Environmental Law News Update

July 9, 2019

In this latest Environmental Law News Update, William Upton QC, Nicholas Ostrowski and Mark Davies consider Peter Kellett’s UKELA presentation on how to achieve environmental compliance, the publication of the Environment Agency’s quarterly scorecard and the UK Government’s new Green Finance Strategy.


What achieves environmental compliance ?

At the UKELA Annual Conference in Sheffield, we heard some personal reflections from Peter Kellett, the Director of Legal Services for the Environment Agency, about what can secure high levels of business compliance with environmental laws. The Agency has reviewed the evidence from its own actions in 2013-2018. In his view, the benefits of regulation (or dis-benefits from the lack of effective regulation) have come under scrutiny through the harrowing Grenfell inquiry. It is almost inconceivable that every regulator has not reconsidered its regulatory approaches in consequence.

Enforcement interventions do not work in isolation, and all appear to need an ultimate backstop of a civil penalty or prosecution. The overall background is that there have been non-compliance issues with less than 3% of the 14,000 industrial permits the Agency regulates (as at 2018). Appeals against their decisions to grant a permit subject to conditions, or to refuse, suspend or revoke them are unsuccessful in almost all cases.

When Enforcement Notices are used, they are complied with in roughly 60% of cases (and there is then no need for further immediate regulatory action in those cases). Whilst they are prosecuting fewer cases, those that they do take have about a 95% success rate (our note: which may have a lot to do with strict liability but also raises a query about which cases are not being pursued). There has been a significant increase in custodial and financial penalties and ancillary orders, including Proceeds of Crime Act Orders and Orders to remedy the cause of the offending. Conversely, the Sentencing Guidelines’ structured approach has led to high fines for large companies which has appeared to encourage defendants to contest cases more vigorously. The use of Enforcement Undertakings is seen so far to have been a great success, with offenders being brought into compliance without the stigma of prosecution, making amends locally for the harm they have caused (through some £11,500,000 contributed towards environmental projects), and crucially (with the exception of water and sewerage undertakers) no reoffending. There have been almost 400 acceptances of Enforcement Undertakings, although they have turned a number of offers down.

There are some less successful areas. Notices requiring the removal of waste on land are complied with in only roughly 33% of cases, which probably reflects the type of enforcement situation where they have to be used as part of a range of regulatory actions. Another area that was highlighted was the use of Injunctions, as the Agency’s experience is that they do not appear to work as a remedy where the Agency has had to seek to enforce them in the Courts.

Peter Kellett’s thoughtful piece comes at a time when there is continued pressure to reduce regulatory burdens. As he said as part of his conclusions, “Over the next 12 years, as we try to mitigate the worst impacts of climate change, should we listen to attacks on regulation or to the evidence which suggests that direct regulation actually works?


The Environment Agency’s quarterly scorecard published – pollution incidents polluting the Agency’s performance

Peter Kellett’s comments on effective regulation is well timed. On 27 June 2019 the Environment Agency published its ‘corporate scorecard’ for the third quarter of 2018-19 which is intended to provide readers with an ‘at a glance’ look at the Agency’s performance over a number of metrics set out in the Environment Agency action plan.

The scorecard is full of numbers, tables and charts and uses a traffic light system to set out those targets which the Environment Agency is on track to hit, those which it may hit and those which it will probably fail.

The measures against which the Environment Agency is assessed are spread across water, pollution, habitats, flooding, incident response and influencing planning decisions by local authorities. There are also ‘organisational’ targets such as the management of the Environment Agency’s budget and, importantly, the ethnic and gender diversity of its workforce.

As readers may recall from the last quarterly scorecard in June 2019, the Environment Agency is currently failing in its plan to reduce serious pollution incidents. The numbers have in fact got worse over the last quarter and while the ceiling target is to have no more than 400 such events in a year, the actual number of incidents rose from 492 such events to 514 events recorded in first three quarters of the year. The other main negative is that the number of illegal waste sites remains stubbornly high and the Agency confirms that it is unlikely to hit its ambitious target of improving 2000km of water environment.

The Environment Agency goes on to set out the ways in which it is investing in a ‘review and overhaul [of] how we regulate to improve water company performance’ so that may have an impact on how pollution incidents from water companies are addressed but, as it stands, there are few details about how the Environment Agency plans to address the other sources of water pollution which it accepts have increased as sources of such pollution in the last quarter. The Environment Agency frequently describes the targets which have been set as ‘challenging’ and this may be a hint that, in future, it will invite DEFRA to agree less ambitious targets for pollution and waste.


Government publishes its Green Finance Strategy

On 2 July 2019 the Government published its ‘Green Finance Strategy: Transforming Finance for a Greener Future’. Regular readers of this Blog will be familiar with the ongoing shift towards a ‘greening’ of the financial sector and this is the latest instalment. The Strategy sets out to achieve the ‘ambition of the Green Finance Taskforce’ and ‘accelerate the growth of green finance’.

The Strategy sets out two initial principles:

  • Aligning private sector financial flows with clean, environmentally sustainable and resilient growth; and
  • Strengthening the competitiveness of the UK financial services sector.

These principles are to be achieved by three main drivers: ‘greening finance’, ‘financing green’ and ‘capturing the opportunity’. Greening finance and capturing the opportunity are relatively familiar phrases, but financing green is perhaps not. Encouragingly under it the Strategy indicates that ‘robust, long-term policy frameworks’ should be established, with ‘improved access to finance for green investment’. It is anticipated that all listed companies and large asset owners will disclose in line with the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) by 2022, and that the government will clarify the responsibilities of the Prudential Regulation Authority, the Financial Conduct Authority and the Financial Policy Committee.

However, the tone of the Strategy seems somewhat out of step with some of the Government’s previous decisions in relation to ‘financing green’ (think the moratorium on on-shore wind, the scrapping of subsidies for the UK’s solar industry or the reduction in subsidies for battery powered vehicles). To expand on the last example, whilst the Strategy highlights that £1.5 billion is to be invested between April 2015 and March 2021 in grants for ULEZ vehicles, just last week The Society of Motor Manufacturers and Traders (SMMT) (see link here) reported that the sales of low emissions had dropped for the first time in two years with the chief executive of the SMMT reporting that:

“Manufacturers have invested billions to bring these vehicles to market but their efforts are now being undermined by confusing policies and the premature removal of purchase incentives.

“If we are to see widespread uptake of these vehicles, which are an essential part of a smooth transition to zero emission transport, we need world-class, long-term incentives and substantial investment in infrastructure.”

Quite how the Government proposes to reconcile its previous decisions with the ‘financing green’ aspect of the Strategy is unclear, but action is clearly required if the Strategy is to be effective.

As a side note, it is interesting to see that the Ministerial Foreword reiterates the commitment made by Theresa May that the UK will be ‘legislating for net zero emissions by 2050’ in ‘response to the latest science’. Setting aside that the science has for a long time been saying that the 80% reduction by 2050 was inadequate (and accepting that at the time of the Climate Change Act in 2008 it was an ambitious, long-term target) one has to wonder whether any decisions that have been taken, or indeed decisions that are made before the new target is legislated for, could be attacked on the basis of the commitment. Time will tell.


Planning, Development and Environmental Law’: UK Supreme Court Yearbook

Stephen Hockman QC and Nicholas Ostrowski have written a chapter in the latest UK Supreme Court Yearbook. The chapter, entitled ‘Planning, Development and Environmental Law’ focuses on the developments in this area of law during the 2017-18 legal year. More here


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