Environmental Law News Update

In this latest Environmental Law News Update, Gordon Wignall, Brendon Moorhouse, Christopher Badger and James Harrison consider a successful appeal by the Environment Agency in the Walleys Quarry litigation, draft documents issued by the new Office of Environmental Protection and the launch of a new consultation into the implementation of the biodiversity net gain (BNG) provisions for planning purposes.

Environment Agency succeed in Walleys Quarry appeal

On 17 January 2022, the Court of Appeal allowed the appeal by the Environment Agency against the decision of Fordham J (previously covered in our blog here). The judgment underlines the limits of the role of the courts to prescribe actions to be taken by public bodies in the face of allegations that the body is acting in a way that is incompatible with rights derived from Articles 2 and 8 of the ECHR. The context here was the risk to a five-year old boy from hydrogen sulphide emissions from a regulated landfill site.

The judgment of Fordham J had been that a declaration should be granted prescribing what was to be done by the Environment Agency in relation to emissions and by what timetable. He had considered that this relief was “necessary” since that the Court had to “step up” given the very real impact that was (and is) felt by Mathew Richard and his family. As is clear from the length and complexity of his judgment, Fordham J considered the relevant ECtHR jurisprudence in great detail. However, the Court of Appeal decided that he had not applied it correctly.

The Court of Appeal concluded that Fordham J had gone beyond his permitted remit in ensuring that no manifest error had been made by the national authorities when striking a fair balance between the interests of the applicant and the community as a whole. As submitted in the successful first ground: the Environment Agency is a statutorily appointed and expert regulator better able to determine how to action compliance with guidance and advice from Public Health England as regards hydrogen sulphide emissions than the Court.

Further, in the absence of a finding of any past or current breach of Articles 2 or 8, and without assessing the evidence of the Environment Agency’s officers as to the steps the Environment Agency was proposing to take in future, it was wrong for the Court to have granted a declaration. Whilst declaratory relief is flexible and can address proposed unlawful action, there was no evidential basis for the declaration in this instance.

Lindblom LJ succinctly summarised the position in the few paragraphs that he contributed to the end of Lewis LJ’s judgment:

In this case, the relief sought in the claim was predicated squarely on asserted breaches of the Environment Agency’s obligations under Articles 2 and 8 of the Convention, which were said to be extant and continuing. But as is clear from his judgment, the judge did not find that any such breach had occurred … There was no unlawfulness requiring a remedy. Yet the judge nevertheless granted relief. And he did so not by way of an advisory declaration, but in the form of an order framed in terms which were both mandatory and prescriptive … To grant such relief in this case was, in my view, to step beyond the role of the court in determining the claim on the facts as they were at the time.

The necessary consequence of finding that there had been no past or current breach put pay to the cross-appeal by the Respondent.

James Harrison and Gordon Wignall’s commentary can be found here and as it appeared in the Local Government Lawyer magazine here.

Draft documents issued by the new Office of Environmental Protection

The Office of Environmental Protection functions came into force on Monday 24th January 2022, marking one of the biggest changes to the scrutiny, regulation and enforcement of environmental laws in the UK in decades.

The OEP has published its draft strategy that is open to consultation, and also its draft enforcement policy that sets out how the OEP intends to use its powers to receive complaints, conduct investigations and bring proceedings in response to serious failures by government and public authorities to comply with environmental law.

Of particular interest are the relevant factors suggested for assessing the seriousness of any alleged breach of environmental law. These are recorded in the draft as:

  • Whether a public authority’s conduct raises any points of law of general public importance;
  • The frequency of the conduct over time;
  • The behaviour of the public authority, including a consideration of ‘compounding’ or ‘mitigating’ factors;
  • The harm or potential harm to the natural environment or to human health associated with the failure;
  • Any other relevant factors.

One of the compounding factors includes whether the public authority has a high degree of responsibility for the failure, for example by acting deliberately, recklessly or negligently. The current phraseology raises an eyebrow. The culpability of an offender would ordinarily be the first thing that a Court would assess – it wouldn’t be considered as a ‘compounding’ factor or, to put it another way, an aggravating feature of the offence. Here, the draft enforcement policy reads as if the level of culpability isn’t actually key to any determination of how the OEP should act, especially as it is suggested that even a negligent failure results in a high degree of responsibility on the part of the local authority. Where there has been a failure resulting in a breach of environmental law, it isn’t particularly difficult to suggest that culpability is at least negligent.

