On 26 February 2014, the Sentencing Guideline Council published sentencing guidelines for environmental offences for the first time. The guidelines will apply to both individuals and organisations convicted of the most serious environmental offences and sentenced on or after 1 July 2014, regardless of the date of the offence.
The guideline covers a wide range of offences that are governed by the Environmental Protection Act and the Environmental Permitting Regulations such as breaches of the waste permitting regime and the unlawful treatment and disposal of waste (such as fly-tipping). Organisations convicted of those offences now face fines of up to £3 million; furthermore convicted individuals may now be sentenced to up to 3 years in prison.
Sentencing courts will be obliged to apply the guidelines unless satisfied that it would be contrary to the interests of justice to do so.
The Sentencing Council has said that the guidelines aim to "promote a consistent approach to the sentencing of these offences". It hopes that the guidelines will encourage the courts to make more use of the highest level of fines for some of the more serious offences, particularly in the magistrates' courts where there is often a lack of familiarity with these types of offences.
The guidelines set out two separate 12 step sentencing processes: one for individuals and the other focusing on offenders that are organisations. Each of the steps can affect the level of an offender's financial liability.
- The court must first consider making a compensation order to pay a victim for any personal injury, loss or damage resulting from the offence. The amount of the compensation is to be decided by the court after having regard to the evidence and the financial means of the offender. Where the offender's means are limited, the court must give priority to the payment of compensation over any other financial penalty. The court must give reasons for not making a compensation order.
- The court must consider confiscation where requested by the Prosecution or if the court considers it appropriate. Confiscation must be considered before and taken into account when assessing any other fine (after compensation).
- To determine the offence category, the court must use only the culpability and harm factors set out in guidelines.
The court is required to consider not only whether senior people within the organisation intentionally breached or disregarded the law in order to establish either the deliberate, reckless or negligent culpability of an organisation, but also whether there was a failure by the organisation itself to put in place effective systems and procedures to avoid the commission of the offence. The guidelines also recognise instances where the organisation may have low or no culpability such as the commission of offences by rogue employees despite preventative measures being in place.
The court must determine the category of harm with reference to the effect or damage caused by the commission of the offence to property, air or water quality, harm to humans and animals, the costs of any clean up required and whether there was an interference with any regulatory regime. Where no actual harm is caused, the guideline requires the court to determine the 'risk of harm' by considering both the likelihood of harm occurring and the extent of it if it does.
- Once it has determined the category, the court should refer to the tables in the guidelines which, based upon the offender's culpability, set out the starting point and category ranges for fines for organisations and fines, custodial sentences, community orders and other options for individuals.
The starting point for organisations depends upon the size of the offending company based upon turnover. Separate tables each set out the starting point and range of fine for either large, medium, small or 'micro' organisations. The guidelines increase the current turnover threshold for large companies to £50 million and above from the previous £25.9 million. Where an offending company's turnover greatly exceeds the threshold for large companies, the court may look beyond the suggested range to achieve a proportionate sentence.
The court should use the starting point to reach a sentence within the category range and then consider a further adjustment depending upon the presence of any aggravating factors such as previous relevant convictions, or mitigating factors such as the voluntary payment of compensation to remedy the harm caused. The guidelines explicitly state that relevant recent convictions and/or a history of non-compliance would lead to a substantial upward adjustment of any sentence.
Where the range includes a potential custodial sentence for individuals, the court should consider whether the custody threshold has been passed, whether it is unavoidable that a custodial sentence be imposed and if so, whether it could be suspended. However, the guidelines state that even where the community order threshold has been passed, usually a fine will be the most appropriate punishment.
The fine must reflect the seriousness of the offence and the court may take into account the financial circumstances of the offender. For organisations this would require a review of the annual company accounts; with regard to profits, directors' remuneration and assets on the balance sheet. It should be noted that failure to disclose financial information on request may lead the court to conclude that the offender has the means to pay the appropriate fine. For individuals, the court will be entitled to draw inferences as to the offender's means from evidence it has heard.
Once it has arrived at the fine level, the court would then be required to take a step back and consider the overall effect of its orders, ensuring that it has removed all gain from a crime, that the fine contains appropriate additional punishment beyond that gain and provides deterrence. It should not be cheaper to offend than to take the appropriate precautions.
