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DRAFT REGULATORY IMPACT ASSESSMENT
Waste Management Licensing Exemptions: a Codification
Introduction
The Scottish Executive is taking the opportunity of the proposed codification of Schedule 3 to review a small number of exemptions from the waste management licensing system. This follows on from work to align the regime controlling special wastes in Scotland with the Hazardous Waste Directive. The Special Waste Amendment (Scotland) Regulations 2004, which achieve this in most respects, came into full force on 1 July 2004. The outstanding issue is to ensure that exemptions for special waste operations meet the requirements of Article 3 of the Directive.
This document provides a draft Regulatory Impact Assessment ( RIA) for the exemptions under review. It discusses policy options, and aims to outline the risks, costs and benefits for the proposals. In some cases, quantification of the costs and benefits has not been possible owing to their intangible nature.
This RIA addresses only the exemptions which are being amended. The codification itself does not result in a regulatory impact except for the cases in which changes are made - except for the positive impact that the codification will make the law more easily accessible to all parties.
Purpose and intended effect of the measures
(i) Objective
Not all current exemptions listed in Schedule 3 to the Waste Management Licensing Regulations 1994 (as amended) ( WMLR) appear to comply with the requirements of the Hazardous Waste Directive for the establishment of limit values. The objective, therefore is that all exemptions relating to special waste should meet the requirements of this Directive. This objective is to be attained as soon as possible. It is anticipated that, after a twelve-week consultation, the Executive will move swiftly to codify all exemptions and place those dealing with special waste on a revised footing. The amendments will be covered by a statutory instrument entitled the Waste Management Licensing Amendment (Scotland) Regulations 2006.
(ii) Background
Scottish legislation on waste stems from the Waste Framework Directive ( WFD), which has been transposed into UK law mainly through the Environmental Protection Act 1990, and through its subsequent amendments and related subordinate legislation, especially the WMLR. Articles 9 and 10 of the WFD state that any establishment or undertaking that carries out waste disposal or recovery operations must obtain a permit from the competent authority (in Scotland, the Scottish Environment Protection Agency). Article 11 of the WFD states that, under certain conditions, establishments or undertakings carrying out waste recovery, or disposal of their own waste at the place of production, may be exempted from the permit requirements imposed by Articles 9 and 10. They may not, however, be exempted from requirements that the necessary measures shall be taken to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods which could harm the environment.
In respect of hazardous, or special waste, the rules for these exemptions have been tightened by Article 3 of the Hazardous Waste Directive, which forbids the disposal of hazardous waste by establishments or undertakings at the place of production under exemption, and requires the adoption of general rules containing limit values. This recognises that an additional level of protection is appropriate in the case of hazardous wastes. Proposed exemptions for hazardous waste must be notified to the European Commission.
Regulation 17 of the WMLR permits the activities listed in Schedule 3 to be exempted from the requirements of full waste management licences. It also establishes that exemptions shall not be available for the disposal of special (that is, hazardous) waste by establishments or undertakings at their place of production.
(iii) Rationale for Government Intervention
The Executive's review is being conducted to ensure that the remaining requirements of Article 3 of the Hazardous Waste Directive are met in respect of exemptions available in Scotland. In these circumstances there is little point in changing one, or some, of the relevant exemptions, while leaving others to which the Hazardous Waste Directive applies untouched. The Executive has notified its proposed exemptions to the European Commission.
The full protection intended by the Hazardous Waste Directive may not be available in the case of exemptions to which full limit values have not been applied. An example is that the exemption in paragraph 3(c) of Schedule 3, for the storage of waste oil prior to burning as a fuel has no upper limit on the amount of waste oil which could be stored without applying for a full waste management licence, with the protection and monitoring that would imply. It is intuitively obvious that the storage of 5 million litres would pose more risks than the storage of 5,000 litres would, although the exact risk is difficult to quantify. Similar risks are involved in the other proposed changes.
The risk of infraction proceedings, however, should we fail to bring our exemption regime for special waste, is more easily quantified. Judgment has already been given by the European Court of Justice against the UK in this respect. The next stage of the proceedings, which has already been instituted, could lead to the imposition of daily fines. The matter of fines is considered in more detail under Options. Government intervention is required as, to alter the legal framework, an amendment to the WMLR is required. This is properly a matter for the Scottish Executive.
