Environmental Law News Update

In this latest Environmental Law News Update, William Upton KC, Christopher Badger and Doug Scott consider the Autumn Statement, the Environment Agency and Ofwat’s investigations into water companies and new DEFRA guidance on conservation covenants.

The Autumn Statement

The word ‘environment’ features twice in the body of the recent Autumn Statement. Once in the phrase “creating the right environment for business investment” and the other by reference to ‘Investment Zones’:

“The government will refocus the Investment Zone programme. The government will use this programme to catalyse a limited number of the highest potential knowledge-intensive growth clusters, including through leveraging local research strengths. The Department for Levelling Up, Housing and Communities will work closely with mayors, devolved administrations, local authorities, businesses and other local partners to consider how best to identify and support these clusters, driving growth while maintaining high environmental standards, with the first clusters to be announced in the coming months. The existing expressions of interest will therefore not be taken forward. The government is grateful to local authorities for their work to develop proposals.”

And so, investment zones were scrapped.

A review into EU regulations was announced. The Retained EU Law (Revocation and Reform) Bill is currently progressing through Parliament. Indirectly referencing this, the Chancellor announced that:

“The government is committed to reforming retained EU law. As part of this programme, the government will move rapidly to review retained EU law in key growth industries – including digital technology, life sciences, green industries, financial services and advanced manufacturing – to identify changes that can be made over the next year which have the greatest potential to unlock growth.”

And electric cars, vans and motorcycles are no longer to be exempt from vehicle excise duty. Zero emission cars first registered on or after 1 April 2017 will be liable to pay the lowest first year rate of vehicle excise duty. From the second year of registration onwards, zero emission cars will move to the standard annual rate.

And there was an announcement of a “new long-term commitment to drive improvements in energy efficiency to bring down bills for households, businesses and the public sector with an ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels”, run by a new Energy Efficiency Task Force with funding of £6 billion available from 2025 to 2028.

Once again there is very little by way of detail in environmental policy. The government states that its priorities are stability, growth and public services. Green technology is referenced as an area with the most potential for growth, but it does appear to be the case that, as yet, there is little coherent strategy to achieve that potential.

Update on the Environment Agency and Ofwat’s investigations into water companies

This time last year we brought you news that the Environment Agency and Ofwat were launching separate but co-ordinated major investigations into all water and wastewater companies in England and Wales. Both organisations have now published updates of their progress.

The EA first. Their investigation – described as their “largest ever criminal regulatory investigation” – is determining the extent of non-compliance with environmental permits relating to water treated and discharged from treatment sites into English waters. At present, the investigation is heading in a difficult direction for the industry, with non-compliance appearing pervasive:

“[The EA’s] initial assessment indicates that there may have been widespread and serious non-compliance with the relevant regulations by all water and sewerage companies.”

Next, Ofwat. Their operation is focused on discovering whether companies are complying with their legal duties to maintain, operate and manage wastewater treatment works. Currently, Ofwat have enforcement cases against six wastewater companies, although they note that all companies in the industry remain part of their wider investigation.

While the respective investigations are ongoing, other tangible results of regulatory oversight of the water industry are emerging. The EA note that the number of storm overflows being monitored and publishing data has increased from 800 in 2016 to more than 12,700 in 2021. Further, since 2015 the EA has brought 56 prosecutions against water companies, which has led to over £141 million in fines.

Ofwat have also recently announced large-scale fines for water companies but with the added benefit that consumers will directly gain. In its announcement last month, Ofwat said that 11 water companies are collectively being fined nearly £150 million and that the recouped money will be taken off customers’ bills. However, unfortunately those serviced by companies who have met their targets, such as Severn Trent Waters, are likely to miss out on a rebate. And, even bill payers that do qualify will not see any reduction until 2023 or 2024.

Both the EA and Ofwat have indicated that their investigations will take time but that they will continue to provide updates on their progress which can be found here and here respectively.

DEFRA publishes guidance on conservation covenants

The introduction of conservation covenants is getting a little bit closer.  Binding commitments will be able to be made to conserve natural or heritage features of the land for the public good. So, whilst you could try to use section 106 agreements to offset the biodiversity impact of a new development, this link will become easier to ensure with a Conservation Covenant.  The relevant provisions of the Environment Act 2021 came into force at the end of September, and now we have some guidance from Defra “Getting and using a conservation covenant agreement” (dated 18 November 2022).

But it is not a functional regime yet.  We are still waiting for the further secondary legislation and guidance needed to provide some of the important substance, in particular about who can be a “responsible authority” with whom landowners can contract.  Perhaps Defra are right to proceed so cautiously.  Unusually, the very first point they make in this new guidance document is “seek legal advice”.  This underlines the point that these deeds, that can bind land for 30 years and more, are not to be lightly entered into.