JÄÄSKINEN AG in Shell: Re-blended fuel was discarded. Waste status of off-spec and reverse logistics products remains uncertain.

I have reported earlier on the importance of the judicial review in Shell. JÄÄSKINEN AG this morning opined that A consignment consisting of fuel which the vendor takes back and processes through blending with a view to placing it back on the market, because the fuel had been unintentionally mixed with a substance and therefore no longer satisfies safety requirements so that it could not be stored by the buyer pursuant to an environmental permit, must be considered as waste

The Advocate-General’s Opinion was very much focused on the factual aspects of the case. Disappointingly, he did not much entertain many of the criteria suggested by the court at Rotterdam – for reasons of judicial economy, one imagines. However Advocate Generals do often get carried away on the analysis. A pitty that did not happen here. Core to the AG’s Opinion is his finding (at 25) that

re-blending of the fuel before its resale, in my opinion, points towards an intention to discard it, and the act of re-blending itself amounts to recovery;

With respect to the contractual context, the AG notes (at 26) that the fact that the contaminated fuel was ‘off-spec’ in relation to the specifications appearing in the contract between Shell and Carens is irrelevant to determining whether it amounts to waste under mandatory EU waste law, the latter being of a public law nature and not subject to the will of the parties to a contract. 

While I am of the view that the contract cannot singlehandedly determine the qualification or not as waste, its (seemingly at least) outright dismissal by the AG as a factor to consider (at least in this para), is disappointing. It is not, I submit, in line with the WFD. Neither arguably is the link which the AG makes at 14 (and in his final Opinion) between an environmental permit, and the qualification of the substance as waste. Ad absurdum: a stolen tanker full of diesel is left for re-sale in a rented garage. The garage has not been given a permit for storage of diesel. Yet the diesel has not turned into waste.

With respect to the overall debate on reverse logistics, there is an interesting section in the Opinion at 37: ‘a consignment consisting of ULSD mixed unintentionally with MTBE and having as a result a flame point lower than allowed for diesel sold from the pump becomes waste within the meaning of Article 1(1)(a) of Directive 2006/12 at the point of contamination, and remains as such up to its recovery by blending or by its commercial re-classification in a manner that is objectively ascertainable.‘[emphasis added by me]. This latter part does open room for products re-sent across the logistics chain not to be considered waste, however there needs to be some kind of ‘objectively ascertainable’ re-classification: this requires some thinking in terms of compliance.

The AG makes the following comparison at 40:

I would like to close by emphasising that mere failure to fulfil agreed contractual specifications does not, as such, mean that a substance or product is necessarily to be considered as waste. If a trader delivers to a restaurant minced meat that is a mixture of beef and horse, instead of pure beef as agreed between the parties, he may be contractually obliged to accept return of the delivery without it thereby becoming waste. However, if the product results from accidental contamination of beef with horse meat during the processing of minced meat, he has an obligation to discard the minced meat up and until its precise characteristics have been ascertained and the minced meat is either disposed of or commercially reclassified, for example, as feed for minks, or as a beef-horse meat mixture for human consumption, provided it satisfies the relevant requirements under food-stuffs regulations. More generally, a non-intentionally manufactured mixture of compound is prima facie waste if the use to which it is intended to be put is not safe, in the absence of knowledge of its composition. This applies to products such as food or fuel whose qualities are important to human health and the environment.

In this section, therefore, the contractual context between parties to a transaction, does seem to enter the train of thought when deciding on the waste status of an off-spec or reverse logistics product.

The ink on the Opinion is literally still drying and undoubtedly there are more angles to it than I report above. However I for one should like the ECJ to state something more unequivocal on the impact of the contractual context, when it delivers its judgment presumably in the autumn.

Geert.

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  1. #1 by Geert Van Calster on 18/06/2013 - 8:53 AM

    Reblogged this on blog.coleurope.eu.

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