The new challenge of waste management licensing

After two postponements and many hiccups, the waste management licensing system established by the Environmental Protection Act 1990 has finally been implemented - and with it the Government has implemented the 1991 EC framework Directive on waste. Although doubts remain about whether the UK is now in full compliance with the EC rules, these have imposed demanding new duties on waste regulators and other authorities, and may have some surprises in store for future regulatory decisions. Meanwhile, uncertainty persists over how waste disposal operators will provide the necessary financial guarantees for new facilities.

"It's been a bit of a saga." That was the note on which Lisette Simcock, head of the Department of the Environment's waste management division, introduced the new rules at an Institute of Wastes Management (IWM) conference in London on 19 April, and for once nobody was disagreeing. The legislation was originally due in April 1993, but in a longer perspective its origins can be traced back at least to a 1985 report by the Royal Commission on Environmental Pollution.

For a while in April it seemed that the saga might be prolonged even further. Welsh Secretary John Redwood, with a reputation as a keen deregulator to preserve, evidently found the package of legislation and guidance placed before him too much to swallow, and held back his signature for a fortnight longer than his English and Scottish counterparts.

Record-breaking package
But sign he eventually did. The result is that probably the most complex item of waste legislation ever passed is now on the statute book,1 accompanied by a circular which, at 199 pages, is also of record length.2 The only placation for the deregulators is that two supporting Waste Management Papers (WMPs) have been honed to a virtual skeleton compared to the original drafts issued for consultation some two years ago.3The regulations generally came into force on 1 May. One of the exceptions is that scrapyards will not be subject to the new licensing rules until 1 October. Although it was made explicit in 1988 that they were subject to the old licensing regime under the Control of Pollution Act 1974, only about 1,000 of the 5,000 scrapyards in Britain have since obtained licences. Environment Minister Robert Atkins caved in to the industry's last-minute pleas for a further delay, and while ostensibly the new rules will apply to the industry in October he has invited it to use the holiday to make further representations.

Another exception is in the provisions for technical competence. Under section 74 of the 1990 Act a licensed activity must be "in the hands of a technically competent person", and for most sites it will be a requirement that such a person must hold a full certificate of competence from the Waste Management Industry Training and Advisory Board (WAMITAB). As a transitional measure, the regulations provide that a provisional certificate may be obtained automatically by anyone who has managed a facility at any time in the 12 months before 10 August 1994, provided that he or she applies for it by that date. The provisional certificate will be valid for five years thereafter.

Thirdly, operators of activities which are subject to licensing for the first time have been given until 30 April 1995 to apply for a licence.

By common consensus, the regulations mark a clean break with the old regime. The change would have been fundamental enough if it had only involved the novel features of the 1990 Act - notably those dealing with the surrender of licences, the tests which operators must pass before being deemed to be "fit and proper" to hold and retain a licence, and waste regulation authorities' more diverse array of enforcement tools. But its ramifications have been widened by the simultaneous implementation of the 1991 EC framework Directive on waste.

EC influences
It was largely the Government's belated realisation that case law in the European Court of Justice (ECJ) had made it imperative that the regulations needed to be made fully compatible with the Directive which caused the 13-month delay in their introduction (ENDS Report 222, p 33 ). The result of its efforts to achieve this is probably the closest and most complex interweaving of UK and EC law seen in the environmental field to date - though even so the Government still needs to introduce regulations defining when and how agricultural and mining and quarrying wastes will be treated and regulated as "controlled waste" for the first time. It has promised to do this later this year.

The difficulties created by the Directive stemmed mostly from two of its provisions. Firstly, Article 4 obliges Member States to ensure that waste is recovered or disposed of "without endangering human health and without using processes or methods which could harm the environment." In particular, such operations must be carried out "without risk to water, air, soil and plants and animals," "without causing a nuisance through noise or odours," and "without adversely affecting the countryside or places of special interest."

These requirements were not met in the Government's original proposals for the licensing regulations in August 1992, as ENDS pointed out at the time. But they created a more general difficulty, in that complying with duties framed in such absolute terms is clearly not straightforward.

Proportionality test
Fortunately for the Government, the ECJ came to its assistance. In a ruling during 1992, it said that Article 4 "sets out the objectives which Member States must observe" in implementing other requirements of the Directive. This has enabled the Government to advise in its circular that, in implementing the Article 4 provisions, competent authorities will have discretion in applying them as objectives, and in particular that they should exercise "proportionality" when doing so. This term is a major theme of the circular, with the Government stressing that regulation "should be proportionate to the risks involved and the benefits to be obtained."

