United Utilities Water plc (Appellants) v. Environment Agency for England and Wales (Respondents)

Biological or physico-chemical treatment of non-hazardous waste requires a permit where it forms part of a process whose product is eventually discarded by a specified disposal operation. The final treatment and disposal need not occur at the installation where the intermediate treatment takes place.

The decisive distinction is between treatment directed towards disposal and treatment directed towards recovery. The eventual destination of the product therefore determines whether the treatment falls within section 5.3(c) of Schedule 1 to the Pollution Prevention and Control (England and Wales) Regulations 2000. A construction confined to activity at a single site would produce irrational results and undermine the legislative policy of preferring recovery to disposal.

United Utilities treated sewage sludge at several plants before transferring it for further treatment at Shell Green. There, about one-third of the sludge was incinerated or sent to landfill and about two-thirds was recovered, mainly by agricultural use.

The company sought declarations that its upstream plants did not require permits under the Pollution Prevention and Control (England and Wales) Regulations 2000. Nelson J decided against it in relation to the Bolton, Davyhulme and Widnes plants: [2006] Env LR 32. The Court of Appeal dismissed its appeal: [2006] EWCA Civ 633; [2006] Env LR 42.

The issue before the House was whether section 5.3(c) of Schedule 1 applied only when the relevant treatment produced a final compound or mixture which was discarded at the same installation, or also covered intermediate treatment followed by disposal elsewhere.

1. Appeal dismissed unanimously. Lord Walker delivered the leading speech. Lord Rodger, Lord Carswell and Lord Brown agreed completely with his reasons. Lord Hoffmann adopted Lord Walker’s account and reached the same conclusion by substantially the same reasoning.

2. Per Lord Walker, section 5.3(c) of Schedule 1 to the Pollution Prevention and Control (England and Wales) Regulations 2000 had to be construed in the context of the Regulations and the European directives which they implemented. Its language was ambiguous. The distinction between disposal and recovery was central to the statutory scheme, whose clear policy was to prefer recovery.

3. The biological or physico-chemical treatment specified in section 5.3(c)(i) and (ii) was not confined to the last treatment at the site where disposal occurred. The definition of an installation could depend both upon the activity performed at the site and upon the final destination of its product. The present tense used in the subordinate clauses did not require production and disposal to occur simultaneously.

4. Per Lord Walker, the phrase concerning treatment which resulted in final compounds or mixtures that were discarded required the product’s eventual destination to be considered. Reading the provision as if it required the product to be discarded at once and without further treatment would produce irrational results. It would allow an upstream treatment plant to escape the permit regime merely because its product was moved elsewhere before disposal.

5. Per Lord Hoffmann, the reference to final compounds or mixtures distinguished treatment forming part of a disposal process from identical treatment undertaken for recovery. It did not prescribe the place at which the discarded product must be produced. Excluding treatment merely because the final product was produced or discarded elsewhere had no rational environmental justification.

6. Accordingly, the treatment at Bolton, Davyhulme and Widnes fell within section 5.3(c) because it formed part of a process under which some of the resulting sludge was eventually incinerated or sent to landfill. The fact that most sludge was recovered did not provide proportionate relief from the permit requirement. Lord Walker regarded any resulting financial grievance as a matter outside the House’s function.

1. House of Lords: The company’s appeal was dismissed unanimously: [2007] UKHL 41; [2007] 1 WLR 2707.

2. Court of Appeal: The company’s appeal concerning the Bolton, Davyhulme and Widnes plants was dismissed. The Agency’s cross-appeal concerning Blackburn and Dalston was also dismissed: [2006] EWCA Civ 633; [2006] Env LR 42.

3. High Court: Nelson J decided against the company concerning Bolton, Davyhulme and Widnes, but in its favour concerning Blackburn and Dalston: [2006] Env LR 32.