Background – why is the definition of waste an issue?

One of the most intractable problems in environmental law that operators, as well as lawyers, have to deal with is the definition of waste, because so much hangs upon it. If “waste” is burned, for example, as a fuel, it is subject to stringent regulation, including the Waste Incineration Directive.

The skill is to square the circle between an ever expanding legal definition of what waste is, following a line of cases that have emerged from the European Court of Justice (“ECJ”) and the entrepreneurial activities and aspirations of a number of operators keen to build up the secondary materials market – especially in fuel.

In a nutshell – when does waste material that has been treated/recycled/regenerated cease to be waste in the hands of subsequent users?

How did this all start?

The debate starts from a beguilingly simple definition of “waste” in the Waste Framework Directive (which originally came into life in 1975, is currently the subject of a major review and which was consolidated in Directive 2006/12/EC). At Article 1(a) “waste” is defined as “any substance in the categories set out in Annex 1 [a long and basically catch-all group] which the holder discards or intends….to discard”.

The emphasis is, therefore, immediately upon the intention of the original holder of the material. But what about when it is passed on?

The problem that the Court of Appeal recently had to grapple with was when material ceased to be waste after it had been processed and was then in the hands of others who wished to use it. That is, individuals who had no intention of treating it as waste. As Lord Justice Carnworth (Master of the Rolls – giving the only substantive judgment) said:-

“….a fundamental problem is the [ECJ’s]….professed adherence to the Article 1(a) definition, even where it can be of no practical relevance. This objective “intention to discard” may be a useful guide to the status of the material in the hands of the original producer. However, it is hard to apply to the status of the material in the hands of someone who buys it for recycling or reprocessing; or who puts it to some other valuable use. In no ordinary sense is such a person “discarding” or “getting rid of” the material. His intention is precisely the opposite.”

Lord Justice Carnworth’s statement came in his judgment in the case of R (OSS Group Limited) v Environment Agency (and others) and DEFRA. The case was heard on 14 and15 May this year and Judgment was handed down on 28 June.

The OSS case

The case involved a company, “OSS”, which collected waste lubricating and fuel oil from garages and workshops and then converted it into what the Court described as “marketable fuel oil”. The question was – did it then cease to be waste? This was critical because those using the material would want to use it as fuel, not waste. If it was burned as waste, they would be subject to stringent and costly regulation, as outlined above.

The Court of Appeal was asked to answer the following question:-

“….whether a lubricating oil, thus not originally used as fuel, which becomes waste can thereafter be burned other than as waste.”

The Court of Appeal’s decision was that it could.

In the High Court Mr Justice Burton had agreed with the Environment Agency that even though those ultimately using the fuel oil did not intend to discard it, there was no way that the material could be burned other than as waste. Its original owners had intended to discard it. Even if the waste had been subjected to a complete recovery operation, when the energy was recovered the material reverted back to “waste”; the material was still being disposed of.

The Court of Appeal took a different view. The decision in the High Court was overruled and OSS’ appeal allowed. Lord Justice Carnworth held that what is required, in these circumstances, is a “value judgment on the facts of the particular case in the light of [a series of objective indicators derived from the policy of the Waste Framework Directive]….”

How can operators and entrepreneurs in this area make informed business decisions when the law is so difficult to interpret?

The Court of Appeal expressed the view that however desirable it might be to have a definitive test about what is and is not waste, the ECJ “….has consistently declined invitations to provide one”. It is not the function of domestic courts to fill the gap”.

This means that operators will have to continue with interpretation on a case-by-case basis. Although the Court of Appeal has now given a very clear steer, courts still need to do is to take a value judgment on the facts of each case, bearing in mind the objective indicators derived from Waste Framework Directive policy (lack of harm to the environment and human health, etc).

The Court of Appeal nonetheless called for (and this plea will be echoed loudly by operators and legal practitioners alike) practical guidance from DEFRA and the Environment Agency on the issue. The difficulty of this area of law is highlighted by the fact that in this case the Environment Agency and DEFRA (DEFRA had involved itself in the case as an intervener) adopted different positions to the question asked of the Court. While the Environment Agency said the answer should be “no”, DEFRA conceded that in certain strictly controlled circumstances, the answer could be “yes”. This cannot be helpful for the industry, particularly, as the Court of Appeal pointed out, there is an emerging need to recycle and reuse material such as fuel to contribute to sustainable development.

So what does this mean for operators and those needing to know what “waste” actually means?

The Court of Appeal has provided a welcome break from slavish adherence to the process of looking into the mind of the person originally holding the “waste” material and attempting to infer what that person’s intention was. Instead, value judgments are to be taken in light of the policy aims of the Waste Framework Directive. In a nutshell, what is the risk to the environment and to human health? Does the material continue to need to be treated as waste to provide it with that necessary layer of regulation?

It is hoped that the Court of Appeal will have shed some welcome light on the issue and, by doing this, increase confidence in the recycling sector.