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Safer Special Waste: Amendments to Special Waste Regulations
Paper 2003/28

Annex B

DRAFT REGULATORY IMPACT ASSESSMENT

AMENDMENTS TO THE SPECIAL WASTE REGULATIONS 1996

This Regulatory Impact Assessment is an evaluation of the costs and benefits for Scotland of the proposed amendments to the Special Waste Regulations 1996.

Purpose and intended effect of the measure

(i) Identify the issue and objective

Certain forms of waste are more dangerous than others. Materials containing heavy metals or hospital waste, for example, are potentially considerably more hazardous than inert stone building or quarrying waste. These more dangerous wastes require more careful handling and measures to ensure that all such waste which arises is properly disposed of. This is recognised in European and UK legislation, in particular the Hazardous Waste Directive (91/689/EEC) ("the Directive") and the Special Waste Regulations 1996 ("the Regulations"). In particular, the Member States of the European Union have agreed what wastes shall be considered hazardous. The European Waste Catalogue ("the EWC"), to which the Directive refers, is a comprehensive list of potential waste, updated most recently by Decision 2000/532, as amended by Decision 2001/118, Decision 2001/119 and Decision 2001/573. Asterisks indicate those wastes which are to be regarded as hazardous. This provides an even degree of environmental protection across the EU, as well as a "level playing field" for industries which produce, process or dispose of hazardous wastes. The UK Regulations call these hazardous wastes "special wastes".

Not all "special" or "hazardous" wastes are covered by existing legislation in the UK. In particular, s75(7)(c) of the Environment Protection Act 1990 inhibits application of waste control regimes to farm wastes, or non-mineral wastes from mines and quarries. Furthermore, the wastes covered by the Regulations do not reflect the latest version of the EWC. The objective of the proposed amendments is to comply fully with the Directive, and thus to provide protection to the environment and legal certainty to industrial sectors affected.

In addition the Directive requires separation of wastes and sets standards for labelling and record-keeping. The objective of the proposed Regulations is to clarify our compliance with these provisions.

(ii) Risk Assessment

Pending full transposition of the Directive and the related EWC certain waste streams are not covered by the special waste regime created by the Regulations. Some of the wastes involved, such as pesticide or veterinary medicine residues, or heavy metals in old batteries and machinery, are potentially hazardous. In addition, the wastes omitted from the Regulations by the failure to update them to parallel the new EWC include substances like dental amalgam and coolant fluids, which pose clear risks. Even in cases where there have been no problems yet identified, for as long as they are not properly controlled there are still potential outstanding risks to the environment and human health, which in any event may be slow to show themselves.

While the desirability of controlling disposal of such wastes is evident, the impacts may not be readily quantifiable. Partly this situation arises from a lack of data. In the case of farm waste or mines and quarries waste, precisely because these wastes have not been regulated in the past there is a lack of information about arisings. Any health impacts of these wastes are likely to be chronic, and it might be difficult to establish their cause.

Options

(i) Identify options

The following three potential options have been identified for revising the Regulations:-

Option 1: Do nothing.

This represents the base case of business as usual against which all other options are compared. The Directive is not implemented in full.

Option 2: Make amendments to the Regulations to implement Community Law in full.

The Directive is fully implemented, but otherwise the regime for controlling special wastes remains as close to its existing form as possible.

Option 3: Revise the entire special wastes regime.

The Regulations would be written again from scratch. The new regime would fully implement the Directive. A new method of tracking shipments of special wastes would be devised.

The impact of these options is on the future cost of disposal of hazardous wastes, although administrative changes would also impact on the Scottish Executive and on SEPA. Administrative costs are as follows:-

Option 1 implies no change to any party and implies non-compliance with the Directive. Such non-compliance would cause the EC to continue infraction proceedings which are already under way, and ultimately lead to a fine of up to 534,000 (about 370,000) per day until compliance is achieved. The cost of such a fine would be met by Scotland, since other parts of the UK have indicated their intention to implement the Directive.

Option 2 requires amendments to be made to the Regulations, incurring one-off public sector costs in drafting legislation and in providing amended guidance documents and recurring public and private sector costs in disposing of newly-listed wastes.

Option 3 would require the drafting of a new regime and guidance documents. It may also require the establishment of a new IT system, the costs of which cannot at present be quantified.

(ii) Issues of equity or fairness

The additional cost of waste management resulting from the proposed amendments will generally be reflected back to the waste producer through the disposal charges levied by the waste management service provider, or SEPA's regulatory charges. This is in keeping with the "polluter pays" principle. It provides an incentive to minimise waste production.

Benefits

(i) Identify the benefits

The principal benefit of the Directive is to ensure that hazardous wastes are properly accounted for, and dealt with. This reduces risk to human health and increases the opportunities for recovery and recycling. The proposed amending Regulations would extend these benefits to waste streams which had previously been excluded from the special waste regime.

