Consultation Paper on the Consolidation of the Waste Management Licensing Regulations and Amendments arising from the Better Waste Regulation Exercise: Also incorporating Proposals for: The Transposition of the revised Waste Framework Directive;

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ANNEX 3
PARTIAL REGULATORY IMPACT ASSESSMENT

1. Title of proposal

  • The consolidation of the Waste Management Licensing (Scotland) Regulations 1994 (as amended) incorporating: a) the transposition of the revised Waste Framework Directive (Directive 2008/98/ EC); b) amendments arising from the Better Waste Regulation consultation exercise; and c) the amendment of legislation relating to waste carriers.

2. Purpose and intended effect of the measures

Objectives

  • To consolidate the Waste Management Licensing Regulations 1994 (as amended) ( WMLR) with the aim of making Scottish waste legislation clearer and easier to understand for both regulators and operators.
  • To amend certain sections of the WMLR to provide a more simplified and efficient waste management licensing system.
  • To transpose the revised Waste Framework Directive (2008/98/ EC) fully into Scots law. The deadline for transposition is 12 December 2010.
  • To amend legislation relating to waste carriers to take account of a clarification of Community law by the European Court of Justice ( ECJ).

Background

Better Regulation

  • In order to meet its commitment to the principles of better regulation, an agenda has been adopted by the Scottish Government with the principle aim of enhancing and growing Scotland's economic competitiveness by helping to improve the regulatory environment and ensuring that it is suitable and appropriate for Scotland.
  • The Scottish Government is committed to reducing, as far as possible, the burdens on business, charities and the voluntary sector arising from EU Directives and Regulations.
  • In March 2007, the Scottish Government and SEPA issued a joint consultation paper on Better Waste Regulation ( BWR). The paper sought waste industry views on how Scottish waste legislation could be improved and following analysis of the responses to the paper, an Action Plan was agreed upon.
  • Many of the proposed changes relate purely to the processes for the issue of waste management licences and can be dealt with through changes to internal procedures at SEPA.
  • However there were several proposals for amendments to the legislation which although relatively minor, would potentially provide a more simplified licensing system which can be more easily applied by SEPA, and provide greater clarity and understanding for waste operators.
  • One example of this is the broadening of draft regulation 10, relating to mobile plant licences which will allow for a more general, lighter touch approach rather than a type specific one.
  • It is proposed to introduce a new ream of activities eligible for exemption status which would lessen the regulatory burden on a wider range of recycling and recovery activities, thereby further encouraging the type of waste management operations which will meet the objectives of environmental and human health protection.
  • It is proposed to remove the legal requirement for a Certificate of Technical Competence ( CoTC), which is the current means of demonstrating that a applicant is a fit and proper person to hold a waste management licence. The Scottish Government believes that this system exceeds the requirements of the WFD.

Consolidation of WMLR

  • Scottish legislation on waste stems from the original Waste Framework Directive (75/442/ EEC) 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.
  • As a result of these amendments, the legislation has become cumbersome and in many instances, it is difficult to draw clear and concise guidance from it, for both regulators and industry alike.
  • A consolidation of the waste management licensing regulations is proposed to allow more clarity and understanding of the requirements set by the WFD.
  • A commitment to do this has been made to the Subordinate Legislation Committee of the Scottish Parliament.

Transposition of revised Waste Framework Directive ( WFD)

  • A revised version of the Waste Framework Directive (2008/98/ EC) came into force on 12 December 2008. The revised WFD contains provisions which will require transposition into Scots law.
  • Member States must have fully transposed the provisions of the revised Directive by 12 December 2010.
  • The Community legislator, in revising the Directive, explicitly disavowed any intention of amending the definition of waste which has been central to waste regulation. Furthermore, much of the existing case law has been preserved in the new text. The regulatory changes are not, therefore, anything like as great as those to which a completely new Directive would have given rise.
  • Furthermore, some aspects of the revised Directive relate more to strategy than to regulation. These will be dealt with in a new national waste plan for Scotland. The Scottish Government has already consulted on this in the consultation paper Scotland's Zero Waste Plan.
  • There are also provisions within the revised WFD which require to be transposed into other areas of Scottish waste legislation outwith the WMLR.
  • To summarise, we propose transposing the revised Waste Framework Directive provisions into Scots law through the following 3 regulatory vehicles:

a. The consolidated Waste Management Licensing Regulations:

Those provisions relating to the WMLR.

b. The National Waste Plan for Scotland:

Those provisions which relate more to strategy than regulation.

