environmental focus 19 Don’t put off until tomorrow,
what you can do today ... In the present economic climate, environmental compliance is unlikely to be top of the boardroom agenda, but 2011 has seen a huge shift in approach by the regulatory authorities away from criminal prosecution towards self-reporting and self-regulation. Until now, enforcement has proven to be increasingly time consuming and costly, writes Sue Crowther, head of planning and environment, Pitmans LLP
Prosecutions
Some cases that have come to court this year demonstrate the scale of the problem:
• A leading retail business was prosecuted for illegally dumping and burning waste at two of its out-of-town shopping complexes. Instead of paying for skip hire, waste timber was burnt on a bonfire and other waste was burnt in a large pit. The company was fined £200,000 and ordered to pay £14,558 costs, plus £500,000 clean-up costs.
• The operator of an illegal waste site was prosecuted for dumping construction and demolition waste over an area the size of five football pitches. He was sentenced to 4 years’ imprisonment for running the operation and laundering millions of pounds in profits. This is the longest prison sentence ever handed out for waste crime and the three-year investigation was one of the biggest and most complex ever undertaken by the Environment Agency (the EA).
• The operator of an illegal waste company was prosecuted for running an illegal waste transfer station and scrap metal yard. He was given a two-year community sentence and ordered to pay over £800,000 under the Proceeds of Crime Act (POCA) 2002, with a warning that if he did not pay within six months, he faced five years’ imprisonment. This is the largest POCA 2002 ruling secured by the EA to date.
But often, non-compliance may simply be down to poor record-keeping, lack of maintenance procedures or just plain ignorance:
• A retail distribution company was prosecuted for six offences under the waste packaging regulations. The company saved £5,430 by failing to register with the EA, or join a compliance scheme. It was fined £11,985 and ordered to pay £2,262 costs and £3,864 compensation.
• A food company was prosecuted for failing to comply with the waste packaging regulations. The company failed to register with the EA and failed to recover and recycle packaging waste. It was fined £8,000 and ordered to pay £3,096 compensation and £1,497 costs.
• A brewery was fined £2,300 and ordered to pay £8,225 costs for breaching its permit and failing to notify the EA of the breach, without delay. Faults at the plant had led to large
THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER 11/JANUARY 12
quantities of cider being diverted to an effluent treatment plant and there were no staff training procedures in place to deal with the correct operation of the system.
There will always be serious offences that justify prosecution, but regulatory enforcement is beginning to take a new form and businesses should take note.
Environmental reporting
In May 2011, the EA reported that environmental disclosure among FTSE All-Share companies has improved considerably since the 2006 assessment. But whilst 99% of FTSE listed companies made qualitative disclosures, the standard of reporting is often very basic. The study revealed that only 28% of the companies surveyed followed government guidance based on key performance indicators (KPIs). This guidance is voluntary, but the Government and the EA are now urging all UK businesses (not just big companies) to report their environmental disclosures based on KPIs, to include: emissions and discharges to air, land and water, their energy and water use, and environmental fines.
In addition, as part of its Better Regulation agenda, the EA is about to trial Annual Environmental Compliance Statements, which will need to be signed off at Board level. The trials will start shortly and focus on 28 sites across six sectors. The message is clear: by measuring environmental impacts and risks, businesses will be better able to manage and reduce them.
Civil sanctions
2011 also saw the introduction of civil sanctions, which were brought into force on January 4 under the Regulatory Enforcement and Sanctions Act (RESA) 2008. These sanctions were introduced to provide the EA with new ways to enforce the protection of the environment, as an alternative to criminal prosecution. They are not aimed at serious offenders, but at “legitimate businesses that are trying to do the right thing.”
There are six types of civil sanctions: compliance notice, restoration notice, fixed monetary penalty (£300 for organisations and £100 for individuals), enforcement undertaking, variable monetary penalty (up to £250,000) and stop notices. These sanctions can be used for offences committed after April 6, 2010 in England and they are now in operation,
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with the ‘enforcement undertaking’ being the frontrunner.
Enforcement undertakings are offers, formally accepted by the regulator, to take steps that would make amends for non-compliance and its effects. To date, there have been 50 offers. Twenty-one offers have been formally accepted and donations in excess of £154,000 have been paid towards charitable and community causes, including wildlife and woodland trusts and a recycling campaign. The largest donation to date is £25,000 towards a canal towpath and environmental improvement project by a company who had failed to register with a waste packaging compliance scheme.
At present, the EA is the only enforcement body to use the new civil sanctions, but Natural England is expected to follow in the new year. Civil sanctions for environmental permitting offences are expected in April 2012 and The First-tier Tribunal (Environment), created in May 2011, awaits its first appeal against the new civil sanctions regime.
The way ahead
The Board therefore has two options: ignore environmental compliance and risk prosecution or one of the new civil sanctions, or embrace the shift in approach by the regulatory authorities by making voluntary disclosure using environmental KPIs and, in the event of non-compliance, consider entering into an enforcement undertaking. This more flexible and proportionate approach towards compliance is welcome news for business.
Details: Sue Crowther 0118-9570222 07885-580293
www.pitmans.com/environment
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