In January we reported on the case of R (Suez Recycling and Recovery UK Ltd) v Environment Agency [2023] (the “Suez case”).  In that case, the High Court determined that the EA had made a material error of law by failing to comply with the Regulators’ Code of Practice 2014 (the “2014 Code”) in not considering whether to provide a proper appeal mechanism for challenging Compliance Assessment Reports (“CARs”).

Following this case, in July, the EA published a Briefing Note and Draft internal instructions which outline a number of proposed changes to its regulatory appeals process. The proposals follow the EA’s commitment to undertake a review of its regulatory complaints and appeals procedure following the above decision. 

In light of the High Court’s findings that the EA’s obligation to comply with the 2014 Code (which includes offering an “impartial and clearly explained route to appeal against a regulatory decision” and “a timely explanation in writing of any right to representation or right to appeal”) extended to CAR decisions, the EA has proposed to implement a two-stage appeals process as follows:

1. Stage 1: Pre-regulatory appeal decision: within 14 calendar days of being notified of a regulatory decision or not acting in accordance with the 2014 Code, the regulated entity should contact (either in writing or verbally) the individual within the EA who made the decision or took the action. The EA has described this stage as “an opportunity for quick corrections to be made or misunderstandings to be resolved” and has stressed that it should not require much time and resource from either the regulated entity or the EA. If the issue remains unresolved, the written response from the EA will prescribe the next steps for a regulatory appeal;
2. Stage 2: Regulatory appeal: the dissatisfied regulated entity will have 21 calendar days from the date of the Stage 1 pre-regulatory decision to request a regulatory appeal via a form on the GOV.UK website. The entity will need to: (a) explain why they believe either that the regulatory decision is wrong or how the EA has not acted in accordance with the 2014 Code; and (b) provide any information and/or evidence related to the appeal.

After the appeal is screened to ensure it satisfies the definition of a regulatory decision – held in the Suez case to be ‘a decision, in the exercise of a regulatory function, which is adverse to a regulated party’ - an impartial decision-maker who was not involved in the original decision will review any documents related to the original decision, together with a handover note provided by the original decision-maker. The allocated decision-maker will be required to, “so far as practicable, stand in the shoes of the original decision maker and consider afresh the relevant facts and any relevant law, policy or guidance”. Importantly, the decision-maker will have the ability to request further information either from the EA or the regulated entity and will also be able to seek an expert (but impartial) opinion from within the EA on the appealed matter.  A decision will then be communicated to both parties and any required changes will be overseen by the decision-maker. The EA will ‘aim to undertake the appeal within 21 calendar days’ (although it is not clear from when this time period will run, i.e. from the date the appeal request is submitted or from the date a decision-maker is allocated).

The EA is currently seeking feedback from stakeholder on these proposals, with a deadline of 14 August to respond.

Implications of the proposed changes

The EA’s proposals are intended to address the imbalance identified in the Suez case as regards a regulated entity’s right to appeal a CAR decision and evidences the EA’s willingness to facilitate a merits-based appeal in relevant circumstances. However, whilst the new procedure does offer an alternative channel for an aggrieved entity to seek an independent reconsideration where it disagrees with the EA’s decisions, the proposals leave open a number of questions as to the fairness of the process, including whether the period of 21 calendar days is a reasonable time within which an entity must submit an appeal request (bearing in mind that expert evidence may be necessary to obtain as part of the information submitted). Another consideration is whether the discretion to determine at the screening stage whether the subject of an appeals request constitutes ‘ a decision (…) which is adverse to a regulated party’ should sit with the EA (although in light of comments made in the Suez case, the position should be fairly clear cut and the screening non-controversial). Any additional published guidance may shed light on these matters in due course. 

The Burges Salmon team is monitoring the proposals outlined by the EA and has extensive experience advising on regulatory disputes. Please contact Michael Barlow at michael.barlow@burges-salmon.com or another member of the Environment team if you would like to understand the potential implications of the EA’s proposals. 

Written by Philippa Shepherd