  1. New Regulations entitled "The Waste (Scotland) Regulations 2010"

Those provisions affecting legislation outwith the WMLR.

Waste Carriers legislation

  • In June 2005, the European Court of Justice ( ECJ) (Case C-270/03) ruled in an infraction case against the Italian Government regarding their transposition of certain legislation relating to waste carriers.
  • Essentially the judgement ruled that waste producers must be registered if they wish to transport their own waste.
  • This is not fully reflected in current Scots law, therefore appropriate amendments must now be made.

Summary

  • The above objectives are to be attained in one combined exercise and as soon as possible. At any rate changes must certainly be made before 12 December 2010, which is the deadline for the requirements of the revised WFD to be fully transposed into Scots law, otherwise infraction proceedings may be taken by the European Commission before the ECJ.
  • It is anticipated that, after a twelve week consultation, the Scottish Government will move as swiftly as possible to bring into force the consolidated regulations, containing the additions and amendments arising from the BWR and consolidation exercise, the provisions requiring transposition by the revised WFD and the required amendment to legislation relating to waste carriers.

3. Rationale for Government Intervention

  • The Scottish Government is committed to the principles of Better Regulation.
  • The legislative changes proposed through the BWR exercise are properly a matter for the Scottish Government.
  • European law states that the provisions of the revised WFD must be fully transposed into Member States' waste legislation.
  • It is important that the provisions are transposed fully into Scots law by 12 December 2010 to avoid infraction proceedings being taken against the Scottish Government by the Commission which could ultimately lead to heavy fines being imposed by the ECJ.
  • The matter of fines is considered in more detail under Options. Government intervention is required as, to alter the legal framework, amendments to the existing WMLR and other transposing legislation are required. Again, this is properly a matter for the Scottish Government.
  • Similarly, failure to amend Scots legislation relating to waste carriers following the European Court of Justice ( ECJ) ruling against Italy, could see similar action being taken against Scotland.
  • It should be noted that fines imposed by the European Commission are levied against the Member State (i.e. the United Kingdom). However in the event that the other UK administrations transpose the provisions of the Directive before the deadline and Scotland fails, then non-compliance would be the fault of Scotland alone. The Scottish Government would then have to pay the fines and indeed the costs of any legal action.
  • Conversely, should Scotland successfully transpose the provisions of the Directive and the rest of the UK fails, then non-compliance would not be the fault of Scotland and the Scottish Government would not be liable to pay any fines imposed on the UK.

4. Industry impact of the new Regulations

Consolidation of WMLR

  • There should be no detrimental impact on the Scottish waste industry arising from the consolidation proposals.
  • The consolidation exercise will provide for a clearer, more transparent waste management licensing regime which should allow for time and cost savings in general for both regulators and industry alike.

Amendments to WMLR arising from BWR discussions

a. Certificate of Technical Competence ( CoTC)

  • The proposed removal of the regulatory requirement for a CoTC will reduce operator costs.
  • Operators will not have to achieve a prescribed qualification in order to satisfy SEPA of their technical competence.

b. Exemptions

  • The introduction of new activities to the Schedule of exemptions will reduce/remove WML fees for the operators involved in those activities.
  • The following paragraphs have been added to Schedule 1 of the draft Regulations enabling the described processes to be undertaken (subject to SEPA approval) under exemption from a full waste management licence:
  • Paragraph 15 - anaerobic digestion of biodegradable waste;
  • Paragraph 16 - dry screening of mixed wastes;
  • Paragraph 49 - treatment of sheep dip;
  • Paragraph 50 - spreading to agricultural land of ash from pig and poultry carcasses;
  • There are also several proposed amendments included in the draft Schedule 1 which will have a deregulatory impact.
  • One example is the amendment to paragraph 7 which removes the 50 hectare limit per exemption, for agricultural land. Currently, farmers with holdings larger than 50 hectares have to apply for more than one exemption: however the proposal will see them saving costs by requiring only one exemption to cover their whole farm.

