Court sets out producers’ obligations under waste electronic equipment directive

18 September 2009 by

R (on the application of REPIC Ltd) v (1) Secretary of State for Business Enterprise and Regulatory Reform (2) Environment Agency (Defendants) & (1) Scottish Environment Protection Agency (2) Electrolink Recylcing Ltd and (3) WERC Ltd T/A City Compliance Scheme (Interested Parties) [2009] EWHC 2015 (Admin)

QBD (Admin) (Wyn Williams J) 31 July 2009

The Regulations adopted pursuant to the Waste Electrical and Electronic Equipment Directive of 2002 were not breached when an operator of a producer compliance scheme collected more waste electrical and electronic equipment from private households than was necessary to meet its obligations.

The claimant, an electronics producer operating a compliance scheme under the WEEE Regulations applied for a declaration, by way of judicial review, that the defendants had failed to discharge their duties to enforce the Regulations when they refused to take action against the over-collection by the Second and Third Interested Parties.

SUMMARY

The Regulations made electronic and electrical goods producers responsible for financing the costs of the collection, treatment, recovery and environmentally sound disposal of waste electrical and electronic equipment from private households. The Regulations specified a compliance period of six months after the coming force of the Regulations with annual compliance periods thereafter. The Regulations further provided that it should be the duty of the appropriate authority, namely the second defendant Environment Agency in England and Wales and the first interested party in Scotland. The first defendant secretary of state had enforcement powers that were equivalent to those enjoyed by the agency.

When the second and third interested parties intentionally collected more WEEE than was necessary to comply with their obligations under Regulation 22 the Claimant alleged that as a consequence of their activities in the first two compliance periods it had been unable to collect sufficient WEEE in order to comply with its own obligation under reg.22. The Claimant contended that they breached the obligation imposed upon them by Sch.7 para.4 of the Regulations, namely the obligation to have “viable plans to collect an amount of WEEE that is equivalent to the amount of WEEE for which it will be responsible for financing under these Regulations” and that the defendants had unlawfully failed to take enforcement action in respect of the breach.

HELD:

Application refused. The Claimant was not entitled to declaratory relief to the effect that the defendants had acted unlawfully. The primary issue to be determined was the meaning to be attached to the word “equivalent” in Sch.7 para.4 of the Regulations. The immediate context of the word “equivalent” was that a producer compliance scheme had to have viable plans for the collection of WEEE. Accordingly, the use of the word “equivalent” was intended to ensure that a producer compliance scheme had viable plans to collect no more and no less than was necessary to meet its obligation under reg.22. If it did not have such viable plans a breach of para.4 would be established. A producer compliance scheme which was in breach of the terms of para.4 would be in breach of a condition of its approval as a producer compliance scheme. That was clear from reg.43(i) and a producer compliance scheme which contravened reg.43 was guilty of a criminal offence.

However actual intentional over-collection of WEEE was another matter. If viable plans existed and a producer compliance scheme acted in accordance with those plans, in relation to the collection of WEEE (either under-collected or over-collected), no breach of Sch.7 para.4 would be established as the obligation under para.4 was to have viable plans. A producer compliance scheme which under-collected would, however, still be in breach of reg. 22 unless it regularised its position. That could be done by it either purchasing evidence notes or invoking reg.39. Trading in evidence notes in such circumstances could not be considered inconsistent with Directive 2002/96. On the evidence, it was clear that in respect of the initial compliance periods the agency had, in relation to the problem of over and under-collection of WEEE, decided to monitor the situation and issue warnings, if appropriate, as opposed to taking more draconian action such as enforcement. That stance was a proportionate one to the problem of over and under-collection of WEEE in the first two compliance periods and one which the agency was entitled to take in the exercise of its discretionary powers. It followed that no complaint could properly be made against the secretary of state as, although he had powers of enforcement which were equivalent to those enjoyed by the agency, it was clear that the primary duty of enforcing reg.43 fell upon the agency.

As for the claim that the failure of the defendants to take enforcement actions was a breach of European Community law, the judge noted that all producer compliance schemes had been subject to the same rules in having to meet their financial obligations, and had been in the same situation of having equal opportunity to enter into agreements to discharge their financing obligations. The enforcement authorities had not therefore acted unlawfully in failing to take enforcement action nor had they disregarded the principle of equal treatment (Karlsson [2000] ECR 1-2737 para 39). All producer compliance schemes in England and Wales, including the Claimant, which had found themselves in the comparable situation of not having collected an amount of WEEE “equivalent” to their obligations, had benefited equally from the agency’s decision not to pursue enforcement action against anyone.

The claim for declaratory relief to the effect that the Defendants had unlawfully failed to take enforcement action against the Second and Third Interested Parties dismissed. Permission to apply for judicial review granted.

COMMENT (October 2009)

Much environmental regulation has unintended consequences like this. This judgment establishes, if it needed establishing, that overzealous compliance which threatens the competitive edge of other players in the field may be an irritant but it is not in breach of the law.

The Second and Third Interested Parties collected far more WEEE than they needed to do in order under the Regulations. This, argued the Claimant, amounted to breach of the regulations because their behaviour indirectly interfered with the Claimant’s own ability to comply with the Regulation, forcing it instead to window-dress its compliance by purchasing evidence notes from other parties in respect of that compliance period. No doubt the claimant was obliged, because of the pressure it was under, to pay “ransom prices” for those evidence notes, although they did not advance this aspect of the story as part of their claim.

The trouble with following this argument through to its logical conclusion is that it would make it impossible for producers to stay within the Regulations if they were not able to predict, to within the last tonne, how much WEEE they were going to be responsible for within a given period. The system of evidence notes was set up to enable producers to “fudge” their compliance in the event that they underestimated the amount of WEEE for which they were responsible. If they have to pay the going market rate for those notes, they may have a financial incentive to make a better assessment the next time round. As counsel for the Second Interested Party pointed out, paragraph 4 requires a producer compliance scheme to have in place the capacity and plans to collect at least enough WEEE to meet its obligations under Regulation 22. It does not prohibit over-collection, only under-collection; had the Regulations intended to ban over-collection they would have done so in express terms, particularly as breach of regulations can give rise to criminal liability. To find that over-collection was a breach of the Regulations would fly in the face of the underlying objectives of the WEEE Directive itself.

The Claimants’ argument that Regulations had not properly transposed the Directive was summarily dealt with. The creation of a market in evidence notes is one of the many unintended consequences of the WEEE Directive. That lack of intent however does not mean that the market itself is evidence that “trading at the margins” of the sort that went on in this case is in breach of the regulatory system inspired by the Directive. Indeed, the judge pointed out that Article 8 of the Directive itself imposed financial responsibility upon producers or operators of the scheme and therefore trading in evidence notes was a natural outcome of such responsibility. It was not for the judicial review court, without the appropriate evidence before it, to decide that because there was over-collection by some producer compliance schemes there was a consequent and resultant under-collection by others.

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