The draft strategy, draft enforcement and consultation documents can be found here

Government launches consultation into the implementation of the biodiversity net gain (BNG) provisions for planning purposes

Following the passage of the Environment Act in November 2021, the Government has launched a consultation into the implementation of the biodiversity net gain (BNG) provisions for Planning purposes (see here). The consultation is due to close on 5th April, and BNG is set to become mandatory in November 2023. (BNG provisions are already ‘live’ in respect to Marine Planning).

The overall objective will be for a developer to demonstrate 10% BNG over a 30-year period, and a key change is the dropping of brownfield sites as an exemption. This could pose problems for urban developers where brownfield sites already contain significant biodiverse content and where net gain cannot be identified on-site.

The details are not yet in place, but the direction of travel suggests that BNG plans will be expected to deliver on-site within 12 months of the commencement of development which is likely to impact multi-phase developments.

Another key area will also be the practical implementation of off-site gain. This subject has already stoked significant controversy in Australia where a similar scheme operates and has been criticised by many in the conservation sector.

To keep up-to-date follow us on Twitter @6pumpcourt or 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, William Upton QC, Christopher Badger and Natasha Hausdorff consider a new government report on the climate risks facing the UK, the state of England’s rivers and the extension of climate-related disclosure requirements by the FCA.

UK climate risk assessment

One of the leading items on the BBC News on 17 January 2022 was that the government has published its latest report on the climate change risks facing the UK.  The News bulletins highlighted that the likely costs of not taking action to adapt are that economic damage could exceed £1 billion per year by 2050, for any of the eight ‘very high’ risks out of the 61 risks identified.  They include risks to infrastructure networks, that could cascade across sectors; flooding; risks to financial markets; overheating in places of work; and risks associated with climate change overseas.  The number of risks that now fall into this ‘very high’ damage category has risen from the 3 that were identified a decade ago.

It is easy for the need for adaptation to be overshadowed by the great efforts being made to try to reduce and mitigate temperature increases.  But the two are interrelated. We must integrate adaptation action into the mitigation efforts – and successful mitigation should in turn ensure that adaptation remains more achievable.  Nevertheless, it is an unpalatable truth that despite all the efforts still being put into limiting average global warming to +1.5°C (from its current +1.2°C), the evidence from the IPCC shows that we must sensibly plan ahead for warming of +2°C by 2050.  We will also need to bear in mind the possibility of greater increases than that by 2080.  The report also highlights that a small shift in the average climate can lead to major changes in extreme events.

As was discussed in our environmental law conference in December, this UK report has been laid before Parliament as required by the Climate Change Act 2008.  It is the third risk assessment to have been produced since the Act began.  The CCRA is intended to be a spur for policy action, as it will lead to a new version of the National Adaptation Programme (NAP) in 2023.  Whilst there might seems to be a slight lack of urgency to this five-yearly reporting process, it is important that it exists as a statutory duty at all – so that policymakers are starting on common ground. It should also influence current decision making.  The government is also aware of the time delay issue – it has already asked the Climate Change Committee to identify what the priority areas for action are in the next two years, in advance of the next adaptation programme – and these have been endorsed in the CCRA3 report.

A link to the report can be found here

The state of England’s rivers

Last week the Environmental Audit Committee published its Report on Water Quality in Rivers, which began by setting out that obtaining a complete overview of the health of our rivers and the pollution affecting them is hampered by outdated, underfunded and inadequate monitoring regimes. Nevertheless, the report charged that a ‘chemical cocktail’ of sewage, agricultural waste, and plastic is polluting the waters of many of the country’s rivers. Not a single river in England has received a clean bill of health for chemical contamination, and the evidence disturbingly suggests that they are becoming breeding grounds for antimicrobial resistance.

The most recent figures published by the Environment Agency show that only 14% of English rivers met good ecological status and no river met good chemical status. It is also alleged that water companies appear to be dumping untreated or partially treated sewage in rivers on a regular basis, often breaching the terms of permits that on paper only allow them to do this in exceptional circumstances. The requirements of the EU Water Framework Directive, implemented in domestic legislation by the Water Environment (Water Framework Directive) (England and Wales) Regulations 2017 remain in force, though Parliament has now given Ministers the express power to amend these regulations under Section 89 (1) of the Environment Act 2021.

The investigation of these issues was prompted by a private members bill, introduced by the Chair of the Committee the Rt Hon Philip Dunne MP, the Sewage (Inland Waters) Bill, which proposed to place a duty on water companies to ensure that untreated sewage was not discharged into rivers and other inland waters. The Inquiry, however, grew to take in challenges to good water quality emanating also from agricultural pollution and road run off. The Committee has focused primarily on rivers in England, as the regulation of water quality in the UK is largely devolved. It received 105 pieces of written evidence and heard in person from 31 witnesses, including the Parliamentary Under Secretary of State at the Department for Environment, Food and Rural Affairs, Rebecca Pow MP, the chief executives of the Environment Agency, Ofwat and Highways England and the chief executives of five of the water and sewerage companies operating in England.

