Scottish Government

PROPOSALS FOR AMENDMENTS TO THE WASTE MANAGEMENT LICENSING REGULATIONS

ANNEX B: REGULATORY IMPACT ASSESSMENT

Introduction

The following section provides an individual Regulatory Impact Assessment (RIA) in relation to exemptions discussed in this consultation document. For each exemption, several policy options are described (in most cases this involves an assessment of the do nothing option, the proposal outlined in this consultation for which the regulations have been drafted, and the requirement for full waste management licensing).

The RIA aims to provide information as to the risks, costs and benefits for each proposal. For each option, where possible, the costs, benefits and risks have been identified. Quantifying these has proved difficult in some cases due to the intangible nature of some of the costs and benefits.

Each exemption has its own RIA, which can be read independently of the others.

1. Land Treatment (Paragraph 7)

TITLE OF PROPOSED MEASURE

Amendments to the waste licensing exemption for the landtreatment (also known as landspreading) of waste.

ISSUE

The land treatment of industrial wastes represents an economical and - when properly controlled - environmentally safe way of recovering value from a variety of organic wastes.

Many wastes can be spread on land beneficially, including industrial wastes such as food processing wastes, paper waste sludge and lime. Such wastes can provide valuable nutrients and lead to improvements in soil structure - allowing farmers to reduce the amount of inorganic fertiliser applied. The landtreatment of waste is a recovery operation under the Waste Framework Directive. However, the inappropriate application of waste to land may lead to soil contamination, deterioration of soil structure, offensive odours and water pollution.

The introduction of the exemption for the landtreatment of certain wastes in 1994 has lead to a large increase in the quantity of wastes being recovered to land. Quantities of waste recovered to land include for example, 49,000 tonnes ¹ per annum of paper waste sludge and 76,000 tonnes per annum of vegetable and food waste. Other major contributors include the waste from the sugar and water treatment industries.

There has been persistent concern about contents, spreading of organic wastes to land and in particular abattoir wastes such as blood and gut on agricultural land. This concern has centred on possible health implications, and on the nuisance to people living near areas where spreading operations have been carried on.

The proposed changes to the exemption here, are in keeping with the SEPA and the Transport and Environment Committee Report ² and with the findings of research ³. They include the introduction of fees for registration to fund inspections; the provision of criteria to determine achievement of agricultural benefit or ecological improvement; amended lists of waste acceptable for spreading in line with proposed new sludge (Use in Agriculture) Regulations 1989;pre-notification conditions; and the requirement of more comprehensive pollution risk assessment.

The rationale for these proposed changes is to ensure the exemption encourages genuine recovery operations which are carried out in ways which provide protection of the environment and human health.

OBJECTIVE

To ensure that landtreatment results in ecological improvement or agricultural benefit, and is carried out in a way which protects the environment and human health (to comply with Article 4 of the Waste Framework Directive).

RISK ASSESSMENT

The potential risks and disadvantages associated with land treatment if not properly regulated include:

• damage to sensitive ecosystems;
• soil contamination from potentially toxic elements or organic compounds;
• deterioration of soil structure;
• pollution of controlled waters; and
• odour nuisance.

OPTIONS

Three options have been considered for dealing with this issue:

Option 1 Landtreatment activities will continue to be regulated under the currently worded exemption or be required to obtain a waste management licence.

Option 2 Provide a revised exemption with enhanced general binding rules to ensure land treatment results in ecological benefit or agricultural improvement.

Option 3 Require all landtreatment activities to obtain a waste management licence. The licence would include conditions that would have to be fulfilled by and before a licence is granted the operator would be required to fulfil the "fit and proper persons test" (see costs section for more information).

ISSUES OF EQUITY AND FAIRNESS

Option 2 is the Executive's recommendation for this exemption.

Under option 2, it is proposed that wherever the waste being spread consists wholly or mainly of agricultural waste, SEPA will not be able to make a charge for the spreading. However, most of the waste spread under this exemption is from industrial rather than agricultural sources and so should not be a significant issue.

