Waste industry lobbies for delay in licensing rules

The waste management industry has blown a fuse over proposals on waste management licensing issued by the Department of the Environment (DoE) this summer. In a hard-hitting response, the National Association of Waste Disposal Contractors (NAWDC) has urged it to postpone the implementation of key parts of the new rules dealing with the financial probity and technical competence of waste management businesses while more credible solutions are devised.

The proposals were issued at the end of July (ENDS Report 211, pp 14-18 ). They were the first of two consultation packages on the licensing provisions in Part II of the Environmental Protection Act 1990, which will replace the existing licensing regime under the Control of Pollution Act 1974.

The proposals included revised definitions of the scope of licensing, a new registration system for minor waste management activities, and a charging scheme to enable the waste regulation authorities (WRAs) to recover their licensing and policing costs. Also included were proposals for implementing section 74 of the 1990 Act, which sets three new tests to be passed by licence applicants.

The consultation papers were expected to draw criticism, and so it is proving. Only NAWDC's response was available as ENDS went to press, but soundings taken among other industries and local authorities indicate that the DoE is felt widely not to have done an adequate job.

NAWDC's agitated response, which makes liberal use of terms such as "unrealistic", "unworkable" and "confused" to describe the DoE's proposals, may not be unwelcome to some DoE officials. For there is little doubt that the implementation programme is in considerable trouble.

The second set of consultation papers, due to cover, among other issues, the thorny question of the terms on which waste management licences may be surrendered, was promised for September. It is now expected in November, leaving precious little time for consultation before the April 1993 implementation date.

The three most difficult issues in the whole package were always likely to be the surrender of licences and the section 74 tests dealing with the financial security of licence applicants and the technical competence of site managers. In all three cases the DoE is struggling to come up with credible solutions, and it may therefore welcome external criticisms of its proposals to back up a possible appeal to Ministers to delay implementation.

On the other hand, Ministers decided to proceed with implementation on 1 April 1993 only in July, when it became clear that legislation to establish the new Environment Agency would be delayed until at least the end of 1993. They would not be too happy to be advised that implementation of the whole licensing package next April would, after all, be impracticable, having been advised to the contrary not too many weeks ago.

NAWDC's response opens by criticising several key components of the DoE's proposals which, it argues, "distort and extend the basic law so much that we cannot envisage how the system can be in place by April '93 nor ever implementable by the current WRAs." The clear implication is that it wants implementation of those parts to be delayed until the WRAs are absorbed into the Environment Agency. This will not occur until April 1995 at the earliest.

NAWDC's main objections are as follows:

  • Relevant offences: One of the hurdles to be passed by licence applicants is that they must not have been convicted of a "relevant offence". WRAs will have discretion whether to refuse a licence to anyone with such a conviction. A lengthy list of relevant offences under pollution, waste management and nuisance legislation was included in the consultation paper.

    NAWDC voices a fundamental objection to the idea that companies which are convicted of a relevant offence before April 1993 may fail with a licence application after that date. "It is quite contrary to the principles of natural justice," it argues, "that companies should be at risk of being penalised under a new law for offences which occurred in the past for which they have already paid the penalty prescribed by law."

    NAWDC also wants the DoE to clarify in guidance to WRAs that someone who leaves a company which has been convicted of a relevant offence in which he was not in any way incriminated should not bring that conviction with him to his next employer.

    On some issues NAWDC is on shakier ground. For example, it argues that convictions under statutory nuisance legislation should be dropped from the list of relevant offences because these "have no bearing on the competence or fitness of the operator to hold a waste management licence." The offences concerned are where a company not only breaches a nuisance abatement or prohibition notice, but fails subsequently to comply with a nuisance order made by a court to enforce that notice. An abatement notice or order may well have been the only means to rectify a nuisance such as odour from a landfill, and a company which has been convicted of breaching an order will almost certainly have been causing a prolonged nuisance, and in doing so might well have shown itself to lack competence.

    NAWDC also comments that it was "outrageous" of the DoE "to imply that licences could be refused (or revoked) on the basis of convictions of a minor or technical nature." In fact, the DoE's consultation paper urges WRAs to take into consideration the gravity of an offence, notes that "an isolated conviction where there are mitigating circumstances need not result in the refusal of an application or the revocation of a licence," and advises that particular regard should be paid to whether the offence involved "special" waste, caused serious pollution, or attracted a large fine.

    NAWDC's purpose in making this point, as it is elsewhere in its response, is clearly to alarm the DoE with the prospect of a massive increase in appeals against the WRAs' licensing decisions. The DoE has been struggling for years to determine appeals in a reasonable period.

  • Financial security: Another of the section 74 tests is that a licence applicant must demonstrate that he has made financial provision adequate to discharge the obligations arising from the licence. NAWDC has already argued that the DoE has been stretching the meaning of this clause to encompass liabilities arising from unforeseen occurrences at landfills which by definition cannot be covered in licences (ENDS Report 212, p 15 ).

    Secondly, NAWDC points out that there is still no proven mechanism for operators to demonstrate that they have made adequate financial provision even within the narrow meaning of section 74. The DoE's consultation paper proposed several types of financial guarantee mechanism, but highlighted drawbacks in each. It also suggested that one such mechanism might be Newco, a collective landfill liability fund proposed by NAWDC itself. However, as reported last month, NAWDC's members are now much less enthusiastic about the idea, and only a handful of its members are currently prepared to contribute funds to turn it into a working proposition.

