Environmental Law News Update

In this latest Environmental Law News Update Charles MorganGordon Wignall and Frances Lawson consider the Draft Environment (Principles and Governance) Bill, recent official publications on water resource infrastructure and a report from the Prudential Regulation Authority concerning climate change-related financial risks.


Scrutiny of the Draft Environment (Principles and Governance) Bill

Section 16 of the European Union Withdrawal Act is that part of the Act which is intended to retain the EU acquis so far as it concerns environmental law. Section 16 had as its target core requirements the following: a set of minimum principles which would reproduce key aspects of EU environmental principles, the establishment of an independent body to secure their observance, and a duty on the part of Ministers of the Crown in any department to ensure that these principles are applied in the course of their policy-making.

In order to achieve this end, the Government drafted the Environment (Principles and Government) Bill. The intention now is that the contents of this Bill should form part of the draft Environment Bill (still to be published).

Michael Gove began the foreword to the Bill as presented to Parliament in December 2018 by stating that: “Leaving the European Union is a once-in-a-lifetime opportunity for this country to help make our planet greener and cleaner, healthier and happier”. That sense of happiness has not extended to the Environment Audit Committee when inquiring into its proposals and in producing its 18th report. Predictably, perhaps, the Committee sensed that the environmental principles might be a little short on the full acquis and that the independent body might not be so independent.

First and foremost, the Committee proposes that a “high level of environmental protection” should not only be incorporated, but that this should guide the principles themselves.

Secondly, the Committee proposes an alternative to the requirement to “have regard” to the policy statement on environmental principles: all public bodies should have a duty to act in accordance with the policy statement and to apply the principles.

The Committee does not like the fact that the current proposals do not adequately secure the independence of the new Office for Environmental Protection (“OEP”): it proposes that the OEP should report direct to Parliament and not be beholden to the Secretary of State.

The Committee is not content with the current definition of “environmental law” as the OEP’s remit and proposes a tighter and at the same time wider definition, expressly including international law and also extending to the enforcement of climate change law.

Indeed, the Committee puts forward a list of areas in which the OEP should be entitled to “bring cases against the Government”, including matters relating to energy and waste matters. It also wishes to strengthen the role of the OEP, by making it a statutory consultee on changes to environmental law and by providing it with a more hard-edged right to take proceedings, certainly one which is not limited to conventional deferential judicial review principles. The OEP must be able to monitor actual standards and outcomes and not just the processes to achieve those ends. The Committee proposes a new right of challenge in the Upper Tribunal.

To date the policy statement on principles has not been published, but, anticipating further interference by Government, the Committee proposes that approval to the policy statement should always be obtained from Parliament.

In passing, it is of some modest interest that when Mr Gove gave evidence, he commented that he thought that the OEP staff would number some 60-120.

All-in-all, the Environment Audit Committee gave the Government a resoundingly poor score (see para. 55). It also expressed its concerns that it has not been able to exercise its role of pre-legislative scrutiny by reason of the failure on the part of the Government to publish the remainder of the Environment Bill, which will obviously be a creature of some size and significance.

The full report can be found here


More Leaks to Trouble the Government

On 23 April, the House of Commons Environment, Food and Rural Affairs Committee published its Report on the Draft National Policy Statement for Water Resources Infrastructure. On 25 April, Water UK, the water companies’ representative body, published its Public Interest Commitment. Both documents arrive as Ofwat is in the process of reviewing the companies’ business plans for the period 2020 -25 and has “fast-tracked” those of United Utilities, Severn Trent Water and South West Water whilst requiring further work from others. Meanwhile, the Secretary of State is assessing the companies’ Water Resource Management Plans for 2019-2024 and has already rejected two of them (Thames Water and Affinity Water).

There is a distinct overlap of subject-matter between the two recent documents (and indeed the two review processes) on the subject of leaks. The Report on the draft NPS stresses strongly the need to promote reduction in demand before embarking on the alternative solution of major new infrastructure projects (with their inevitably significant environmental consequences). “The NPS should require that a company proposing significant new supply infrastructure has a clear strategy in its water resources management plan to mitigate as far as possible the need for it.” The Report also reiterates the Committee’s concerns that the leakage reduction targets in the current business plans are “not ambitious enough”.

