APPENDIX
The Government welcomes the Select Committee's interest
in this issue and is grateful for the opportunity to respond to
the Committee's conclusions and recommendations. The Government
shares a number of the Committee's concerns as can be noted in
DEFRA's Memorandum to the Committee, under the subheading,
'Lessons Learned', and is already taking steps to address them.
This response deals with each of the conclusions and recommendations
and provides further information on actions taken.
a. The European Scrutiny Committee may of
course itself wish to review any lessons for the scrutiny system
arising from this episode, and in particular the adequacy of the
two Explanatory Memoranda (EM) provided (paragraph 15).
The scrutiny system is a matter for Parliament. But
the Government places a great deal of importance on Explanatory
Memoranda to ensure that Parliament is fully aware of the potential
impact of legislation on the UK.
When the first Explanatory Memorandum was provided
in September 1998, the draft Article 15 had not been changed,
so the issue had not arisen. The Supplementary EM, provided on
3 December 1998, was in response to the Scrutiny Committee's specific
request for further information on HCFCs and Methyl Bromide. The
implications of changing the draft article 15 were not picked
up until January 1999, by UK industry who alerted officials who
in turn raised it at the next Management Committee meeting on
the European Regulation in February 1999. The UK continued to
raise this issue at every Management Committee meeting, on nine
separate occasions, over a two and a quarter year period until
June 2001, before the UK received an agreed interpretation from
the European Commission.
b. We are particularly concerned at the breakneck
speed at which the draft was propelled through Parliament in the
autumn of 1998 (paragraph 16).
and
d. We recommend that Regulations such as 2037/2000
should in future not be agreed to until the practical implications
of implementation have been clarified (paragraph 24).
and
i. We recommend that in future the Government
fully assesses the impact of European Union Regulations and Directives
before it agrees to them, following the practices it has itself
described to us; and that in particular it looks again at the
plethora of forthcoming waste disposal Regulations and Directives
as a matter of urgency. We further recommend that the Government
ensures that in future all relevant stakeholders are consulted
as part of the examination of the implications of EU legislation
(paragraph 47).
The Government shares the Committee's concern about
the speed at which the legislation passed through Council and
the European Parliament in the Autumn of 1998: it is a point highlighted
by DEFRA in its memorandum (paragraph 49(1)). The key point was
that noone, including industry, raised the question of recovery
of controlled substances from rigid foams until after the proposal
had passed through Environment Council, nor was it pursued by
anyone as it went through the European Parliament.
In this case, the Commission proposal was published
in August 1998. As the DEFRA memorandum points out, there was
strong political pressure to secure early agreement under the
Austrian Presidency, in order to implement amendments and adjustments
to the Montreal Protocol as soon as possible. Furthermore, the
change affecting fridges was made to the relevant article very
shortly before Council, resulting in insufficient time to consult
and impeding the possibility of delaying Council consideration.
In such a situation, the UK was unable to delay the political
agreement that was reached in the Council in December 1998. In
future, however, measures should be considered more fully during
the legislative process. The Government is pleased that the Committee
raised the issue of understanding the full implications of European
legislation prior to signing up to it.
The European Commission presented an Action Plan
on Simplifying and Improving the Regulatory Environment at the
Seville Summit in June. The Action Plan builds on the recommendations
of the Mandelkern report of November 2001, and sets deadlines
ranging from immediate action to actions by 200405. It identifies
improvements at various stages of the regulatory chain, from early
conception to implementation. Its commitments include:
* Minimum standards will be introduced for consultation
at European level during policy development. The Commission
will progressively introduce a system for major policy initiatives
to include an account of consultations held and their results.
* Social, economic and environmental impacts will
be assessed for major initiatives when policies are being
devised, using a mechanism that integrates the various impact
assessment procedures currently used by the Commission. The Commission
will assess more systematically the costbenefit ratio of
its more significant proposals.
