Last reviewed 4 February 2020
The Environment Agency has released its latest enforcement and sanctions policy detailing how it intends to use its powers to secure compliance with environmental regulations to achieve the best outcomes for the environment and for people. John Barwise outlines the key aspects of the policy, focusing on when enforcement undertakings and variable monetary penalties may be applied.
The complexity and range of environmental regulations have grown over recent years, along with continued pressure on businesses to ensure all their regulated operations remain compliant. Most breaches of environmental law are criminal offences that can result in enforcement notices, civil sanctions, fines, and in some case imprisonment.
The Environment Agency’s (EA) updated enforcement and sanctions policy document consolidates the EA’s earlier enforcement and sanctions statement, and enforcement and sanctions guidance and clarifies the regulator’s approach to enforcement, including its use of sanctions as an alternative to prosecutions.
Role of the EA
The EA’s regulatory responsibilities are extensive, covering pollution control, waste regulation, the management of water resources, flood and coastal risk management, fisheries, conservation and navigation. On matters relating to planning, air pollution, public health and occupational safety, the EA works with local government and other regulators to ensure coherent regulation. They also work with many conservation bodies, voluntary groups and non-governmental organisations in order to achieve common goals.
In situations where the EA and other enforcement bodies both have the power to take enforcement action, they work collectively and adopt a co-ordinated and consistent approach to ensure that any action is appropriate for the offence.
In discharging its regulatory duties, the EA’s approach is to engage with businesses first by providing information and advice on compliance issues to help avoid unnecessary bureaucracy and excessive cost. Where an operator or individual is not complying with a particular regulation or notice, the initial course of action is normally to provide advice and guidance to help them become compliant and agree solutions and timescales for making improvements. Depending on prevailing circumstances, the use of formal enforcement powers and sanctions may also be necessary.
Enforcement and sanctions policy — key elements
The EA is committed to “firm but fair” regulation. The updated enforcement and sanction policy outlines the EA’s regulatory and penalty principles and its enforcement and sanction options. It also explains how enforcement and sanctions decisions are made, including the enforcement framework for the climate change schemes and the control of mercury regime.
The document sets out four principle outcomes it seeks to achieve:
stop illegal activity from occurring or continuing
put right environmental harm or damage, also known as restoration or remediation
bring illegal activity under regulatory control, and so in compliance with the law
punish an offender and deter future offending by the offender and others
According to the EA, these are the best outcomes for protecting the environment and people, and it will use its enforcement and sanctioning powers to ensure these outcomes are achieved.
Enforcement and sanction regulatory principles
The EA follows the requirements of the Regulators' Code in discharging its duties as a regulator. The code aims to promote proportionate, consistent and targeted regulatory activity through transparent and effective dialogue between all regulators and those they regulate.
Exceptions to the code include where the EA can demonstrate that immediate enforcement action is required to prevent or respond to a serious breach of the law or where following the code would defeat the purpose of the proposed enforcement action.
Key enforcement and sanction principles include:
Acting proportionately — assessing risks to people and environment, the seriousness of breaches of the law, impacts on the environment and economic growth and costs and benefits of taking enforcement action
Growth duty — taking enforcement action or imposing sanctions only when needed and in a proportionate way, but not allowing operators to pursue economic growth at the expense of protecting the environment
Consistency — taking a similar approach to achieve similar ends in similar incidents and being consistent in advice and responses to breaches of the law and when deciding whether to prosecute and apply sanctions.
The enforcement and sanction principles also cover; transparency in communicating with businesses; targeting enforcement action towards those activities that pose the greatest risk to the environment; and, accountability — taking responsibility for enforcement decisions and follow up actions.
Other elements of the policy
The enforcement and sanctions policy consolidates most of the requirements set out in the earlier enforcement and sanctions guidance and enforcement sanctions statement. These have been updated and clarified and include the following.
Enforcement and sanction penalty principles — aims to remove any financial gain arising from a breach and taking steps to ensure damage is restored.
Liability for enforcement action — meet the test in the Code for Crown Prosecutors ensuring there is a realistic prospect of securing a conviction.
