High Court rules on recycling

In an important test case, the High Court has held that many forms of recycling and scrap metal operations fall within legal definitions of waste recovery, and require licensing. The decision is the outcome of a long-running legal dispute between the scrap metal industry and the Environment Agency, and the complex judgment clarifies a number of key issues, although some grey areas remain.

Mayer Parry Recycling Ltd v Environment Agency (High Court, 9 November 1998) was a legal challenge concerned with testing the legal status of various scrap metal operations, and the extent to which they are covered by the Waste Management Licensing Regulations 1994.

The court accepted that the definitions of waste in the regulations were the same as those contained in EC law, essentially the 1975 framework Directive on waste as amended in 1991. That Directive has itself been the subject of interpretation in several decisions of the European Court of Justice (ECJ). Two of those decisions made in 1997, after the Mayer Parry case began, proved to have a decisive influence.

The legal context of the decision is complicated because of significant changes to the definitions of waste over the last decade. The original 1975 EC Directive contained a very generalised definition which focused on the "disposal" of substances by a holder.

Earlier ECJ case law held that the fact that a substance was capable of economic utilisation did not in itself exclude it from the Community definition of waste. British legislation also contained a generalised definition which included references to scrap material and disposal, and British case law also held that waste was defined from the point of view of the person producing or getting rid of it, even if it was capable of being recycled.

Dissatisfaction with the uncertainties contained within the legislation led to substantial amendments to the 1975 Directive in 1991 with the introduction of a far more elaborate definition of waste. Article 1 of the amended Directive defined waste as meaning "any substance or object set out in Annex I which the holder discards or intends or is required to discard." Annex I contains various categories of substances or products, including a residual category expressed in such broad terms as to render the list rather valueless - "any materials, substances or products which are not contained in the above categories."

The Directive also requires the European Commission to draw up a list of wastes falling within these categories, which it has done in the European Waste Catalogue.

The Directive goes on to require the licensing of recovery or disposal operations listed in Annexes IIA and IIB.

The 1994 British regulations incorporated these definitions, but no change was made to the definition of waste in the Environmental Protection Act 1990. It could have been argued that this was inconsistent with EC law, and the opportunity was taken with the Environment Act 1995 to amend the 1990 definitions to make it clear they were the same as those contained in Community law.

The Mayer Parry case was basically concerned with considering whether scrap metal which was subjected to a recycling operation as defined in Annex II of the Directive was waste within the meaning of the law. Four key categories of material were identified:

  • Ferrous and non-ferrous scrap which required no further processing but was capable of being used as a fuel or for melting by manufacturers.

  • Scrap metal sent for treatment or processing including such operations as sorting, cutting or fragmentising with a view to its being used as a raw material for smelting.

  • Scrap metal contaminated with oil and cutting fluids requiring special measures or drying operations.

  • Metal scrap containing small amounts of foreign matter such as plastic or wood which would require separation before being used as a furnace feed.

    In the High Court, Mr Justice Carnwath noted that the primary definition of waste in the 1991 Directive focused on the concept of discarding rather than disposal, with the term "disposal" now reserved for defined disposal operations listed in Annex IIA.

    He observed that the notion of discarding generally has a more negative meaning than the term disposal, and it might be that if this had been a purely British point of construction much might have been made of the subtle change in wording. But the interpretation has to be read in a European context. French and Italian versions of the Directive, for example, had not made any such distinction, and continued to use the same terminology as before ("se defait" and "disfarsi di").

    In any event, Mr Justice Carnwath considered that two recent ECJ decisions had largely clarified the matter. In the 1997 Tombesi case (ENDS Report 270, pp 43-44 ), the ECJ had reaffirmed that the Community legislation was intended to cover all substance or objects discarded by their owners even if they have a commercial value by means or recycling, reclamation or reuse.

    The actual decision of the ECJ did not elaborate on the meaning of discarding, but the opinion of the Advocate General discussed the concept in more detail.

    He considered that in the context of the 1991 Directive, "little is to be gained by considering the normal meaning of the term 'discard'." Instead, it had to be considered as having a special meaning encompassing both the disposal of waste and its consignment to a recovery operation, and that while a "recovery operation" was not exhaustively defined it was preferable to work on a case by case basis and examine whether the substance concerned was being consigned to one of the recovery operations listed in Annex IIB of the Directive or an analagous operation.

