Plans for revolution in classification of a substance as a by-product | In Principle

A bill has been submitted to the Sejm proposing major changes to the procedure for classification of objects or substances as by-products. If the amendment is passed, this will have a negative impact on anybody who uses such products in their activity.  All classifications  of objects or substances as by-products performed under the current laws will expire six months after the new bill comes into force.

There have been a number of articles on our website about classification of objects or substances as by-products. Many businesses use such products in their activities. Since regulations on this subject were passed in the Polish legal system (under the Waste Act of 14 December 2012) several hundred filings of by-products have been made.

A by-product is an object or substance resulting from a production process the primary aim of which is not the production of the item, if all of the following criteria are fulfilled:

• Further use of the object or substance is a certainty,
• The object or substance can be used directly without further processing, other than normal industrial practice,
• The object or substance in question is produced as an integral part of this production process,
• the substance or object in question meets all major requirements, including legal requirements, with regard to the product, environmental protection, and human life and health, for the specified manner of use of those substances or objects, and use in that way does not have a general harmful impact on the environment, and human life or health.

What is going to change? Proposals for new regulations

The changes in the proposed amendment to the Environmental Protection Law and Waste Act (parliamentary paper 2550) mainly concern the procedure itself for classification as a by-product.

To date, this classification of post-production remains was approved unless the province marshal raised an objection, by issuing a decision, within three months of receipt of notification concerning classification of an object or substance as a by-product. Under the proposal, not only an objection is made in the form of an administrative decision. This is also the procedure for classification of an object or substance as a by-product (not failure to object, as up to now). This decision would be issued for a definite period of no more than 10 years.

The proposal also includes an obligation for producers of by-products to perform a new filing if they make changes to the production process in which the product or substance is produced, or change the process in which it is used.

To date, the sole authority involved in evaluation of filings was the province marshal. Under the new regulations, this authority will have to seek the opinion of the province environmental protection inspector in each case. Before issuing an opinion, the province environmental protection inspector will be entitled to conduct an inspection. Province environmental protection inspector approval will not be binding for the marshal; this authority will be able to issue a decision stating that the object or substance in question is not a by-product if it does not consider the criteria specified in the Waste Act to have been fulfilled. If the province environmental protection inspector finds that the object or substance cannot be classified as a by-product, the marshal will have to issue a decision denying the application.

Assessment of the proposal

The proposed changes mean upheaval for businesses using by-products in their production process.

Above all, it is hard to understand and find grounds for the transition provision included in the proposal. Under the provision, classification of an object or substance as a by-product under current laws is valid for six months from the day the new act comes into force.

This means that any filings to register substances as by-products by businesses under the current provisions will expire. Presumably lawmakers intend to make by-products waste once again.

There is no explanation in the statement of reasons of why this solution is being adopted. The bill does not change the criteria for a product or substance to be classified as a by-product, and thus it is difficult to say why all of the rulings concerning by-products to date are to expire. The bill only provides for a change in the form in which an object is to be considered a by-product. Whether a particular object or substance meets the criteria specified in the act is not determined in any way by whether an authority rules on the issue by not raising an objection or issuing an administrative decision.

If administrative proceedings are repeated in these cases, a large number of employees will have to be assigned and this will definitely prolong the proceedings. The new laws also do not give businesses that successfully registered by-products before the amendment came into effect any guarantee that a repeated filing will be reviewed within the six-month time limit.

Moreover, the proposed regulations do not resolve the issue of the effect of expiry of classification of a product or substance as a by-product, especially if those objects or substances become waste. As mentioned, under the Waste Act, which is not amended under the bill in this respect, objects or substances that cease to meet the criteria for classification as by-products are waste. If under the amendment these criteria remain unchanged, then this provision is not applicable. Presumably, substances or objects of this kind will not be waste or by-products. This does not resolve however in any way the problem of correct classification of these post-production remains.

According to the statement of reasons for the bill, the proposed changes are intended to eliminate the risk of objects or substances which are essentially hazardous substances being classified as by-products. The new provisions will probably not achieve this goal. Merely changing the form in which an object or substance is classified as a by-product and obligatory involvement of the province construction inspector in such proceedings does not eliminate the risk of these authorities making a mistake. This goal cannot even be achieved by modifying the criteria for classifying objects or substances as by-products.

The obligation concerning a new filing where changes are made to the production process is also not very clear. The wording of the proposal suggests that the obligation to make a new filing applies again whenever any change occurs in the processes in which a product is produced or used (even the smallest and immaterial change). The amendment also does not specify the consequences of a business not complying with this obligation in terms of the status of post-production remains.

The description of the production process is an element of the filing but is not a prerequisite for classification of an object or substance as a by-product. In this regard, the question of whether an object or substance is an integral part of the production process (the bill does not make any changes in this regard) is the deciding factor. Similarly, when assessing whether an object or substance is a by-product, use must be a certainty. The characteristics of the process in which the by-product is used are not a determinant.

The bill is in the initial stages of the legislative process, and the final version might, and should, be changed as it does not solve the problems for which it was drawn up. Also, some changes may have harmful consequences for trade, especially for those whose business activity entails creation or use of by-products.

Bartosz Kuraś, legal adviser, Martyna Robakowska, Environmental Law Practice, Wardyński & Partners