Key decision on BPEO and use of solvents in lime and cement kilns

A High Court judgment in a major case concerning the use of solvent-derived fuels in cement and lime kilns was given in May. Several judicial reviews raising the same fundamental legal questions were joined in the case, and the judgment contains important analysis of the application of the BPEO principle by the Environment Agency and the relevance of EC waste rules where solvent-derived fuels are being burned in a manufacturing process. The legality of the Agency's decisions to permit the use of such fuels was ultimately upheld by the Court, but the legal analysis suggests that at certain points there was significant misinterpretation of the legal duties.

The use of solvent-derived fuels - sometimes known as secondary liquid fuels (SLF) or Cemfuel - as a substitute for conventional fuels in cement and lime works has provoked public concern during the 1990s, and was the subject of two inquiries by the House of Commons Environment Committee in 1995 and 1997. After the latter inquiry, the Committee was highly critical of the Agency's regulation of cement works, though the evidence submitted to the inquiry clearly indicated a complex legal position on which the Committee could not give a definitive interpretation (ENDS Report 266, pp 30-32 ).

R v Environment Agency and Redland Aggregates Ltd ex parte Gibson, R v Environment Agency and Redland Aggregates ex parte Leam, and R v Environment Agency ex parte Sellars and Petty (Queen's Bench Division, High Court, 8 May 1998) combined three judicial review applications brought by local residents in respect of decisions to permit the use of solvent-derived fuels in Redland's lime manufacturing plants at Whitwell, Derbyshire, and Thrislington, Durham, and in Castle Cement's Clitheroe works in Lancashire.

While much of the legal interpretation of the relevant provisions was common to all three cases, the Court, as is usually the position in such applications, had to apply those principles to different factual circumstances in each case.

Both lime and cement works are regulated under integrated pollution control (IPC) by the Environment Agency. It was agreed that at all three works there were likely to be releases of substances into more than one environmental medium, and that therefore the objectives contained in section 7 of the Environmental Protection Act 1990 included that of ensuring the use of the "best available techniques not entailing excessive cost" (BATNEEC) to minimise pollution "having regard to the best practicable environmental option [BPEO] available as respects the substances which may be released."

The lime works were authorised under IPC in 1993. At the time the fuel used was petroleum coke, and the judge was satisfied that the authorisations were granted having regard to both BATNEEC and BPEO.

The first legal question before the Court concerned the Agency's duties when it dealt with variations of authorisation conditions. Section 11 of the Act entitles a company to apply for variations. Redland applied for variations to use a proportion of solvent-derived fuels in place of petroleum coke - 25% in the case of Whitwell and 40% for Thrislington.

In granting the variations, the Agency compared the existing and proposed fuel regimes and concluded that the latter were a better environmental option. The applicants claimed that this was far too limited an exercise, and that in dealing with a variation the Agency was obliged to carry out a full BPEO study including the use of other fuels such as coal. The argument was based on the fact that the section 11 provisions are expressly stated to be subject to the requirements of section 7, which contains the BPEO provisions.

Mr Justice Harrison accepted that section 11 requires the Agency to ensure that the conditions imposed met the BATNEEC/BPEO requirements. But what they actually had to do was a matter of fact and degree according to the circumstances of the case: "It is not right to say that every time the Agency receives a section 11 application it has to carry out an exhaustive examination of all practical options and techniques relating to the process as a whole, regardless of the circumstances. Such a rigid rule would not only be unnecssarily burdensome to the Agency but it could also deter operators from bringing forward improvements by a section 11 application. Whilst there may be circumstances where such a full scale examination of the process as a whole may be warranted, in my judgment it was not necessary in the circumstances of this case."

In the present case, the Agency was held to be entitled to take on board the fact that the original authorisation conditions were considered to meet the BATNEEC/BPEO requirements. The proposed use of solvent fuels was considered to be an environmental improvement, and in the absence of an obviously better alternative the Agency was, according to the Court, "entitled to treat the proposed improvements by the use of SLF as part of the ongoing improvement programmes and as a continuation of the BATNEEC/BPEO position."