The Action Plan also asks the European Commission,
the European Parliament and the Council to agree an interinstitutional
agreement to commit all three institutions to conducting impact
assessments in respect of amendments tabled at First Reading.
Measures to improve European legislation are also
likely to be considered in the Convention on the Future of Europe
in the context of fundamental changes to the workings of the European
Institutions. The UK is represented on the relevant working groups,
and will promote and support proposals to ensure future European
environmental legislation is simplified, relevant and of high
quality.
The Government strongly welcomes the Action Plan
which is accompanied by communications on impact assessment and
minimum standards for consultation at European level. In addition
to cooperating in fuller analysis, DEFRA will work closely with
the Cabinet Office's Regulatory Impact Unit and other interested
Government Departments as appropriate on developing RIAs for all
legislative proposals at the earliest possible stage. This includes
an initial RIA at the outset of negotiations, which is then developed
into a partial RIA, drawing on economic, legal and other specialist
advice, prior to public consultation wherever possible. A full
RIA is prepared on the basis of further research and on the results
of consultation.
When negotiating legislation, DEFRA consults widely
and thoroughly with industry including SMEs, NGOs and other interested
parties. In accordance with Cabinet Office Guidance, whenever
a new policy is being considered that imposes new responsibilities
on business, the voluntary sector or charities, policy officials
allow at least twelve weeks for consultation with stakeholders
(unless there are exceptional circumstances). Major policy issues
are discussed at meetings with stakeholders and with 'shadow groups'
as well as being subject to written consultation with industry.
In accordance with Government policy to promote the
use of RIAs at as early a stage as possible, DEFRA recently set
up the Modernising Environmental Regulation Branch to work closely
with the Environmental Protection Economics Division and the Environment
Agency to modernise DEFRA's approach to environmental regulation.
A key tool is the production of an RIA at a very early stage in
the development of new EU legislation, particularly as an aid
to negotiations. By extending the development of RIAs, DEFRA would
expect them to be an increasingly useful policy tool for implementation
purposes.
DEFRA will implement the Government's policy of ensuring
that the practical implications of European initiatives are fully
analysed as early as possible in line with the Cabinet Office
Guide on Better Regulation. The aim is to inform the UK's approach
to European initiatives from the outset of negotiations through
to the implementation stage.
DEFRA plans to implement this strategy on a raft
of legislation on waste issues that are in the pipeline; the Waste
Electrical and Electronic Equipment (WEEE) Directive, the End
of Life Vehicles (ELV) Directive, the Landfill Directive and the
Hazardous Waste Directive. The Government has been working closely
with stakeholders to ensure they are consulted fully on developments.
For example, DEFRA has issued two consultation papers on implementation
of the Landfill Directive and DTI has undertaken consultation
exercises on both the WEEE Directive and the ELV Directive. More
details of the processes that have so far taken place for each
are attached at Annex A.
The strategy will also ensure that:
* The regulator is involved in the negotiation
process of European initiatives to analyse the practical
implications from the outset of negotiations: a useful model has
been the Environment Agency's involvement in negotiations on the
proposed EU directive on Environmental Liability; and
* Ministers are alerted at an early stage to any
potential difficulties with European initiatives under negotiation.
e.The Minister should inform us as soon as he
is able to where financial responsibility for the disposal of
refrigerators will lie once the current backlog of refrigerators
has been cleared.
and
g. This debacle will cost the UK around £40
million, a cost which would not have otherwise have been incurred.
In the shorter term, the Government recognises that
there is an additional burden on local authorities. The Government
has already provided £6 million to cover their costs for
the first three months of this year and has just announced an
additional £40 million to cover 2002/03. As treatment facilities
are now coming on line in the UK, DEFRA anticipates that the backlog
of fridges will be cleared during this period.
The Government expects that before the end of 2005,
the costs of collection and treatment will fall to producers under
the WEEE Directive. Until this occurs, provision will need to
be made to cover the additional burdens incurred by local authorities.