The Committee has called on National Highways to accelerate its efforts to eliminate toxic chemical and plastic pollution from the most polluting outfalls on the Strategic Roads Network by 2030 and expects to see far more assertive regulation and enforcement from Ofwat and the Environment Agency.

FCA extends climate-related disclosure requirements

The FCA has published two policy statements entitled ‘Enhancing climate-related disclosures by standard listed companies’ and ‘Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers’.

Climate-related financial disclosure requirements are being extended. The Government has committed to work towards mandatory TCFD-aligned disclosure obligations across the UK economy by 2025. This is the next step.

Standard listed companies

A new rule, LR 14.3.27R, will apply for accounting periods beginning on or after 1 January 2022. This requires in-scope companies to include a statement in their annual financial report setting out:

  • Whether they have made disclosures consistent with the TCFD’s recommendations and recommended disclosures in their annual financial report;
  • Where they have not made disclosures consistent with some, or all, of the TCFD’s recommendations and/or recommended disclosures, an explanation of why, and a description of any steps they are taking or plan to take to be able to make consistent disclosures in the future, and the timeframe within which they expect to be able to make those disclosures;
  • Where they have included some, or all, of their disclosures against the TCFD’s recommendations and/or recommended disclosures in a document other than their annual financial report, an explanation of why;
  • Where in their annual financial report (or other relevant document) the various disclosures can be found.

Guidance provisions set out by the FCA includes guidance on metrics, targets and transition plans and implementation.

Companies are also encouraged to assess the extent to which it has considered the UK’s net zero commitment in developing and disclosing its transition plan. Where it has not done so, the company is encouraged to explain why. This blog has repeatedly identified that it was likely that the onus to meet net zero would fall on industry, particularly due to the lack of concrete policy commitments from the Government. Here we see evidence of that likelihood in action.

The first annual reports subject to the new rule will be published in early 2023.

Asset managers and other FCA-regulated asset owners

In scope firms are required by new rules to make disclosures on an annual basis at:

  • Entity-level: an annual TCFD entity report published in a prominent place on the main website of the firm’s business setting out how they take climate-related matters into account in managing or administering investments on behalf of clients and consumers;
  • Product-level: disclosures (including a core set of climate-related metrics) on the firm’s products and portfolios made publicly in a prominent place on the main website of the firm’s business and included or cross-referenced in an appropriate client communication, or made upon request to certain eligible institutional clients.

The rules will apply to 34 asset management and 12 asset owner firms in the first phase of implementation from 1 January 2022. Once full implemented they will apply to 140 asset management and 34 asset owner firms, representing £12.1 trillion in assets under management and administered in the UK, 98% of the market.

The first public disclosures in line with the FCA’s requirements must be made by 30 June 2023.

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If you have any comments or suggestions please contact Bridget Tough at bridget.tough@6pumpcourt.co.uk

Environmental Law News Update

In our first Environmental Law News Update of 2022, Christopher Badger, Mark Davies and James Harrison consider some environmental law predictions for the year ahead, climate compatibility checkpoint tests for oil and gas, and an agreement between the UK and Norway on fishing access and quotas.

Environmental law predictions for 2022

As ever, we begin the year with our predictions for environmental law in the forthcoming year.

Environmental targets

A draft of the statutory instrument containing regulations setting each of the targets required by section 1(2) of the Environment Act 2021 (long-term targets in respect of at least one matter in the priority areas of air quality, water, biodiversity and resource efficiency and waste reduction) as well as the PM2.5 air quality target required by section 2 and the species abundance target found in section 3 of the same Act is required to be laid before Parliament on or before 31 October 2022.

Targets will be set following a period of “robust evidence-gathering, consultation and engagement with experts, advisers and the public”. The Government has committed to a public consultation on new legal targets for PM2.5 and other pollutants in early 2022. The World Health Organisation stated in September 2021 that annual average concentrations of PM2.5 should not exceed 5mg/m3 considerably lower than the current legal limit of 20mg/m3. The species abundance target was a late addition to the Environment Act, only introduced in June as the Bill ping ponged its way through the Houses.

