Environmental Law News Update

November 2, 2020

In this latest Environmental Law News Update, Charles Morgan, Gordon Wignall and Christopher Badger consider the NCC’s Final Response to the 25 Year Environment Plan Progress Report, the legal arrangements between water companies and local authorities for payment for the supply of mains water to tenants, and funding shortages – the effect on the Environment Agency, inspection, enforcement, end-of-waste and the new Office for Environmental Protection.

Funding shortages – the effect on inspection, enforcement, end-of-waste and the new Office for Environmental Protection

The Defra press office maintains a blog used to respond to media stories (“Defra in the media”). 

This week, this Gov.uk blog has been busy (26 October, The Times – critical of the Environment Agency’s prosecution of regulatory breaches, the decline in site inspections, the alleged failure to tackle farming-related river pollution incidents involving slurry and fertiliser; 28 October, Edinburgh Evening News (Friends of the Earth Scotland) – fears over environmental standards in future trade deals; 28 October, BBC – questions over the independence of the new Office for Environmental Protection; and 29 October, The Times – alleged failures adequately to monitor and regulate unconsented sewage overspills into the Thames at Mogden).

Inevitably, even absent current circumstances, a key issue is funding. 

In the 26 October blog, the EA Chair herself was quoted as saying: “ultimately we will get the environment we pay for. A core part of that is funding the Environment Agency properly. The government has an opportunity to do that in this year’s spending review. We hope it will.”

A frequent casualty of retrenchment by the EA has been the Definition of Waste panel and related services (such as the demise of the Wrap Quality Process assessments and their accompanying Regulatory Position Statements, which had the effect of protecting operators from the risk of enforcement). 

With effect from 17 September 2020, it was announced that the Definition of Waste panel will not be offering any opinion as to whether a product has achieved end-of-waste until 1 January “at the earliest”. 

This will be hard on operators in the circular economy, especially since they are likely to be promoting new types of products. The closure of the panel leaves them more at risk of the discretionary decisions of local officers, who will have to make judgments as to the boundaries of the Environmental Permitting Regulations, including operations which are exempt, excluded, or which fall within the scope of current Regulatory Position Statements.

The closure of the panel may also amount to lost opportunities, since after the end of the implementation period, there may also be some flexibility outside the EU to fashion an updated definition as to what constitutes end-of-waste.

The devolved governments offer no better prospect than in England. No end of internal scientific data and legal reassurance will provide the reassurance which a regulator might provide (which has itself been guarded in scope).

Defra’s response to questions about the independence and vigour of the Office for Environmental Protection, which is intended in practical terms to make up the vacuum left by the absence of the EU Commission, includes the promise that “the OEP’s budget will be ring-fenced for each spending review period” (Defra media blog, 28 October).

The spending review in place from 2019 was for one year (2019-2020) and the next spending round will also only be for one year (2020-2021).  This is another area in which the words of the Chair of the EA will ring true: “ultimately we will get the environment we pay for”.

NCC’s Final Response to the 25 Year Environment Plan Progress Report

On 26 October, the Natural Capital Committee (‘NCC’) published its ‘Final Response to the 25 Year Environment Plan Progress Report’.

Previously the NCC has been fairly scathing of the Government’s ‘progress’, citing a lack of appropriate metrics or baseline to be able to measure changes in the environment, a selective approach to results that risked ignoring overall declines in the environment and highlighting the lack of strategic approach by Government to achieve coherent improvements.

This Final Report conducts its own assessment of the state of natural capital. It concludes, starkly, that the Government is not on course to achieve its objective to improve the environment within a generation. Using a red, amber, green analysis, none of the seven natural assets were rated green. The report is 486 pages long, so here is our best effort at summarising the conclusions:

Atmosphere – Amber.

While there has been an overall reduction in pollution levels in recent years, in some urban areas levels are still resulting in significant health impacts. One key recommendation is for clearer air quality targets to be set out in the Environment Bill.

Freshwater – Red.

Poor progress. No surface water bodies met the criteria for ‘good’ chemical status in 2019 and only 14% of rivers met the ‘good’ ecological status criteria. It is estimated that 22% of water put through the supply system is lost through leaks.

Marine – Red.

There is very limited data on marine assets. The Government needs to urgently address data gaps in order to assess the extent and condition of marine natural capital assets. Trends for some physical and chemical parameters since 2011 indicate drastic climate-driven change in the marine environment.

Soils – Red.

Soil degradation through erosion, intensive farming and development is estimated to incur losses between £0.9 and £1.4 billion per year for England and Wales, mainly linked to the loss of organic content of soils at 47% of the total cost. It is estimated it takes 100 years to form 1cm of topsoil. The NCC calls for an urgent national survey to provide data on the extent and condition of soils.

Biota – Red.

Species which are critical for ecosystem function such as pollinators show dramatic declines between 1980 and 2016. For example records from 365 pollinating bee and hoverfly species across a number of 1km grid squares in the UK indicate a 30% decline in occurrence between 1980 and 2016.

Land – Red.

The Biodiversity 2020 Strategy target is for 90% of priority habitats to be in a ‘favourable’ or ‘unfavourable recovering’ condition. However, the figure has plateaued for the last 4 years at around the 70% mark. The Government will not hit its target and there should be a clear plan on how to deliver on existing targets.

Minerals and resources – Amber.

Household recycling rates have plateaued since 2013 at around 44%. Targets need to be set to achieve higher recycling rates. Active illegal waste sites increased from 556 in 2013/14 to 685 in 2018/19. There were 1,070,000 fly tipping incidents in 2018/19.

Council finds itself piggy-in-the-middle for water charges

Last December in Update 121 we reviewed the decision of Morgan J. in Royal Borough of Kingston-upon-Thames v Moss [2019] EWHC 3261 (Ch) concerning the legal result of arrangements between Thames Water and Kingston for bulk payment for the supply of mains water to the Borough’s tenants. In short, the unintended consequence was that, by operation of the provisions of the Water Resale Orders 2001 and 2006, the Borough had to pass on to its tenants the benefit of some of the allowances and commissions negotiated between it and Thames Water. The Borough’s appeal to the Court of Appeal has just been dismissed: Royal Borough of Kingston-upon-Thames v Moss [2020] Civ 1381. As Lewison LJ put it, whilst the Borough as a local authority had statutory power to agree with an undertaker to act as the undertaker’s agent for the collection and recovery of water and sewerage service charges from individual occupiers (in which case it could have charged and recovered the full charges and retained any discounts for itself), the question was whether that is what it had in fact done. The Court of Appeal held that it hadn’t. It had made itself the supplier by resale to its individual tenants.

On appeal the Borough tried to rely upon the nature of its pre-privatisation arrangements with the Thames Water Authority as an aid to interpretation of its later agreements with Thames Water. That was held to go well beyond acceptable bounds of contractual interpretation. The Court of Appeal was particularly struck by the fact that the post-privatisation agreements with Thames Water called the Borough “the Customer”, who was to “pay for the Services”, which expressions were found to mean what they said.

The ramifications of the controls imposed by the Water Resale Order upon the multifarious arrangements that can exist in situations of multiple occupation are by no means confined to the context of tenants of local authorities. The outcome of this litigation will fix the proper interpretation of many other arrangements, quite possibly with equally unintended results and economic consequences.

The judgment of Lewison LJ (with whom the other two judges simply agreed) is worth reading just for the pleasure of it. It is a masterpiece of clarity and a masterclass in contractual interpretation.

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