental protection as the coal they would otherwise replace, and that the operation to "recover" or make the pellets was neither a listed WFD "recovery operation" nor analogous to one.

    (3) It is illegal to open the floodgates and treat all processes the same

    There are concerns that the regulatory authorities will feel sufficiently pressured by the Court of Appeal ruling as to perhaps allow an unwarranted "relaxation" of the rules in practice. For example, we have observed a tendency in some regulatory quarters to adopt what they consider to be a fair and evenhanded approach to the application of this sort of ruling by treating everyone in the same way.

    At one level, this is fine – that level is the fair and even-handed treatment of all regulated organisations without favour or discrimination.

    However, there is another potential "level" - where regulators adopt a "broad brush" approach, eschewing the difficult (but legally required) methodology of bespoke scrutiny of every single case on its own scientific and legal terms, in favour of simply assuming that ALL processors of a given waste stream recovering material with the same after-use ARE THE SAME.

    Just as previous regulatory refusal to engage the correct legal criteria contributed to years of investment meltdown (and its unavoidable bedfellows of black market waste management and adverse environmental impact), so the same result inevitably must follow even after regulators are applying the correct legal criteria if they choose to do so in a way which does not properly distinguish between the following starkly different industrial behaviours:

    • those few operators who invest in the technologies, plant, equipment, research and development, and expert human resource required to process hazardous wastes into the quality of secondary materials which actually meet the test now affirmed by the Court of Appeal; and
    • those who do not.

    Even in the short period since the judgment was handed down by the Court of Appeal, we have observed comment in certain quarters, for example, to the effect that "most" collectors of waste oils can now benefit from the judgment and proceed with confidence and without any new significant investment in technology to process these waste oils to a point where they are no longer waste.

    Any moves down this road would be unlawful. Every industry has a mix of participants: those who invest in quality and high performance, and those who don’t and take instead the path of least resistance. The waste oils collection and treatment business is no different:-

    • at one end of the spectrum, it has sophisticated organisations, backed by serious institutional finance, run and staffed by technical experts who are leaders in their field;
    • at the other end, it has shoestring operations where there is little hope of ever coming near the Court of Appeal criteria; and
    • in between, lie a range of operations, processes and output material, the provenance of which is at all times doubtful and in need of exacting testing, in terms of the criteria for "end of waste" laid down by the European Court and the Court of Appeal.

    The court of appeal has raised the bar.

    (4) Potential pitfalls for end-users

    All of this has implications for those end-users of products that are derived from waste streams and then marketed as secondary products as if they were no longer waste.

    • What is the "due diligence" on these "products"?
    • How do end-users know that they are no longer waste?
    • What steps are taken to test the materials against the legal and technical criteria laid down by the European Court and the Court of Appeal?

    These are critical questions for the end-users. If the regulators take to heart the recommendation of the Court of Appeal (see (5) on next page] and apply the ruling to operators who have not brought their case before the courts and/or made any new technological investment detailed in their pending PPC permit applications, then end-users will have to exercise care in their buying and operating decisions; mistaken assumptions as to the legal status of a waste-derived material would expose them to criminal prosecution, a range of civil enforcement measures (including suspension of permits) and even personal liability for directors in some cases.

    Although it is true that the "processors" of hazardous industrial waste have their statutory "duty of care" not to be marketing as "product" a waste-derived material which does not pass the Court of Appeal criteria, nonetheless the "liability buck" invariably stops with the end-users.

    The natural temptation to view all marketed "products" as the same, and thus to reduce the buying decision to price alone, could have serious repercussions. See the Scottish Power case.

    The major operators will, of course, have no difficulty in establishing correct "protocols" with the reputable processors who have invested and who can meet the criteria. These protocols should ideally be worked out between the lawyers and the technicians who are intimate with what is required at the legal and technical levels.

    (5) The Court of Appeal requires DEFRA and the EA to implement the legal test properly

    We close with a positive message from the Court of Appeal:

    "I hope, however, that in the light of this judgment, it may be possible for DEFRA and the Agency to join forces in providing practical guidance for those affected. It is unfortunate that the difficulties of interpreting pronouncements from Luxembourg are compounded by the failure of the national authorities to agree a common approach. It is important that the national authorities should use their expertise and experience to assist those concerned with treatment and handling of waste, and also the courts (civil or criminal) who may be faced with deciding individual cases without the benefit of comparable expertise."

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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