Onshore and offshore disposal of drilling wastes
SOURCE: INTERNATIONAL OFFSHORE NEWS, SEPTEMBER 2003
In what will be a series of three articles, the authors consider some of the legal issues arising out of International, European Union and domestic UK environment and pollution laws, in the context of the vexed and technically complex subject of question of the processing, recycling and disposal of offshore drilling wastes – an issue of obvious central importance to the offshore exploration industry.
Since marine disposal of drill cuttings was outlawed by the EU some years ago, the growth of the onshore industry for the treatment and disposal and sometimes distillation and re-refining as recovered base oil of drill cuttings has been exponential. This has brought its own business pressures as onshore treatment and disposal operations seek to cope with demand. However, something of a legal crisis threatens to develop as a result of a combination of the following:
-
Recent decisions of the European Court of Justice which reinforce the expansive and seemingly inflexible legal definition of waste;
-
Imminent changes to UK hazardous waste law, on the back of the EC Hazardous Waste Directive 1991 (as amended);
-
A recent tendency on the part of UK environment protection agencies (including the Scottish Environment Protection Agency (SEPA) as regulator of the UK North Sea onshore industry) to reject industry non-waste classifications of the residues of the drill cutting treatment process, and indeed to favour a hazardous waste classification; and
-
Consequential regulatory impacts thus appearing on the horizon from a number of other applicable EC laws – e.g. the Integrated Pollution Prevention and Control Directive 1996, the Landfill Directive 1999, and the Incineration Directive 2000.
These regulatory pressures threaten the commercial and technical bases of the onshore drill cuttings treatment and disposal industry, and bring the possibility of criminal and civil liabilities for those who are unable or unwilling to adapt to these changes. This is not simply a problem for the onshore processors, it is a challenge for the entire industry including, in particular, the offshore producers of this drilling waste, especially in the light of the imminent update of UK hazardous waste law in 2004, which is likely to result in tighter responsibilities for original producers.
The greater focus of the industry response to all of this has, to date, been to try and face up to the technical challenges posed by the materials themselves, including the possibility of recycling. However, others have been turning their minds to the possibilities of avoiding these onshore complications by means of technologies aimed at offshore treatment and re-use. Solutions still appear some way off and, as mere lawyers, we have to defer to the scientists. However, we believe it may be useful for industry to understand better what the legal parameters are, at least in outline, which is the aim of this series of articles.
We can only be very brief in the space available. Therefore we concentrate on four “core” legal issues:
-
What exactly is the legal definition of “waste” and how does this apply to drill cuttings?
-
What is the legal definition of “hazardous waste”, what are the new laws on hazardous waste going to mean, and how does this impact on drill cuttings?
-
Is there a legal solution in recycling, and at what point legally does this occur?
-
What are the potential legal pitfalls of offshore treatment and re-use, especially in terms of international and EU law?
In this article, we deal with the first of these areas, since the difficult technical question of legal waste definition still causes confusion, understandably, and merits a degree of analysis. The second article will focus on the equally important subject of hazardous waste definition, and especially the imminent new EC-based laws. In the last article, we will cover the legalities of recycling, and the international/EU aspects of offshore waste handling.
Definition of “waste” under EC and UK law
Although the legal definition of waste in the UK arises from a confusing amalgam of various pieces of legislation, centred round section 75 of the Environmental Protection Act 1990, the issue is dominated by EC law, in the form of:
-
the EC Waste Framework Directive 1975 (as amended), and
-
recent case decisions of the European Court.
Under these laws, material is waste if the producer of it, or the person in possession of it, discards it, or intends to discard it, or is required to discard it. In assessing whether something is waste, consideration therefore has to be given to actions, intentions and/or requirements of the producer, or the person in possession, of the relevant material.
In construing this fundamental provision of the Directive, especially in those “border-line” cases where the relevant material is capable of economic re-utilisation, the European Court – in the leading cases of ARCO Chemie Nederland [2000] and Palin Granit [2002] - has laid down certain principles, of which the following is a very basic summary:
-
The concept of “discard” must be interpreted in the light of the strict environmental protection aims of the Waste Framework Directive;
-
A material’s nature as waste is unaffected by what happens to it subsequently;
-
Mere usefulness does not necessarily mean that material is waste;
-
“Recovery” of material is irrelevant if its holder still discards it, or intends (or is required) to discard it;
-
In determining whether material is a production residue, it is necessary to examine what is the primary purpose of the production process. Any material which is not the primary end product of the process is “waste” unless it has an economic value as a product is subject to other legislation applicable to that product and its re-use is a certainty ;
Application of the legal definition of waste to treated drill cuttings and recovered oil
These rulings of the European Court are not easy to understand in a vacuum, and each case tends to turn on its own merits, and there to the solid and liquid residues of the onshore drill cuttings treatment process is problematic. SEPA appear to adopt the position that EC pollution avoidance objectives are not being met, on the basis of evidence of residual hazardous contaminants and leachate potential, at least in the case of the solid treated cuttings.