BENEFITS

Option 1

This option does not pose any additional financial costs on those who carry out the landspreading operation. However, the current exemption does not provide assurance that the spreading results in agricultural benefit or ecological improvement, nor will it reduce the risks to the environment and health, and of causing nuisance through smells etc.

Option 2

Overall, the revised exemption will help secure protection of the environment and human health through tighter controls on the landspreading activity. The exemption will provide clearer guidance to SEPA and provide them with the resources that are necessary to carry out the enhanced level of inspection that will be required.

Specifically, the main benefits are:

• The exemption will ensure compliance with the Waste Framework Directive by requiring a risk assessment to be carried out prior to spreading. Compliance will also be aided through the provision of clear criteria, based on properly qualified advice, to demonstrate agricultural benefit or ecological improvement. Providing benefit to agriculture involves providing improvement to the soil for the purpose of growing crops or grazing. Ecological improvement will act to maintain or support wildlife habitats which might otherwise deteriorate, and includes the creation of new and the restoration of old habitats. The criteria will enable the SEPA to ensure that the activity will be a legitimate recovery activity under the exemption.
• The exemption will comply with other legislation such as the Animal By Products Regulations and the revised Sludge Use in Agriculture Regulations. This is achieved through the banning of the use of both septic tank sludge and untreated blood and gut contents (countering risks of transmitting E.coli into the human food chain) under the exemption.
• Charging operators for notifying SEPA, will provide them with the resources necessary to carry out more regular inspections than at present. This will help SEPA regulate more effectively and ensure that activities will not cause harm to the environment or health.
• The exemption will define more clearly the types of waste that can be spread. The exemption will exclude certain wastes which are inappropriate because of associated risks; and at the same time, will include other types of waste which can be spread beneficially. This will help prevent environmental damage, while at the same time providing clear guidance as to what is and what is not exempt, and encourage recovery activities.
• The requirement for operators to provide SEPA with 21 days notice before the spreading is to take place will allow SEPA time to fully consider the activity and inspect the before activities commence. This will again act to ensure the legitimacy of the activity and ensure that the general binding rules are adhered to.
• Increasing the penalty for failure to register the exemptions with SEPA, will provide a stronger incentive to register.
• Under this option, operators will be required to keep records of the details of their landtreatment activities which SEPA can require sight of. This will help SEPA to regulate the activities more effectively.

Option 3

The enhanced level of scrutiny and site monitoring offered by waste management licences would provide a greater degree of confidence in achieving protection of the environment and human health, and therefore compliance with Article 4 of the Waste Framework Directive. Waste management licences contain site specific conditions which depend upon the types and quantities of waste, and the precise nature of the activity. The Agency would be required to apply the fit and proper persons test, which includes provisions to ensure that the operators were technically competent, have made financial provision to cover the requirements of the licence and to bear in mind relevant offences of the operator.

COSTS FOR BUSINESS, CHARITIES AND OTHER ORGANISATIONS⁴

The proposed measures will principally affect the following industries:

• specialist land treatment contractors;
• landowners and farmers;
• abattoirs and poultry preparation plants;
• paper manufacturing and recycling;
• food and drink;
• cement manufacture;
• inland waterways maintenance;
• textile manufacture;
• tanneries;
• water treatment;
• livestock markets, stables, zoos and animal parks;

OPTION 1⁵

There are no additional costs with this option as it represents the base case. However, current costs are as follows:

Regulatory Costs

SEPA currently incurs costs through considering whether the notification received complies with the general rules of the exemption, and for carrying out periodic inspections. These costs are currently covered by grant-in-aid from the Scottish Executive, and are estimated to be 75 per notification. Given 262 notifications per year ⁶, this gives a total regulatory cost of 19,650 per year.

Operator Costs

The operator incurs costs, in providing information to SEPA to demonstrate compliance with the general rules of the exemption, before the activity can be formally put in the register. Operational costs will vary and are estimated to fall within the range 100-200 per annum per operator, and while specific costs are not available, the table below shows the potential impact of this range on total costs to the industry.

Total Cost

Taking the operator costs to be the mid range value (150 per annum), this gives:

OPTION 2

Regulatory Costs

Under this option, the costs to SEPA for the consideration of information in the notice, registering the notice, and undertaking inspections, will be covered by fees levied on the operators.