In response, Water UK seeks to show “leadership at a national level” by identifying “five challenging goals” to be achieved by 2030. These are:

  • to triple the rate of leakage reduction
  • to make bills affordable “as a minimum for all households with water and sewerage bills more than 5% of their disposable income” (? – interpretations welcome)
  • to achieve net zero carbon emissions
  • to reduce plastic waste by the equivalent of 4 billion plastic bottles
  • to make 100% commitment to the Social Mobility Pledge.

An independent panel will be established to report annually upon progress.

It will be interesting to see which of the current leaks the Government finds easier to stem.


Prudential Regulation Authority publishes expectations on climate change risks

Following on from last week’s news about the Bank of England’s warnings on the importance of climate change-related financial risks, the Prudential Regulation Authority (“PRA”) that sits under the Bank’s auspices has just published a Supervisory Statement (or “SS”) on ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’. A Policy Statement (“PS”) issued alongside the SS summarises the responses received to its recent consultation and the changes made to the SS, which are said to be minor. The SS and the PS therefore need to be read in conjunction.

The PS sets out that the PRA received 54 consultation responses. It notes that some respondents urged the PRA to move more quickly and decisively on climate change issues. Perhaps the most eye-catching part of the PS relates to implementation. The SS, it explains, sets out “expectations” that the PRA has of firms, and will take effect immediately upon publication. It goes on to note that the PRA expects firms to have an initial plan in place to address the expectations and submit an updated Senior Management Function form by 15th October 2019.

The substance of the PRA’s expectations in the SS relates to the need for all firms to adopt a strategic approach to managing climate change-related financial risks. Specifically, the SS specifies that the PRA:

  • Expects a firm’s response to the financial risks from climate change to be proportionate to the nature, scale, and complexity of its business;
  • Expects firms’ approach to managing financial risks from climate change to mature over time;
  • Expects a firm’s board to understand and assess the financial risks from climate change that affect the firm, and to be able to address and oversee these risks within the firm’s overall business strategy and risk appetite.
  • Expects firms to address the financial risks from climate change through their existing risk management frameworks, in line with their board-approved risk appetite, while recognising that the nature of the risks requires a strategic approach.

The SS states that the PRA intends to embed the measurement and monitoring of these expectations into its existing supervisory framework.

The PRA’s approach signals that the UK financial industry is being hauled into action to climate change-related financial risks seriously, although ‘hauled’ may be a slightly unfair choice of term, as the PS reveals that some of the consultation responses called for the PRA to take more urgent and decisive action on climate change. In any event, this is a watershed moment and one whose effect should be to change the way banks and insurers consider the issue, now and for the future.

The Supervisory Statement can be found here

The Position Statement can be found here


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


To keep up-to-date click here to subscribe to the mailing list. If you have any comments or suggestions please contact Bridget Tough at bridget.tough@6pumpcourt.co.uk

Environmental Law News Update

In this latest Environmental Law News Update, Stephen Hockman QC, Christopher Badger and Ana Kantzelis consider a rebuke for the UK’s lack of progress towards improving air quality in the European Commission’s most recent Environmental Implementation Review, a report from the Bank of England on the financial risks of climate change and coverage of a recent meeting of UNCITRAL WG III Investor-State Dispute Settlement Reform.


UK rebuked for lacking improvement in air quality

On 5th April, the European Commission published its ‘EU Environmental Implementation Review 2019’ in respect of all Member States, including the UK. The report is structured first by considering thematic areas including ‘Turning the EU into a circular, resource-efficient, green and competitive low-carbon economy’, ‘Protecting, conserving and enhancing natural capital’ and ‘Ensuring citizens’ health and quality of life’ before moving on to looking at implementation tools including taxation and governance.