The applicant's second main argument was legally more complex, and as in the Bolton incinerator case (see below) concerned the meaning of the requirements of the 1975 EC framework Directive on waste as introduced under the Waste Management Licensing Regulations 1994.

Under schedule 4 of the regulations, when dealing with a prescribed process involving waste disposal or recovery, the Agency must ensure that waste is disposed of or recovered without endangering human health or harming the environment.

The regulations only kicked into play if the solvent fuel was "waste" - a question still disputed between the Agency and the operators. But for the purposes of the case Redland was prepared to assume that waste was involved, reserving the right to argue the point at a later date.

The argument of the applicants was that the Agency had treated these requirements as essentially co-extensive with the BATNEEC/BPEO obligations, while they submitted that they were requirements in their own right which had to be met, and in particular were not qualified by economic considerations.

The legal position was made more complex because schedule 4 goes on to provide that the Agency is not obliged to take into account matters relating to the prevention of detriments to the amenities of the locality if planning permission was in force after 30 April 1994 resulting from the taking of specified action by a planning authority, including the determination of an application for planning permission.

Amenity questions were taken to include such matters as noise, smell, visual impact and traffic movements. It followed that if no planning permission had been granted after 1994 then amenity questions had to be considered by the Agency. But the position on planning permission was not clear cut. In the Thrislington case, the county council had indicated that permission was required for the change of fuel - an issue disputed by Redland, and still to be determined by the courts.

The applicants argued that the Agency's decision letters indicated that it had considered the schedule 4 objectives to be satisfied by the BATNEEC/BPEO requirements and, in the case of Thrislington, had assumed that planning permission would be required and would deal with the amenity questions. On this point, the applicants contended that schedule 4 referred to permissions that were in force and not simply "required".

The judge agreed with the applicants that the BATNEEC/BPEO requirements were not co-extensive with the schedule 4 objectives. He also accepted that the Agency had made statements to the effect that, apart from the question of noise, it assumed that the requirements were in fact co-extensive.

Furthermore, in the case of Thrislington, the Agency had been wrong to assume that the amenity issues would be dealt with by the planning authority: "In this case there was no post-April 1994 planning permission in force at either of the plants so that it fell to the Agency to consider the relevant objectives insofar as they related to the prevention of detriment to the amenities of the locality."

This ruling was not, however, sufficient to help the applicants. In what must seem a rather harsh finding, the judge concluded that the Agency had in fact considered all the relevant objectives.

With Thrislington, he said, "in the case of nuisance through noise and in the case of visual amenity the Agency states its view, erroneously, that it is not required to consider them but it nevertheless goes on to consider them and to give its conclusions." As for the Whitwell works, the decision letter made scarce mention of the amenity objectives, but the judge was prepared to accept the inspector's affidavit evidence that they had been taken into account.

This part of the judgment is perhaps the most contentious since it is arguable that there is a considerable difference in treating considerations as legal requirements rather than discretionary elements. It is probable that the judge was influenced by the fact that the amenity considerations had only been raised for the first time at the hearing. Had it been otherwise, his ruling might have been more difficult to sustain.

The applicants' final argument concerned the application of the 1984 EC framework Directive on industrial air pollution. They contended that the plants fell within two categories of processes listed in the Directive - cement and lime production and incineration of toxic and dangerous waste. As such, the Agency was obliged to carry out a BATNEEC exercise to consider what was best for incineration as well as for cement or lime production, but had failed to do so.

The Agency relied on the Environmental Protection (Prescribed Processes and Substances) Regulations 1991 which provide that where waste disposal or treatment is ancillary to a production process only one application is required, and the disposal or treatment could be regarded as falling within that process.

The applicants maintained that this was inconsistent with the 1984 Directive, whose provisions were sufficiently precise and unconditional to have direct effect, and therefore overrode the regulations. The Agency countered that even if the Directive had direct effect, it simply required prior authorisation of certain plants in accordance with BATNEEC and there was nothing to imply the need for a separate exercise as the applicants contended.