Transposition of revised WFD

  • The transposition into Scots law of the revised WFD should result in no major increase in the regulatory impact. Some, indeed, (such as the new definition of by-products) could conceivably result in a reduction of the regulatory burden.
  • We propose to transpose many of the new provisions through their inclusion in the revised National Waste Plan ( NWP). These provisions are more of a strategic nature (such as waste hierarchy and waste management plans) than a regulatory one. Any potential impact on industry has therefore been discussed in the consultation paper, Scotland's Zero Waste Plan.
  • There are also some provisions within the revised WFD which affect legislation outwith the WMLR. These are included in the draft Regulations in Annex 2, entitled the Waste (Scotland) Regulations 2010. These are more definitional amendments and should not have a major impact on industry.

Amendments to waste carriers legislation

  • This amendment means that waste producers who intend to transport their own waste will require to be registered with SEPA.
  • This amendment is unavoidable due to the risk of severe financial penalties being imposed on Scotland by the European Commission.
  • However we anticipate that it will have a relatively small effect on Scottish industry. Its requirements may be avoided by contracting appropriately-registered waste management professionals.

5. Consultation

Internal Departments consulted in the preparation of this consultation paper and draft RIA were the Scottish Government Legal Directorate, Planning, Marine Strategy, Better Regulation and Industry, Economics (Environment) and Waste Strategy Teams.

  • A joint public consultation exercise by? the Scottish Government and SEPA on BWR was conducted in March 2007.
  • Ongoing discussions have taken place with external bodies regarding proposals contained within this consultation paper.
  • These proposals will now form part of the overall consolidation and transposition exercise which will be the subject of a twelve-week consultation with interested parties.
  • Those listed in Annex 4 will be specifically invited to comment on the proposals.

6. Options

Option 1 - Do nothing

  • This represents the base case of business as usual against which other options are compared. The existing WMLR and its subsequent amendments remain intact, the requirements of the revised WFD are not fulfilled, and the required amendments to the waste carriers legislation are not made.

Option 2 - Consolidate the WMLR, making amendments for BWR and necessary amendment to legislation relating to waste carriers, but do not incorporate the additions and amendments to the WMLR required to transpose the provisions of the revised WFD; or make the necessary amendments to Scottish waste legislation outwith the WMLR.

  • To the extent that only those changes required to consolidate the existing WMLR, address BWR issues such as more exemptions, and ensure compliance with ECJ judgement on waste carrier are made.
  • Effectively the regulatory position does not alter significantly as the consolidation and BWR aspects should merely allow for a simpler, more straightforward regulatory regime.
  • The requirements of the revised WFD are not fulfilled.

Option 3 - Consolidate the WMLR, making amendments for BWR, and necessary amendment to legislation relating to waste carriers and incorporate the necessary additions and amendments required to transpose the provisions of the revised WFD into the WMLR and associated Scottish waste legislation.

  • The regulatory position is consolidated.
  • The implementation of the proposals arising from the BWR exercise to the WMLR are made.
  • The requirements of the revised WFD are fulfilled.
  • The required amendment to the legislation relating to waste carriers is made.

Administrative costs

  • Option 1 implies no change for any party, so there would be no costs attributable to any regulatory change. However, this option also implies non-compliance with the revised WFD.
  • This could lead to fines being levied, as a result of legal proceedings which would certainly be taken by the Commission before the European Court of Justice. 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 €534,000 (c £490,000) per day (nearly £180 million per year).
  • It should be noted that fines imposed by the European Commission are levied against the Member State (i.e. the United Kingdom). However in the event that the other UK administrations transpose the provisions of the Directive before the deadline and Scotland doesn't, then non-compliance would be the fault of Scotland alone. The Scottish Government would then have to pay the fines and indeed the costs of any legal action.
  • Conversely, should Scotland successfully transpose the provisions of the Directive and the rest of the UK doesn't, then non-compliance would not be the fault of Scotland and the Scottish Government would not be liable to pay any fines imposed on the UK.
  • Option 2 will involve the Scottish Government (and SEPA) in the costs of making, printing and publishing the consolidated legislation. These are difficult to quantify but would occur in the ordinary course of the business of these organisations.
  • In view of the minimal difference made by the proposed changes to the practical situation, minimal expense with regard to guidance for SEPA staff will be required.
  • Making the necessary amendments to Waste Carriers legislation would obviate the dangers of costs arising from potential legal proceedings by the European Commission.
  • However, the failure to implement the Directive would still entail the danger of incurring the fines and costs described in option 1.
  • Option 3 will entail the costs of making, printing and publishing the consolidated legislation.
  • There is also likely to be a need for production of guidance, in due course, on matters such as the new definition of "by-products". The Scottish Government does not, however, propose that this should be a major exercise: it is not for the Scottish Government to "second-guess" the ECJ in these matters.
  • Transposition of the requirements of the revised WFD would obviate the dangers of costs arising from infraction fines.
  • Making the necessary amendments to Waste Carriers legislation would also obviate the dangers of costs arising from potential legal proceedings by the European Commission.

