The recent decision of Eclipse Resources Pty Ltd v The State of Western Australia (No. 4)  WASC 62 (Eclipse Resources) has provided businesses producing waste and the waste industry with much-needed clarification to the approach of Australian courts in determining when material will be ‘waste’ for the purposes of environmental legislation.
The Western Australian Supreme Court has clarified that, for the purposes of levies, environmental regulations and transport controls, the question of when a material is considered to be ‘waste’ is to be determined at its source, irrespective of how it is regarded by its recipient or how it may later be used. This means that once material becomes ‘waste’, all relevant laws applying to the particular category of waste must be met, including storage, transportation and disposal of that waste.
What is waste?
‘Waste’ is defined in the Environment Protection Act 1970 (Vic) (EP Act), the primary legislation in Victoria regulating waste management, as including:
- Any matter that is discharged, emitted or deposited into the environment, causing an alteration to the environment;
- Materials which have been discarded, rejected, abandoned, unwanted or surplus; or
- Discarded, rejected, abandoned, unwanted or surplus materials that are intended for recycling, reprocessing, recovery purification, or sale.
There has been considerable judicial debate concerning the construction of this definition and its equivalents in other jurisdictions. In particular, there has been much debate about whose state of mind is relevant when determining the point at which a material becomes unwanted or surplus, for example when a substance is being transported or there has been a change in ownership. Is the relevant state of mind for which the classification of materials be assessed that of the owner or the recipient of the relevant material, and at what point in time should that assessment be made?
In the recent case of Eclipse Resources, the Western Australian Supreme Court held that ‘waste’ is to bear its ordinary meaning of “material that is unwanted by, or excess to the requirements of the party from whom it comes” (emphasis added).
This decision is in line with Environment Protection Authority v Terrace Earthmoving Pty Ltd  NSWCCA 180 (Terrace Earthmoving), a decision of the New South Wales Court of Criminal Appeal, a leading case in this area. In a detailed consideration of the definition of waste in the context of the NSW regulatory framework, the Court of Criminal Appeal held that the determining factor is whether the owner of the material has a continuing use for it.
Does it always remain waste?
In Terrace Earthmoving the Court of Criminal Appeal went on to say that if the owner does not have a continuing use for the material, but that the material may have a use at a later point in time, the material is to be considered a ‘waste’ until it is applied to a new use. In contrast, a recent decision of the Environment, Resources and Development Court of South Australia in March 2016, held that a material ceased to be waste when it arrived at a resource recovery facility because it was “clearly viewed” in a different light by its new owner, and had changed in character at the point of transfer of ownership.
In Terrace Earthmoving, the court held that where a waste has been processed, recycled, reused or recovered, it will cease to be waste, except in prescribed circumstances. The WASC extended this position in Eclipse Resources, observing that the legislature’s “evident concern to advance recycling and the reuse of waste” implies that a material will only remain ‘waste’ when it has no use whatsoever.
Although the Victorian courts are not bound to follow these decisions, there is no High Court authority on this exact point. In our view, the Victorian courts are more likely to follow the Eclipse Resources and Terrace Earthmoving line of authority that the determinative consideration is the state of mind of the waste’s source, irrespective of it is regarded by a recipient, until the material is applied to a new use (if at all).
Consequently, in our view material will become ‘waste’ when it is:
- Surplus to the ordinary business needs of their owner;
- No longer required/unwanted for the operations of the business;
- The by-product of a manufacturing process; or
- Rejected, or has been discarded, by the owner.
What are the implications for business?
Materials that are surplus or unwanted are not precluded from being ‘waste’ because they may be reprocessed, re-used or recycled at a future time. It is clear that the classification of a material can change.
For example, by-products of industrial processes will be ‘waste’ for the purposes of the EP Act unless the owner has an immediate use for them. Although the owner or another person may intend to recycle or use them at a future time, the by-products are classified as ‘waste’ until they are actually applied to a new use.
Importantly, this means that if a material is surplus to the current owner’s requirements, and is therefore ‘waste’, it will remain so while it is being transported to a place where it will be reused or recycled. This means that all relevant laws applying to that category of waste must be met during transportation. Further, even if the waste could be used at some point in the future for a different purpose, if it is currently surplus or unwanted, it must be stored or disposed of in accordance with all relevant laws applicable to that category of waste.
The EP Act and other relevant legislation provides a range of offences for failing to meet applicable waste storage, transport and disposal obligations. To assist individuals and industry understand their obligations under the regulatory framework, the EPA have recently released guidance note 1624 which can be accessed via this link.
Businesses producing surplus or unwanted materials and those in the waste industry should:
- Be aware that a material becomes ‘waste’ at the point in time when it becomes surplus or excess to operational requirements, even if later it may be used/recycled. Materials that meet this classification must be handled appropriately in terms of storage, transport, disposal and other relevant waste management laws;
- Check the terms and conditions of carriage and acceptance contracts with consignees, and require indemnity against penalties or action in the event that goods are mis-described; and
- Be aware there is increased scope for criminal liability under the EP Act if materials are not treated as waste when they should be.
This article was written by Meredith Gibbs, Partner and Ben Weintraub, Trainee Solicitor.