Back in 2017 the main challenges for the UK had been identified as a need to improve air quality in urban areas, to tackle water quality (in particular water pollution caused by nitrate from agricultural use) and to improve nature protection. In the most recent review, the European Commission has reported on progress:

  • On air quality in urban zones there has been no change to the compliance situation with regard to the high number of zones with exceedences above the EU air quality standards for nitrogen dioxide, albeit that in 36 out of 37 non-compliant zones, the latest data shows that there has been some improvement. Air quality in the UK continues to give cause for severe concern and it is noted that persistent breaches of air quality standards have severe negative effects on health and the environment.
  • On water quality, diffuse pollution, notably from nitrates, remains an issue in parts of the UK.
  • There has been some improvements in nature protection, notably on the protection of the harbour porpoise, but the protection of offshore birds is still a challenge and there is no overall protection strategy for dispersed species to date.

Other interesting aspects of the review include:

  • The UK has gone from 5th to 11th on the EU’s ‘Eco-innovation Scoreboard’. The main drivers are the growing market demand for eco-industry and clean-tech sector products, building and construction sector and investment in renewable energy. However, the main barriers are the cost of virgin versus secondary materials, difficulty in accessing financing and capital investment and the fact that mainstream accounting procedures do not favour circular business models.
  • Recycling accounts for 44% of municipal waste. The UK has been stuck at this level for the past few years and further efforts are needed to hit the 50% target for 2020 and subsequent post-2020 targets. Landfill tax is one of the highest in Europe. The plastic bag charge is estimated to have taken 15.6 billion plastic bags out of circulation.
  • Road transport is responsible for over 35% of NOx emissions.
  • The ecological status/potential was less than good in two thirds of surface water bodies, demonstrating that the UK still has a long way to go to meet the objectives set down in the Water Framework Directive.
  • Environmental taxes account for 2.39% of GDP in 2017. There is a potential for shifting taxes from labour taxes to consumption taxes for the benefit of the environment.
  • The UK spent EUR 17.6 billion on environmental protection in 2016, a decrease of 13% from 2015. 77.8% of these payments were allocated to waste management activities. The review identifies that there are existing environmental financing gaps, in particular in the area of water quality, which is delaying the correct implementation of EU environmental law and policies.

The full report can be found here


Bank of England warns on financial risks of climate change

In an open letter published on 17 April, the Bank of England has warned of the potentially catastrophic financial risks caused by climate change. As part of the Network for Greening the Financial System (‘NGFS’) the BoE has contributed to a report designed to translate commitments to act on climate-related financial risks into concrete action through four specific recommendations.

First, to integrate the monitoring of climate-related financial risks into day-to-day supervisory work, financial stability monitoring and board risk management. Supervisors are encouraged to set expectations to ensure financial firms are adequately addressing the financial risks from climate change, including by conducting scenario analysis to assess their strategic resilience to climate change policy. Firms are encouraged to take a long-term, strategic approach to the consideration of these risks, and to embed them into their business-as-usual governance and risk-management frameworks.

Second, lead by example, specifically central banks are encouraged to integrate sustainability into their own portfolio management.

Third, collaborate to bridge the data gaps to enhance the assessment of climate-related risks. Public authorities should share and if possible make publicly available any climate-risk data.

Fourth, build in-house capacity and share knowledge with other stakeholders on management of climate-related financial risks. An important element to achieving consideration of climate risks across the financial system is to support internal and external collaboration.

The full report can be found here

One factor that is highlighted in the report is the need for additional guidance on the materiality assessment in order to help firms comprehensively capture the climate-related risk factors to be considered and disclosed. The members of the NGFS collectively pledged their support for the recommendations of the Task Force on Climate-related Financial Disclosures and encouraged all companies issuing public debt or equity as well as financial sector institutions to disclose in line with those recommendations. Given the almost universal support for the work of the TCFD, why is there as yet still no internationally consistent environmental disclosure framework?


Recent meeting of UNCITRAL WG III Investor-State Dispute Settlement Reform

Following our piece on environmental considerations in IIAs in last week’s blog, this week we cover a recent meeting of the UNCITRAL Working Group III on Investor-State Dispute Settlement Reform, held in New York on 1-5 April.

One of the most common dispute resolution mechanisms for IIAs is ad hoc arbitration under the rules of the United Nations Commission on International Trade Law (UNCITRAL). UNCITRAL is the core legal body of the UN system in the field of international trade law, with a mandate to “further the progressive harmonization and unification of the law of international trade.”