- The courts should ensure that through the combination of financial orders made, it has removed the economic benefit from the offending. When determining the economic benefit of the offence, the court should consider any avoided costs, operating savings and any gain made as a direct result of the offence. For some offences, such as water pollution cases there may be no obvious gain. The court should therefore consider any avoidance of costs, such as a lack of installation or maintenance to alarm systems or other security measures.
- For individuals, the court should then consider further factors in order to ensure the proposed fine is proportionate, having regard to the financial means of the offender and the seriousness of the offence. The guideline for individuals contains a non-exhaustive list of relevant factors to be considered, such as the impact of the fine on employees, suppliers and/or the local economy or the offender's ability to make restitution to victims.
For an organisation, although the proposed fine should have a real economic impact in order to 'bring home' to shareholders and management the need to improve regulatory compliance, the court should also examine the financial circumstances of the organisation to arrive at a proportionate fine. If a small company has a small profit margin relative to its turnover then a downward adjustment may be required; conversely if it has a large profit margin an upward adjustment may be needed.
A fine may have the effect of putting the offending company out of business, which the Sentencing Council considers that may be an appropriate consequence in certain cases.
Furthermore, the court has discretion to allow time for payment or order payment in instalments depending upon the circumstances of the offending company. In a number of previous cases the Court of Appeal has confirmed that it is a legitimate sentencing policy to allow corporate offenders more time to pay fines than would be appropriate for individuals. That has had the impact of allowing more substantial fines to be imposed than would otherwise have been the case.
- For organisations, the court should then consider the non-exhaustive list of relevant factors set out at step 6 for individuals. An upward or downward adjustment to the proposed fine may be made by the court where, for example, the fine would severely impact upon the offender's ability to improve conditions in the organisation to ensure compliance with the law.
For public or charitable bodies, the guideline is clear that the courts would be likely to reduce the fine substantially where it can be demonstrated that the proposed fine would have a significant impact on the provision of their services.
For individuals, the fine may then be reduced at step 7 by the court to give credit for any assistance provided or offered to the prosecution by the offender.
- For an offending organisation, the fine may then be reduced by the court to give credit for any assistance provided or offered to the prosecution. For an individual, the court may take into account the potential for any reduction in the fine level where an early guilty plea has been entered, in accordance with existing statutory and judicial guidance.
- For an individual, the court will then consider whether it is appropriate to make any further orders such as disqualification of a director, forfeiture of a vehicle or a remediation order under the Environmental Permitting regime.
For an offending organisation, the court at this step may take into account the potential for any reduction in the fine level where an early guilty plea has been entered by an offending organisation, in accordance with existing statutory and judicial guidance.
- The court will then consider whether it is appropriate to make any further orders against the offending organisation such as a remediation order or deprivation order for property used in the commission of an offence. The court must have regard to the value of the property and the effect of making such an order.
Where an individual offender is being sentenced for multiple offences or already serving a sentence, the court should engage the totality principle to consider whether the total sentence is 'just and proportionate' to the offending behaviour.
- For an offending organisation which is being sentenced for multiple offences, the court should then engage the totality principle to consider whether the total sentence is 'just and proportionate' to the offending behaviour.
The guideline then restates the court's obligation to provide reasons for and explain the effect of the sentence imposed upon individuals.
- Finally, for organisations the guideline restates the court's obligation to provide reasons for and explain the effect of the sentence imposed.
For individuals, the last step is for the court to take into account and give credit for any time spent on bail in connection with the offence.
Although the guideline is not directly applicable to all environmental offences, general guidance is also provided for sentencing other relevant and comparable environmental offences such as statutory nuisance and waste carrier offences. Adjustment of the starting point and ranges should be carried out by the court with reference to the statutory maxima for those offences.
The guidelines require the court to place greater prominence on an organisation's turnover when considering an appropriate fine. For very large organisations with an annual turnover greatly in excess of £50 million, the guidelines provide scope for the court to consider a starting point far beyond the £3 million pound threshold in order to achieve a proportionate sentence.
From the very high fines that could now be imposed upon larger offending organisations, it is clear that the guidelines aim to hit offenders where it hurts. However, with the guidelines encouraging courts to consider the financial means of an offender when imposing a fine, the impact of increased fines upon smaller organisations and individuals may not be as great.
The guidance makes clear that persistent offenders will face tougher punishment, and in the most serious cases may result in offenders going out of business. It is hoped that the new guideline will help potential offenders think twice before committing such offences, which are usually motivated by cost savings made from cutting corners and instead encourage organisations to improve their compliance systems.