The crucial question, and one which may well become a bone of contention in future regulatory decisions, is whether action based on the proportionality principle will satisfy the Article 4 requirements.

For example, many landfills employ passive gas control systems. These are intended to ensure that any methane generated in the waste mass cannot migrate through the surrounding rock, but is instead vented to atmosphere. However, it cannot be argued that this practice is "without risk" to air, since methane is a powerful greenhouse gas. Passive gas venting may be a "proportionate" response to the issue, but it may not be felt by everyone to amount to a determined pursuit of the relevant Article 4 objective.

Likewise, occasional applications are made to locate landfills on Sites of Special Scientific Interest. Some are allowed, but whether or not these are "proportionate" decisions it is again arguable that they are inconsistent with the Article 4 objective of avoiding adverse effects on places of special interest.

Duties on authorities
Article 4 is therefore likely to shake up the framework within which waste management decisions are taken, quite possibly by a good deal more than the Government has suggested. This point is important because the pursuit of its objectives has been made a statutory duty - and one falling on many more bodies than just the waste regulation authorities (WRAs).

The principal reason for this is that Directive provides that the Article 4 objectives must be pursued when its other requirements - notably waste disposal planning and permitting of waste facilities - are being applied. Because these functions are often carried out by bodies other than the WRAs, they have had to be designated as competent authorities when carrying out those functions.

For example, HM Inspectorate of Pollution has now been required to consider noise nuisance when considering applications for integrated pollution control authorisations for processes which received planning permission before 1 May. This is a significant extension of its existing functions.

Similarly, planning authorities will have to pursue the Article 4 objectives when, say, they are drawing up development plans or taking planning decisions. And both they and WRAs will have to pursue the objectives of Articles 3 of the Directive as well, which provides that waste management plans must encourage waste minimisation and recycling. There are many other examples of this kind, and clearly the competent authorities will need to think hard about their new duties if they are not to risk falling foul of the Directive and arranging an appearance by the UK before the ECJ.

Difficulties over registration
The second main difficulty created for the Government by the Directive - albeit one largely of its own making - was in Article 11. This allows Member States to exempt waste recovery operations from licensing, subject to three conditions. The first is that general rules on the types and quantities of waste involved and the conditions to be observed must be laid down for each activity. The second is that the quantities of waste and recovery methods involved must be such that the requirements of Article 4 are complied with. And the third is that exempt activities must be registered with the authorities.

In 1992, the Government proposed a series of exemptions from licensing. However, as ENDS observed at the time, in some cases it failed to specify the necessary quantitative limits.

The new regulations lay down such limits for exempt activities. However, it is a moot point whether the EC requirement that conditions are laid down for each exempt activity has been fulfilled. To achieve this, the Government has relied primarily on section 33(1)(c) of the 1990 Act, which imposes a broad prohibition on the treating, keeping or disposal of controlled waste in a manner likely to cause pollution or harm to human health, and a general requirement in the regulations that the exemptions apply only if the types or quantities of waste and the methods of disposal or recovery are consistent with the need to attain the Article 4 objectives.

In order to comply with the EC requirement for registration of exempt activities, the Government has devised a passive registration system. This will be administered by WRAs for most exempt activities. Registration will be automatic.

The registration arrangements "may sound slightly Alice in Wonderland," Ms Simcock commented at the IWM conference, and so they do. Although it will be an offence for a registrable activity not to have registered by the end of 1994, the regulations provide that the relevant authority must register an operation not only on receiving the appropriate particulars but also if it "otherwise becomes aware of those particulars." The circular adds that since a failure to register does not in itself threaten pollution or harm, "authorities should not expect to take enforcement action for such technical breaches, until and unless the establishment or undertaking concerned fails to cooperate with the reasonable actions open to the authority to secure a registration."

The EC Directive also requires "appropriate periodic inspections" of registered activities. WRAs have expressed concern that the charging scheme introduced for licensed facilities does not extend to registered activities, but Ms Simcock drew attention to the "heavy hint" in the circular that they should "go easy" on such inspections.

Advice on enforcement
If the Government has its way, WRAs will also be going easy on "technical breaches" of licence conditions. According to the circular, waste management facilities "are a source of benefit to the environment and sustainable development," and WRAs should "strike an appropriate balance between advice and encouragement and regulation and legal enforcement."

