Valpak and Corus help defeat Mayer Parry's request for PRN relief

Metal recycler Mayer Parry Recycling (MPR) has failed to win compensation for being unable to sell packaging waste recovery notes (PRNs) while its case that it should be an accredited reprocessor under the packaging regulations is heard by the European Court of Justice (ECJ). Its case was opposed by packaging compliance scheme Valpak and steel producer Corus, as well as the Government and the Environment Agency.

Two years ago, the High Court ruled that metal scrap which required no further processing but was capable of being used as a fuel or for melting by manufacturers was a raw material rather than a waste. Armed with this decision, MPR applied for accreditation under the Agency's voluntary scheme for packaging waste reprocessors - along with the right to sell PRNs for some of the grade 3b scrap it handles.

The Agency turned down its request, so MPR applied for judicial review. In September, following the intervention of the Environment Secretary, the case was adjourned for referral to the ECJ. The Agency confirmed that it would not consider changing its accreditation policy for packaging waste reprocessors until the ECJ ruling - which is not expected for at least 18 months (ENDS Report 308, p 46 ).

In the light of this delay, MPR went back to the High Court on 31 October to ask for "interim relief" on potential PRN income.

In addition to the Agency and the Secretary of State, two steel producers who use packaging waste as feedstock also appeared in court to argue against MPR. One, ASW - a customer of MPR - would have had to pay the value of the PRNs it issues against packaging waste that MPR delivers. The 250,000 tonnes of material per year is worth about £100,000 in PRN revenue.

The other steel producer, Corus, does not receive grade 3b packaging waste from MPR but does so from other companies belonging to the same parent company, European Metal Recycling. Its concern was that, if MPR won, its packaging waste suppliers would seek similar relief from it next year or in 2002.

Valpak told the court that it was worried that if MPR was accredited instead of ASW, its own contract for PRNs with ASW

would be jeopardised. In fact, MPR has promised to continue the contract and provide PRNs at the market price.

Valpak might also have argued that in opposing MPR's search for accreditation it was representing the interests of its members - one of which is Corus. A Corus executive sits on Valpak's board.

In hearing the

evidence, Mr Justice Collins was also influenced by arguments that PRN revenue "cannot be used as the recipient might wish" but "must be applied in such a way as will assist in developing recycling and recovery capacity and will promote recycling." He also recognised that "naturally", reprocessors such as ASW would spend the money on projects which increased "efficiency" and so benefited it as well as recycling.

Providing a rare glimpse of the kind of measures included in PRN contracts, he said that measures in Valpak's contract with ASW included some support for the price of metal packaging waste and investment in an oxy-fuel burner, which will increase throughput efficiency. However, it is worth noting that, of the 3b scrap which enters the burner, ASW issues PRNs against only 4%.

Counsel for the Agency and the Secretary of State argued that the court also had to consider the public interest, in that a change of accreditation could lead to many other recyclers seeking similar relief. There was a possibility of double counting of reprocessed packaging, and the ensuing administrative chaos would lead to the UK missing its targets under the EC packaging Directive.

In rejecting MPR's application for interim relief, Mr Justice Collins appeared to be influenced most strongly by the fact that "the Agency's present policy is supported by the existing regulations which concentrate on the materials going to the accredited person," and therefore make it relatively easy to keep track of reprocessing as there are not many accredited reprocessors.

MPR was ordered to pay 75% of costs for the Agency, awards of £15,000 each to Corus and ASW and 70% of allowable costs to Valpak.

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