Waste exports and imports
The 1990s have been marked by companies increasing their global manufacturing operations, customer base and environmental consciousness. This has heightened the need to export and import wastes generated by manufacturers and their customers. These wastes often cross foreign boundaries in search of recycling, treatment and disposal facilities that may feature one-of-a-kind technology or present a particularly low-cost option. The transboundary shipment of waste may also be required because treatment, recycling or disposal may not be allowed in the country where the waste is generated, or contracts or product stewardship obligations may necessitate sending the waste back to the product manufacturer.
For several years, the ability to export and import wastes has been governed by the limitations of certain multinational, regional and bilateral treaties, as well as domestic regulations. These limitations can be easy or very difficult to meet, depending on the waste's country of origin and destination, and whether the waste is broadly defined as hazardous under applicable international and domestic laws. However, once the criteria for exporting and importing the waste are met and the shipment leaves the port, the liability for damages that may result during transportation or disposal of the waste are generally not governed by international conventions. A new international protocol that is scheduled to be completed this month would change that.
The protocol is formally titled Draft Protocol on Liability and Compensation for Damage Resulting from Transboundary Movements of Hazardous Waste and Their Disposal, and can be found on the Internet at www.unep.ch/basel/meetings/sbc/liab10-arts.htm. Under the protocol as currently drafted, liability for contamination resulting from the export or import of broadly defined hazardous waste would be assigned in the first instance against the carrier, shipper or other party at fault. But if fault cannot be proven, the protocol would create strict liability. Whether such liability will be placed on the waste generator or the carrier is a major issue under negotiation by the drafters.
The draft protocol also calls for a study of the need for a "Superfund-like" tax on waste generators to pay for the contamination and damages resulting from shipping and disposing the waste when the liable party is either insolvent or cannot be found. As such, the protocol could be an alarming first step toward an international Superfund regime. Finally, the protocol could become the accepted norm for new domestic legislation on liability and compensation for waste disposal in many countries that, unlike the United States, do not currently have such legislation.
The Basel Convention
In the 1980s, there were several reported cases of hazardous waste being sent from developed countries to certain developing nations that may not have had the capacity to properly manage and dispose of the hazardous waste. Under the auspices of the United Nations Environment Programme (UNEP), countries began to consider an international convention regulating the transboundary shipment of hazardous waste.
In May 1992, the Basel Convention on the Control of the Transboundary Movement of Hazardous Waste and Their Disposal was adopted by sufficient countries to enter into force. It is the first international convention restricting and preconditioning the transboundary shipment of hazardous waste.
In many ways, the Basel Convention followed the regulations that governed foreign shipments of hazardous waste under the U.S. Resource Conservation and Recovery Act (RCRA). Both Basel and RCRA require notice to and consent from the receiving country before a hazardous waste may be exported. The Basel Convention, however, goes further than RCRA regulations in that it covers a broader universe of wastes, including those that are defined as hazardous by the originating, receiving and transit countries. Basel also covers waste that would not be hazardous under U.S. law, such as certain medical waste, municipal solid waste and a broad range of other wastes that are exempted from hazardous waste regulation or are otherwise nonhazardous under U.S. law. Basel also requires additional information in pre-notification and shipment documents and a determination by the exporter's government that the waste will be handled in a "environmentally sound manner" in the receiving country.
Over 120 countries are currently parties to the Basel Convention. Although the United States has ratified the convention, it has not become a party since it has not enacted domestic legislation implementing it. Importantly, parties are prohibited from allowing shipments of hazardous waste to countries that are not parties to the convention, unless the country is covered by a separate bilateral or regional agreement. Thus, the United States is limited in its import and export of hazardous waste from and to many of the convention's more than 120 parties.
There are some important exceptions. Notably, the United States can import and export waste from and to Canada, Mexico, Costa Rica and Malaysia under separate bilaterals, and to members of the Organization of Economic Cooperation and Development (OECD), under a special "OECD Decision." These countries are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, New Zealand, The Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. However, in some cases, including the OECD countries, the waste may only be sent for purposes of recovery.
To summarize, whether waste can be shipped to a foreign country depends on whether the material is in fact a "hazardous waste" as broadly defined under applicable laws, and whether the countries of origin and destination are parties to Basel or other treaties. To answer these questions, careful analysis is required of each proposed shipment before a waste generator or exporter can be certain that its waste may be legally sent across country boundaries.
International protocol on liability and compensation
Article 12 of the Basel Convention calls on its parties to adopt a protocol setting out rules and procedures for liability and compensation for damage that might result from the transboundary movement and disposal of wastes. Under the auspices of UNEP, an ad hoc working group of the conference of the parties to the Basel Convention has been meeting to develop a draft protocol for ultimate review and approval by the conference of the parties.
The United States attends these meetings as an observer, but is not a voting member since it is not a party to the Basel Convention. When adopted by the conference of the parties, the protocol will become international law within 90 days after ratification by 20 countries. Although a protocol is scheduled for a vote by the conference of the parties at their Dec. 6-10, 1999, meeting in Basel, Switzerland, due to the many still-unresolved issues in the draft protocol, that vote may be pushed back into 2000, or later.
