It’s been 20 years since the Y2K computer glitch was expected to shut down global computer systems but amounted to nothing – what will we be saying in 20 years about the impact of what has been dubbed the “20YWS”?
The latest stage of consultation closed on the EPA’s 20-year waste strategy in late September. It is expected consultation will show that industry and each level of government is in broad agreement about the need for NSW to move towards a circular economy in that timeframe. But what regulatory levers will need to be pulled in NSW in order for the state to achieve this goal? This question is much more difficult to answer and there is not likely to be a similar consensus between the key players.
It is timely to consider the key regulatory issues likely to emerge in consultation and the options available to government and the EPA to deliver a lasting impact.
The regulatory framework
The cornerstone of the regulation of resource recovery in NSW is the Resource Recovery Order and Exemption framework. Put simply, orders and exemptions permit material to be recovered from waste and re- used in NSW without requiring the person recovering or generating the material from complying with the detailed regulatory requirements of the Protection of the Environment Operations Act (POEO Act).
However, recent controversies over the revocation of the Mixed Waste Organics Order and Exemption on the grounds of environmental risk, and in case law arising from EPA prosecutions, have highlighted the weaknesses in the current system.
Risks to investment in plant, equipment and technology
The greatest strength of the framework – that it is flexible and provides the EPA a large degree of discretion – is also its greatest weakness. The Alternative Waste Treatment (AWT) industry has learned in respect of the mixed waste organic outputs order and exemption that “what the EPA giveth, the EPA can also taketh away” (without any prescribed requirement for consultation with affected parties). This risk has a cooling effect on capital investment based on resource recovery orders – in turn impacting the rate of the diversion of waste from landfill.
Consumer trust is critical
There is little protection for generators or consumers of recovered materials in the framework. Recent case law has confirmed that simply because recovered material meets the requirements of an order when it leaves the premises of a generator, does not give any protection to the consumer if that material is tested the following day and fails once it is applied to land. This degree of exposure is likely to undermine consumer confidence in recovered material.
Product liability risks for generators of recovered material
It is now clear that any non- compliance with an order, for example in relation to record keeping, means the material is no longer subject to the order and exemption. Even where the breach is minor, the generator is exposed to the full breadth of regulatory requirements and offences that apply to waste material.
The need for a level playing field
Currently, site specific orders and exemptions are confidential to protect commercial information. However, this undermines competition and limits investment as there is no way to know whether a competitor has a higher or lower contaminant limit or testing regime than a comparable facility.
What could be done to improve these risks?
The government and EPA have a number of options. Some potential ways forward that have been floated by various members of the industry include:
• Amending the Regulation to provide that orders and exemptions should be given a practical interpretation to give effect to the EPA’s Waste Strategy;
• Adopting an “asbestos protocol” to allow minor levels of asbestos to be appropriately dealt with on-site;
• Ensuring amendment or revocation of orders and exemptions is put through a Regulatory Impact Statement-type process which would ensure detailed consultation with industry;
• Amending the POEO Act to allow compliance with orders and exemptions to be taken into account in the exercise of regulation action (for example in whether to issue a clean-up notice); and
• Providing that “site specific” orders be kept on a public register (minus commercial in confidence information).
Striking the balance
Unfortunately, there is no easy solution – rather it is a task of striking a balance between regulation and promoting resource recovery. The challenge for the EPA and government will be to draw out these key themes and strike a balance that promotes the good news story of a shift to a circular economy, but importantly lifts the regulatory burden to actually achieve it. For businesses to have confidence to make investments to support a circular economy, it is necessary to have stable platform with a manageable level of risk in the product produced.
Ross Fox is a principal lawyer at Fishburn Watson O’Brien and an accredited specialist in planning and environment law. He is also a former principal legal officer and acting director of litigation for the NSW EPA.