Environmental Law News Update

In this latest Environmental Law News Update, Gordon Wignall, Christopher Badger, and Mark Davies consider the inadequate disposal of clinical waste, a Bank of England report on climate change and the banking sector, and a RoboCop for the environment.

Clinical waste: an unfinished story 

There has a been a great deal of press attention very recently about the treatment of clinical waste. Press reports indicated that a company with the obligation to deal with this waste had simply not been doing so, to such an extent that the COBRA committee had been convened.

This story points to many different roads of interest to environmental professionals.

The company was named in the press as Healthcare Environmental Services Limited (“HES”). It was also said that the company had difficulty in obtaining access to incineration infrastructure.

It is necessary to be cautious at this stage, since a great deal remains unclear. That in itself raises issues. Current notions are that openness is the friend of the environment. Openness is reflected in this instance by the Beta service provided by Companies House, BAILII and the Regulators’ public registers.

It is impossible, however, not to visit a side road in a little detail and to mention a recent procurement case, SRCL Ltd v. NHS Commissioning Board (NHS England) HT-2017-000169 (27 July 2018) (sourced via BAILII, but which came to the writer’s attention through the excellent blog Legal Futures).

The case is itself of interest to civil litigation practitioners because the judge criticised the decision of the claimant to call its own solicitor as a witness of fact, putting her in her own difficult regulatory position. The judgment is also well worth a read on the topic of the importance of Lists of Agreed Issues, which should be established by the time of PTR. If a matter is not in a list of issues it may well not be determined.

SCRL’s complaint was that HES, the successful auction bidder for a contract to deal with NHS waste, had won its bid by reason of an “abnormally low tender” (which had not attracted the correct level of scrutiny by NHS England).

During the procurement proceedings, the losing bidder (SRCL) complained that supposed incineration plant in Scotland was not operational, could not be commissioned at all and that it did not provide “incineration” because a process of pyrolysis was employed (paras.24-28 and 30).

SRCL also alleged in terms that “if HES won the contract, the waste would not be incinerated and would simply be stored or stock piled” (para.87).

The public register in England shows that HES has permits at three sites regulated by the EA. It is not possible to read the permits on-line. The enforcement page of the gov.uk website has four entries showing a breach of reg.36 reading “comply with conditions and remedy pollution”. These are from 7 March to 25 July. The fifth entry discloses a breach of reg.38 dated 25 July, a regulation which governs criminal offences. It is impossible to discover more.

Companies House shows that HES is Scottish, so that its main infrastructure is regulated by SEPA. The judgment shows that the plant in Scotland was where it was intended finally to dispose of the waste.

The judge dismissed the complainant’s allegations on what one might think was very slim evidence (see para.86). The judge himself was in a difficult position by reason of the way in which the claim had been presented to him.

The eagle-eyed reader will have noticed that the reg.38 proceedings were commenced two days before Mr Justice Fraser gave judgment.

A lot might be thought to follow from all this. One can only identify some questions. One is the state of the public registers and whether or not they disclose enough electronically (given obligations of confidentiality). Another is the extent to which SEPA and the EA are required and do communicate with each other about the provision of infrastructure and the extent to which a permit in one part of the UK can be met by infrastructure in another (this is an issue which constantly rumbles underneath the surface of the judgment). One might also ask whether a regulator should be invited to intervene in private law proceedings if there may be unintended consequences for the environment.

There is also the related question about the practical ability to meet climate change and waste aspirations. In the Waste (Scotland) Regulations 2012 the Scottish government has banned biodegradable municipal waste from going to landfill after 2020. If it is not possible to send biodegradable municipal waste to landfill and there really is a lack of incineration facilities, then how will governments ensure that waste of different sorts is not simply dumped, leading to a further increase in waste crime and economic and regulatory consequences for local authorities and innocent landowners?