Mr Justice Harrison disagreed with the applicants: "I find the concept of a single plant being treated as two plants requiring separate authorisations very difficult to accept. In my view on any sensible analysis the plants at Whitwell and Thrislington are lime production plants; they are not plants for the incineration of waste."

There was, he felt, no inconsistency between the Directive and the regulations. But again he added, perhaps mindful of a possible appeal, that if he was wrong on that point, he was very doubtful whether he would have exercised his discretion to quash the decision on the grounds of a failure to conduct a BATNEEC exercise for the disposal of waste in addition to those carried out. The evidence suggested that the emission standards actually set would not have been any different had such an assessment been carried out.

The legal challenge concerning Castle Cement's works was also brought by local residents and raised many of the same legal arguments but against a different factual background. The original IPC authorisation for the plant was granted in 1993, and the company was permitted to use a proportion of solvent-based fuel, Cemfuel, on a trial basis. In 1996, it was authorised to burn the fuel indefinitely in two of the site's three kilns.

Subsequently there were problems in ensuring that the deliveries of Cemfuel met the specification set out in the authorisation. The Agency responded by varying the authorisation in 1997 under section 10 of the 1990 Act, requiring the adoption of a sampling and analysis procedure and barring Castle Cement from burning Cemfuel until this had been agreed with the Agency. The procedure was approved by the Agency a few weeks later. It was both the variation and the subsequent approval which were challenged.

Again, the applicants first argued that when making the variation the Agency should have conducted a full BATNEEC/BPEO assessment, comparing the renewed burning of Cemfuel with other fuels. The Court agreed that the BATNEEC/BPEO duties applied to a variation, but repeated its view that was required was a matter of fact and degree. In the circumstances of the case it was unreasonable and unrealistic to expect the Agency to carry out a full assessment of a whole range of options and techniques.

Furthermore, in this particular case, the judge agreed with the Agency that the variation relating to sampling should essentially be regarded as part of enforcement action to ensure that the process met the BATNEEC/BPEO objectives. Although it could have used the specific enforcement procedures in the 1990 Act, when the BATNEEC/BPEO duty would not have arisen, the Agency chose the variation route as a speedier method of achieving the same objective.

The applicants then argued that in dealing with the variation the Agency had failed to have regard to the objectives of the EC framework Directive on waste, as contained in the 1994 waste licensing regulations. Mr Justice Harrison agreed, observing: "Strictly as a matter of law they should have done." But he went on to exercise his discretion not to quash the decision on that ground, partly because he considered that what had taken place was essentially an enforcement decision and partly because, except for the question of smell, none of the amenity issues had been raised by the applicants before the hearing.

The third argument was that cement works should be considered as a waste incineration process requiring a separate BATNEEC assessment under the EC framework Directive on industrial air pollution. This was rejected on the same grounds as in the applications relating to the lime works.

The final legal argument was distinct to the cement works. Essentially the applicants claimed that the various fuel specifications which allowed for a degree of mixing of Cemfuel which met the specifications with Cemfuel which did not were contrary to provisions of the 1991 EC Directive on hazardous waste and the Special Waste Regulations 1996 prohibiting the mixing of separate categories of hazardous waste.

Mr Justice Harrison accepted that there was no legal definition of what was meant by "categories" of waste and that "it was really a matter of impression and a matter of fact and degree." He concluded that the mixing of different specifications of Cemfuel that was permitted did not involve a mixing of different categories of waste.

The controversy over solvent-derived fuels may well continue, but the High Court's decision has clarified a number of the important legal issues which have been raised - though the question whether a change of fuel is a sufficient change of use of land to require planning permission remains at large.

In dealing with variations the Agency will need explicitly to address BATNEEC/BPEO questions, though it will have considerable discretion as to the scope and level of detail required.

Where waste disposal is involved, the ruling concerning the application of the waste framework Directive adds a significant burden to the Agency, particularly where no planning permission is in force dealing with amenity questions. As has often happened with EC Directives, Member States no doubt agreed to the general principles concerning the disposal of waste without risk to human health and the environment without appreciating the full consequences of what they were doing.

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