You can read the report here. WG III is comprised of 60 voting member states, 103 non-voting states, 2 state entities, 6 inter-governmental organisations and 55 non-governmental organisations, and is currently entrusted with a broad mandate to work on possible reforms to the Investor-State Dispute Settlement (ISDS) system.

In recent years, a growing number of countries and civil society groups have been frustrated with the current ISDS system, and have voiced their concerns in these ongoing ISDS reform discussions.

One the main agenda items at the New York session was third-party funding, which refers to cases where financial support is provided to the claimant investor from a third party, typically a litigation fund. Third-party funding is an increasingly common feature of international arbitration, however, concerns have been expressed, particularly by some developing countries, about a lack of regulation and transparency, and the potential that it has the potential to drive costly and speculative claims. WG III has begun to canvass possible ways to address these concerns, such as required disclosures and rules on third-party funding. It was concluded that it would be desirable for reforms to be developed by UNCITRAL relating to the definition of, and use or regulation of, third-party funding in ISDS.

Delegates also discussed “other concerns not already covered by the broad categories of desirable reforms already identified,” as agreed at the November negotiating session. Topics included in this category included: consideration of means other than arbitration to resolve investment disputes; dispute prevention methods; the requirement to exhaust local remedies before bringing claims; third-party participation; counterclaims; calculation of damages; and the phenomenon of “regulatory chill”. It is interesting, and perhaps a missed opportunity, that some particularly controversial items which have previously been raised by a significant number of observers and countries as concerns have been included in this catch-all “other concerns” category. For instance, it was agreed that the link between ISDS and regulatory chill would not be discussed at this stage as a separate concern of the Working Group.

Delegates also discussed proposals for developing a work plan for upcoming deliberations on phase three of the WG III mandate. A particularly interesting institutional reform option outlined was the European Union’s proposal for a multilateral investment court (MIC). The European Commission submitted this proposal to the UNCITRAL process in January, accompanied by a separate submission for a work plan leading up to an MIC.

The next meeting of WG III will be in Vienna between 14-18 October 2019.


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


To keep up-to-date click here to subscribe to the mailing list. If you have any comments or suggestions please contact Bridget Tough at bridget.tough@6pumpcourt.co.uk

Environmental Law Podcast – April 2019

The latest monthly environmental law news podcast presented by Christopher Badger and Mark Davies in association with LexisPSL, is now available.

In this short update Chris and Mark consider and discuss:

–          further developments in the creation of the new Office for Environmental Protection

–          the European Commission’s latest publication on pharmaceuticals in the environment

–          the alleged lack of content in Philip Hammond’s 2019 Spring Statement


Please find a link to April’s podcast here:-

Environmental Law News Update

Following a week off, our Environmental Law News Update returns with four articles covering recent developments. Stephen Hockman QC, William Upton QC, Charles Morgan, Gordon Wignall and Ana Kantzelis consider the inclusion of environmental considerations in IIAs, the treatment of environmental protestors in the civil courts, the duty of care in respect of environmental activities of companies at home and abroad, and publication of new EA guidance containing an extended list of convictions for assessing permit competence.


The inclusion of environmental considerations in IIAs

In recent years there has been a surge in the number of international investment claims filed with an environmental component. A trend towards the inclusion of environmental and sustainability clauses in new generation international investment agreements will ensure that environmental considerations are increasingly taken into account by investment tribunals.

As many readers of this blog will be aware, international investment agreements (IIAs) concluded between States are a common method of regulating the arrangements under which international investors, based in one state party, undertake investment in the other party, which is the host State for the investment. The primary purpose of IIAs is to protect the property rights of foreign investors, whether natural or juridical. They seek to achieve this by establishing specific rules which provide substantive protections, together with procedures for resolving disputes between foreign investors and host states, usually in the form of international adjudicatory arrangements. The result can be open-textured or weak language, resulting in an imprecise and uncertain co-existence between a general unwillingness to reduce environmental standards and the pursuit of economic objectives.