Two levels of fee will be levied. The notification of first time, or one off spreading activities will incur a higher charge (estimated to be 350) than the notification for repeat spreading activities (i.e. notifying the same types of wastes at the same site), which is estimated at 225 per notification. This is because the level of assessment required by SEPA when the activity is to spread the same waste at the same location is less than for a first time spreading. The reduced costs to SEPA will be reflected in lower fees to the operator.

Exact figures as to the number of first time notifications compared with repeat spreadings is not available. However, the table below provides some scenarios to indicate the impact on costs for the industry.

Operator Costs

In addition to the notification charge, the operators will incur costs for providing the information required under the regulations to SEPA. This information includes the pollution risk assessment and the demonstration of agricultural benefit or ecological improvement, based on properly qualified advice. These costs are estimated to be 300 per notification.

300 per notification * 262 notifications per annum = 78,600
NB. The cost per notification will be lower for repeat notifications.

Other additional costs to the operator (e.g. additional administration costs) are estimated to be 100 per notification.

Therefore the total operational costs are:
(300 + 100) * 262 notifications = 104,800 per annum

Total Costs For Option 2
Assuming 75% of spreadings are first time spreadings, the total costs of this option per year:
= Regulatory Costs + Operator Costs
83,575+ 104,800 = 188,375 per annum

OPTION 3

Waste management licences will be required for each land treatment operation. The operator would cover all the costs to SEPA via fees payable.

The operator would be required to pay for the completion of a pollution risk assessment. Assuming 262 currently notified exempt activities would require a waste management licence, the costs are estimated as follows:

The above costs represent the cost to the operator in the first year. In subsequent years the application fee will not be applicable. Therefore the cost to each operator will be 1,750, and the costs to the industry as a whole will be 458,500 (not accounting for any increases in costs due to inflation).

In addition, each operator will need to demonstrate they are 'Fit and Proper' persons including provision of Technically Competent Management and Financial guarantees sufficient to discharge the obligations of the licence. Both of these will act to increase further the costs of option 3. We have not included these figures because the size of the financial provision can vary significantly depending on the size and nature of the activities, and it is not clear whether any of the operators already have Certificates of Technical Competence.

Other Costs

There are additional (not directly financial) costs that will be incurred under this option. For example it can take several months to obtain a waste management licence. This is partly because there is a statutory requirement on SEPA to consult certain bodies on the proposals. It is likely that compliance with this option will decrease as the requirements to obtain a waste management licence could be considered much more burdensome than the other options.

The increased costs of this option might lead to reduction in spreading in certain cases and diversion to other outlets, for example landfill. This would run counter to Scottish Executive targets to reduce the amount of waste deposited to landfill.

RECOMMENDATION

There has been increased concern about the effect of landspreading activities, which can lead to adverse environmental impacts, such as water pollution and foul odours. However, the activity can be a very beneficial waste recovery operation, and we wish to encourage it where it beneficial is properly controlled. Whilst the stringent controls of waste management licences are likely to serve as too great a disincentive on those who take advantage of the exemption, doing nothing is also undesirable because the current situation does not tackle the risks appropriately. Option 2 is therefore recommended as the most appropriate option, as it provides the most cost effective measure for dealing with the concerns encountered.

ENFORCEMENT, SANCTIONS, MONITORING AND REVIEW

SEPA, as competent authority, administers and enforces the waste management regime, including exemptions. This includes, as specified in the legislation, the requirement to carry out "appropriate periodic inspections" on the operations. SEPA will issue internal guidelines and train staff to facilitate implementation and enforcement of the regulations. The Scottish Executive, in conjunction with SEPA, will keep under review the effectiveness of the regulation.

OTHER RELEVANT GUIDANCE

More guidance can be found in the Scottish Executive's Prevention of Environmental Pollution from Agricultural Activity (PEPPFA) Code

2 - Use of Wastes for Land Reclamation and Construction (Paragraphs 9 and 19)

TITLE OF PROPOSED MEASURE

Amendments to the waste licensing exemption for the use of waste for land reclamation, land improvement and construction.