Consultation
Within the Scottish Executive we have consulted colleagues in Enterprise, Transport and Lifelong Learning Department, and Solicitors. We have carried out initial consultations with the Scottish Environment Protection Agency.
These proposals will now form the subject of a twelve-week consultation with interested parties. Those listed in the Annex are being specifically invited to comment on the proposed codification, revised special waste exemptions and this RIA. They are also being invited to give their views in more general discussions on the future of waste regulation.
Options
(i) Identify options
Option 1: Do nothing.
This represents the base case of business as usual against which other options are compared. The requirements of the Hazardous Waste Directive are not fulfilled.
Option 2: Consolidate the exemptions in the WMLR but make few or no changes to exemptions for special waste.
To the extent that no changes are made to the exemptions, but they are merely consolidated, effectively the regulatory position does not alter - it is merely clarified. The requirements of the Hazardous Waste Directive are not fulfilled.
Option 3: Consolidate the exemptions in the WMLR and make changes to those dealing with special waste to implement Community law.
The regulatory position is clarified and the requirements of the Hazardous Waste Directive are fulfilled.
These options will impact mainly on administrative costs, which would be borne chiefly by the Scottish Executive and SEPA, though there are potentially very rare cases in which they could impact on the costs of carrying out waste management activities for which the rules governing exemptions are changed. Administrative costs are as follows:-
Option 1 implies no change for any party, so there would be no costs attributable to any regulatory change. However, this option also implies continued non-compliance with the Directive. This could lead to fines being levied, as a result of legal proceedings which are already in train. The Commission has published guidance on how it calculates the fines it thinks appropriate in the circumstances. These are set out in OJ No D242, 1996 and OJ No C63, 1997. The Commission's proposed fine is advisory. The actual fine imposed is that decided on by the Court, but the Court has stated that it has found the Commission's proposal helpful. The Commission's proposed fine is based on a uniform flat rate multiplied by 2 coefficients relating to the offence itself, and then by a deterrent effect factor that takes account of the Member States' ability to pay and the weighting of votes in Council. The maximum advised fine that could be imposed on the UK for the most serious of breaches and the maximum duration is â'¬534,000 (c £365,000) per day (over £133 million per year). Fines are levied against the Member State, but since other parts of the UK have indicated their intention to comply with the Directive, any non-compliance would be the fault of Scotland alone, and the Scottish Administration would therefore have to pay the fines, and indeed the costs of any legal action.
Option 2 will involve the Scottish Executive (and, to a lesser extent, SEPA) in the costs involved in making, printing and publishing the codified legislation. These are difficult to quantify but would occur in the ordinary course of the business of these organisations. In view of the lack of difference made by the proposed changes to the practical situation, no expense with regard to guidance will be required. However, the failure to implement the Directive would still entail the danger of incurring the fines and costs described above.
Option 3 will entail the costs of making, printing and publishing the codified legislation. It would also involve minor administrative costs in advising any parties affected by changes to the exemptions of these changes, and action they should take as a result. These latter costs would fall mainly on SEPA. Their magnitude would depend on the number of operators affected by changes to the exemptions. This is estimated to be very small: consequently the costs in this respect are likely to be negligible. This option, however, would obviate the dangers of costs arising from fines.
(ii) Issues of equity or fairness
Any increase in regulatory costs or the costs of waste management arising from the proposed changes are likely to be absorbed by the operator (which, in the case of exemptions, is also the waste producer) or passed on to those who use the services provided by the operator. They will thus be borne to those who contribute to, or occasion, the production of the waste. This is in keeping with the "polluter pays" principle, and provides an incentive to minimise waste production.
Costs and benefits
(i) Sectors and groups affected
The Scottish Executive believes that the proposed changes would have a direct effect only on operators affected by the change to paragraphs 3(c), 6(2), 28 and 38. These are operators who:-
- store waste oil prior to its use for fuel, in quantities in excess of 23,000 litres (and who do not have, in any case, either a waste management licence or a PPC permit covering the whole of their operation);
- store returned goods which are waste, to an amount in excess of 1,000 tonnes, again without a waste management licence or a PPC permit; and
- store more than 10 tonnes of samples without a waste management licence or PPC permit.