We predict:

  • Biodiversity and water targets will largely mirror EU ambitions;
  • The resource efficiency and waste reduction target will take the form of a ratio, most probably the ratio of GDP to raw material consumption;
  • DEFRA will in fact set two targets for PM2.5 – a ‘population exposure reduction target’ and a concentration-based ‘limit value’ target. The latter won’t be as low as the WHO’s guideline limit, but will be ostensibly justified on a cost-benefit analysis and by linking the wider public health to the general population target;
  • The data underlying species abundance will prove to be much more useful for frequently encountered and abundant species than species under threat, resulting in rather generic and general targets.

The Office for Environmental Protection

The strategy which the Office for Environmental Protection (“OEP”) is obliged to produce under section 23 of the Environment Act 2021 will be a key document of the organisation and will contain the enforcement policy relating to the OEP’s formal enforcement functions. The OEP will not be able to investigate or take enforcement action against every alleged breach of environmental law by public bodies – repeated reference is made for the breach to be ‘serious’ and the enforcement policy must set out criteria on how the OEP will determine that a breach is ‘serious’ or not.

Section 23(7) requires the OEP, in considering its enforcement policy to have regard to the particular importance of prioritising cases that it considers have or may have national implications, and the importance of prioritising cases that relate to ongoing or recurrent conduct, relate to conduct that the OEP considers may cause or has caused serious damage to the natural environment or to human health or that the OEP considers may raise a point of environmental law of general public importance.

However, this should not be considered to be an exclusive list of priorities and, arguably, given the multitude of factors that might be taken into account, the section supports a broad and flexible interpretation of what might be considered ‘serious’. We also detect more than a hint that the Chair of the OEP is quite prepared to be robust and independent in their own approach.

We therefore predict that:

  • The enforcement policy to be published for consultation will take a broad approach to the types of cases that could legitimately be taken up by the OEP that will allow the OEP the flexibility it needs to start to assert itself. ‘Serious’ won’t be limited to serious impact on the environment but will include cases where the breach itself might be seen as serious even if environmental harm is limited and will include scope to take action against the cumulative impact of repeated small breaches of environmental law.

Environmental taxes

Green levies have been very much in the news recently following soaring energy prices and the Prime Minister is coming under increasing pressure to suspend them while gas prices remain high. The issue largely turns on who should bear the cost for raising money for infrastructure to support the growth of renewables and whether it is really fair to expect the consumer to fund infrastructure development when the cost of living is so high.

Looking elsewhere the plastic packaging tax comes into force on 1 April 2022, with a rate of tax of £200/tonne on plastic packaging that contains less than 30% recycled plastic, and which is manufactured or imported into the UK (including packaging on finished goods which are imported).

We predict that:

  • Environmental ambition in the form of taxes and levies that result in higher consumer costs will take a significant back seat during 2022, the ‘year of the squeeze’. This is highly likely to influence any forthcoming producer responsibility schemes and impact on policy initiatives designed to ensure that companies achieve tangible environmental outcomes, rather than passing on costs. Government will shrink from taking any steps that might increase consumer costs.

Climate compatibility checkpoints consultation

There is an inherent difficulty faced by the Oil and Gas Authority (“OGA”) in working out how to reconcile continued oil and gas production and subsequent distribution, with governmental policy objectives relating to climate change. This is reflected in the Central Obligation of the OGA’s Strategy published in February 2021, which can be paraphrased thus: steps must be taken necessary to secure that the maximum value of economically recoverable petroleum is recovered from the UK Continental Shelf and in doing so, appropriate steps must be taken to ensure compliance with the UK target to achieve Net Zero by 2050. One might consider that these two sets of steps are contradictory. It is hoped that the implementation of ‘climate compatibility checkpoints’ will assist the OGA to square this circle.

The OGA currently operates a regime that grants licenses to operators, which are a pre-requisite before that operator can explore for, drill for, or produce petroleum. Licences grant the holder exclusive rights to explore for petroleum in the area covered by the licence. To go beyond exploratory drilling, operators must gain consent from the OGA, which is further subject to environmental assessments by the Offshore Petroleum Regulator for Environment and Decommission, and assessments by the Health and Safety Executive. Net Zero considerations are imposed by the OGA’s Strategy across all aspects of a project’s lifecycle.

Licences are typically awarded following a ‘licensing round,’ which occur at most once a year and consist of a tender process for a specified number of licence areas. It is proposed that climate compatibility checkpoints would be exercised before the OGA offers any new licensing round(s) to ensure that new licences are awarded only on the basis that they are aligned with the UK’s climate goals. In short, there must be industry-wide compliance because unless all new licensees are collectively able to satisfy the checkpoint no licences will be granted.