Summary

  • Both Option 2 and Option 3 admit the possibility of making new exemptions. In both cases there are the administrative costs and those of any guidance needed, as well as training costs in applying the new exemptions and other changes.
  • These costs are likely to be small. The expense would largely be borne by SEPA.

7. Costs and benefits

Sectors and groups affected

  • The Scottish Government believes that the proposed consolidation of the WMLR would considerably improve the Scottish waste regulatory regime for all stakeholders, by eliminating confusion created by the many pieces of amending legislation which have been introduced since the original WMLR came into force in 1994.
  • This would undoubtedly make the administrative elements of the regime less time-consuming for both regulators and operators and potentially cost saving for all parties.
  • The proposed amendments to the waste legislation arising from the BWR discussions will affect both regulators and operators.
  • The proposed new exemptions would affect those sectors which recover and recycle the wastes listed, now and in the future. Any effect in this respect would relate to the reduction in fees and bureaucracy, and can only be positive.
  • There are also amendments to the existing exemption requirements which will further reduce costs for those operators eligible.

Benefits

Consolidation

  • The principal benefit of the consolidation which forms the background to these changes is that it provides more clarity on the law for 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. It will also help avoid errors arising from referring to out of date legislation.
  • Simplifying the regime could have the effect of encouraging operators into the recovery and recycling business.
  • It is hoped that the greater clarity brought to the legislative process by the consolidation will allow for swifter decision making and subsequently provide potential savings on resources for both regulators and operators.

Better Regulation

  • The Scottish Government is committed to the principles of Better Regulation. The BWR exercise has consulted extensively with representatives of the Scottish waste industry in order to seek views on how the regulatory regime can be improved.
  • The proposed changes to licence application and issuing process which have arisen from the discussions are aimed at streamlining the system, making it less time consuming and therefore more resource friendly and cost effective for both regulators and operators.
  • The removal of the legal requirement for a CoTC, which is the current means of demonstrating that an applicant is a fit and proper person to hold a waste management licence will ease the process by which a waste management licence can be obtained.

New and amended exemptions

  • The inclusion of new exemptions increases the range of activities that operators will be able to undertake without having to pay the larger cost of obtaining a full waste management licence and paying subsequent related fees.
  • Application fees for full waste management licences for these kinds of operations range, depending on activity and scale, from £952 - £4,483, with an annual subsistence fee ranging from £1,277 - £10,011.
  • There are also other fees for modification or variation, surrender and transfer. Exemption costs range from £0 - £803, the only other charges being annual fees ranging from £0 - £655.
  • The new exemptions will continue to require that the objectives of protection of the environment and human health should be observed, and the exemptions are framed to ensure that risks are minimised.

Transposition of revised WFD

  • Purely for the point of avoiding European fines, transposing the revised WFD into Scots law to ensure our legislation is compliant will be beneficial to the Scottish waste industry by avoiding money being taken out of the Scottish economy in general, and from the waste sector in particular.
  • The revised Directive is particularly aimed at strengthening the controls which ensure that any potential risks to human health and the environment from waste management are kept to a minimum.
  • Whilst Scottish waste legislation has its own characteristics which distinguish it from other member state regimes, there are obviously benefits to maintaining an approximately "level playing field" with the rest of the European community. Moreover it is the intention of the Scottish Government to use any deregulatory potential of the new Directive to the maximum.

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

  • Option 1 - do nothing. There are zero benefits attached to this option. There are, however, severe unintended consequences arising from a) failing to apply the full range of new and amended provisions in the revised Waste Framework Directive, and b) failing to amend Scots law to ensure compliance with the ECJ judgement on waste carriers legislation.
  • Option 2 - consolidate the WMLR but do not transpose the provisions contained within the revised WFD into Scots law. This option would have the benefits of consolidation discussed above, but would have the severe unintended consequences arising from failing to apply the revised WFD properly.
  • Option 3 - consolidate the WMLR and transpose the new provisions contained within the revised WFD into Scots law. This option would give rise to the benefits of consolidation discussed above and ensure compliance with European Community law, thereby avoiding substantial fines.
  • Options 2 and 3 also allow for a) the implementation of the proposals arising from the BWR consultation exercise to the WMLR the benefits of which are discussed above, and b) the required amendment to the legislation pertinent to waste carriers

Costs

Consolidation

  • The consolidation of the WMLR is intended to improve regulatory certainty. There is no major change to the regulatory system being brought about by this action as consolidation is merely the bringing together of the initial 1994 Regulations and its subsequent amendments into one document.
  • There are no major changes required to do this and we do not anticipate that there will be any operators adversely affected by them.

