Court of Appeal

Published July 6, 2007

Regina (OSS Group Ltd) v Environment Agency

Before Sir Anthony Clarke, Master of the Rolls, Lord Justice Carnwath and Lord Justice Maurice Kay

Judgment June 28, 2007

Lubricating oil collected after use and processed into fuel oil for burning could cease to be waste before it was burnt.

The Court of Appeal so held, allowing an appeal by the claimant, OSS Group Ltd against the refusal of Mr Justice Burton (unreported [2006] EWHC 3023 (Admin)) to grant judicial review of the decision of the defendant, the Environment Agency, that waste lubricating oil reprocessed as fuel did not cease to be waste until it was burnt. Mr Robert McCracken, QC and Mr Stephen Tromans for OSS; Mr John Howell, QC and Miss Dinah Rose, QC for the Environment Agency, Mr Derrick Wyatt, QC and Ms Kassie Smith for the Department of the Environment, Food and Rural Affairs, intervening.

LORD JUSTICE CARNWATH said that the business of OSS Group was the collection of waste lubricating and fuel oil from garages and workshops, and its conversion into marketable fuel oil.

The issue was when the material ceased to be waste for the purposes of the Waste Framework Directive 2006/12/EC (OJ April 27, 2006 L114/9-21).

Was it at the completion of the process of preparing it for use as fuel, as argued by OSS, or when it was actually burnt, as argued by the agency? The judge agreed with the agency.

The answer was of considerable economic significance, because the cost of complying with the higher standards required for waste processes, particularly since 2005 when the Waste Incineration Directive 2000/76/EC (OJ December 28, 2000 L332/91) was applied to existing waste operations.

If the judgment was upheld, a power station using the claimant’s fuel was subject to more costly controls applying to a waste incinerator, which would not apply if it were burning virgin fuel oil.

The question was whether a lubricating oil, not originally used as fuel, which became waste could thereafter be burnt other than as waste.

In ARCO Chemie Nederland v Minister van Volkshuisvesting (Joined Cases C-418/97 and C-419/97) ([2002] QB 646) the Court of Justice of the European Communitites impliedly accepted that it was possible for a substance which was waste to cease to be waste, even if it was destined ultimately for use as fuel.

That court did not, however, go on to identify the other factors which might need to be taken into account and the test to be applied in deciding whether the material had ceased to be waste.

It simply asserted that the decision had to be taken in the light of all the circumstances and by comparison with the definition of “the discarding of the substance, or the intention or requirement to discard it” in article 1(a) of the Waste Framework Directive.

His Lordship found the Luxembourg court’s reasoning obscure, and after considering subsequent cases, concluded that a search for logical coherence in its case law was probably doomed to failure. A fundamental problem was the court’s professed adherence to the article 1(a) definition, even where it could be of no practical relevance.

Understandably, the Court of Justice had held that a material did not cease to be waste merely because it had come into the hands of someone who intended to put it to a new use.

But that should not be because it still met the article 1(a) “discarding” definition in his hands; but rather because, in accordance with the aims of the Directive, material which was originally waste needed to continue to be so treated until acceptable recovery or disposal had been achieved. Unfortunately, the Court of Justice had consistently declined invitations to develop workable criteria to determine that question.

Instead it continued to insist that the “discarding” test remained applicable, even where the holder was an end-user whose only subjective intention was to use, not to get rid of the materials in issue.

Although the court continued to pay lipservice to the “discarding” test, in practice it subordinated the subjective question implicit in that definition, to a series of objective indicators derived from the policy of the Directive.

What was required from a national court was a value judgment on the acts of the particular case in the light of those indicators.

That was the approach in Scottish Power Generation Ltd v Scottish Environment Protection Agency (2005 SLT 98). It should be enough that the holder had converted the waste material into a distinct, marketable product, which could be used in exactly the same way as a ordinary fuel and with no worse environmental effects.

It could not be said that such a material was being discarded in any ordinary sense of the term. The agency’s test was too narrow.

If it were correct it would have provided a complete answer to the ARCOcase. Any practical difficulties in applying a wider test were inherent in the imprecise nature of the article 1(a) definition.

However desirable it might be to have a definitive test, the Court of Justice had consistently declined invitations to provide one. It was not the function of the domestic court to fill the gap.

His Lordship determined the appeal question in the affirmative.

The Master of the Rolls and Lord Justice Maurice Kay agreed.

Solicitors: Sharpe Pritchard for Semple Fraser LLP, Glasgow; Mr Duncan Mitchell, Bristol; Solicitor, Department of the Environment.

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