That advice will doubtless be welcomed by waste disposal contractors. Derek Greedy of Shanks & McEwan commented at the IWM conference that "it is unlikely for an operator to be in compliance with all his licence conditions all of the time." The industry's fear is that a successful prosecution for a breach of a licence will bring into play section 74 of the 1990 Act, under which WRAs have discretion to revoke a licence if the holder is convicted of any of a range of prescribed offences.

However, Jeremy Frost of Lancashire WRA took issue with the Government's advice that technical breaches of licences should not attract enforcement action. Most waste operators, he suggested, would be unhappy if no action was taken against an illegal operation, and effective enforcement was also critical to maintaining public confidence in the regulatory system.

The regulatory package introduces a host of other innovations. There are few substantive changes from the last published drafts dealing with licensing, the three "fit and proper" tests, and procedures and criteria for the surrender of licences. Among the more noteworthy points are:

  • Statutory backing has been given for the first time to the two new WMPs and aspects of the circular which guide WRAs on the discharge of their functions. This will give the documents a higher status in appeals and legal proceedings, as well as in drafting of licence conditions. The minimum inspection frequencies laid down in one of the WMPs have also been given an enhanced status.

  • The existing UK definition of "waste" has been replaced by that in the EC Directive. The Government's interpretation of the new definition was given earlier this year (ENDS Report 227, pp 34-35 ). Some British case law in this area is likely to have been made redundant as a result.

  • Legal effect has been given for the first time to two EC Directives dealing with groundwater protection and permissible PCB levels in waste oil. The Government has added an extra day to the calendar by advising WRAs to initiate any action needed to modify existing licences to bring them into line with the groundwater Directive by 31 April 1995.

  • A new registration system has been established for waste brokers.. Again, this requirement was driven by the EC Directive.

  • With the widening of the scope of the licensing system, the grounds for appeals against WRAs' decisions have also been extended. However, the Government says that appeals should be a last resort, and it expects proportionately fewer appeals than under the old licensing system. Its hopes are likely to be dashed. The National Association of Waste Disposal Contractors (NAWDC) says that it will be encouraging its members to lodge appeals in order that precedents can be set on important issues by the Secretary of State.

  • The regulations will greatly extend public access to information on licensed activities via a system of public registers. In addition to the standard documentation, they provide for the disclosure of WRAs' site inspection reports, creating a precedent for other regulatory regimes. However, industry was successful in arguing that "special waste" consignment notes should not be placed on the registers.

  • The WMP on licensing provides new guidance on the relationship between working plans and licences. This has been a thorny issue between WRAs and operators for some time because of doubts about whether the working plan should form part of the licence - and whether an operator loses his rights of appeal if it is made a licence condition that he may not modify his working plan without the WRA's approval.

    The WMP makes it clear that working plans are operators' documents. However, since their content will be influenced by licence conditions, it urges operators to open discussions with WRAs several months before a licence application is submitted so that the content of both documents can be thrashed out. Thereafter, only some licence conditions should need to be tied to the working plan, and those that are will only sometimes require the WRA's prior approval of any changes to the plan.

  • The Government's guidance on the provision of financial guarantees by operators to cover liabilities arising from their licences - one of the three "fit and proper" tests - is little changed from the last draft on the subject. However, a difficulty has arisen with NAWDC's plans to set up a company, Newco, to assume responsibility for closed landfills until their licences are surrendered, with the liabilities being covered by levies on waste inputs during the life of the sites.

    Although the Newco initiative is broadly endorsed in the Government's circular, most NAWDC members have now got cold feet about it because of fears that Newco itself could be deemed to be not "fit and proper" to hold a licence if it was convicted of a relevant offence. Participating companies might have needed to take out secondary cover to ensure that they could finance their licence liabilities if such an event occurred, and not surprisingly most have declined to countenance the idea. The industry is now likely to be thrown back on using escrow accounts, bonds or guarantees from parent companies, although it is still not clear which of these options are likely to be acceptable to WRAs.

    Meanwhile, NAWDC says that member companies have reported that at least three WRAs have asked what financial guarantees they intend to provide for old-established landfills. The Government's guidance makes it clear that guarantees are not required for existing sites. This is just one of the misunderstandings that are likely to crop up as regulators and operators alike get to grips with the complexities of the new regime.

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