Historically, it has been rare for either bilateral or multilateral IIAs to include any specific reference to environmental considerations. In recent years, however, newly concluded “new generation” IIAs have increasingly included provisions specifically designed to protect the ability of the State to act in pursuit of regulatory objectives, including in the area of environmental protection and sustainable development. This trend is clear and has been well-documented. For example, a 2011 paper by the Organisation for Economic Co-operation and Development (OECD) covering 1623 IIAs showed that, although only 8.2 per cent of these agreements included environmental language, the proportion of newly concluded treaties which did include a reference to the environment increased from the mid-1990s, rose steeply from 2002, and peaked in 2008 when 89 per cent of newly concluded treaties included a reference to environmental concerns.

Two of the main factors driving this trend are as follows. First, in recent decades there has been an increasing internationalisation of environmental law, and a growing awareness of the interconnected and transboundary nature of many environmental problems. References to sustainable development and the role of the private sector are increasingly being integrated into the outcome documents of major multilateral environmental conferences, such as in the UN 2030 Agenda for Sustainable Development and its Sustainable Development Goals and the 2015 Paris Agreement, and the direction of travel is clear – a shift away from a polluting, resource-inefficient economy, towards a global economy with a lower environmental footprint.

A second driver of this trend, and related to the above, is a desire by host States to protect their ability to act in pursuit of legitimate environmental regulatory objectives. The inclusion of regulatory “carveouts” or exceptions in newly concluded IIAs are attempts by host States to minimise the likelihood that regulatory changes will trigger a cause of action by an aggrieved foreign investor; the standard formula for an investor-State claim with respect to adverse regulation being for an investor to sue a host State for indirect expropriation and violation of a “fair and equitable treatment” standard. Although the scope and content of these environmental provisions vary from treaty to treaty, broadly speaking, they are an attempt to:

(i) recognise the rights of States to adopt certain measures designed to ensure that investment activity is undertaken in a manner  sensitive to environmental concerns; and/or
(ii) provide guidance as to the kind of regulatory measures which will not amount to indirect expropriation under the agreement.

In recent years there has been a surge in the number of international investment claims filed with an environmental component, a significant number of which arise from host State regulatory changes in renewable energy policy (see, for example, a number of recent cases involving changes to renewable energy policy in Spain). Other categories of disputes have related to the environmental permits and licencing, extractive industries, water and waste management. There are, however, very few awards that demonstrate how environmental carveouts in new generation IIAs may be taken into account by arbitral tribunals. One example is Al Tamimi v Oman (2015, ICSID), a dispute relating to the enforcement of environmental regulations against a limestone quarry project and the US-Oman FTA. In this case, the tribunal referred explicitly to an environmental provision at Article 10.10 of the treaty, and to the ‘environmental’ Chapter 17 of the treaty, as a means to interpret the minimum standard of treatment under Article 10.5, finding that “when it comes to determining any breach of the minimum standard of treatment under Article 10.5, the Tribunal must be guided by the forceful defence of environmental regulation and protection provided in the express language of the Treaty.” It is clear that environmental considerations, clearly expressed in the treaty text, contributed to the tribunal’s decision to reject the claim for a breach of Article 10.5.


Restraining environmental protestors

In these days of environmental protest, what role can the civil courts play? The Court of Appeal has recently had to consider the use of interim injunctions to restrain unlawful acts by Persons Unknown in the case of Boyd & Corre v Ineos Upstream Ltd & Others [2019] EWCA Civ 515. There are certain statutes that allow it – notably, as many in Chambers are aware, section 187B of the Town and Country Planning Act 1990 (when dealing with unlawful traveller and gypsy sites) – but normally a court will be very cautious about granting injunctions against unknown persons since the reach of such an injunction is necessarily difficult to assess in advance. Environmental protest also raises the need for the court to take into account the right to lawful assembly and freedom of expression. In this case, Ineos and several of its subsidiaries had sought a wide ranging set of interim orders to protect its fracking sites and offices from (1) trespass to land; (2) private nuisance; (3) public nuisance; and (4) actions aimed at injuring other companies in the supply chain. The orders had been made by the High Court against two named defendants and a range of “Persons Unknown”, defined by reference to the different alleged torts.

