New Era for Environment Enforcement

Proposed Implementation of the Environment Agency’s New Enforcement Powers

On 15 February 2010 the Environment Agency (“Agency”) launched a consultation on implementation of new enforcement powers. The Regulatory Enforcement and Sanctions Act 2008 (“Act”) introduced a range of alternative non-criminal sanctions open to certain regulators, including the Agency. By virtue of the Environmental Civil Sanctions (England) Order 2010 (“Order”), presently in draft form, certain sanctions will be made available to the Agency and Natural England to supplement (and not supplant) existing enforcement powers (similar legislation is intended in Wales). These have the potential to give rise to substantive changes in enforcement.

Please click here to view our previous article regarding details of the sanctions

The sanctions are intended to be applicable to certain offences occurring after 6 April 2010. The Agency has set out proposals on the use of the new powers in both England and Wales. The closing date for responses to the consultation is 7 May 2010. Please click here for the Consultation documentation

A key point is that currently the offences to which the sanctions relate are limited but the range of offences may be extended considerably in the future. Therefore industries which are unlikely to commit offences within the current scope, should want to take an interest in the proposals for implementation. Importantly the Agency plans to apply the sanctions to the Environmental Permitting Regulations 2010 (due to be implemented in April 2010) and for flood risk management offences which may have a wide impact.

The criteria for assessing which sanctions (if any) the Agency should employ, the proposed governance arrangements and the proposed methodology for calculating variable monetary penalties (“VMP”s) are likely to attract most scrutiny from business during the consultation.

The consultation

The consultation documentation is divided into 1 main document with 7 annexes. The consultation poses 12 questions relating to, for instance, the structure of the new enforcement and sanctions documents, VMPs, the use of enforcement undertakings, the sanctions process, governance safeguards and proposals for public reporting on the use of sanctions.

Annex 1 - Offences Covered

The sanctions will not been introduced for all legislation enforced by the Agency but may be later extended. At the moment the legislation to be covered by sanctions includes the Water Resources Act 1991, the Water Industry Act 1991, the Environment Act 1995, Producers Responsibility Obligations (Packaging Waste) Regulations 2007, Hazardous Waste Regulations 2005 (for both England and Wales), the Transfrontier Shipment of Waste Regulations 2007 and the Control of Pollution (Oil Storage) (England) Regulations 2001. Further for the offences which are covered, not all sanction options will be available for each offence. For example, the Water Resource Act 1991 is included but s85 which covers an often alleged offence of polluting controlled waters is not.

Annex 2 - Enforcement and Sanctions Policy, Annex 3 - Enforcement and Sanction Guidance and

Annex 4 - Offence Response Options

The intent is to adapt the existing Agency Enforcement and Prosecution Policy and Functional Guidelines to achieve a more “outcome based” approach. The stated approach of the Agency is to match its enforcement response to the circumstances i.e. to reflect the “criminality”. This reflects previous criticism, namely that the use of traditional criminal law in all circumstances was too blunt.

The Agency identifies four outcomes which it seeks to achieve through use of the sanctions (a) to stop the offending circumstances reoccurring, (b) to restore and/or remediate the consequences of the breach, (c) to bring under regulatory control, and (d) punish and/or deter.

The following enforcement actions are identified as suitable responses under each category:-

(a) warnings, stop notices and injunctions

(b) warnings, enforcement notices, remedial works, Enforcement Undertakings (“EUs”), third party undertakings (“TPU”s) and restoration notices.

(c) warnings, statutory notices, suspension, revocation or variation of permit, EUs or compliance notices.

(d) Fixed Monetary Penalties, VMPs, Non Compliance Penalties, Fixed Penalty Notices, formal cautions, prosecution and ancillary matters related to prosecution such as confiscation of assets.

When considering its response to an offence, the Agency will consider (i) the available sanctions, (ii) whether it has published a regulatory position statement which covers the area in question in relation to the scenario, (iv) whether the activity is a low risk waste activity or (v) whether any transitional provisions apply to the offence. The Agency outlines that it will first consider the outcome sought followed by the public interest factors and the sanctions available.

Annex 5 - VMPs

This is potentially one of the most contentious sanctions. The document sets out the methodology to be applied in calculating VMPs. VMPs will have to be calculated individually for each offence and the starting point for the deterrent component for each offence is to be individually determined. This may be a controversial point for some. The components of a VMP are modelled thus: (financial benefit + deterrent component impacted by mitigating factors) - deductions = final VMP.

