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EU waste decision applauded by bunker suppliers

Hydrocarbon Engineering,

AKD, a law firm in Rotterdam, The Netherlands, has said that recent guidance handed down by the European Court of Justice ruling that off spec fuel oil does not have to be handled as waste has been viewed as a triumph of commonsense and has been welcomed by all suppliers of fuel oils and bunkers. Shell Nederland and Shell Belgium, before this decision were disputing a ruling made by the Dutch environmental authorities (ILENT) which wanted to force them to handle a parcel of diesel oil which had been rejected by a Belgian client as waste, when Shell had intentions to up blend the fuel to specification for selling elsewhere.

The ruling is expected to have a major impact on the key North Europe bunker hub of Rotterdam where a lower Dutch court and ILENT had interpreted EU Regulations (259/93) which describe waste ‘as a substance or object…which the holder discards or intends or is required to discard’ literally with respect of off spec bunkers.

Comments on the ruling
Carel van Lynden, a partner with the shipping and offshore team at AKD said, ‘this is a good decision for bunker suppliers. This case reverses the very strict interpretation which ILENT had placed on off spec bunkers. By insisting they were classed as waste they invoked all sorts of domestic and EU regulations for their handling which imposed disastrous and totally unnecessary costs on the bunker industry.

‘The problem is that when off spec bunkers are defined as waste, all sorts of environmental regulations kick in. For storage, transportation, blending and recycling of waste prior permission from ILENT is required. Such permission will only be given to a licensed waste collector or processor. A regular bunker supplier cannot take the bunkers back unless it has such licenses, which is of course it has not. So the value of the off spec bunkers to the supplier drops to nil, and extensive costs have to be incurred for debunkering and processing.’

Literal interpretations
Literal interpretations, as discussed above of EU waste regulations have resulted in odd situations in the past. For instance, bunkers with an aluminium/silicon content of over 80 (which is the 2005 industry standard), which were refused by a vessel could only be debunkered by a licensed waste collector. The standard practice in the Netherlands until then would be debunkering by the supplier, blending with a parcel with a lower aluminium/silicon content and resale on the market. There have even been cases where the master of a vessel wanted to reject high sulfur fuel due to a low sulfur order and where the mere reasons that the master wanted to discard an acceptable high suflur fuel is because it ‘technically’ qualified as waste.

To the rescue
Suppliers were saved by the European court decision in December of last year. In cases C-241/12 and 242/12, the court ruled that such literal interpretation was incorrect. The case concerned contamination of a parcel of ultra low sulfur diesel (ULSD) with remnants of MTBE. As a result, the flashpoint became too high, and the ULDS was considered off spec. This was discovered when the parcel had been delivered to the Belgian buyer. The buyer requested Shell take the parcel back. Shell did that and retransported it to the Netherlands for up blending to the required specification. ILENT found out and the parcel as waste.

Subsequent proceedings
During subsequent proceedings at a court in Rotterdam, Shell argued that the waste qualification was wrong because the EU regulations were misinterpreted. The Rotterdam court was then the party to as for EU guidance and the EU court ruled that, in determining whether a substance is waste, one should take into account whether that substance is still of use to the holder. In this particular Shell case the parcel had no use for the buyer, but that was not decisive, the buyer had handed the parcel back to Shell against repayment of the purchase price. The buyer did not ‘discard’ the parcel in the sense of the regulation. The parcel still retained considerable value which needed to be addressed. Shell took the parcel back for the purpose of up blending to specification. The European Court decided that the strict waste legislation does not apply to cases such as the Shell case where parcels can easily by reconditioned and resold for considerable value.

Adapted from press release by Claira Lloyd

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