Environmental 2010 - Environment Agency - New Civil Penalties Regime

Wednesday, March 3, 2010

There has been significant press interest about the new powers being given to the Environment Agency and Natural England to impose civil sanctions on businesses that breach environmental regulations. What have been less widely reported are how these sanctions will be applied, and the effect of these new powers on your business. We set out below a summary of when the new powers will commence, what penalties can now be imposed, and what the regime will look like, to allow you to better understand the impact that this will have on you, with specific focus on the Environment Agency.
 
Why change?
 
The Environment Agency and ministers set out that the new power to impose civil sanctions will mean fairer and more effective environmental regulation. It is hoped that the ability to impose civil sanctions will lead to increased flexibility in sentencing, making it easier and more cost effective for businesses to operate within environmental laws. The Environment Agency in particular states that business saves £36 million per year of costs as a result of action that it has taken to improve how it regulates. It appears that this step has been taken in an attempt to reduce that cost further.
 
Operation of the system
 
The new powers are expected to enter into force on 6 April 2010. The Environment Agency is currently consulting on its approach to enforcing the new regime and Defra states that there is unlikely to be any exercise of the new powers until August 2010.
 
The draft order sets out a list of offences to which the new sanctions will apply. They do not apply to the whole range of matters regulated by the Environment Agency, but do apply, for example, to certain waste and water offences. In due course, the scope of the powers may be widened.
 
It appears that where an offence has been committed and civil penalties are available, it will be for the Environment Agency to decide whether it would be best to deal with it in the criminal or civil courts. Press releases from ministers and Defra suggest that criminal prosecutions will now be reserved for those breaches which cause, "deliberate, reckless and grave environmental damage".
 
If the Environment Agency decides to impose a civil sanction, it must be satisfied beyond reasonable doubt that the person or business being sentenced was guilty of the offence. Other than in the case of Stop Notices, it will issue a Notice of Intent to impose the sanction. The person or business will then be given a period of time to make representations and objections. Subject to any representation, the Environment Agency will confirm, vary or withdraw the sanction. If the sanction is confirmed, the person or business will have a right of appeal to a new specialist tribunal.
 
Importantly for businesses, the Environment Agency expects to use the new powers "sparingly" and states that informal methods such as advice and guidance will remain central to the new system of regulation.
 
Penalties
 
The new penalties broadly fall into three categories, financial penalties; a Stop Notice, which requires a business to immediately cease activities which cause serious harm or risk causing serious harm; and orders which require businesses to take prescribed steps either to restore harm caused by non-compliance, or to prevent an offence from either continuing or occurring in the future.
 
In the case of financial penalties, the Environment Agency can order fixed penalties of up to £300 or, for more serious breaches, a Variable Monetary Penalty of up to £250,000, depending upon the offence. Non-payment will be enforced through the civil courts and a further financial penalty can be imposed. Prosecution through the criminal courts cannot usually take place after a financial penalty has been imposed.
 
 
Once the Environment Agency publishes its response to the consultation on 21 June 2010, we will have a clearer idea of how the new regime will operate in practice. However, despite assurances that the new powers will be used sparingly, it seems likely that there will be an increase in enforcement of "low level" offences which lead to Fixed Monetary Penalties, as the process for issuing civil sanctions is likely to be significantly quicker than proceeding through the criminal courts. We will keep you updated on developments throughout the year.