(ii) Quantify and value the benefits

The benefits for each of the three options have been identified below:-

• Option 1 - Do nothing - there are zero benefits attaching to this option beyond the present regime. Compared with the other options, the benefits of maintaining compliance costs at existing levels is outweighed by the resulting potential for damage to human health and the environment. This would arise from allowing substances deemed to be harmful to one or the other, or both, to continue to be disposed of with little or no audit trail to ensure that they do not escape into the wider environment. At Government level this option would lead to the intensification of infraction proceedings and potentially to heavy fines.

• Option 2 - Amend the Regulations - this option would secure the health and environmental benefits of the Directive in relation to agricultural waste and non-mineral waste from mines and quarries, as well as the full range of hazardous wastes listed in the EWC. There would also be benefits to waste disposal contractors, in the form of further business opportunities.

• Option 3 - Introduce a new special waste regime - this option would also secure the health and environmental benefits of the Directive in relation to the full range of wastes. It could have further benefits in terms of improving the flow of information required by the Directive, depending on the characteristics of the new regime, and in taking the opportunity to streamline the processes by which the disposal of a hazardous waste is recorded.

Compliance and other costs for business, charities and other organisations

(i) Business sectors affected

The proposed amendments will impact on waste producers, private sector waste management contractors and, potentially, other organisations involved in managing the disposal of wastes, such as local authorities or Scottish Water. It will also impact on the Scottish Executive as the drafter of legislation and SEPA as regulator.

For most of these sectors, the extent of the impact will be relatively small if Option 2 is followed, as proposed. The special waste regime with which they are familiar will continue. The difference will be that additional waste streams will be regulated under it so that, for example, hazardous farm wastes or dental amalgam will be tracked from the point of arising to point of disposal. Therefore the chief impact will be felt by sectors whose wastes are hazardous and are at present not covered by the Regulations, notably farming, mining and quarrying. However, the impact will be limited to further documentary requirements and the cost of obtaining a consignment note from SEPA since disposing of wastes on farm or at site is already prevented by controls on landfill ¹. Where these sectors have already come to arrangements with contractors to remove their waste it is likely that these contractors have been applying the new requirements already.

Charities and voluntary organisations as waste recyclers. Charities, voluntary organisations and NGOs make a significant contribution to local schemes for recycling and re-use of certain household and commercial wastes. They may have an increasing role in niche markets, such as through not for profit companies in commercial waste recycling and local networks of waste exchanges with resultant additional paid and voluntary employment opportunities. It is unlikely the proposed changes will greatly affect their operations. They are already covered by the special waste regime and are in any case unlikely to come into contact with special waste routinely.

(ii) Compliance costs

• Option 1 - Do nothing - Would have no additional compliance costs for industry or regulator, but would leave Scotland short of full implementation of the Hazardous Waste Directive. This could lead to significant fines on the UK (a potential 534,000 per day), that would be met from funds allocated to the Scottish Executive. This would clearly have significant impacts on Scottish Executive resources and ability to deliver public services.

• Option 2 - Amend the Regulations - This option places additional costs on those producers of waste who are brought into the Regulations for the first time, either because the specific hazardous waste that they produce is brought into the ambit of the Regulations, or because their business type in brought within the ambit of waste covered by the Regulations. There are also minor additional costs for all producers of hazardous waste, the regulator, and potential costs for those undertaking activities involving hazardous wastes under a Waste Licensing exemption.

A study carried out by Oakdene Hollins for the Scottish Executive estimated that the change in the coverage of the Regulations could lead to an increase in the number of hazardous waste consignments covered by the regulations from 154,000 to 240,000. All of these additional consignments will have general additional administrative costs. The degree of additional waste management charges will depend on the present waste practices, and how far these have to change to meet the Special Waste Regulations. Some of the newly included substances will be affected by other existing or forthcoming regulations, arising as a result of the End of Life Vehicles Directive and the Waste Electronic and Electrical Equipment Directive, which will impose additional costs in the management of these wastes. Moreover, other regulations, such as the Landfill Regulations, already include a definition of hazardous wastes that will cover these substances. It is therefore likely that the increase in waste management costs that is due to these amendments to the Special Waste Regulations is in many cases fairly moderate. Overall, we can estimate the increase in costs for businesses in consignment fees, additional waste management charges, and administrative costs of some 4m per year.

A significant number of new businesses shall be brought into the scope of these Regulations by the extension of the definitions. In all, including a number of farms that is difficult to estimate, an additional 50,000 agents could be brought into having to prepare a hazardous waste consignment note at some time, although for many of these, this will only be very occasionally. Certain large farms may produce a large volume of hazardous waste. We can estimate an additional one off cost of 2.5m for these agents in finding out about the system, and an additional recurring cost of 1m for those businesses not included in the earlier estimate of additional recurring effort in completing consignment notes and in additional waste management fees.

The additional costs faced by the regulator are included in the above estimates, as they are covered by the consignment fee. The additional record keeping requirements are not expected to lead to increased costs as there are already requirements on waste producers to keep records.