    In the subsequent Wallone case, also decided in 1997, the ECJ itself followed this line, and made explicit that the term "discard" includes both disposal and recovery.

    The ECJ noted that the categories of waste listed in the Directive and the listed disposal and recovery operations did not in principle exclude any kind of residue, industrial by-product or other substance arising from production processes. Nevertheless, it accepted that there remained a difference, "however difficult that distinction may be", between waste recovery falling within the Directive and the normal industrial treatment of products which are not waste.

    Given the European context, Mr Justice Carnwath accepted that the notion of discarding has to be given a special meaning, and agreed with the Agency's general approach that the focus of attention should now be on the description of recovery operations contained in Annex IIB.

    In his view, "the term 'discard' is used in a broad sense equivalent to 'get rid of' but is coloured by the examples of waste given in Annex I and the Waste Catalogue which indicate that it is concerned generally with materials which have ceased to be required for their original purpose, normally because they are unsuitable, unwanted or surplus to requirements."

    However, that broad definition was itself limited by the legislative context which was designed to control the disposal and recovery of such materials. It therefore followed that "materials which are to be reused (rather than finally disposed of) but which do not require any recovery operation before being put to their new use, are not treated as waste." It also followed that materials processed for reuse by recovery operations cease to be waste once the operation is complete.

    The Court noted that one form of recovery operation contained in the Directive was the "recycling and reclamation of metal and metal compounds", and concluded that as long as materials were subject to any process falling within that description then they remain waste for the purposes of the definition. The presumption was that any operations which formed part of the scrap metal recycling business were recovery operations and, again following the ECJ's decision in the Wallone case, the fact that some operations might not have environmental implications did not exclude them from the definition.

    Turning to the four categories of materials put before the court, the Agency itself accepted that the first category - ferrous and non-ferrous scrap metal requiring no further processing for use as a fuel or for melting by producers - was not waste. Mr Justice Carnwath agreed.

    In the case of the next two categories where some form of processing was involved, he agreed with the Agency's arguments that these all involved recovery operations and fell within the definition of waste as long as these operations continued.

    With the last category - loads of scrap metal containing small amounts of foreign matter - Mr Justice Carnwath agreed in principle with the Agency that any sorting by Mayer Parry to remove impurities was a recovery operation and that the material so treated was waste. But he accepted that the position was rather more complex where a manufacturer agreed to accept materials containing a degree of impurity and had to carry out special operations to decontaminate them.

    According to the evidence, decontamination processes such as swarf dryers were often used by foundry operators as an integral part of their operations. The court accepted that in such cases the dividing line between "recovery operations" and "normal industrial treatment" was exceedingly difficult to draw and that there could not be a "wholly logical resolution of this issue."

    Nevertheless, the court agreed with the Agency that swarf drying and other recovery operations, even if an integral part of an industrial process, meant that the material remained waste. On the other hand, where a company simply sorted material which had been delivered to it in a reusable form, this was not a recovery operation - though if the sorting involved separating material for reuse and material for disposal this did amount to a recovery operation.

    Even this distinction might not always reflect reality, since manufacturers sometimes would accept loads containing a small amount of non-hazardous foreign matter. In such cases, Mr Justice Carnwath was inclined to the view that this did not make the whole load waste, and that removal of a small amount of unusable matter might be so immaterial as to be legally insignificant.

    Matching generalised legal definitions to a wide variety of operations that take place in practice is always a challenge in law, not least in the field of waste controls. Nevertheless, the Mayer Parry decision will give comfort to the Agency and the Government that their general approach concerning the coverage of waste licensing controls has been legally correct.

    The case confirms that scrap metal requiring no further processing essentially is to be treated as raw material rather than waste, and that once recovery or recycling operations are completed, material ceases to be waste. Despite rather extravagant claims by the British Metals Federation following the decision, the Agency accepted that this was the legal position. On the other hand, it is clear in law that most operations involved in recovery and recycling require licensing under waste management law.

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