Mayer Parry case sheds new light on metal packaging waste definition

Maria Cull, from law firm Herbert Smith, analyses recent environmental court rulings concerning business

The European Court of Justice has reached its long-awaited decision in R (Mayer Parry Recycling Ltd) v Environment Agency and Another and has shed light on the difficult issue of when waste material subjected to a recycling or recovery operation ceases to be "waste".

This commercially important issue arises in a variety of different legal contexts. In an earlier and separate UK case in 1998, Mayer Parry challenged the Environment Agency's view as to when scrap metal dealt with at its metal recycling/recovery facilities ceased to be waste. In a partial victory for Mayer Parry, the High Court held that when scrap needed no more processing but could be used as a raw material, it was no longer waste.

On that basis Mayer Parry took the view that some of its operations in relation to packaging waste brought it within the definition of a reprocessor of packaging waste under the Packaging Waste Regulations entitling it to be accredited as such with the Environment Agency, and entitling it to start generating income by selling packaging waste recovery notes.

In spite of the apparent logic of Mayer Parry's arguments, the Agency turned down its application. After a legal challenge by Mayer Parry, the High Court referred a number of legal issues to the European Court of Justice (ECJ).

Case notes

The original disagreement between the Agency and Mayer Parry was reasonably simple. Mayer Parry buys scrap metal, including packaging waste, from industrial sources. It then inspects, sorts, cuts, separates and shreds the scrap, producing Grade 3B material, which is in turn sold to steel manufacturers and used to produce ingots, sheets or coils of steel - from which, among other things, further packaging may be made.

The Environment Agency's policy has been to accredit the manufacturers that produce the ingots, sheets or coils of steel from that 3B material as reprocessors, rather than those producing Grade 3B material.

The ECJ heard complex arguments from a variety of interested parties, including steel companies and the UK, Denmark, Netherlands and Austrian governments. Ultimately the question for the court was whether the concept of recycling included the reprocessing of metal packaging waste, transforming it into a secondary raw material such as Grade 3B material. Or, is material only recycled when it has been processed further into ingots, sheets or coils of steel?

A question of definition

It was clear that "recycling" - as defined within the relevant directives - is a form of "recovery operation". An essential characteristic of a waste recovery operation is that the waste should serve a useful purpose in replacing other materials.

It follows that waste must be transformed into its original state in order to be useable for a purpose identical to that of the material from which it was derived. In other words, metal packaging waste could be regarded as recycled - and no longer waste - only when it had been reprocessed into material suitable for the production of metal packaging.

Applying this reasoning to the Grade 3B material, the court noted that what was produced was essentially a secondary raw material suitable for substituting for a primary raw material.

The production of Grade 3B material did not, however, involve the reprocessing of metal packaging waste so as to return it to its original state, so it was not reusable for its original purpose - the manufacture of metal packaging. Grade 3B material is a mixture, which contains impurities that have to be removed if the material is to be used to produce steel.

As the material could therefore not be used for the manufacture of new metal packaging, it could not be said that the Grade 3B material had characteristics comparable to those of the material of which the metal packaging was composed, and could not be regarded as recycled packaging waste.

The court then turned to the question of whether, as the Agency believed, the use of Grade 3B material by the steel manufacturers to produce ingots, sheets or coils of steel could be regarded as a packaging waste recycling operation.

This was found to be the case, as the production process resulted in the manufacture of new products which did possess characteristics comparable to those of the material of which the metal packaging waste incorporated in the Grade 3B material was initially composed, and which could be used for a purpose identical to the original purpose of the material from which that waste was derived, namely the metal packaging.



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