    Another important point made in NAWDC's response is that company law restricts the disclosure of financial information. Listed companies, it says, are not permitted to disclose to WRAs information which is not already widely available, and in the run-up to the publication of their annual accounts are not allowed to provide any financial information. This issue, it says, has not been addressed at all by the Government - though it might also be said that NAWDC has itself not drawn attention to it either.

    NAWDC, though, has come up with its own proposal on how proof of financial security might be provided. This would take the form of a certificate from an auditor, working in cooperation with an applicant and a WRA and to guidance issued by the Secretary of State and, possibly, to an accounting standard. The precise implications of this proposal are not clear, but WRAs will certainly want to know whether such a certificate would be a stronger guarantee that a pot of money would be available when required than some alternative such as a bond. On the other hand, WRAs are certainly not confident that they possess the expertise to assess licence applicants' financial position.

  • Technical competence: NAWDC's dispute with the DoE on this, the third section 74 test, is over both the means by which site managers can prove their technical competence and the DoE's draft guidance on the circumstances in which a technically competent person must be supervising a site.

    On the first issue, the source of the dispute is the DoE's belated turnaround on whether personnel with, say, five or ten years' experience in managing a particular operation should be eligible for "grandfather rights" - in other words, should automatically receive a Certificate of Qualifying Experience from WAMITAB, the industry's training body. The DoE's view now is that they should not (ENDS Report 209, pp 12-13 ). Instead, existing waste managers have been given until April 1998 to qualify for a full Certificate of Technical Competence.

    The consequence, says NAWDC, is that existing site managers will be able to manage only the type of facility in which they have experience unless they obtain a full certificate enabling them to manage a different type of facility. This, it forecasts, will give rise to "significant operational difficulties in the transitional period as the limited pool of provisionally qualified staff will be in great demand and finding replacements will be very difficult."

    NAWDC wants the DoE to return to its original concept of "grandfather rights", since this would "automatically provide a pool of people able to both run the sites and, more importantly, act as assessors for incoming candidates." But external observers may question whether this would delay unreasonably the transition to higher standards of professionalism within the industry.

  • Public registers: A series of objections are made by NAWDC to the DoE's proposals in this area, which it says could create "massive registers of mostly meaningless details" and result in the disclosure of commercially confidential information.

    NAWDC's worries about confidentiality centre on the disclosure of financial information which companies supply in support of their financial security claims under section 74, and of "special" waste consignment notes, which would be of value to competitors in identifying the sources of contractors' business.

    It also says that the basis on which WRAs will be expected to make judgements about whether information should be treated as commercially confidential is not clear. The DoE's draft guidance says that the test should be whether disclosure would "prejudice to an unreasonable degree the commercial interests of an operator." However, it is unlikely that this form of words will be changed, as it has already been used in official guidance on the registers established under Part I of the Act.

    More generally, NAWDC maintains that the amount of data to be placed on the registers is "excessive". If the purpose of the registers, it says, is to satisfy "commercial competitors or extreme environmental groups who demand to know everything for the sake of knowing then the current proposals are correct. If it is, as we would hope, for the vast majority of the general public who wish to know that any operations are legal, are being conducted properly and have a general understanding of what is going on then a modified 'summary' type register is appropriate. If such a summary does not exist then the public will rightly complain that the Government and industry is bamboozling them with masses of information."

    Environmental groups, "extreme" or otherwise, will see the issue very differently, and NAWDC's suggestion that information not on the "summary" registers could be made available on request is at odds with Government policy that the public should have access via registers to information to which regulators themselves have access by virtue of their statutory powers, subject to confidentiality considerations.

  • Charges: NAWDC has voiced no objection in principle to the system of cost-recovery charging proposed by the DoE, but says that it should be made explicit that WRAs must account publicly for the use they make of charge income so that this is clearly seen to be spent on regulation.

    The proposed charging scheme is fairly complex, consisting of a licence fee and an annual "subsistence" charge, with the level of each being determined by the type of facility, the type of waste it handles, and the maximum licensed input. NAWDC, however, wants to add further complexities. It has urged the Government to base subsistence charges on actual rather than licensed throughput - implying that they would have to be paid or adjusted retrospectively - and varied in some unspecified manner according to site design and local hydrogeology.

    The charging scheme could also bear down unfairly on small landfills, particularly those taking small quantities of asbestos or other "special" wastes, NAWDC argues. Shortages of suitable capacity or illegal disposal could be the consequences unless the scale of charges is graduated.

  • Scotland: Many disposal sites in Scotland are operated under council resolutions rather than licences. These will not be caught by the vast majority of the new licensing rules, and hence will have an unfair competitive advantage against private sector sites.

    The consultation papers' failure to address this issue, says NAWDC, is a clear breach of an undertaking given as the Environmental Protection Act was passing through Parliament, when a Scottish Minister promised that the management of all local authority sites would be in the hands of "fit and proper" persons, as required by section 74. In addition, the new cost-recovery charges will apply only in relation to licences, and not resolutions.

    NAWDC's response is also critical on many other detailed issues arising from the consultation paper. But its principal demand is that implementation of those parts of the new system which are not obligatory under EC law should be postponed beyond April 1993. This means, in particular, the provisions dealing with financial security and technical competence.

    The DoE is now facing a grave dilemma. To postpone will mean serious loss of face. But to press ahead as planned will bring more than the normal teething troubles associated with a new regulatory regime - and quite probably a mass of existing licences being surrendered with their accompanying liabilities in the weeks before next April.

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