The Court of Appeal did reject the broad argument that there is a conceptual or legal prohibition on suing persons unknown who are not currently in existence but will come into existence when they commit the prohibited tort. This will no doubt disappoint some legal theorists, but it is a proper reflection of the court’s exercise of its discretion whether or not to impose an injunction when faced with likely unlawful acts. Indeed, the key point to bear in mind was that Ineos did satisfy the judge that unidentifiable protestors were likely to commit the relevant torts and that there was a real and imminent risk of their doing so. Faced with that evidence, a court is unlikely to stand idly by – however well motivated the protestors may seem to be – and will seek to frame the injunction in terms that correspond to the threatened tort and which are sufficiently clear and precise as to enable persons potentially affected to know what they must not do. Therein lies the conundrum. The injunctions restraining trespass and interference with private rights of way stood. But the Court of Appeal accepted that the injunctions seeking to limit potential protestors’ right to lawful assembly on the public highway, and the orders regarding interference with the supply chain, were too broad. Indeed, the court went as far as holding that unreasonable obstruction of the public highway is not susceptible to advance definition and that a person faced with such an injunction may well be chilled into not obstructing the highway at all. It is only when events have happened which can in retrospect be seen to have been illegal that wide-ranging injunctions of the kind that had been granted should be considered.

Whilst writing this, the role of managing the ‘Extinction Rebellion’ protests on the capital’s streets has been left to the Metropolitan Police. But it looks like the courts will continue to be called upon by private companies to strike the correct balance between their private law rights and the right to protest.


Toxic Torts at Home and Abroad – the Supreme Court speaks, but definitely not the last word.

The much-awaited decision of the Supreme Court in Vedanta Resources plc v Lungowe [2019] UKSC 20 was published on 10 April. The case concerns the assertion of liability of both Vedanta and its Zambian mining subsidiary KCM for the pollution of a watercourse in Zambia and its environmental consequences. The Supreme Court upheld the decision of both the first instance judge and the Court of Appeal that the claimants were entitled to proceed in the English courts against both Vedanta and KCM. The style of this blog permits no more than a headline summary of the main points decided in the pellucid judgment of the court delivered by Lord Briggs:

  1. to exercise the established right to sue the English parent company Vedanta in England was not an abuse of EU law (a doctrine found to be of narrow application); whilst the prospect of thereby bringing the Zambian subsidiary KCM before the English courts was a substantial reason for suing Vedanta it was not the sole one; there was a bona fide assertion of direct liability against Vedanta;
  2. the issue to be tried against Vedanta had a real prospect of success; the circumstances in which a parent might owe a tortious duty of care in respect of its control and management of the activities of its subsidiaries fell to be determined on general principles and did not constitute any special or novel category of common law negligence liability; on the facts, there were triable issues concerning statements made in published materials, the effect of a management services agreement and the evidence of a former employee as to mode of management in practice;
  3. the allegation of breach of statutory duty under Zambian legislation was similarly arguable;
  4. nevertheless the natural place to litigate against KCM was Zambia; Vedanta having indicated a willingness to submit to the Zambian jurisdiction, any risk of conflicting and irreconcilable judgments effectively arose from the choice of the claimants nevertheless to sue Vedanta in England;
  5. the clinching factor in favour of permitting the claim against KCM to proceed in England was the concern that substantial justice could not be obtained in Zambia because of funding problems and lack of suitable size and experience.

For our readership, the main point of interest will be the consideration of the principles upon which a parent company may assume and be in breach of a direct duty of care owed to employees of a subsidiary and third parties in relation to the activities of the subsidiary. Lord Briggs seemed most impressed by the potential effect of published materials “in which Vedanta may fairly be said to have asserted its own assumption of responsibility for the maintenance of proper standards of environmental control over the activities of its subsidiaries, and in particular the operations at the mine, and not merely to have laid down but also implemented those standards by training, monitoring and enforcement …” [61].

Since it seems unlikely to have been suggested that the Zambian claimants had read such material, the kernel of its relevance seems to be as an admission of what the realities were or should have been. The result may well be to herald in a new cautious manner of expression of environmental credentials in corporate literature – grand but unsubstantiated claims will be asserted to have consequences and parent companies may discover that the law requires them “to put their money where their mouth is”.

