UK: Environment Enforcement: Variable Monetary Penalties Increase

The Topline

Explore our video series Environmental Law in Practice, for practical guidance on managing your business' impact on the environment.

Environmental breaches and Variable Monetary Penalties

The Environment Agency (EA) and Natural England are empowered to use civil sanctions including Variable Monetary Penalties (VMPs) as an alternative to criminal prosecutions for certain breaches of environmental law.

VMPs can be imposed directly by the regulators rather than by the courts. It's their policy to use these powers:

• When there's evidence of negligence or mismanagement.

• When there's an environmental impact.

• To remove an identifiable financial gain or saving as a result of the environmental breach.

• Where it's not in the public interest to prosecute.

Up to now, VMPs have been issued relatively infrequently and have tended to be modest. In the courts however, large fines are commonplace. Recent 2023 prosecutions include several fines, ranging from £510,000 to £3.3m, issued to various water companies.

On 5 August 2023, the EA confirmed that changes to regulators' powers to issue VMPs are expected to come into force on 1 December 2023. Subject to consultation, the new regime will include a significant increase in the maximum penalty – from £250,000 to £250m – and an extension of powers to issue VMPs for breaches of the Environmental Permitting (England and Wales) Regulations 2016.

An overhaul of the VMP regime to cover breaches of environmental permits will mean that regulators will find it much easier to take enforcement action against a wide range of corporate offenders. VMPs are cheaper and quicker than prosecutions in the criminal courts and offer flexibility not always available under sentencing guidelines. They also require a lower evidential burden (although the regulator itself must still be satisfied 'beyond reasonable doubt' that an offence has been committed and there is a right of appeal to the First-tier tribunal). Although the changes are aimed primarily at tackling offending water companies¹, the new regime will affect all holders of environmental permits.

The 1000-fold increase in the VMP limit is likely to improve the capacity of regulators to take enforcement action against the biggest offenders. It's also likely to expose smaller operators and permit holders to significant potential liabilities.

Variable Monetary Penalties increase: What practical advice arises?

• With extended powers in the regulators' armoury, permit holders must focus more than ever on environmental compliance.

• Operators of permitted sites must ensure that the conditions of all permits are clearly understood by relevant personnel through appropriate training.

• Compliance and monitoring must be paramount.

• Special attention should be paid to high-risk activities such as the storage and disposal of hazardous materials.

• Waste management plans should be subject to continuous review.

• Any interaction with a regulator should be treated seriously, and specialist advice should be sought where something has gone wrong or where compliance gaps are identified.

Footnote

1. See Walker Morris' recent briefings on Water stress: Environmental and commercial concerns and Water pollution and construction: What you need to know

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.