Treatment costs, which are the larger element of
the overall costs, would have to be borne by someone, whether
by producers, consumers or the Government Although the initial
annual UK cost is likely to be around £40 million, this will
decrease as additional facilities are commissioned, competition
becomes established and more fridges that do not contain either
CFCs or HCFCs enter the waste stream. In any event, by implementing
this measure the UK will further reduce its contribution to total
chlorine loading in the stratosphere.
f. Whilst the European Commission must accept
some blame for lack of clarity, the overwhelming responsibility
for mishandling the implementation of Regulation 2037/2000 lies
with Government. Government officials initially made a judgement
that insulating foam within fridges fell under Article 16(3) not
Article 16(2); they argued about the semantics of the phrase 'if
practicable' when in fact the practicality of dealing with the
foam was abundantly demonstrated by practice in other European
countries; they were unaware of the implications of Article 11
for exports of fridges from the UK, and therefore for 'takeback'
schemes; despite requesting clarification on so many occasions
they failed to resolve the issue; they apparently ignored or reacted
very slowly to a host of warnings from interested parties; and
despite those warnings and legal advice suggesting that the Regulation
would be taken to apply to foam insulations they failed to put
in place contingency plans to cope with the problem (paragraph
44).
The Government categorically denies that it mishandled
the implementation of the Regulation. The crux of the problem
was that Article 16 of the Regulation was unclear. As Regulations
are directly applicable in all Member States and do not require
transposition, there is very little scope to improve their clarity
domestically.
Following the political agreement that was reached
in December 1998, the Government circulated the Common Position
to stakeholders. The refrigeration and foam blowing industries
asked for clarification regarding the recovery of controlled substances
in rigid foams. In response, Government officials raised this
with the Commission in February 1999, just two months after the
Council reached political agreement. Officials continued to press
for clarification at every Management Committee meeting on the
European Regulation, even asking for an extraordinary Management
Committee meeting to resolve it.
As pointed out in the DEFRA memorandum, it was UK
officials' view that neither paragraph 1 nor paragraph 2 of Article
16 applied to rigid foams, therefore, recovery of controlled substances
would be "if practicable" under paragraph 3. For much
of the two and a quarter years during which this was discussed
in Management Committee, the Commission's own interpretation of
Article 16 was the same as that of the UK.
The practicability issue was not one of pure semantics.
The industry, to whom it fell to make the investments to implement
the Regulation, were pressing the Government for certainty about
what was required. As the Select Committee itself acknowledges,
this was not unreasonable before investing several million pounds
in equipment. Placing a requirement on UK industry to recover
controlled substances from rigid foams prior to obtaining an agreed
interpretation would certainly have laid the Government open to
accusations of "goldplating" European legislation.
The Government was aware of the legal effect of the
Regulation for exports of fridges and other equipment containing
CFCs as coolants, but consultation with representatives of the
refrigeration industry had not revealed the scale of the export
trade in second hand fridges.
Any question of contingency plans must take into
account the inherent difficulty of asking the waste management
and recycling industry to prepare to invest in expensive new technology
when it was far from certain whether it was necessary.
h. The fact is that doubts were expressed
and queries raised for some months before the Regulation was adopted.
All that had to be done was for officials to alert Ministers to
the problem and ensure that the Regulation was not agreed until
there was a clear shared understanding of what it meant. We find
it deeply disturbing that the Government signed up to a Regulation
whilst still suffering from knowledge gaps about its full impact
(paragraph 45).
The Government acknowledges this criticism. As the
DEFRA memorandum itself acknowledges, with hindsight Government
officials should have alerted Ministers earlier to the fact that
there was a technical difficulty in the regulation. However, as
also highlighted in the memorandum, there was considerable reluctance
within the EU to reopen at a late stage the political agreement
reached by Ministers. Where a Common Position text has been agreed,
it can only be changed by an amendment in the European Parliament.
In practice, where a problem with the Common Position emerges
options for tackling it are fairly limited, particularly when
factors such as codecision and Qualified Majority Voting
are taken into account.
| 
