Construction Waste Disposal Charging Scheme

l         The Waste Disposal (Amendment) Ordinance 2004, which was passed by the Legislative Council (LegCo) on July 2, 2004 with amendments, is the enabling legislation for the Charging Regulation and the Designated Waste Disposal Facility (DWDF) Regulation and provides the statutory basis for the introduction of the construction waste disposal charging scheme. The Charging Regulation and the DWDF Regulation were tabled at the LegCo on November 3, 2004 and subsequently passed on 5 January 2005.

l          The Charging Regulation and the DWDF Regulation set out the details of the construction waste disposal charging scheme, including the charges for the disposal of construction waste at landfills, sorting facilities and public fill reception facilities and their calculation. The Charging Regulation sets the disposal charges at $125 per tonne at landfills, $100 per tonne at sorting facilities and $27 per tonne at public fill reception facilities in order to fully recover the capital and recurrent costs of the facilities according to the polluter pays principle.

l          To address the concern of waste haulers over possible cashflow and bad debt problems, it was decided to remove on-site payment and require all charges to be paid through billing accounts. This arrangement was supported by the waste haulers and the LegCo Subcommittee.

l          Under the proposed charging scheme, a main contractor who undertakes construction work with a value of $1 million or above will be required to make an application to the DEP within 21 days after being awarded the contract to establish a billing account. Upon the establishment of the billing account, the main contractor will be required to use the account to pay any disposal charges payable in respect of the construction waste generated from construction work undertaken under that contract. A billing account established solely for a construction contract with a value of $1 million or above cannot be used to settle charges arising from other contracts. In addition, to lower the administration costs of managing multiple billing accounts by small and medium contractors, under the Regulation, a contractor may establish one billing account to cover several contracts with a value of less than $1 million each.

l          According to our initial proposal, an account-holder will be required to pay to the DEP all charges payable within 30 days from the day of the notice of demand issued by the DEP.  In response to the request of the trades and the LegCo Subcommittee, the Charging Regulation was amended to extend the payment period from 30 to 45 days so as to further relieve the cashflow pressure on the trades. If an account-holder fails to make payment as required within 45 days, he will be liable to pay a 5% surcharge. If the account-holder fails to pay the unpaid charges and the surcharge within 14 days, the DEP may suspend the account in question. Upon the suspension of the account, the DEP is required to issue a final notice to the account-holder. If the account-holder fails to pay the unpaid charges and the surcharge within 14 days of the final notice, the DEP may revoke the account.

l          When delivering a load of waste to a designated waste disposal facility, the waste hauler appointed by the account-holder will be required to produce a valid "chit". Similar to the practice of public utilities, the account-holder will be required to pay a deposit when he applies to the DEP for such chits and the deposit will vary according to the amount of usage. To minimize the financial impact on the trade, we have proposed and the trade has agreed that a two-tier system be adopted. Under this two-tier system, the deposit for the disposal of construction waste generated from a contract with a value of $1 million or above will be charged at a minimum of $15,000 for 200 chits. If additional chits are required, additional deposit on a pro-rata basis will have to be paid.  For a contract with a value of less than $1 million or other general uses, a deposit of $300 for each chit will be required. This amount is determined on the most lenient assumption that all vehicle loads contain inert materials to be disposed of at public fill reception facilities charging at $27 per tonne.

l          In addition, the Charging Regulation was amended to the effect that the DEP may, on his own initiative or at an account-holder's request, refund the deposit or part of it if the DEP is satisfied that the deposit or that part is no longer required. In making such a decision, the DEP shall have regard to the factors that he considers relevant, including the amount of construction waste that the account-holder proposes to dispose of.

l          The Charging Regulation specifies the type of construction waste that may be accepted at the various designated waste disposal facilities.  If the construction waste delivered by a waste hauler to a designated waste disposal facility is not of the type that may be accepted at that facility, that waste hauler will be turned away. Under these circumstances, to facilitate the waste hauler's delivery of the waste to the appropriate facility, the staff at the facility will give the waste hauler an entry refusal note (Rejection Advice), which will specify the reason for refusal and the appropriate designated waste disposal facility for the waste to be delivered to.  When the waste hauler delivers the waste to the appropriate waste disposal facility, he will not be turned away again.

l          For the purpose of enforcing the requirements on inert construction waste content set out in Column 3 of Schedule 2 of the DWDF Regulation, the DEP will determine the content of waste using a reference table based on the net weights and permitted gross vehicle weights of different types of vehicles. The LegCo Subcommittee was of the opinion that the Regulation should authorize the DEP to determine the inert construction waste content according to the criteria set out in the reference table in order to avoid disputes in the enforcement process although the reference table is not intended to be part of the subsidiary legislation.  As such, the DWDF Regulation was amended to require the DEP to give notice in the Gazette of the criteria adopted for the determination of the inert content of waste. We also undertake to consult the trades through the Tripartite Working Group (TWG) before making any changes to the reference table in future. The TWG, comprising waste haulers, developers/contractors and government representatives, will continue to operate after the implementation of the charging scheme in order to maintain close liaison and co-operation between the Administration and the relevant trades, and review the operational procedures and monitoring mechanism.

l          According to our initial proposal, if a main contractor who undertakes construction work under a contract with a value of $1 million or above fails to apply to the DEP for the establishment of a billing account within 14 days after being awarded the contract, he will commit an offence and, in the case of a continuing offence, will be liable to a daily fine of $5,000. As the Bills Committee considered the proposed daily fine too high, we propose that the daily fine level be reduced from $5,000 to $1,000. In response to the request of the trades, we also propose to extend the period for establishing a billing account from 14 to 21 days. When scrutinizing the Regulations, the LegCo Subcommittee was concerned that lowering the penalty might make the provision less effective as a deterrent and suggested that a review be conducted six months after the implementation of the charging scheme. We accept the proposal of the LegCo Subcommittee and will review the charging scheme six months after its implementation and at regular intervals afterwards.  The scope of review will include the deterring effect of the penalty, the deposit levels and the effectiveness of the reference table. We will submit detailed review reports to the LegCo Secretariat in due course.

l          The Regulations have been widely publicized through publicity and education activities and inform the public and the trades of the arrangements under the construction waste disposal charging scheme. Waste producers, including renovation contractors, have been educated on their responsibility for minimizing waste and establishing billing accounts. A dry run of the charging mechanism has been conducted starting from 15 July 2005 with the trades before formally launching the charging scheme on 20 January 2006 so that those involved can fully familiarize themselves with the procedures.

l          EPD had arranged over 30 briefing sessions and seminars in the past 3 to 4 months to promote the scheme and explain the application procedures and operational requirements under the scheme.  More than 3,500 representatives and the concerned trades had attended.  All publicity materials are also available from EPD website as well as in the leaflets and posters widely distributed.  Since the CWDCS came into operation on 1 December 2005, EPD has received more than 10,000 applications and printed more than 340,000 chits. About 5,100 eligible applicants requiring chits for use have been informed to collect the chits from the said offices of EPD and CEDD (some are mailed to the users).  EPD is continuing their effort in handling the applications received in the last few days with a view to issuing the chits for use on 20 January 2006.