The number of such operators is likely to be very small; we are not aware of any. As discussed, the Scottish Executive does not believe the proposed changes to paragraphs 42 and 43 will affect any existing operators.
The intention of the proposed change to paragraph 29 is to ensure that existing operators who are excluded from the effect of the Pollution Prevention and Control Regulations 2000 continue to be so excluded. It does not, therefore, change their regulatory position. Similarly, the proposed change to paragraph 17 is for simplicity and legal certainty.
(ii) Benefits
The principal benefit of the codification which forms the background to these changes is that it makes the law more accessible to waste operators and regulators alike. Mainly this issue is one of convenience: however, to the extent that this reduces the time taken to locate any particular provision it also has the potential to reduce legal fees, for example. Simplifying the regime could have the effect of encouraging operators into the recovery and recycling business.
The principal benefit of applying the controls in the Hazardous Waste Directive to exemptions is that it would put an end to infraction proceedings and thus obviate the dangers of the costs described above. However, it would also ensure that these exemptions are available only in respect of relatively benign and small-scale activities. Larger-scale and more dangerous activities would have to be carried out under the more stringent controls of a full waste management licence. These changes would reduce the risk to human health and the environment.
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 saving of the administrative costs of codification (which are difficult to quantify, but likely to be small). There are, however, disbenefits arising from failing to apply the full range of controls in the Hazardous Waste Directive to exemptions.
- Option 2 - codify but make few or no changes to exemptions for special waste. This option would have the benefits of clarity and accessibility discussed above, but would still have the serious disbenefits arising from failing to apply the Hazardous Waste Directive properly.
- Option 3 - codify exemptions and make changes necessary to bring those dealing with special waste into compliance with Community law. The option would give rise to the benefits of codification discussed above and the benefits of more careful controls on hazardous wastes, as well as avoiding substantial fines.
(iii) Costs
Should a business wish to continue to store more than 23,000 litres of waste oil, 1000 tonnes of returned waste or 10 tonnes of samples, this would amount to a requirement to operate under a full waste management licence or a PPC permit, rather than under an exemption. These costs are likely to be of four figures, depending on the kind of licence sought, opposed to an exemption, which in these cases is free.
Alternatively, an operator could simply cease to store more than the permitted maxima.
The proposed consolidation of exemptions to the WMLR, and changes to exemptions dealing with hazardous waste, are intended to improve regulatory certainty and ensure that the full protection of the law on hazardous waste is extended to waste management operations, while correctly transposing the HWD. The actual changes required to do so are very small, and we do not anticipate that there will be many operators - if any - affected by them. If any operators are affected by the new limit values, they will have the option of keeping within the new limits, and thus remaining unaffected by the legislation. Where the amount of waste they store exceeds the new limits, we believe that the risk justifies the greater degree of caution which the stricter licensing requirements entail. At the same time the possibility of substantial fines for non-compliance with Community legislation is avoided.
Small/Micro Firms Impact Test
This draft forms part of a consultation paper on which small businesses will be invited to comment. As stated above, we are not aware of any small businesses which will be affected. In particular, it is a very remote possibility indeed that any microbusiness would wish to store wastes in quantities greater than those we are now proposing. Should we become aware of any small business whose present operations would be affected, we shall consult specifically with that business on these proposals.
Business forms
No new forms are to be introduced as a result of these proposals.
Competition assessment
The proposed changes do not apply selectively. Furthermore, since it is not anticipated that these changes will actually impact on any party, they can have no effect on competition.
Enforcement, sanctions, monitoring and review
SEPA is the authority currently responsible for issuing, enforcing and ensuring compliance with waste management licences and PPC permits, as well as for registering and enforcing and ensuring compliance with exemptions. It will continue to be so, in exactly the same way as it is currently. No change is proposed in this paper to any of the sanctions currently in force, or to SEPA's present charges for licences, permits, and authorising exemptions. Since any changes proposed to the current regulatory situation are unlikely to have a significant effect, major changes to SEPA's enforcement practices, and the necessary training for its officers, are not foreseen. The Scottish Executive and SEPA would monitor and review the effectiveness of these changes.
RIA 2005/34
Comments on this regulatory impact assessment are invited. Please send them to the address given at the beginning of this paper.
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