On 12 July 2023 DEFRA announced the results of its consultation on 'strengthening environmental civil sanctions' and that the law will be changed as a result.

The consultation was launched in April 2023 against the backcloth of concerns about the performance of England's nine water and sewerage companies, particularly as set out in the Environment Agency's 2022 Assessment.

The proposals in the consultation were twofold. First, to increase the scope of civil penalties so that Variable Monetary Penalties (VMPs) would become available for all breaches of the Environmental Permitting Regulations 2016 (EPR).  Secondly, whether the £250,000 cap on VMPs should be raised to £25 million, £250 million or removed altogether (thereby making such penalties unlimited).

DEFRA has announced that the VMPs will be extended to all breaches of the EPR and that the cap on VMPs will be removed completely. This will only apply in England once the relevant legislation has been amended.

No-one can argue with the fact that those who breach environmental law should not be subject to enforcement but that enforcement should be appropriate and proportionate.  Understanding the history of the development of civil sanctions (including VMPs) shows that, in that context, the first change is sensible but the second change raises concerns. 

Civil sanctions were introduced as a result of the Macrory Review ('Regulatory Justice: Making Sanctions Effective) in 2006.  Professor Macrory identified that there was a "compliance deficit" for regulatory breaches "where non-compliance exists and is identified but no enforcement action is taken because the appropriate tool is not available to the regulator", basically because criminal proceedings were too expensive and/or cumbersome .  Civil sanctions (including VMPs) were intended to fill that compliance deficit with the most serious cases still being subject to prosecution.

Using this logic, extending the use of VMPs to all EPR breaches is a sensible step and will avoid the compliance deficit for enforcement of those breaches.  That is a logical extension of the introduction of civil sanctions.

However, the argument put forward by the government to justify unlimited VMPs does not stand up to scrutiny.  The Government response to the consultation states that "these penalties [ie unlimited VMPs] should deter organisations from polluting and increase their incentive to comply with environmental regulations".  It also states that the Environmental Sentencing Guidelines (the "Guidelines") will continue to apply and be used for determining the appropriate level of VMP.

A prosecution for an environmental offence can already result in an unlimited fine and the Guidelines apply to such prosecutions.  As such, it is difficult to see why the removal of the cap on VMPs is likely to have the claimed deterrent effect.

However, the process for issuing a VMP is very different from commencing a prosecution and organisations that may be subject to such enforcement will need to be prepared to respond quickly and forcefully to the threat of such action (to date, very few VMPs have been issued but the upcoming changes are likely to change that).

In order to issue a VMP the relevant regulator must:

1. Satisfy itself beyond reasonable doubt that an offence has been committed;
2. Determine the appropriate level of the VMP;
3. Serve a prior "notice of intent" to issue a VMP on the alleged offender;
4. Provide the alleged offender with 28 days to make written representations, raise a defence or make a discharge payment;
5. After the above period, decide whether to continue to issue the VMP or vary it;
6. Allow for an early payment discount.

From the above it can be seen that those threatened with the issue of a VMP have a short period of time to make representations. If those representations are unsuccessful in preventing the service of a VMP, an appeal can be brought in the First-Tier Tribunal. The appeal can be based upon the following grounds:

1. The decision to issue the notice was based on an error of law or fact;
2. The decision was legally incorrect;
3. The decision was unreasonable for any reason;
4. The amount of the penalty is unreasonable; or
5. Any other reason.

Due to the short period of time for making representations and the impact of the issue of VMPs, we anticipate that there will be a significant increase in the number of appeals being brought.

The Burges Salmon environment team has been following the development of civil sanctions since they were first proposed and has extensive experience of advising clients on them. If you would like any further information, please contact Michael Barlow at michael.barlow@burges-salmon.com or your contact in the environment team.