Bank of England publishes report on climate change and the banking sector

On 26 September the Bank of England published a report on the impact of climate change on the UK banking sector. To compile the report, the ‘Prudential Regulation Authority’ (PRA) conducted a survey of 90% of the UK banking sector representing over £11 trillion in assets.

The report identifies two principal categories of risk factors – physical risks that arise from climate and weather-related events, including heatwaves, droughts, storms and sea level rise which can lead to large financial losses, impairing asset values and the creditworthiness of borrowers, and transition risks arising out of the process of adjustment to a low-carbon economy, for example changes in policy, technology or sentiment can result in a reassessment in the value of a large range of assets and create credit exposures.

The PRA has identified three broad categories that define how banks are responding:

• 30% are being ‘responsible’, an approach primarily driven by Corporate Social Responsibility, focusing on reputational risks;
• 60% are being ‘responsive’, where climate change is viewed as a financial risk, albeit from a relatively narrow, short term perspective;
• 10% are being ‘strategic’ taking a more comprehensive approach on the long-term view of financial risks.

The report found that financial risks arising from climate change are sufficiently material to be considered at board level. As a consequence, the PRA will be setting out supervisory expectations for consultation that will focus on governance, strategy and risk management. In addition, a Climate Financial Risk Forum will be established, in order to share best practice and to build intellectual capacity.

Materiality of risks posed by climate change (and other environmental issues) is a current hot topic. This blog has already reported on several instances of organisations being referred to either the Financial Conduct Authority or the Financial Reporting Council for failing to properly address climate change in their annual reports.

The same report also identifies two particular needs to promote the required investment:

• Green securitisation. By securitising assets, banks certify borrowers’ credit quality which will be pivotal to obtaining the necessary finance for energy transition and long-term sustainable infrastructure;
• Green bonds. As underwriters, banks can provide capital market access for green bond issuers or can invest in the green bond market themselves.

The Bank’s report and proposals will be welcome news to those who have read about the worrying conclusions reached by the IPCC in its Special Report on Global Warming of 1.5oC of today’s date. The Report has restated just how much work is going to be needed on a global scale to tackle climate change to the levels required under the Paris Agreement.

The full report can be found here.

The IPCC Report, which will be covered in 6 Pump Court’s International Climate Change Blog in the coming weeks, may be found here.

A RoboCop for the environment?

On 5 October the Government announced the initial details of a new fund to back projects aimed at ensuring rules and regulations ‘keep pace with technological advances of the future’. The projects backed range from virtual lawyers to flying cars.

The 15 winning bidders of the £10 million Regulators’ Pioneer Fund are tasked with creating a regulatory environment that ‘gives innovative businesses the confidence to invest, innovate and deploy emerging technologies for the benefit of consumers and the wider economy’.

Where, you might ask, does our title (it is certainly not based on the 80s/90s film franchise RoboCop, thank you) for this piece come from in all of this? Sadly, not in the form of any proposed android enforcement officer tasked with taking down the worst waste criminals, but rather SEPA’s winning project, the ‘Decommissioning Regulatory Hub’.

SEPA’s project was one of two winners from the Clean Growth section (the other being Ofgem and its ‘Future Services Lab’) and it is proposed to provide a ‘safe, collaborative environment that supports industry to develop and test innovative new products and services in support of decommissioning’. It will reportedly, ‘bring together operating companies and multiple regulators from across the oil and gas industry and waste supply chain to address cross-cutting areas, share best practices, create innovative solutions and manage the associated risks’. So, whilst there is no plan for an Environmental RoboCop, at least there is a plan to utilise new technology in at least one area of environmental law.

It should be noted that the SRA have also been awarded money for their bid for ‘Data-Driven Innovation in Legal Services’, which, whilst aimed at ‘growing the underdeveloped legal services market for small businesses and consumers’, might come to have applications in the environmental field down the line. One example this author can think of is allying AI learning with satellite mapping data to identify illegal waste sites.

The full list of winning projects can be found here.

We published September’s Environmental Law Podcast recently – a monthly round-up of the latest developments in environmental law.

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