Fuel laundering and smuggling

Written evidence from Alex Atwood MLA, Minister of the Environment

Introduction

This paper sets out the Department of the Environment (NI)’s involvement in combating fuel laundering and smuggling in Northern Ireland.

Background

Fuel laundering is an illegal process to remove marker dyes from red (UK) or green (Republic of Ireland) diesel. Red and green diesel is available legitimately for agricultural purposes and is significantly cheaper than road-use diesel, due to reduced excise duty. A variety of methods (cat litter, acid, or clay) are used in fuel laundering plants to extract the dyes, filter and decolorise the fuel and pass it off as legitimate for sale, at discounted rates, to unsuspecting motorists and/or fuel retailers and for inspections by regulators.

Those responsible for producing fuel laundering waste are criminals who have no intention of incurring costs, or risking apprehension, by disposing of the waste lawfully. They have no regard for the environmental consequences of their actions and it is left to others to clean up their mess.

Profits are considerable and the proceeds, measured in millions of pounds annually, are used to fund further criminality, in some cases paramilitary. As an illustration, provided by Her Majesty’s Revenue & Customs (HMRC), one small plant incurred £800 set-up costs and then made £52,000 profit in the first 10 days.

Aside from the environmental damage of waste illegally disposed of on land or in water, the practice deprives both the legitimate fuel industry and Treasury of considerable revenue, and imposes substantial costs on District Councils for clean up and on vehicle owners whose vehicles are damaged by the fuel. It can also present Health & safety risks for the public from unregulated illicit fuel sites, abandoned waste products and vehicles (fire; sub-standard vehicles unfit for purpose; noxious gases and liquids).

Environmental damage caused by fuel laundering

The unregulated processing, storage, transport and delivery of the adulterated fuel and the unregulated storage and deposit of the waste produced can contaminate and pollute both land and waterways.

Parts of Northern Ireland have been subjected to serious environmental damage from the waste products generated by illegal fuel laundering plants. This damage, while by and large very localised, can be extremely corrosive.

Substantial quantities of liquid waste residue (often acidic), are generated during the fuel laundering process, while huge throughputs of fuel are handled by fuel laundering sites. Almost invariably this fuel and the associated wastes will be handled in entirely inadequate premises where no thought or care has been given to the containment of spills, and where spills and pollution therefore readily occur.

It is difficult to quantify the extent of environmental harm caused by this practice as it is clandestine in nature, but what we do know is that solid waste residue (e.g. chicken/cat litter or fullers’ earth clay) tends to be moved from the laundering plants and dumped in multiple sites, usually in forests and along roadsides, in relatively small quantities (2-3 tonnes). Given the volume dumped, it can run off into and damage our water courses and seep into arable land. Acid and hydrocarbon waste in rivers will alter the quality of the water and kill its plant and animal life. In a number of instances fuel laundering was only detected through the serious pollution of nearby watercourses (including instances of threats to drinking water reservoirs). An example of such an incident was the contaminated cat litter discovered at the Education & Library Board depot in Coleraine in 2009.

Environmental damage can also arise from the unsatisfactory storage, transport and delivery of the impure fuel to retailers and customers. Lorries used for transporting illegal fuel are often adapted and can be unstable and unsafe. There have been a number of accidents involving illegal fuel lorries crashing and shedding diesel, polluting watercourses and contaminating land. Very often in such accidents the driver will abandon the crashed vehicle, leaving emergency services and the public to face unknown risks.

Where the dumping of fuel laundering waste has polluted watercourses, NIEA Water Management Unit (WMU) will coordinate a cleanup of the affected watercourse. There have also been instances where fuel laundering waste has been dumped close to reservoirs and threatened the public drinking water supply. In these instances Northern Ireland Water has generally carried out a cleanup of the waste and affected watercourses.

The Department of the Environment’s (DOE) Role in Tackling Fuel Laundering

Regulation and enforcement of the fuel industry and the associated illegal fuel smuggling and laundering is discharged by a number of agencies including PSNI, HMRC, Health & Safety Executive (HSE) and District Councils. Due to the cross-border nature of the illegal trade the Garda Siochana and the Revenue Commissioners in the Republic are key allies.

HMRC ha s primacy over fuel laundering investigations and has had a number of recent successes dismantling and closing down laundering plants and illegal filling stations.

The role of the Northern Ireland Environment Agency (NIEA) , the regulatory "arm" of DOE, concerns waste and pollution associated with the trade. It will investigate and prosecute those identified as responsible for producing laundering waste where sufficient evidence exists. NIEA investigates and prosecutes serious waste crime under the Waste & Contaminated Land Order 1997.