In the case of both types of “residue”, the assessment depends on a number of factors in each case including, for example, the processor’s contractual obligations. As we have seen, intention or requirement (to discard) is highly significant, and thus it may be that a producer or holder of alleged waste materials will be required to discard, by virtue of his contractual obligations. However, in the light of the more recent European Court judgements, it is also be relevant to consider the potential applicability of the Court’s dual test of primary production and certainty of re-usability, whilst also considering the operations in the light of the achievement of the overall environmental protection objectives of the EU Waste Framework Directive.
Primary production purpose test
The industry tends to be dealing here with the residues or by-products of the thermal processing operation carried out by onshore processors under contract to offshore oil companies. Prior to that process, the untreated drill cuttings are indisputably legal waste consigned to the waste stream by the offshore operators. The difficult question is whether they have reached a stage in the overall process where the relevant materials have left the waste chain.
The primary purpose of the thermal processing operation appears clearly to be the recovery or disposal of waste, that “waste” being the untreated drill cuttings. However, moving on a stage, it is equally arguable that the primary purpose of the production process is the production of two by-products – namely the solid treated drill cuttings and the recovered oil. It could be argued that the solid cuttings are materials which are a primary product ready for re-use as landfill engineering material, though it could equally, and forcibly, be argued that they are truly a production residue of a production process, the primary product of which is the recovered oil.
Thus, it could be asserted that the primary purpose of the thermal process is to recover the re-usable and saleable oils from the untreated drill cuttings received from offshore operators, albeit with the side effect that this must render the solid treated cuttings as a production residue of that primary production purpose. On the other hand, the overriding commercial purpose of these operations appears to be to deliver a waste management and treatment service to the offshore oil industry, since it would otherwise simply consign its untreated cuttings into the North Sea. Thus, the true primary production purpose could be one of fulfilling that service and, as part of it, to deal effectively and in an environmentally acceptable manner with the residues of that primary purpose.
Certainty of re-usability test
Although, as a matter of fact and practice, the treated cuttings have a certain re-usability by being accepted by the landfill operators, we anticipate a SEPA argument to the effect that the cuttings do require further processing, and that they are not an integral part of the production process. This argument has even greater force if the method of ultimate disposal is seen to be running counter to the achievement of the overall objectives of the Waste Framework Directive.
In the case of the recovered oils there does appear to be a degree of certainty of re-usability, and provided the oil:
-
can be re-used without any further processing,
-
has an economic value as a product regardless of any form of processing, and
-
is subject to legislation applicable to that product,
then it seems to be in line with the European Court. However it must be evident that no further form of treatment or processing is required and there must no longer remain any environmental threat, which takes us on to the objectives of the Waste Framework Directive.
Fulfilment of Waste Framework Directive objectives?
As we have seen, the European Court takes an expansive and purposive approach, on the basis of the merits of each individual situation, to the legal definition of waste. In particular whether a substance or material is waste must be determined in the light of all the circumstances, regard being given to the aim of the Waste Framework Directive and the need to ensure that its effectiveness is not undermined, especially in its essential objective of the protection of human health and the environment against harmful effects. This, of course, is where science tends to take over from law.
We understand that some analyses of treated drill cuttings have disclosed the presence of excess sulphate levels and failure to achieve leachate tests in the case of contaminants within the cuttings, as well as (allegedly) the presence of a range of contaminants which will leach from the material over time. It therefore seems to be questionable whether the cuttings can fulfil the products requirement in that their suitability for landfill lining, by meeting normal health and environmental requirements applicable to non-waste products, without further treatments, may be open to question in scientific terms.
In the case of the recovered oils, operators would have to show that by the time the oil has been recovered at the processing plant it does not possess any components or characteristics which would make it different from, and more environmentally hazardous than, non-waste products which would otherwise be employed (for example by the so-called “mud companies”) in the same blending process if the recovered oil was unavailable.
Fundamental nature of the “waste question”
The point is that if such materials are waste under the law, then they may well also qualify as hazardous waste, and a whole raft of legal implications follow, creating commercial difficulties for the industry, at least in terms of its current commercial and contractual positioning. On the other hand, if a material is not waste under the law, then by definition it cannot be hazardous waste either.
In the next article, we will look closely at the law on hazardous waste.
AUTHOR: VINCENT BROWN