The High Court papers show that two claims will be declared by REPIC:
• The continuing failure of the Environment Agency to take enforcement action against schemes which are deliberately and significantly over-collecting WEEE is unlawful; and
• The WEEE Regulations are unlawful insofar as they fail to provide any mechanism to prevent schemes from charging excessive prices for evidence notes at the end of each compliance period.
Some of the background to the case is that under the UK system evidence notes for WEEE recycling are primarily generated from reprocessors who receive WEEE from civic amenity sites. Compliance schemes have generally sought to align themselves with the sites they need to ensure that they can receive the evidence. However, since the system was introduced, REPIC, which has major producers of electronics goods as its members and so needs a lot of evidence, has been unsuccessful in gaining access to enough evidence. Some schemes, such as Electrolink, have gained access to more civic amenity sites than they actually needed in terms of the evidence required for their own members.
Allocation
When the UK system was consulted on several years ago, REPIC had argued in favour of a national allocation centre and the government almost went down this route. But, local authorities and others during the consultation process said that this would be too rigid an approach and they wanted more flexibility and choice and the government opted for what was deemed a flexible, free market approach. Had an allocation scheme gone ahead, it would have given REPIC more access to WEEE and in particular old washing machines and fridges at a specified number of civic amenity sites, rather than allowing the local authority to choose which scheme it would like to align with. REPIC's members include large manufacturers such as Dyson, JVC, Panasonic and Hoover and consequently the scheme has a high need in particular for evidence in white goods recycling which arises at CA sites.
In the Judicial Review, REPIC does not appear to be arguing directly again for a national allocation centre, but is looking for a new mechanism to sort out the pricing system for evidence notes. The case will begin on June 9 2009 and is likely to last for three days. The claimant in the case is Dr Philip Morton, chief executive of REPIC, and the defendants are the Secretary for Business, Enterprise and Regulatory Reform and the Environment Agency.
In its submission to the Court, REPIC, on the issue of enforcement, says that the defendants (plus the Scottish Environment Protection Agency as an interested party), have failed to take enforcement action against certain schemes engaged in collecting and treating WEEE. It considers that action should have been taken against schemes which have access to too much WEEE and argues that the Agencies had promised action.
REPIC wants a declaration that the Environment Agency is acting illegally in not taking enforcement action against schemes which it alleges “are deliberately and significantly over-collecting WEEE” and that the WEEE regulations are unlawful for not having a mechanism to prevent schemes from “charging excessive prices for evidence notes at the end of each compliance period”.
However, while the regulations also allow for potential enforcement action against schemes which under-collect evidence, REPIC does not appear to be seeking any action from the court on this aspect of the system.
In its detailed statement of grounds for judicial review, REPIC argues that producers and producer compliance schemes have to comply with requirements to treat and dispose of WEEE and provide evidence of this. “In order to fulfil this key principle… there must be both a mechanism enabling effective regulation of the collection and treatment of WEEE and there must actually be effective regulation.”
REPIC then states that that the regulators have allowed REPIC and others to be “severely prejudiced by the over-collection of WEEE by certain producers which allows those producers to stock WEEE and then charge ransom prices to producer compliance schemes such as REPIC in order that REPIC and others may comply with their obligations under the Regulations by proof of purchase of quantities of WEEE in evidence notes.”
REPIC has submitted that it is “common ground” that over-collection is not permitted and that there is no mechanism “whatever” to prevent the charging of “ransom-prices” for over-collecting.
This, suggests REPIC, because there is no mechanism for protecting the scheme “so prejudiced by ineffective regulation”, means that the domestic regulations are unlawful.
The compliance scheme makes allegations about certain schemes such as Electrolink and City Compliance which it believes are “deliberately” over-collecting WEEE. Both organisations however, are thought to consider that they are fully acting within the legislative framework and are making evidence available for sale at reasonable prices. The word ransom features several times in REPIC's court submission with regard to the amount charged for evidence.
Because of this, the Judicial Review argument from REPIC lays a lot of emphasis on the perceived failure of the regulatory authorities to take enforcement action as the scheme believes that the same situation as happened in 2007 will happen for the 2008 and 2009 compliance periods.
Schemes have until the end of May 2009 to collect evidence for 2008 and the shortfall in REPIC's evidence could be significant. In the court document it says that it had collected only 17% of the WEEE it estimates it is obliged to collect.
Dr Philip Morton, in his witness statement, gives further details about what he calls over-collecting by schemes such as Electrolink and City Compliance.
Defence
In defending the Judicial Review, the Secretary of State for BERR, the Environment Agency and SEPA as an interested party say that REPIC's case is unarguable. They claim that the case is essentially one down to commercial reasons. They say:
1. The regulations represent a lawful transposition of the broad margin of appreciation given to the Member States under the WEEE Directive; and
2. The power to take enforcement action is discretionary and the defendants have not precluded the taking of enforcement action.
The defence also claims that the system which is in operation offers freedom of choice so to avoid disruption to local authorities' existing collection systems. The defence case also notes that REPIC did not agree with the approach taken by BERR on WEEE.
With regard to enforcement action, the defence papers state: “The question of whether there has been compliance with the Regulations is still under consideration by the Agency and involves a number of operators and producers including REPIC. Since the regulations introduced a new regime, it is the defendants' contention that it is reasonable to expect a period of time for the resolution of any issues with regard to the new system including recognition of the fact that compliance with reg. 43 could not be the subject of enforcement action with regard to the first year of the operation of the scheme (2007). Both BERR and the Agency consider this period to be continuing and decisions as to enforcement or with regard to any necessary changes in policy or legislation remain to be taken following a sufficient period to assess the operation of the scheme under the regulations.”
With regard to the idea of a mechanism for sorting/allocating out the evidence notes, the defence also says that trading in evidence notes in a market mechanism and is not inconsistent with the terms or purpose of the objective that the cost of financing the collection and disposal of WEEE should be determined by market forces. It adds that the market is a new one and likely to settle over a number of years.
The defence also notes, that “even were it lawful to regulate market prices (which is not conceded), this is neither required by the WEEE Directive nor is the absence of such a mechanism inconsistent with the purpose of ensuring that producers should finance the costs of collection, treatment, recovery and environmentally sound disposal.”
Electrolink
A spokesman for Electrolink said it would not be commenting ahead of the case. City Compliance could not be reached. In the past, Electrolink has said it is of the view that local authorities should have choice as to which compliance scheme they sign up to and expressed reservations as to the amount of control that producers should have at the civic amenity site end of the chain.
Outcomes
If REPIC loses the Judicial Review, the scheme could face real challenges in complying for 2008, as it will face the same situation that it did in 2007. However, it is thought that it has already managed to gain access to more civic amenity sites than before, although it will still face more financial pressures than it would like to in purchasing evidence notes.
In terms of enforcement, if REPIC loses the case the Environment Agency would appear likely to continue its stance that until 2010 there is a bedding-in period for the WEEE system and that enforcement actions will remain an option.
If the judge finds in favour of REPIC in terms of the wrongful implementation of law over an evidence notes mechanism, then there will be a significant challenge for BERR, probably with a need to take the regulations back to Parliament along with potential further consultations. This could have knock-on consequences for the way the UK system is viewed by the European Commission.
As to the impact of the Judge's ruling on enforcement action, the methodology for this is not explained in the papers. The Environment Agency might well consider any ruling an interference in its work but would have to take on board a ruling and respond.
A decision could come in June but the complexity of the case might see a ruling delayed.
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