ISSUE

The House of Commons Sustainable Waste Management Committee ⁸ investigated allegations that two exemptions, one for recovery of inert wastes for reclamation or improvement of land and the other for use of wastes for construction work, were being abused as a means of disposal rather than for general recovery, and expressed concern about the way in which the exemptions were monitored.

Research was commissioned ⁹ to establish whether there was evidence to substantiate the allegations and to aid in the review of the licensing exemptions.

The proposed amendments to the exemptions address the Committee's concerns and on the basis of the research require information on the quantities and types of waste recovered, when the activities begin and end, to be submitted to SEPA, and the introduction of fees to enable SEPA to inspect sites more effectively.

OBJECTIVE

To ensure that the exemptions are only used for genuine waste recovery; to ensure ongoing compliance with the relevant objectives (Article 4) of the Waste Framework Directive (i.e. to ensure protection of the environment and human health); and to encourage further waste recovery where appropriate.

RISK ASSESSMENT

The potential risks associated with use of wastes under the terms of the paragraph 9 and 19 exemptions include:

• Damage to the environment through further abuses of the exemptions;
• Nuisance resulting from deposits of waste;
• Non-compliance with the Waste Framework Directive through the waste being used for disposal purposes rather than recovery operations.

OPTIONS

Option 1 Continue to rely on the current exemption as provided in the legislation.

Option 2 Repeal the existing exemptions under Paragraphs 9 and 19 and require all activities to obtain a waste management licence.

Option 3 Amend the exemptions as drafted in order to tighten their control and regulation to prevent abuse.

ISSUES OF EQUITY AND FAIRNESS

There are no perceived issues of equity and fairness with the options proposed. Each option will treat similar operations in the same way. The fees charged are consistent with the requirement for SEPA to recover its regulatory costs from the operators and is consistent with the "polluter pays" principle.

BENEFITS

Option 1
There are no perceived benefits from maintaining the current situation. They will not go to solve the allegations of abuse of the exemption.

Option 2
Enhanced scrutiny and site monitoring offered by waste management licences will ensure protection of the environment and human health, and therefore compliance with Article 4 of Waste Framework Directive.

Option 3
Tighter and more precise terms of the exemptions, and the requirement for proof of benefit to agriculture or ecological improvement will help ensure only genuine recovery activities take place under the exemption, thus preventing abuse. This will ensure, in accordance with the Waste Framework Directive that the environment and human health are protected, and will also ensure that a level playing field for all operators is maintained. Furthermore, specifying the types of waste that can be used under the terms of these exemptions will encourage recovery of these waste streams. This will be achieved through several measures including:

• the requirement where appropriate to prove that the spreading under paragraph 9 will result in agricultural benefit or ecological improvement, based on properly qualified advice (this being consistent with the land spreading exemption).
• ensure the activities only lead to waste recovery. For example, to add, "the waste will contribute to the reclamation, restoration or improvement at that site" and to widen the activities allowed in paragraph 9 to include the restoration of land.
• adding a depth to which waste can be spread (para 9) in addition to a quantity limit, i.e. "no more than 2 metres depth of waste is spread to a maximum of 20,000 m_ per hectare on that land". This will prevent spreading waste to a depth which may constitute disposal.
• specific registration requirements on the operator, including a 21 day pre notification to SEPA; keeping of records; payment of fees, will ensure that SEPA has a complete record of the activities for administration and inspection purposes.
• enhanced clarity and consistency in applying the exemption will be achieved through defining the waste that can be used within the terms of the exemption more precisely. This will be achieved partly through reference to the European Waste Catalogue. For example, the types of sludge that can be used under paragraph 9 will be defined, and will include paper waste sludge, which can be used in, for example, the renovation of former colliery sites.
• the use of wastes under the exemptions will only be allowed if it is in accordance with any required planning permission. SEPA are already required to make sure that planning permission is in place before they can grant a waste management licence, and this provision will help ensure that all relevant planning controls are complied with.

COSTS FOR BUSINESS, CHARITIES AND OTHER ORGANISATIONS.

The main types of business affected by the measure will be: construction businesses, demolition contractors, developers, road building and repair contractors, British Waterways, Railtrack and rail maintenance contractors and British Sugar.