Better Waste Regulation

  • All of the proposed amendments arising from the BWR exercise are designed to reduce the regulatory burden on operators and in some cases, will actually make costs savings.
  • An example of this is the amendment where it is proposed to allow just one exemption to cover a single farm unit. At present, an exemption is required for each individual site thereby incurring a separate cost for each application.
  • New exemptions will have the administrative costs outlined above (Benefits section). Where an activity which was formerly carried out under a waste management licence is carried out instead under an exemption, this will potentially have the effect of reducing SEPA's revenue in line with the figures stated above.
  • At the same time, however, SEPA's charges relate to the amount of regulatory effort required. This is normally considerably greater in the case of waste management licences than in that of exemptions (although there are some instances where this is not the case), so the new exemptions will have the potential effect of reducing SEPA's costs.
  • Given that charges are based on cost recovery, the effects on SEPA's finance would balance out.
  • At any rate costs to operators, both in time and fees, of exemptions are significantly less than those of licences.
  • In certain circumstances, operators who would previously have required the services of an environmental consultant to assist with their application for a full licence, may benefit from a significant reduction in costs.
  • It is also the case that the Scottish Government hopes that more operators will be encouraged to undertake the kind of recovery and recycling activities facilitated by the new exemptions. This would involve more regulatory effort for SEPA, but also a greater income. Again, this should balance out.

Transposition of revised WFD

  • As there are no major alterations to the Scottish waste regime as a result of the transposition of the revised WFD, we do not anticipate there being any great impact on operator costs.

Amendment to waste carriers legislation

  • There is a registration fee and annual renewal charge for registering with SEPA as a waste carrier.
  • This may have an particular impact on farmers.
  • The current charge for initial registration is £157 and thereafter, £108 for renewal each year.
  • However, as most people carrying their own waste will, at some point, be handing it over to a proper waste management operation, if they choose not to register, all they will need to do is hand it over earlier, meaning that at worst they will have to bear the waste manager's transport costs.
  • Any increase in regulatory costs or the costs of waste management arising from the proposed changes (which we believe to be relatively small) are likely to be absorbed by the operator or passed on to those who use the services provided by the operator.
  • They will thus be borne by 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.

8. Small/Micro Firms Impact Test

  • The consolidation of the WMLR, the amendments to the legislation following the BWR consultation, the new exemptions to be added and the measures being in introduced by the transposition of the revised WFD should have no detrimental effect on small businesses.
  • The simplified regime and new exemptions, on the other hand, are likely to be of assistance to small businesses in particular.

9. Business forms

  • New forms will have to be designed for the new exemptions but these will require less detail than the application for a full licence.

10. Competition assessment

  • The changes do not apply selectively. They do not, therefore, result in imposition of costs, or the availability of benefits, to some operators in any industrial sector, but not to others.
  • By removing the requirement to hold a CoTC the proposed changes remove a barrier to entry, and thus avoid maintaining what might otherwise be an oligopoly.

11. Enforcement, sanctions, monitoring and review

  • SEPA is the authority currently responsible for issuing, enforcing and ensuring compliance with waste management licences 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.
  • There are no proposed changes in this paper to the terms of any of the sanctions currently in force, or to SEPA's present charges for licences, permits, and authorising exemptions.
  • There would be an increase in penalties for the offence of operating an exemption without registering it. This would, however, merely bring these penalties into line with those for other waste management offences. This is appropriate as an improperly-exercised exemption might be as damaging as many other waste management offences.
  • Any amendments to the current regulatory situation are unlikely to result in major changes to SEPA's enforcement practices. There will, however, be the need for training for its officers in respect of the new exemptions described above.
  • The Scottish Government and SEPA will monitor and review the effectiveness of these changes.

RIA

Minister's Declaration

I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.

Signed by the responsible Minister Date

Page updated: Tuesday, February 23, 2010