Simon Tilling Tom Gillett October 10 2022 Sewage discharges in England: politics, regulatory control and role of courts Steptoe & Johnson LLP | Environment & Climate Change - United Kingdom Simon Tilling, Tom Gillett Environment & Climate Change IntroductionBackgroundSummer of discontentManchester Ship Canal Company Ltd v United Utilities Water LtdCommentIntroductionIndustry, government, the regulators and even the courts are currently grappling with the issue of unlawful sewage discharges to England's waterways; a complex challenge of investment in an ageing sewerage network that has been super-charged by a groundswell of public opinion and might even be the root of a dispute under the EU-UK Trade and Cooperation Agreement. This article considers the latest political and legal developments in this long-running saga, and takes a closer look at the role of the courts following the Court of Appeal decision in Manchester Ship Canal Company Ltd v United Utilities Water Ltd.BackgroundOn his first day in office, the newly appointed secretary of state for the Department for Environment, Food and Rural Affairs (DEFRA), Ranil Jayawardena, ordered water companies to submit plans to reduce sewage discharge into waterways within two weeks. In his first speech to the House of Commons, Jayawardena did not pull any punches, stating:The volume of sewage spewed out by water companies is completely unacceptable, and the public have rightly shown their outrage. Yesterday, in my first day in office, I told water chief executives that it is not good enough, and I have instructed them to write to me formally by 21 September with a plan for how they will make significant improvements. I also met the Environment Agency and Ofwat, and I told them that they should use every enforcement power available to them to make sure that there is compliance. I will not hesitate to take further action if I do not see the pace of change that this House expects.Undertaking such action on the very first day in the job is clearly intended to send a message that this issue is a top priority of the new government. While the well-publicised policy approach to many other areas of environmental law has a deregulatory angle, Jayawardena appears to have reached the view (rather quickly) that the political pressure to resolve the perceived issues with sewage discharge requires a more robust approach.Jayawardena's intervention is simply the latest in a series of policy announcements, regulatory investigations and judicial decisions over the summer, but the mounting pressure suggests that this may indeed be an issue by which the latest top team at DEFRA will come to be judged. It is notable that the issue of unlawful discharges has even been raised by members of the European Parliament as being a potential breach of the EU-UK Trade and Cooperation Agreement.Summer of discontentSummer 2022 saw a number of significant developments relating to the regulation of sewage discharge. First, the new Office for Environmental Protection (OEP) announced an investigation into the Environment Agency, Ofwat, and the (previous) environment secretary for failing to enforce the legal obligation on water companies to invest in sewerage infrastructure under the Water Industries Act 1991. Second, and on the same day, Ofwat confirmed that the majority of statutory wastewater companies are currently subject to live enforcement cases and declared that "the scale of the issue here is shocking". Significantly, the environmental law non-governmental organisation Wild Justice also commenced legal proceedings for judicial review of Ofwat's regulatory supervision and enforcement of wastewater companies.Against this complex (and emotive) political backdrop, the Court of Appeal was asked to determine the role of the courts in holding wastewater companies to account through common law claims in nuisance and trespass in the latest case in the dispute between United Utilities (UU) and Manchester Ship Canal Company Ltd (MSCC) regarding discharges into the Manchester ship canal.Manchester Ship Canal Company Ltd v United Utilities Water LtdIn Manchester Ship Canal Company Ltd v United Utilities Water Ltd,(1) fundamental to MSCC's claim was the argument that unauthorised discharges of untreated sewage were, by definition, not authorised by the Water Industry Act 1991 and, as such, MSCC was entitled to bring a claim in nuisance or trespass before the courts. UU argued that such private law rights were ousted by the statutory scheme under the Water Industry Act 1991 and the only remedy available was action by the regulators.UU's defence relied on the principle from the landmark case of Marcic v Thames Water Utilities Ltd.(2) In Marcic, a lack of adequate capacity in the sewerage system caused foul water to flood a private property, and the only long-term solution identified was capital investment to increase capacity in the sewerage system. The House of Lords held that Marcic's claim in nuisance failed because it was "incompatible" with the statutory scheme. In other words, it was ruled that it was not for the courts to decide where capital investment in England's sewerage infrastructure should be made, when Parliament had created a statutory scheme to set such priorities.MSCC argued that the principle in Marcic did not oust a private law right for discharges of untreated sewage that were, by their very nature, unauthorised. MSCC pointed to two provisions in the Water Industries Act 1991, sections 117(5) and 186(3), that explicitly stated that nothing in the Water Industry Act 1991 authorised a sewerage undertaker to discharge untreated sewage into a watercourse (referred to as the "foul water provisos").MSCC was supported by the Good Law Project and others who intervened to argue that recent history had shown the weakness of the regulators – a point which the OEP is now investigating and Wild Justice is now challenging – and as such it was important to keep legal routes open for people directly affected by such discharges.Ultimately, the Court of Appeal unanimously agreed with UU that the Marcic principle did extend to unauthorised discharges. The Court of Appeal considered that the root issue was the same. In cases analogous to Marcic, where the only solution is capital investment in sewerage infrastructure, then the statutory scheme created by Parliament to determine the priorities for such investment impliedly ousts the role of the court in determining the same question through ad hoc legal claims in nuisance or trespass.The Court of Appeal did have some difficulty in reconciling this conclusion with the "foul water provisos", and Lord Justice Nugee accepted that "the application of the Marcic principle to the unauthorised discharges in question does diminish the role of the provisos and leave it rather unclear what the practical effect of them now is". Nugee suggested that Parliament's intention may have been to signal that discharges of untreated sewage were certainly not authorised by Parliament, even if "parliament's expectations in that respect have been regularly disappointed".CommentThe Court of Appeal decision puts the ball firmly back in the government's court to ensure delivery of those "significant improvements" at its desired "pace of change". Regulatory action is now inevitable; the only question is its scope and impact.For further information on this topic please contact Simon Tilling or Tom Gillett at Steptoe by telephone (+44 20 7367 8000) or email ([email protected] or [email protected]). The Steptoe website can be accessed at www.steptoe.comEndnotes(1)  EWCA Civ 852.(2)  UKHL 66.