Financial benefit
The financial benefit component is intended to reflect and remove any financial benefit from the offence including avoided costs and operating savings. The documentation notes that the calculation of financial benefit should be based on evidence. If such information is not forthcoming the Agency will estimate the financial benefit based on the evidence it has or similar cases or industry practice.

Deterrent Component
The deterrent component is based on one of three starting points which shall be determined by the characteristics of the offence which is then adjusted according to aggravating and mitigating factors. The possible starting points are (i) the financial benefit, (ii) the costs of restoration required by a notice or (iii) the statutory maximum fine. The starting point is stated to be that which is the most significant in terms of characterising the offence (most likely this will be the starting point with the highest value). A multiplier (which overall cannot exceed four times the starting point) can be applied to the deterrent component. Aggravating features include blameworthiness, e.g. a multiplier of 3 may be applied where the action was deliberate but perhaps 0.1 where there was low or no culpability. A history of offending; negative attitude; foreseeability and risk of environmental harm and ignoring previous warnings or advice of the Agency can be aggravating features..

Mitigation features
The deterrent component may be reduced to take account of any mitigating factors. Application of mitigation features will normally allow up to an 80% reduction of the deterrent element but the regime can allow for 100% reduction in exceptional circumstances.

Mitigation factors are awarded a percentage reduction as follows: use of preventative measures up to 10%; co-operation with the Agency up to 10%; self reporting up to 20%; immediate and voluntary remediation and restoration up to 20%; positive attitude up to 10%; mitigating personal circumstances up to 10% and case specific factors up to 20%.

Deductions
The cost deduction is to reduce the penalty by the amount of costs incurred by the offender in the enforcement process. Examples might include the costs of complying with a notice from the Agency and payments to compensate third parties affected by the notice. Where the total deductions equal or exceed the overall penalty element, a nominal VMP of £1 will be issued.

The Agency makes a point that initially it will not expect the overall final amount for a VMP to exceed £250,000 for either way offences (which are most environment offences). Where it would do so, the Agency will normally prosecute.

Annex 6 - EU Example

An example is provided which sets out the qualifications to the EU if accepted on the part of the Agency. The example confirms that once accepted the Agency shall publish details of the EU. Exactly what will be published however is not explained. If an EU is accepted by the Agency, once complied with, the party providing the EU can apply for a Completion Certificate which acknowledges that the relevant action has been taken.

Appeals

Appeals will be to the General Regulatory Chamber of the First-tier Tribunal, established under the Tribunals Courts and Enforcement Act 2007. The consultation notes that the Agency is working with the Tribunal Service to establish a fast track procedure for hearing appeals against Stop Notices and those appeals which may require an expedited hearing. The Agency anticipates that the Tribunal Service will issue guidance on environment appeals.

In any appeal (apart from those relating to a Stop Notice) where the commission of an offence is an issue, the Agency must prove that offence to the same standard of proof as in a criminal prosecution. In any other case the Tribunal shall determine the standard of proof. All notices apart from Stop Notices will be suspended pending appeal, but the Tribunal may suspend or vary a Stop Notice.

It is expected that the grounds for appeal will be reviewed 2 years after introduction.

Danger of subjectivity?

The Agency appears to be aware of concerns in this regard. It states that civil sanctions will not be issued “in the field”(i.e. at the whim of individual officers). Decisions to impose them will be made following a review of the evidence by legally qualified staff and more senior managers in accordance with policies and guidance and there will be a national Agency panel to provide oversight and consistency. Following the issuing of a Notice of Intent representations will be considered at a more senior level. If a civil sanction is available and thought appropriate or an EU offered it will be reviewed at a Local Area Enforcement Panel. The recommendation of the Area Enforcement Panel will be sent to the National Panel for consideration.

Public disclosure
The Agency states it will consider maintaining a public register of the sanctioning decisions but that it would not normally take active steps to report FMPs which relate to minor offences in individual cases.

Community Involvement
The Agency states that it will encourage offenders to enter into a dialogue with community representatives with a view to offering appropriate TPUs and EUs. How this will work in practice remains to be seen.

Next steps
The Agency states that it will publish a full response to the consultation within 6 weeks of 21 June 2010. Guidance will also be published on 21 June 2010. The Agency expects use of the civil sanctions to commence in September 2010.