It is also interesting to consider the judgment of Lord Briggs in the context of a “one-man” company, where the extent to which the “parent” (read “sole shareholder”) controls and directs the activities of the “subsidiary” (read “company”) to a degree that is effectively total. There is certainly nothing in the reasoning of the court to distinguish between individuals and corporations as “parents”. Would Mr. Salomon today be able to avoid the imposition of a tortious duty of care in respect of the environmental activities of A. Salomon & Co. Ltd on similar facts? Does that represent any change in the law? There is much to be discussed and expect further seminars from Six Pump Court on the topic following our recent “Piercing the Corporate Veil” (already repeated by popular demand).


Extended list of convictions for the purposes of assessing permit competence

On 22 March 2019 the Environment Agency published “guidance” on the Gov.UK website as to the convictions which an operator must disclose when applying for a permit.

This list is extensive (covering about 40 statutes) and extends not only to applicants but also to company officers, even when the conviction in question relates to another company of which an applicant’s officers were officers at the time of the offence. The list makes allowance for spent convictions.

This “guidance” is the response to DEFRA’s 2018 consultation about waste crime.

The issue as to what previous convictions an applicant or permit holder has, is of relevance to the Core Guidance of 2013 (which does not appear to have been updated). This prescribes what is meant by operator competence. The Core Guidance tells an applicant that an operator must not have a “poor record of compliance with regulatory requirements”. Convictions may also result in the removal of a permit because “competence” is no longer demonstrated.

These requirements are in fact a long way from what is specified in the Permitting Regulations themselves about competence. On the matter of an application for a permit, for instance, paragraph 13 of Schedule 5 requires only that an applicant should “operate the regulated facility in accordance with the environmental permit”.

The intention appears to be that the regulator can divine a failure of competence from the fact of convictions.

There has been a considerable degree of litigation at the highest level about the disclosure of convictions and the human rights consequences, in particular in the Supreme Court. On 30 January 2019 in Gallagher the Supreme Court considered whether the requirement to disclose previous convictions in certain (very sensitive) circumstances was lawful (eliciting varied responses).

Whether, in individual cases under the permitting regime, convictions under the new list do in fact justify a refusal to issue a permit, would clearly be a matter of careful consideration. But there are also issues about the validity of the guidance itself, as well as the extent to which the refusal to issue (or to remove) a permit is a sanction and an interference with a right of property. It is not at all clear that an aggrieved person would be entitled to the detailed reasons for an adverse decision.

A decision to refuse a permit on competence grounds is a matter which an inspector can consider on appeal.

Following the same consultation about reducing waste crime, DEFRA has also concluded that it will also make important changes to the exemption regime. These will be announced, it is said, in 2020.


To keep up-to-date click here to subscribe to the mailing list. If you have any comments or suggestions please contact Bridget Tough at bridget.tough@6pumpcourt.co.uk

Environmental Law News Update

In this latest Environmental Law News Update, Christopher Badger and Mark Davies consider requirements for UK waste exporters to review contingency plans in the event of a ‘no deal’ Brexit, a possible merger of DEFRA Non-Departments Public Bodies and new guidance for organisations to ensure compliance with modern slavery regulations.


Government issues reminder to waste industry in the event of a ‘no deal’ Brexit

The Government has reminded companies that export waste from the UK to review their contingency plans in case of disruption at ports, should the UK leave the European Union without a deal.

With or without a deal, all existing consents which authorise the export of hazardous waste, known as ‘notified waste’, to any EU country will remain valid when the UK leaves the EU (it is understood that Spain was the last EU member state to reach agreement on this, to whom our principal waste export is apparently car batteries). Companies that export waste from the UK should see no change in the processes that govern the export of ‘non-notified waste’ (green-list wastes) to the EU.

However, the Government has warned that in the event of a no deal Brexit, there may be “some delays” at ports which operate ‘roll-on, roll-off’ systems, with Dover predicted to be most affected. Consequently, businesses are advised to:

  • Review their own capacity and how long they can store waste at their site;
  • Identify alternative storage facilities that could accept their waste;
  • Assess if there are other export routes to market that avoid impacted ports;
  • Identify any alternative recovery or disposal routes for their waste;
  • Contact their haulage operator to discuss any potential changes to transport plans.

