Japan Enacts New Scrap Yard Licensing Rules

Japan has introduced a new national licensing framework for scrap metal and plastic recycling businesses following the enactment of the 2026 amendment to the Waste Management and Public Cleansing Act (廃棄物の処理及び清掃に関する法律).

Enacted on 12 June 2026 and promulgated on 19 June 2026 (Act No. 43 of 2026), the amendment establishes new permit requirements for businesses engaged in the storage and recycling of certain used metal and plastic products.

The reform addresses a longstanding regulatory gap. Under the existing legislation, commercially valuable materials (有価物) generally fall outside the waste management licensing framework when they do not qualify as waste. Consequently, certain scrap yards have operated without waste treatment permits despite the environmental risks associated with their activities, including fires, noise and water pollution.

The new framework will extend regulatory oversight to specified used metal and plastic products, regardless of whether they retain commercial value.

1. New Licensing Requirements for Scrap Yard Operators

The amendment introduces two separate categories of permits:

• Storage Business Permit (Article 24-7): Required for businesses commercially storing specified used metal or plastic products for subsequent transfer or sale.

• Recycling Business Permit (Article 24-15): Required for businesses engaged in the recycling or processing of specified used metal or plastic products, including storage associated with those activities.

  
  

Both permits will be issued by the competent prefectural governor or delegated authority and will require periodic renewal. The statutory validity period must be at least five years, with the precise duration to be established by Cabinet Order.

The new requirements may affect scrap metal traders, recycling facilities and businesses involved in sorting, dismantling, crushing or processing used metal and plastic products.

However, not all businesses handling scrap metal or plastic will automatically require a permit. The scope of the new regime will depend on the materials handled, the activities conducted and the applicable statutory exceptions.

In particular, the amendment provides exceptions for certain small-scale facilities, public bodies and other qualifying operators. Recycling carried out as part of the manufacturing process for finished products, such as steelmaking or smelting, is also excluded from the recycling permit requirement.

The minimum site-area threshold for the small-scale exception remains to be determined by Cabinet Order.

Furthermore, certain operators holding existing waste management permits or qualifying recycling authorisations may conduct equivalent activities without obtaining a separate scrap-yard permit. These operators will nevertheless remain subject to relevant operational and compliance requirements.

2. Compliance Obligations and Additional Export Controls

Businesses subject to the new licensing regime will need to demonstrate that their facilities and operational capabilities satisfy the applicable licensing requirements.

Permit holders will also be required to comply with storage and recycling standards, maintain appropriate records and submit to regulatory inspections.

The detailed technical requirements are still under development. The Ministry of the Environment is examining matters such as storage conditions, fire prevention measures, wastewater management and the handling of potentially hazardous materials.

The amendment provides for improvement orders, business suspension, permit revocation and criminal penalties in cases of non-compliance.

The reform also strengthens controls on the export of certain hazardous scrap materials.

Specified used metal and plastic products falling within the scope of Japan's Basel Act (Act for the Control of Export and Import of Specified Hazardous and Other Wastes) will be subject to additional export confirmation requirements from the Minister of the Environment.

The amendment also establishes a principle that such materials should, where possible, be appropriately stored or recycled domestically.

These measures are particularly relevant to businesses involved in the international trade of used batteries, electronic components and other potentially hazardous recyclable materials.

3. Implementation Timeline and Transitional Measures

The new national scrap-yard licensing provisions have not yet entered into force.

They will take effect on a date designated by Cabinet Order, before 19 December 2028. Other provisions of the 2026 amendment, notably those concerning disaster waste management, entered into force on 16 September 2026.

The Ministry of the Environment aims to develop the implementing regulations and technical guidelines during the Japanese fiscal year ending in March 2027.

Importantly, the amendment allows businesses to submit permit applications before the new licensing requirements enter into force.

Prefectures will begin accepting applications as their administrative preparations are completed. Where an application remains pending on the commencement date, the applicant will be deemed to hold the relevant permit until the competent authority reaches its decision.

The statute as enacted does not provide for automatic grandfathering merely because a business was operating before the new regime. However, additional transitional measures may be established by Cabinet Order.

Existing scrap-yard operators should therefore assess their licensing position and prepare for the new requirements before implementation.

Another important change concerns operators currently subject to the notification system for hazardous used equipment (有害使用済機器). This notification regime will be abolished under the amendment, requiring affected operators to reassess their position under the new licensing framework.

4. Practical Implications for Businesses and Investors

The reform will have significant implications for companies involved in scrap trading, recycling, dismantling and the acquisition or operation of scrap-yard facilities in Japan.

Businesses should review their operations to determine whether the new requirements may apply, taking into account the materials handled, the nature of their storage and recycling activities, existing permits and the characteristics of their facilities.

Local regulations must also be considered. Several Japanese prefectures have already introduced specific scrap-yard controls independently of the national framework.

For example, Gunma Prefecture's scrap-yard licensing ordinance entered into force on 1 October 2026. It applies to specified outdoor storage and processing activities involving forklifts or similar equipment at sites exceeding 100 m².

For investors considering the acquisition of existing scrap-yard businesses, the reform also introduces additional regulatory due diligence considerations. These include the target company's licensing status, compliance with local regulations and potential facility modifications required under the forthcoming national standards.

5. Preparing for the New Licensing Framework

Although the detailed implementing regulations remain under development, businesses should begin assessing their potential licensing obligations and reviewing their existing operations.

Early preparation will be particularly important for operators currently relying on the hazardous used equipment notification system, businesses considering new scrap-yard facilities and investors acquiring recycling operations in Japan.

LPA Administrative Scrivener Office assists domestic and international businesses with regulatory assessments, licensing strategies and administrative permit applications in Japan.

For further information regarding the new scrap-yard licensing requirements or their potential impact on your operations, please contact our team.