The consultation sets out seven potential tests, including domestic demand for oil and gas, the sector’s projected production levels, the increasing use of clean technologies such as carbon capture and hydrogen generation, and the industry’s progress against emissions reduction targets. A combination of these, and/or other tests proposed by consultees, will be used to assess new licences.

One of the apparent differences between the tests outlined in the consultation is which emissions they seek to address. It is stated within the consultation document that Scope 3 emissions are “many times greater” than emissions from Scopes 1 and 2. This is to say that indirect emissions including when hydrocarbons are combusted or used in other process such as the production of plastics or medicines, exceed those generated during the process of extracting the oil and gas, and any indirect emissions from energy purchased by the emitter. In devising a test that does not account for Scope 3 emissions there is a great risk that a huge amount of potential environmental impact is not accounted for. As is foreshadowed in the preamble setting out potential test five, there are inherent complexities in accurately calculating Scope 3 emissions given that the emissions are associated, not with the operator itself, but with fuel users up and down its value chain but this is surely a matter that consultees are likely to address in their responses.

The first potential checkpoint test – ‘Reductions in operational greenhouse gas emissions from the sector vs. commitments’ – is illustrative of some of the difficulties that the OGA faces. In the abstract it is a relatively simple test, which involves the assessment of both historical data, and emissions projections (other than Scope 3) in order to establish compatibility based on current performance, and on future risks to agreed objectives. The test compares the sector’s progress in reducing emissions to date with the commitments set out in the North Sea Transition Deal (inter alia 50% reduction in emissions by 2030), the operative Carbon Budget, the UK’s Nationally Determined Contribution, and with projected reductions in future. Given that a margin for error is factored into this test it would appear to be fundamentally workable and easily understood.

However, one could also say that the phraseology of the first checkpoint test hints towards the issue raised at the top of this post: the compatibility of environmental goals with the OGA’s obligation (or commitment) to encourage steps towards the extraction of the maximum value of economically recoverable petroleum. Moreover, even if this interpretation reads too much into the test, there is no reference to how the test would be reconciled with the OGA’s overarching objective, which could result in unsatisfactory uncertainty. This is an area congested with new policy documents and strategies (the OGA’s Strategy, the governmental review, the Consultation document, the North Sea Transition Deal, and the OGA’s ‘Stewardship Expectation 11 – Net zero’ have all been published since February 2021 and all consider the issues around Net Zero) and so it is presently unclear how they all interrelate and how the OGA will be able to carry out the appropriate balancing exercise.

We may soon gain clarity on this issue because of judicial review proceedings brought by climate campaigners (link here), which was heard on 8 and 9 December 2021 and should yield a decision early this year. In that case it was alleged that the OGA Strategy is irrational on that basis that it will result in increased oil and gas production because the profitability of operators is exaggerated as a result of the fact that government subsidies are not considered at the licence stage, which conflicts with UK Net Zero targets.

The consultation period runs until 28 February 2022. Responses can be submitted online here or via email to oilandgasconsultations@beis.gov.uk.

UK and Norway agree fishing access and quotas

Amidst all of the wrangling about the Northern Ireland Protocol, the Government announced on 21 December last year what, on its face, would appear to be some good news: the agreement with Norway as to fishing access and quotas in each other’s waters in the North Sea and Arctic.

The agreement is only for one year (2022) and permits the UK fishing industry to take 30,000 tonnes of whitefish stocks in the North Sea with 6,550 tonnes of cod allocated to the UK around Svalbard, an increase of 1,500 tonnes than in 2021.

Importantly, vessels wishing to fish in Norwegian waters in 2022 must still apply for an external waters licence via the UK Single Issuing Authority. Guidance is available on this process (see here).

Whilst Fisheries Minister Victoria Prentis announced the agreement as “[providing] opportunities for the UK fleet and [ensuring] a strong balance that will benefit both our fishing industry and the protection of our marine environment”, the agreed quotas have been criticised by those in the fishing industry with it seemingly possible that the UK’s biggest trawler (the Hull-based Kirkella) will remain mothballed with the figures reportedly only providing a week’s worth of work for its crew.

This announcement followed an earlier announcement in December last year when the Government concluded fishing catch limits with the EU and Norway. Interestingly, and noting the dismay expressed by those in the fishing industry, the catch levels for five of the six stocks were set in line with, or lower than, the levels advised by scientists at the International Council for the Exploration of the Sea, which would suggest that concerns surrounding overfishing are, perhaps at last, being taken seriously.

More information on the announcements may be found here

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If you have any comments or suggestions please contact Bridget Tough at bridget.tough@6pumpcourt.co.uk