Environment Protection Authority v Terrace Earthmoving Pty Ltd [2013] NSWCCA 180 (Terrace) and Shannongrove Pty Ltd v Environment Protection Authority [2013] NSWCCA 179 (Shannongrove)

Introduction

In two recent cases that have the potential to impact on a wide range of parties involved in resource recovery, recycling and waste transportation, the NSW Court of Criminal Appeal has determined the question of what is “waste” in favour of the EPA. The judgments confirm the EPA’s view that waste is to be defined very broadly, for the purpose of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act). This means that almost any resource recovery, or similar activity is likely to be subject to the POEO Act and EPA regulation, regardless of other external factors such as the re-usability or value of a “waste” substance. Companies which work in demolition and construction related industries, as well as the waste and resource recovery industry are most likely to be impacted by these decisions.

Background

Both cases were appeals from Justice Craig of the Land and Environment Court.  In Terrace, the EPA appealed against Justice Craig’s finding that the transportation of construction and demolition waste (C&D Waste) did not constitute the transportation of waste for the purpose of the POEO Act, as the substance was not “waste”.  Conversely, in Shannongrove, the appellant appealed against Justice Craig’s earlier decision that a liquid byproduct resulting from an organic waste treatment process did constitute “waste”.  The appeals were heard consecutively, as they both sought to answer the question of what is “waste” for the purpose of the POEO Act.

Facts of the cases

In Terrace, the appellant was a company that carried out demolition and excavation work, transported the byproducts of those activities (being a licensed transporter of waste), and also carried on road-building using the C&D waste. These activities were carried out over a period from 2005 to 2007. The company was charged with a breach of s143 of the POEO Act, for the unlawful transportation of waste, to a place that could not be used as a waste facility. The company argued that the material was not “waste” for the purpose of the POEO Act, as it was “wanted” for re-use in the construction of roads.

In Shannongrove, Council putrescible waste was subject to a complex organic treatment process, which produced what was, essentially, a fertiliser, as well as a liquid by-product. That liquid by-product was excess to the process, and so the company (a licensed transporter of waste) was contracted to transport, and dispose of that liquid by-product. The company transported the liquid to farmland, and injected it in the soil as a form of fertiliser. It was said to be beneficial as a form of fertiliser, not just by the company, but by the farmer, at whose farm the material was injected. The question, again, was whether the liquid material was “waste” for the purpose of the POEO Act, since it had a purported beneficial use.

Discussion and Findings

In the Terrace case at first instance, Justice Craig found that the C&D Waste was not “waste”. Justice Craig’s reasoning was that, while the respective definitions of waste in the POEO Act referred to “any unwanted or surplus substance…” or “any discarded, rejected, unwanted, surplus or abandoned substance” (depending on the charge period), a range of other factors should also be taken into account (at [5] of Terrace and [184] at first instance) – such as the nature of the substance, whether there was an identified demand for the substance, whether the substance was intended to be used for that purpose, the circumstances of its removal, whether the substance was specifically stockpiled, and the period of time that elapsed between its transportation and its use. In developing such a test, Justice Craig said that the intention of the POEO Act and Waste Avoidance and Resource Recovery Act 2001 (NSW) was to maximise re-use, recycling and recovery, and thus a purposive approach should be adopted (at [210] at first instance), rather than applying the highly restrictive definition of waste.

The CCA held that Justice Craig had erred in developing his test, because it focussed on whether the material was capable of being used for a specific purpose (at [25]). Rather, the Court held, the only test is whether the owner (i.e. generator) of the material at the time transportation commenced had a continuing use for the material. If not, the material is simply waste.

The Court further clarified that the test requires reference to the specific state of mind of the owner of the waste, immediately prior to transportation (at [27]). That is the only factor to determine. If the owner has no further use for the substance, it is waste.

Given the findings in Terrace, the Shannongrove appeal was also determined in favour of the EPA. The reasoning was the same as that in Terrace, namely that the test was a simple objective test of the state of mind of the owner at the time immediately prior to transportation. As the owner had no use itself for the liquid byproduct, it was therefore waste, regardless of any beneficial use in applying it to farmland. The Court further stated that even if material has value to the transporter, or to the end user, it is still waste - otherwise, no substance being transported as part of a business, or that was applied to agricultural land, would ever be waste, and the intention of the POEO Act in restricting the transport and disposal of waste, would be subverted (at [34] – [36]).

Implications for clients

These findings have significant implications. They provide a clearer test to determine whether or not a substance is waste for the purposes of the POEO Act. These decisions also impact on reuse and resource recovery, especially for materials such as C&D Waste, or organic by-products.

Companies will need to be very careful that, unless a clear intention to reuse/recover the material is established by the owner of the material prior to transportation, any material is treated as waste for the purpose of the POEO Act – even if it is intended for ultimate reuse or recovery by other parties. If reuse or recovery is intended by other parties, it must be in accordance with the terms of the POEO Act, a resource recovery exemption, or an environment protection licence.