If export routes are changed, then the export notification must also be changed and must be agreed with the UK and overseas competent authority. If additional waste is kept on site, this gives rise to potential environmental risks which will need to be assessed and controlled and could lead to visits by the Environment Agency!

The UK cannot deal with its own waste. It does not have the infrastructure. In addition, some waste has an economic value to other countries. There is a suggestion that the Government will publish detailed plans on the future of the waste export industry soon. Unsurprisingly, however, the only current intention is to try and maintain the status quo. The International Waste Shipments (Amendment) (EU Exit) Regulations 2019 were approved on 7 March. There was little debate. The Opposition in the Delegated Legislation Committee debate stated that due to the Government’s last-minute rushing through of Statutory Instruments, their ability to examine in depth their implications had been constrained and there had been insufficient time to consult stakeholders or to review whether the Statutory Instrument raised any problems.

One interesting aspect is that the UK has been a recipient of hazardous waste from Ireland for some time now, at the request of the Irish Government, due to the fact that suitable disposal facilities are not available in Ireland. In the UK this hazardous waste is subjected to high-temperature incineration. When the UK leaves the EU, Ireland is likely to be prohibited from exporting that hazardous waste to the UK under EU law.


Michael Gove suggests a merger of DEFRA Non-Departments Public Bodies

In evidence before the Environment, Food and Rural Affairs Committee on 27 March, Michael Gove stated that once we are outside of the EU, there will be new responsibilities that will fall to DEFRA that have been the responsibility of the EU. 2,800 staff have been recruited into DEFRA in order to deal with Brexit. Their roles (and whether they will still be needed if the UK does leave the EU) will form part of the forthcoming Comprehensive Spending Review.

A team is also currently considering what the future of DEFRA will look like and in particular the responsibilities of its numerous NDPBs, to see if any can be merged or if they need to be extended. There is, according to Michael Gove, an element of overlap (and potential gaps) that need to be addressed. He cited the fact that in other Government departments he has been responsible for closing other NDPBs and stressed the importance of having bodies that are fit for purpose.

The future of the Environment Agency was not specifically discussed.


New guidance on the publication of annual modern slavery statements

We thought we might be forgiven for occasionally adding an important issue from the wider regulatory world to our environmental fare, as corporate reporting requirements increase.

On 12 March the Government published guidance to help organisations identify whether they need to publish a modern slavery statement and, if so, best practice on how to do so. The requirement for certain commercial organisations to publish an annual statement setting out the steps they take to prevent modern slavery in their business and supply chains comes from s.54 of the Modern Slavery Act 2015.

If a commercial organisation meets all of the following criteria, it must publish an annual statement:

  • It is a body corporate or partnership, wherever incorporated or formed;
  • It carries on a business, or part of a business, in the UK;
  • It supplies goods or services; and
  • It has an annual turnover of £36 million or more.

The onus falls on commercial organisations themselves to determine whether or not they need to publish an annual statement and there are some fine distinctions within the criteria that could easily lead an organisation to think that it might not need to prepare one, when in actual fact it does. For example, it is not immediately apparent from the wording of the criteria that the turnover threshold is in fact the turnover of the organisation and any of its subsidiary undertakings, including those operating wholly outside the UK. So, if your parent company is registered at Companies House, but in fact is little more than a figurehead for the supply of goods and services overseas through subsidiary companies, and those companies have a combined turnover of £36 million or more (after trade discounts, VAT and any other taxes) then the parent company may need to prepare a statement.

Why, you might ask, should a commercial organisation bother doing this? What’s the penalty for failing to do so? In past years, organisations (which shall remain nameless in this article, but are easily found on Google) have failed to comply with the requirements and have been named and shamed for their failings. Still then, a business might shrug off that criticism, and view the requirement as an unnecessary regulatory requirement; be warned, in the Second interim report of the Independent Review of the Modern Slavery Act (the product of Frank Field MP, Maria Miller MP and Baroness Butler-Sloss – see here, published in January 2019, the authors recommended that the Independent Anti-Slavery Commissioner should monitor compliance and report annually and that the Government should make legislative provision to strengthen the approach, including warnings, fines (as a percentage of turnover), court summons and even directors’ disqualification.

So, with that warning given, the Government’s guidance may be found here


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