Rights, records and cost recovery — including published details of enforcement action on a public register for environmental permitting; certain information about penalties for the climate change schemes; and, where a RES Act civil sanction has been imposed or an enforcement undertaking offer accepted, where inappropriate.
Interventions — support those who has committed an offence or likely to commit an offence by giving advice and guidance, with the aim of meeting compliance requirements.
Making enforcement decisions — based on facts and circumstances relating to the breach or offence and deciding whether to take enforcement action, how to choose the enforcement option and which enforcement option to use. Enforcement decisions for climate change schemes is set out in annex 2 of the policy.
Key elements of the policy to consider
The EA will use the full range of enforcement and sanctioning tools that are available to it. Where an offence has been committed, the Agency will consider issuing some form of sanction as well as any other preventative or remedial action taken to protect the environment and people. Anything beyond the provision of advice and guidance or a warning, as described above, is considered to be a sanction, either civil or criminal.
Enforcement undertakings (EUs)
An EU is a voluntary offer by an offender to undertake certain actions, agreed with the regulator, to mitigate the impacts of their offence on the environment and other third parties. The offer must also state the action the offender will take to ensure future compliance, for example investing in an environmental management system and/or new monitoring equipment etc.
Where it is not possible to fully restore any environmental damage, then the offer needs to include some form of environmental benefit or improvement and compensation for damage to the environment (natural capital). One example often reported is where a water company pays for a project to improve river quality following a water pollution incident.
An EU is not an admission of guilt and the EA cannot bring a criminal prosecution for the original offence, but the EA will publish details on the GOV.UK website and it may be included in the public register.
Annex 1 of the policy sets out specific guidance on the factors the EA will consider, including what it expects an offer to include and how it decides whether or not to accept it. For example, the EA is more likely to accept offers when they are offered early and proactively and where it is confident the terms of the enforcement undertaking will be complied with. The EA will not normally accept an enforcement undertaking offer if the offer includes a clause denying liability or a clause that sets up defences for possible breach of an enforcement undertaking
Variable monetary penalties (VMPs)
VMPs are another set of civil sanctions that the EA can use as an alternative to prosecution. The Sentencing Council’s Definitive guideline for the Sentencing of Environmental Offences (referred to as the ‘Guideline’ in the policy document), explains how to assess a suitable penalty for an environmental offence.
Unlike Fixed Monetary Penalties where the value of the penalty is fixed depending on the type of offence, the value of a VMP will be determined by the EA on a case by case basis, depending on the nature and seriousness of the offence.
The EA uses culpability (blame) and harm factors when determining the offence category, but will also use the Common Incident Classification Scheme (CICS) and Compliance Classification Scheme (CCS) classifications as evidence of harm, as part of the assessment process.
When calculating a VMP, the EA assesses the size of the organisation, by turnover or equivalent or, in the case of individuals, their financial circumstances. The starting point for fines in the guidelines for the most serious and deliberate offences by a large organisation is £1 million. But the maximum penalty (statutory cap) the EA can impose using a VMP is £250,000, which means the Agency has reduced the starting point by a factor of 4 to reflect the statutory maximum.
Further steps in the Guideline could then be applied, including considering additional factors that could result in adjusting the starting point for the penalty up or down. For example, aggravating and mitigating proportionality and removal of economic benefits derived from the offence are factors that may warrant further upward fine adjustment. Equally, a downward fine adjustment may be appropriate for a guilty plea for the offence.
In some circumstances, the EA may treat very large organisations (VLOs) in a class of their own. This is in line with how the courts deal with fines for VLOs — applying a mechanistic increase or reduction is not considered helpful. An example of this is the judgment in the case: R v Thames Water Utilities Limited  EWCA Crim 960.
After these initial steps the EA says it will ‘step back’ to consider other factors such as removal of economic benefit from the offending, whether the fine will have a real economic impact or other matters that came up during the investigation of the original offence.
The updated enforcement and sanctions policy consolidates and updates earlier enforcement and sanctions statements and guidelines, making it easier for businesses to access and understand the ‘why, how and when’ the EA is likely to prosecute offenders that have carried out illegal activities.
The clarity of the document and links to other relevant information will be helpful to all organisations that are facing prosecution, as well as those that want to ensure they improve environmental performance and minimise risk of prosecution in the future.