Introduction of the Proximity Principle: Limiting Waste Transportation Distance

New South Wales has 12 new Protection of the Environment Operations Waste Regulations. From 1 November 2014, the 2014 Regulations will dramatically limit the distance waste can be transported through the introduction of a new offence '€“ the proximity principle. The proximity principle will help reduce risks and social costs of long-distance transportation of waste. Risks identified in the Centre for International Economic's report 'NSW waste regulation Cost-benefit analysis' (CIE Report) included heavy vehicle traffic and congestion, fuel consumption, carbon emissions, traffic accidents, waste spillages and contamination. The CIE Report recognised that long-distance movement of waste was becoming prevalent due to the rigorous regulatory framework for licensed landfills in NSW, including a high waste levy.

New restrictions

The CIE Report noted the significant financial savings that could be made by waste operators transporting the waste to places where the disposal fee per tonne is significantly less due to the particular facility operator or inter-state legislation (for example, Queensland). The new offences under clause 71 were deemed by the EPA to be the most appropriate response in circumstances where NSW Government had no power to regulate activities in other state or territories. The provisions will prohibit a person, in the course of business, transporting by motor vehicle waste generated in New South Wales (other than restricted solid waste) to any place that can be lawfully used for the disposal of that waste unless:

• the place is within 150 km of the origin of the waste, or
• the place is more than 150 km from the origin of the waste but is the closest or second closest place that can be lawfully used for the disposal of that waste.

The provisions do allow the transportation of waste to another state where the border crossing is within 150km or is closer to the origin of the waste than the closest or second closest place that can lawfully be used for the disposal of that waste. Distance is measured in a straight line and to "transport" includes to cause or permit waste to be transported.

Special provisions for waste types

Special provision is made for the transportation of restricted solid waste. This type of waste must be transported to the place closest to the origin of the waste that can be lawfully used for its disposal, or to a place in another State where the border crossing is closer than any other place in NSW that can be used for the disposal of the waste. Restricted solid waste is defined in the Waste Classification Guidelines, using a technical chemical assessment.

Penalties

The penalties for the offences are significant, being up to 400 penalty units ($44,000) in the case of a corporation, or 200 penalty units ($22,000) for an individual. There are also defences being introduced specifically for the new proximity principle offence. There is no offence if a defendant establishes that the waste:

• was not deposited at the place to which it was transported, or
• was transported for lawful and genuine recycling, resource recovery, energy recovery, processing or re-use, noting that simply storing or sorting waste does not constitute any of these
• was transported in an emergency to protect human health, the environment or property, or
• as part of an approved mandatory product recall

The EPA may also grant an exemption under Part 9 of the Regulations in regards to category 1 and 2 trackable waste.

Impact on the waste industry

The restrictive provisions have a "polluter-pays" likeness, whereby the social costs caused by long-distance transportation of waste is taken into account and waste generators are held responsible for its safe disposal and managing it to prevent additional impacts on human health or the environment. The CIE Report estimates that the net benefit to the NSW community would be in the range of $18-44 million. The proximity principle will likely have significant commercial and competition ramifications for people operating in the waste industry for two reasons. Firstly, it will shrink the potential client base for many waste disposal facility/landfill operators, particularly those operating in remote rural locations. Secondly, it will reduce competition between landfill operators. The CIE Report admits that a study on the current spatial distribution has not been completed. This would appear to be very valuable information in understanding the impact of the proximity principle on spatial competition. Nonetheless, the CIE Report concludes that the allowance of disposing waste at one of at least 2 facilities (even if both are outside the 150km radius) will mean that any competition impacts "will likely be small", a conclusion which the NSW Government appears to have accepted in its waste regulatory amendments.