Rough and ready justice? New civil sanctions to be made available to the Environment Agency

On 12 July 2023, Defra published the government's response to the consultation on proposed strengthening of the Environment Agency’s (EA) powers to issue monetary penalties by increasing both the level and scope of such penalties.

Why did the government consult on strengthening Environmental Civil Sanctions?

The consultation followed an Environment Agency Assessment in 2022, which concluded that the performance of England’s nine water and sewerage companies fell to the lowest level since reporting began in 2011.

This prompted the government to agree to an EA proposal that the agency's powers to impose civil penalties should increase dramatically from £250,000 to £250m, or even become unlimited.

The government specifically sought views to help decide on the extent of the increase to the Variable Monetary Penalties (VMPs) cap and whether VMPs should be also available for breaches of the Environmental Permitting (England and Wales) Regulations 2016 (EPR).

What are the proposed amendments to the Environmental Civil Sanctions?

Subject to parliamentary approval, the government has confirmed it will amend the Environmental Civil Sanctions (England) Order 2010 and the EPR, with the aim that the reformed penalties will reduce pollution and increase protection of the environment.

Whilst these changes are primarily prompted by the increase in pollution incidents by water companies, in practice the impact will be much wider reaching making it easier for the EA to impose significant civil penalties for environmental breaches across all industries.

What is the current Civil Penalty Framework?

There are currently a range of civil sanctions available to the EA. These include restoration notices and enforcement undertakings, (which are the most used sanctions), and Fixed and Variable Monetary Penalties amongst others.

The proposed changes relate specifically to the use of VMPs which are currently capped at £250,000 for individual breaches. As VMPs are a civil penalty, they are a quicker enforcement option and can be used as an alternative to criminal prosecutions.

However, under the civil procedure, companies only have a very short timeframe to respond to allegations and there's also far less of a requirement on the EA to set out its case in detail or provide disclosure as is the case in criminal proceedings.

In essence, all that is required of the EA is to serve a notice of intent once it's satisfied that the company has committed the offence.

The recipient has an opportunity to make representations in writing, 28 days after which, a penalty can be imposed (this is also after of course the EA has given due consideration to any representations).

Appeals against the notice are to the First-tier Tribunal of the General Regulatory Chamber. The grounds for appeal include errors of fact and/or law, and that the amount of the penalty is unreasonable.

Whether or not the penalty is unreasonable is likely to be considered against the backdrop of the trend of increased fines in EA prosecutions.

What are the proposed changes to the caps on Civil Penalties?

Subject to parliamentary approval, the government has confirmed that it will be removing the VMP cap entirely and making all penalties unlimited.

This may cause concern for duty holders given the civil process has far less rigorous procedural and evidential requirements for the EA to meet before a fine can be imposed than the criminal process, which is also independently overseen by a judge.

It is a lot easier for the EA to arrive at a position where a penalty is imposed. Civil penalties are also payable to the EA directly, unlike court fines which go to the Treasury – cynics might consider that this will increase the likelihood of enforcement action by the EA.

In light of this it was unsurprising to see that of all the respondents to the consultation, the support for the removal of the cap was lowest amongst the waste and resource management, energy and mineral products sectors, and water companies.

However, the government maintain despite the removal of the cap the penalty amount will always follow the relevant guidelines and legal precedents to ensure it is proportionate to the size of the company, its ability to pay, its degree of responsibility and the seriousness of the incident.

What is the current framework for Environmental Permitting regulation?

The Environmental Permitting Regulations 2016 (EPR) address waste management and pollution prevention together with the permitting of activities.

These largely apply to businesses involved in the waste and water sector but also apply to manufacturing, power generation, radioactive substances, mining, flood risk activities and pig and poultry farming.

Currently, breaches of the EPR can be dealt with as a criminal offence by way of warning, formal caution, or prosecution, or by civil sanction in the form of an enforcement undertaking.

There are no monetary civil penalties available for such breaches in most cases.

What are the proposed changes to the scope of Civil Penalties?

The response confirms that the government will be increasing the scope of civil penalties so that the EA can issue VMPs for breaches of the EPR. Again, unsurprisingly support was lowest from the waste and resource management and energy sectors.

This is likely to lead to increased civil penalties in this area which is a cause for concern for companies due to the limited opportunities to respond and appeal as outlined in relation to the VMP cap increase.

Why does this matter?

No one would argue that those who damage the environment shouldn't be held to account. The current approach for serious offending is to bring criminal proceedings.

The marked increase in the level of fines that we have witnessed, including noticeably the £135m fine imposed on Southern Water in 2021, shows the response being taken to the risks posed by environmental offences.

Criminal proceedings take a long time to come to court – and justice delayed is justice denied as the old expression has it. So, any mechanism dealing more swiftly with environmental cases should be welcomed, shouldn't it?

It's not quite as straightforward as that in our view. This process requires a lot less evidence gathering. The proceeds from financial sums received go to the Environment Agency and not to the government's central funds. All good so far… for the Environment Agency!

But the risk is that this becomes a rough and ready form of justice. Duty holders may be concerned that a less rigorous approach to investigating cases is not in their interests – might complacency set in when it comes to investigating cases?

What about the need for due process and the procedural protection (of disclosure for example) that is provided for in the criminal justice system?

These are important safeguards against injustice, and it will be essential that the same vigorous approach to investigating all cases is maintained.

If you would like any support on dealing with the challenges posed by the new civil sanctions, please get in touch with Nathan Peacey or Christian Silk.