OPTION 1
There are no additional costs with this option as it represents the base case. However, current costs are as follows:

Regulation Costs
SEPA currently incurs costs through considering whether the notifications received comply with the general rules of the exemption, and for carrying out periodic inspections. These costs are currently covered by grant-in-aid from the Scottish Executive and are estimated as follows,

Operator Costs

These are the costs to the operator of providing information to demonstrate compliance with the rules of the exemption, before the activity can be formally put on the Register.

Total Cost of Option 1:

Regulatory costs + Operator costs = 89,925 per annum.

OPTION 2

Regulatory and Operator Costs
Waste management licences will be required for each activity currently covered by paragraphs 9 and 19 exemptions. The operator would cover all the costs to SEPA via annual fees payable to SEPA. The operator would also incur a fee for completing the pollution risk assessment.

Taking the total number of paragraph 9 and 19 exemptions together, they can broadly be broken down into projects involving under 5,000 tonnes of waste, and those over 5,000 tonnes. We do not have exact figures of how many registrations involve more or less than 5,000 tonnes of waste, however, the following assumes a half and half split.

Total cost in Year 1 = 1,687,650

However, in year 2 onwards only the subsistence charge will be applicable.

Total recurring cost = 1,078,300 per annum

In addition, each operator will need to demonstrate they are 'Fit and Proper' persons including provision of Technically Competent Management and Financial guarantees sufficient to discharge the obligations of the licence. We have not included these figures because the size of the financial provision can vary vastly depending on the size and nature of the activities. Also, the cost of obtaining a certificate of technical competence can vary depending on the operation, and some operators may already have a relevant certificate, so has not been included here.

The increased costs of this option might lead to the reduction in spreading and diversion of the materials to other outlets, for example landfill. However, it is not possible to quantify the likely scale of this effect and impact.

OPTION 3

Regulation Costs
These costs will be levied against the operator by way of a fee to cover the regulation costs of SEPA, for carrying out inspections and assessing that the activity complies with the terms of the exemption. The initial registration cost is higher than any subsequent renewal costs (which are due annually if the activity continues), as the regulation requirements in terms of analysing documents will be less in subsequent years. The table below outlines the regulation costs incurred.

Operator Costs
In addition to the notification charge, the operators will incur costs for providing the information required in the notice to SEPA and for keeping records. We estimate these costs will be around 75 per notification. For higher risk paragraph 9 exemptions using sludge, the notification will also require the pollution risk assessment and the demonstration of agricultural benefit or ecological improvement, based on properly qualified advice. This cost is estimated to be 110.

Therefore:
75 per notification x 327 notifications per annum = 24,525

110 (cost for demonstrating agricultural benefit or ecological improvement) x 26 paragraph 9 notifications per annum = cost of 2,860 ¹¹.

Total operational costs (for both paragraphs 9 & 19) are:
24,525 + 2,860 = 27,385

Total Cost in Year 1 = Regulation Costs + Operator Costs
162,192 + 27,385 = 189,577

Recurring annual renewal costs = 126,876

RECOMMENDATION

Option 1, does not provide sufficient means to ensure that the exemption is undertaken without abuse. While this would be provided by option 2 - i.e. the requirement for all operations to have a waste management licence, this option is seen as being over-regulatory and over burdensome, given that the recovery operation can safely be provided within the terms of a waste management licensing exemption.

Option 2 would act to discourage such waste recovery operations, thus resulting in more waste being diverted to disposal routes such as landfill.

Given this, option 3 is the recommended option, representing the best value response to tackling the risks identified. The option provides the most appropriate regulatory approach, being proportionate to the risks to the environment and human health.

ENFORCEMENT, SANCTIONS, MONITORING AND REVIEW

SEPA, as competent authority, administers and enforces the waste management regime, including exemptions. This includes, as specified in the legislation, the requirement to carry out "appropriate periodic inspections" on the operations. SEPA will issue internal guidelines and train staff to facilitate implementation and enforcement of the regulations. The Scottish Executive, in conjunction with SEPA, will keep under review the effectiveness of the regulation.