There will also be additional one-off costs for a number of NHS establishments and for certain businesses who need to establish the physical means of capturing the hazardous wastes brought into the ambit of the Regulations. It is estimated that many dentists and many NHS establishments where dental patients are treated shall need to install filters to capture dental amalgam in their drains (something that is already recommended as good practice by Scottish Water), and some garages may have to make provision to secure coolant fluid from cars (although they shall have to do this in any case under the forthcoming End of Life Vehicle Regulations). It is difficult to estimate the proportion of these costs that will be imposed or brought forward by these proposals, rather than by other regulatory requirements including the Duty of Care over these wastes established by the Environmental Protection Act 1990. It seems reasonable to expect that some 10,000 businesses may have to spend an additional amount on equipment of between 250 and 500, leading to an estimate of the one-off cost imposed by the regulations of 4m.

• Option 3 - Introduce a new special waste regime - Under this option, all of the costs identified above would be incurred. In addition, there would be additional costs for the regulator in implementing a system (including IT costs), and for the regulated in adapting to a new system. Set against these costs is the potential that there could be future savings if a new system was significantly more streamlined than the existing system. The Executive is not currently satisfied that there are sufficient future cost savings to justify the costs of revising the special waste regime.

Table: Summary of estimated compliance costs

Consultation with small business: the "Litmus Test"

As part of the present consultation small businesses, in particular, are invited to submit information on the potential costs of these changes.

Identify any other costs

As identified above, there will be costs to SEPA and to the Scottish Executive. The proposed changes will introduce additional burdens on SEPA in the following principal areas:-

• Examining documentation for waste streams not presently covered by the special waste regime;

• The licensing and permitting of additional facilities for the recycling and/or treatment of wastes from these streams, in accordance with the Directive and the Regulations; and

• The enforcement of prohibitions in respect of these waste streams.

SEPA currently charges for the first two activities on the basis that charge income should cover operational costs of this nature. SEPA would charge according to the same scales in respect of the new waste streams.

Amending the current special waste regime, as opposed to creating a new one, would obviate the costs for SEPA that setting up such a new system would entail. These would mainly relate to IT capabilities, but there would also be a requirement for training for staff, and new guidance. Option 2 is likely also to create one-off staff costs for SEPA in respect of refresher training and updating existing guidance (however, as SEPA already has a training budget these costs are more in the way of future costs brought forward than entirely new costs). These costs will be much smaller than if Option 3 were adopted. There will also be costs to the Executive in terms of drafting the legislation. These changes have not been costed for this document.

Result of consultations

A three-month consultation is being carried out with recipients being specifically invited to comment on the proposed amendments to the Regulations and this RIA.

Summary and recommendations

The proposed amending Regulations reflect the Directive's intention to introduce a Europe-wide level playing field for the producers of a broad variety of wastes. They also reflect the Scottish Executive's intention that waste shall be more carefully managed in Scotland in future, whatever its source, and that best European practice shall be applied to Scottish waste management.

The cost of failing to amend the Regulations to implement European law correctly are the health and environmental costs related to failing to control particular waste streams, which are difficult to quantify, and potentially fines imposed by the European Court of Justice of up to 534,000 (c. 370,000) a day. The costs of amendment would depend on whether a minimal approach was followed, as in Option 2, or a complete revision, as in Option 3. The costs for Option 2 would be small, and almost entirely recurring, whereas there would be immediate, possibly substantial, non-recurring costs involved in Option 3, though recurring costs could then be lower. Although Option 3 would also allow us to build on the experience of applying the 1996 Regulations there has been no noticeable demand for an overhaul of the existing regime. If industry is indeed content with the status quo it would accordingly, be sensible to restrict change to the minimum necessary to secure full UK compliance with EC law. (In this respect Defra has proposed wide-ranging changes to the special or hazardous waste regime for England. The Executive will therefore observe how that new system operates and consider at a future time whether it would be beneficial to introduce some or all of Defra's proposals in Scotland.)

Accordingly, this paper recommends the adoption of Option 2.

Enforcement, sanctions, monitoring and review

SEPA, as the competent authority, would be responsible for enforcing and ensuring compliance with the amended Regulations, just as in the case of the current Regulations. This duty is at present and would be in the future carried out through a process of audit and spot checks of installations, registers etc. There is a duty on those handling wastes to maintain records and make these available to SEPA on request. Among the proposed amendments are provisions to make these duties explicit. The Regulations carry appropriate maximum fines, which would not be affected by the proposed amending Regulations. SEPA's charging scheme permits it to recoup the cost of enforcing the activities which the amending Regulations will require.

SEPA would also provide such guidelines and training as may be necessary to its officers, so that the amending Regulations are implemented, monitored and enforced consistently and fairly across the country. The Scottish Executive and SEPA would monitor and review the effectiveness of the regime.

Since the costs of these Regulations are closely related to the additional disposal costs imposed by the Landfill Regulations 2003, we propose to carry out a joint review RIA of these two sets of regulations once the full impacts of implementation are clear.

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