Each year at least two or three new pieces of environmental regulation hit the headlines. Last year, for example, we had the Environmental Damage Regulations, this year the focus is on the Carbon Reduction Commitment.

New legislation can be challenging both to comply with and to regulate, so the focus on it is understandable.  But our eye’s should not be taken off the ball when it comes to the bread and butter of environmental regulation, such as environmental permitting, emissions controls and waste management.

A lot of blood, sweat and tears have been shed over the past five years, trying to improve environmental regulation and to ensure that it both drives improvement and rewards regulatory compliance.

It started with a review of regulatory inspection and enforcement by Philip Hampton in 2005, which set out a vision for a risk-based and proportionate approach to regulation and criticised the burden on business caused by uncoordinated regulatory action.  Then, in 2006, Richard Macrory looked at potential regulatory tools to deliver this risk-based approach and made a number of recommendations, including a proposal to give regulators the power to issue fixed and variable monetary penalties. 

The fruit of these labours is the Regulatory and Enforcement Sanctions (RES) Act 2008.  The aim of the Act is to improve regulatory justice.  The detail, of course, is much more complex, but the principals – to create an overarching body to promote better regulation, to better co-ordinate local regulation, and to speed up the enforcement process by introducing civil sanctions – can be appreciated.

The RES Act actually applies across a variety of sectors, including food standards and health and safety, but on 10 February this year, the Environment Agency and Natural England became the first regulators to be given the new civil powers, which include a provision to enable a number of new sanctions (see panel below).

The RES Act introduces several new civil sanctions that can be used to enforce environmental law:

• Compliance Notice – a written notice requiring actions to comply with the law, or to return to compliance, within a specified period; 
• Restoration Notice – a written notice requiring steps to be taken, within a stated period, to restore harm caused by non-compliance, so far as possible; 
• Fixed Monetary Penalty – a low-level fine fixed by legislation that the regulator may impose for a specified minor offence; 
• Enforcement Undertaking – an offer to take steps that would make amends for non-compliance and its effects that is formally accepted by the regulator; 
• Variable Monetary Penalty – a proportionate monetary penalty which the regulator may impose for a more serious offence; and 
• Stop Notice – a written notice which requires an immediate stop to an activity that is causing serious harm or presents a significant risk of causing serious harm.

"fairer for the law-abiding majority of businesses"

Hilary Benn, the Environment Secretary, has been quoted as saying that the new powers will “help make the system fairer for the law-abiding majority of businesses”.  Ian Lucas, the Minister for Business and Regulatory Reform, meanwhile says that “businesses will benefit from a more straightforward process”.  Certainly this is the intention of the Act, and it is fair to say that the majority of professional bodies and trade associations are in favour of the Act, but will it really deliver on these promises?

Concerns have been raised during Defra’s consultation on the new powers.  One key issue, for example, is that regulators will no longer have to prove in court that an offence has been committed.  The fear is that more fines will be issued and that the regulators’ role as both enforcer and judge will damage the relationship with regulated businesses.

There is also uncertainty about how variable monetary penalties (or VMPs) will be calculated.  VMPs will be used in the case of serious breaches of regulations and will be calculated by establishing how the business in question benefited from the breach (for example, in the case of fly tipping, by avoiding disposal costs) and what would be an appropriate penalty to deter future breaches.  The UK Environmental Law Association has raised concerns over the method of the calculations, in particular how “benefit” will be accurately calculated, what is an appropriate deterrent, and how reference to maximum and minimum levels of fine fits within the broader method of penalty calculation.  With VMPs of up to £250,000 for certain offences, getting this right is essential.

While there are clearly still issues to resolve – and consultation to achieve this is on-going – what is clear is that, assuming the spirit of the law is realised, the enforcement process will be quicker and, unless compliance improves substantially, more penalties will be issued. 

For those businesses that comply with environmental legislation this should be good news.  In 2008, 250 companies were taken to court by the Environment Agency with total fines of £3 million.  Expectation is that both these numbers will ultimately increase as more businesses operating illegally are penalised.

So the advice hasn’t changed; it is crucial to ensure that you understand environmental regulation that applies to your business and comply with it.  The difference now is that, if you’re not on top of environmental compliance, you may find your business is the guinea pig for this new streamlined approach to enforcement.

Will Nitch-Smith
Operations Director - MLM Environmental
Member of the UK Environmental Law Association