The driving force behind the development of this protocol is the concern of developing countries that although they lack the financial and technological capacity to clean up hazardous waste releases in their countries, their country may be used for treatment, recycling and disposal of wastes generated abroad. Accordingly, they seek clearer rules of liability and financial assurances from the waste generators, largely in developed countries. The drafters of the protocol appear to have agreed that a liability and compensation regime should be adopted for damages arising during the transboundary shipment of hazardous waste and during and after the hazardous waste is disposed. The main components of this agreement are discussed below.
Liability under the protocol
As a preliminary matter, like the Basel Convention, the protocol is likely to cover wastes that are hazardous under the domestic laws of both the exporting, importing and transit countries, as well as wastes that are considered hazardous under the Basel Convention. As such, the covered wastes will likely include many that would be considered nonhazardous in the United States.
With regard to liability for damages during the shipment of a hazardous waste, under the draft protocol, liability would attach to the party whose negligent or intentional acts or omissions or whose violations of the Basel Convention lead to damages from the transboundary shipment. An example might be shipping poorly-packaged, incompatible wastes that violently react and result in a release and contamination during transportation. In that case, the shipper who was at fault for the improper packaging would be liable. If fault cannot be assigned, strict liability will be assigned.
The drafters of the protocol, however, are still debating whether the carrier or the exporter should be strictly liable during transportation. Most legal precedent to date has placed the liability on the carrier under the theory that while the carrier is in control of the waste, it should be presumed liable for any damages. A change in this traditional presumption of carrier liability would have important ramifications for shippers, carriers and their insurers.
With regard to damages during and after disposal, if the shipper's negligence leads to a release during or after disposal, the shipper would be liable. For example, this might be the case if the shipper negligently sends a highly pyrophoric waste to a disposal facility, and a fire results after the packaging deteriorates. But if fault cannot be assigned, it is likely that the protocol will conclude that the disposer is strictly liable once the waste is accepted for disposal. For example, if waste, properly shipped and disposed, leaches out of a landfill and contaminates groundwater, the company that owns and operates the landfill would be strictly liable. This strict liability scheme is similar to that under U.S. law for owners and operators of disposal facilities.
Finally, monetary limits on liability are being considered, but no agreement on this has yet been reached.
Compensation plan under the protocol
A second major objective of the protocol is to provide compensation for damages from the transboundary shipment and disposal of waste. To accomplish this, the Protocol first requires all potentially liable parties to be covered by insurance, bonds or other financial guarantees in an amount that is still to be decided.
But of potentially much broader significance is that the drafters are also debating whether to establish an international compensation fund, a la Superfund, to provide compensation for damages that cannot be assigned to a responsible, solvent party.
The current draft of the protocol would only require a study of this issue, as opposed to actually setting up a fund.
The draft requires the secretariat to compile information on the number of incidents that involve damage under the convention and the costs associated with each incident. During this period of study, and until a compensation fund is established, the draft protocol urges parties to voluntarily contribute to the Technical Cooperation Fund, which will be earmarked to pay for damage and preventative measures.
There are also questions as to whether existing bilaterals, the OECD Decision and other regional agreements would have to be renegotiated to address the liability and compensation issues, or whether waste shipments between and among the countries to such bilaterals and agreements may continue without modification. The issue here is whether a country can essentially opt out of the requirements of the protocol by relying on other agreements it has reached in the past or may enter into in the future with trading partners or groups of other countries.
These other bilateral or regional agreements may not impose as stringent rules regarding liability and compensation as those in the draft protocol. This "opt out" option is particularly contentious since many developed countries are threatening to enter into their own agreements, and thus neither abide by the liability obligations in the protocol nor provide funds for the compensation mechanism.
Effects of the protocol
The U.S. administration supports enactment of legislation to implement the Basel Convention, but has no current intent to support ratification of the liability and compensation protocol or enactment of the domestic legislation that would be necessary to implement it. Nonetheless, even if the protocol does not become U.S. law, it could affect U.S. waste exporters and importers since it will likely limit waste shipments between ratifying and non-ratifying countries, like the United States.
For global companies, the protocol is especially noteworthy, since it would be the first international framework for liability and compensation for the transboundary shipment and disposal of waste. Many countries that have not yet adopted liability and compensation laws for their internal waste management may look to this new protocol as the accepted norm and starting point for their own new domestic legislation. The protocol would also be significant if it reverses existing precedent that presumes carriers to be liable for damages that result while cargo, including waste, is in their possession. Finally, the protocol could be the first step toward an international "Superfund" for transboundary management of waste, which would have a significant and perhaps chilling effect on global manufacturing.
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This article originally appeared in the December, 1999 issue of Environmental Protection magazine, Vol. 10, Number 12, pp. 34-37.
This article originally appeared in the 12/01/1999 issue of Environmental Protection.