This includes waste licensing and regulation of the legitimate industry as well as dealing with reports of illegal deposits of waste including fuel laundering waste unlawfully deposited. Reports about fuel laundering waste usually originate from local Councils and the public.

Clean up of fuel laundering waste

The Department of the Environment does not currently clean up illegally deposited waste. HMRC generally removes waste from the fuel laundering plants themselves when they are being dismantled as part of an enforcement operation. The Department also has powers under Article 27 of the Waste and Contaminated Land (Northern Ireland) Order 1997 ("the 1997 Order") to require illegally deposited waste to be removed to a licensed facility for treatment and/or disposal and to require that the waste be accepted.

The burden therefore rests largely with District Councils (DCs). Fuel laundering waste would not constitute part of a Council’s routine waste management functions. However, under Articles 28 and 28A of the 1997 Order, DCs have powers to require the occupier, or in certain circumstances, the owner of land on which waste (including fuel laundering waste) has been illegally deposited to remove the waste. DCs also have powers to remove such waste themselves and to attempt to recover the costs of doing so from the occupier or owner of the land or the person who deposited the waste if they can be traced.

The Waste and Contaminated Land (Amendment) Act (Northern Ireland) 2011, has extended this power to the Department of the Environment (the legislation has not yet commenced these particular powers). However, the Department has neither the staffing resource nor the necessary infrastructure to clean up and dispose of any waste. There is no current budget stream to absorb the significant costs of removing such waste either by contract or by developing in-house expertise and capability. DOE is currently developing a flytipping protocol with the District Councils which should establish the roles and remit of both organisations in dealing with all controlled waste.

NIEA’s Water Management Unit has been involved in clean-up where incidents of fuel laundering have impacted on a waterway. The cost over the past 5 years is £17,466, which includes analytical and salary costs.

The majority of the clean up burden has fallen on a few District Councils by virtue of their location along the border with the Republic of Ireland. Newry and Mourne alone has spent £70,000 in the last year, and £135,000 over the last four years.

Legal responsibility for the disposal of controlled waste, such as fuel laundering residue, lies with the occupier of the land or the landowner, or ‘keeper’, in the first instance. NIEA has, on occasion, taken enforcement action requiring the landowner to dispose of the waste. However, it does not routinely prosecute landowners who are victims themselves of the unscrupulous fuel launderers.

Pa r tnerships in tackling fuel laundering

NIEA’s Environmental Crime Unit (ECU) is represented on the Organised Crime Task Force Cross Border Fuel Group, comprising representatives from the Garda Síochána, PSNI and HMRC. The group targets those involved in fuel laundering. Membership of this group has enabled NIEA to participate in planned operations and to include environmental criminality in cases being prepared by HMRC. This represents a very efficient use of limited resources.

Further to the group referred to above, ECU has recently met with the HMRC’s Criminal Investigation Department to discuss means of co-operating closer during PSNI/HMRC raids of fuel laundering plants so that those directly responsible for producing the illegal waste can be held to account by the NIEA under waste legislation. ECU will therefore be able to target efforts with HMRC benefiting from shared intelligence to deter and disrupt those involved in fuel laundering at the source of the criminality. This is a better use of resource with more potential deterrent effect than responding to incidents of dumping of the waste.

NIEA investigates and prosecutes incidents where pollutants are discharged or deposited into waterways, as described in the Water (Northern Ireland) Order 1999. WMU has a longstanding working relationship with the lead agency HMRC, whereby information on suspected fuel laundering and the resulting pollution is exchanged, assistance provided and oil pollution cases investigated and prosecuted.

WMU will respond to all reports of water pollution and take whatever steps are required to identify the source of the pollution, stop the pollution at source and undertake clean up if required. In addition to this, where appropriate, enforcement action will be undertaken.

For fuel laundering, if waste is deposited in a watercourse and is causing pollution NIEA will have it removed using specialist contractors. If waste has been deposited beside a watercourse then we will seek to have the landowner or responsible authority remove this waste. WMU will take steps to stop any run off from making its way into a waterway.

WMU have undertaken clean up operations where rivers or lakes have become polluted with oil associated with fuel laundering operations.

Based on intelligence, NIEA and HMRC are on an ongoing basis participating in joint operations targeting significant figures in the illegal fuel trade.

Tackling the hierarchy of the fuel laundering business in this manner appears to me to be more important and effective than focusing efforts on cleaning up fuel laundering waste which could be viewed as actually assisting criminality by removing its waste.

In addition, I am concerned that the public of Northern Ireland need to be made aware of the extensive problems caused by fuel laundering including the issue of its waste – and not as a technical offence that provides a benefit of cheap fuel.

14 November 2011