From 1 July 2014 the courts in England and Wales when sentencing specified environmental offences will be obliged to follow the “Environmental Offences Definitive Guideline” (the “Guideline”) published recently by the Sentencing Council (click here to view the Guideline in full). The Guideline shall apply from that date regardless of when the offence was committed. The Guideline obliges the Magistrates’ Court and the Crown Court to follow a 12 step decision-making process when determining which level of fine to impose. Introducing a tariff based system of sentencing, the overarching impact of the Guideline is that fines are to be linked directly to the Defendant’s organisation’s level of turnover which shall significantly increase the level of fine. The Guideline also applies to the sentencing of individuals.

All organisations with environmental permits or which produce or handle waste should consider the Guideline with care and assess its implications for business. Senior management and investors, particularly those with a low appetite for risk, should take note given the substantive fine potential. Whilst previous sentencing cases have expressed a similar philosophy to that set out within the Guideline i.e. that the aim for any fine is “to have a real economic impact which will bring home to both management and shareholders the need to improve regulatory compliance”, the tariff gives the courts for the first time express guided tools to achieve the aim.  As many readers shall be aware fines are not insurable.

Offences covered

The core offences covered are:-

  • The unauthorised deposit of waste or harmful deposit, treatment or disposal of waste under Section 33 of the Environmental Protection Act 1990; and 
  • Illegal discharges to air, land and water, including operating without a permit, contravention of a permit condition and non compliance with enforcement notices, under Regulations 12 and 38(1),(2) and (3) of the Environmental Permitting (England and Wales) Regulations 2010 (as amended).

The Guideline contains other general guidance for other environmental offences.

The 12 step approach

Step 1 – Compensation

The courts must consider making a compensation order for any personal injury, loss, or damage resulting from the offence. Priority is to be given to the payment of compensation where the Defendant’s means are limited. The level of compensation will be based on what the court considers to be appropriate in the circumstances.

Step 2 – Confiscation (Crown Court only)

Confiscation orders can only be made by a Crown Court in accordance with section 6 of the Proceeds of Crime Act 2002 (“POCA”). The court will have to consider whether the offending organisation has a “criminal lifestyle”, and whether it has benefitted economically from the commission of the offence. The Guideline requires confiscation orders to be made after compensation orders, but before any other financial penalties are imposed.

Step 3 – Determining the offence category

The offence category is determined by applying culpability and harm factors.  Culpability has four classifications: deliberate, reckless, negligent and low or no culpability. There are also 4 levels of identifiable harm ranging from the most serious actual harm in Category 1 to the least serious potential risk of harm in Category 4.

The importance of the classification of harm and culpability levels should be understood. These can change a fine for a large organisation from millions of pounds to the lower thousands (£3,000,000 to £7,000).

There is an expectation that expert evidence may become more important even when a guilty plea is entered to ensure that appropriate evidence is before the court in assessing the level of harm and culpability. Contested hearings on these points may become more frequent given what is now at risk to organisations at time when criminal court resources are becoming increasingly reduced. 

Step 4 – Starting point and category range

Once culpability and harm have been decided, the court is obliged to consider the turnover of the Defendant organisation in order to ascertain which tariff applies. The Guideline distinguishes an organisation’s turnover in the following terms:

  • Large organisation (with turnover of £50 million and over)
  • Medium (turnover of £10 million to £50 million)
  • Small (with turnover of £2 million to £10 million) 
  • Micro (turnover of not more than £2 million)

The Guideline allows the court the discretion to go beyond the published ranges for very large organisations.

The indicative starting point of level of fine within each tariff range is adjusted by taking into account aggravating or mitigating factors. The Guideline provides a non-exhaustive list of “Factors increasing seriousness” (e.g. previous convictions, history of non-compliance, and sensitive location of the offence) and “Factors reducing seriousness or reflecting mitigation” (such as steps taken to remedy the situation, remorse, and little or no financial gain for mitigating factors). The Guideline emphasises that relevant recent convictions and/or a history of non-compliance are likely to result in a substantial upward adjustment of the fine.

Steps 5 to 7 – Removal of economic benefit, proportionality, and other adjustment factors

Step 5 requires the court to “step back” from the arrived figure and re-assess it in light of the key objectives of punishment, deterrence, and removal of gain. The court is obliged to remove any economic benefit the offender has derived through the commission of the offence including: avoided costs, operating savings and any gain made as direct result of the offence. Thus, for example, failure to install alarms or provide adequate bunding to oil tanks could be treated as avoided costs.

Step 6 requires the court to ensure that the proposed fine based on turnover is proportionate to the means of the offender. This is where financial information other than turnover figures (e.g. profit before tax and directors’ remuneration) is taken into account. The Guideline clearly provides that the fine should be high enough “to have a real economic impact which will bring home to both management and shareholders the need to improve regulatory compliance.”

Step 7 takes into account an organisation’s public or charitable status and to consider who, realistically, will be hit hardest by the fine. Matters such as the fine impairing the offender’s ability to make restitution to victims, or its effect on employees, customers, and the local economy must be taken into consideration.

Steps 8 to 12 – Factors indicating a reduction, ancillary orders, the totality principle, and the need to give reasons

In Steps 8 -10 the courts are obliged to reduce the fine if the offender has provided assistance to the prosecution and/or if he has entered a guilty plea. As part of Step 11the court is required to consider the totality principle: i.e., whether the total sentence is just and proportionate to the offending behaviour.” As part of Step 12, the court must give reasons for, and explain the effects of, the sentence.


The Guideline is a significant development in how some environmental non-compliances shall be treated by the courts. Only in very limited circumstances may the Guideline not be followed and the Court would have to provide adequate justification or the sentence would be open to challenge. This follows a pattern of cases where substantial fines have been upheld on appeal and senior judicial comments patently sending a clear message that organisations must comply with environment legislation or be penalised in such a way that an unequivocal message is effectively relayed to shareholders and stakeholders.

In some recent publicity emphasis has been placed on the Guideline’s application to fly-tippers. The rest of business should not switch off. For those acquiring new businesses with environmental permits such as within manufacturing, energy, utilities, waste, the status of compliance has become more than a tick box exercise about the status of the permit with limited attention to perceived operational non compliances. Non-compliances with permit conditions should be thoroughly reviewed prior to purchase. 

There are many nuances within the Guideline. All non-compliance scenarios should be considered with the potential of the Guideline in mind and advice taken accordingly. There are some actions that could be taken now prior to the introduction of the Guideline which could assist in mitigating risk or be of value in the court process following 1 July.  For those uncertain about how the Guideline may impact upon their business and who would like further information please contact one of the authors below. It is likely that the Guideline will prompt more management and investor scrutiny of compliance status. Some environmental permitting offences involve very technical concepts and can involve limited or negligible culpability; being able to present these aspects effectively will be key.

The prompt development of the Guideline is in contrast to the absence of the ability to apply civil sanctions to environmental permitting offences. Originally earmarked for introduction to environmental permitting in 2011, 3 years later there is limited sign of civil sanctions being rolled out. Introduced for other offences they have shown to be a proportionate and effective way of dealing with less serious offences. Business and the public sector and the regulators themselves are unable to avail themselves of useful alternatives to prosecution which ultimately can have far more focused positive impact on the environment than the results of the criminal court process. For responsible businesses faced with a non compliance the ability to provide an enforcement undertaking with a structured plan to deal with differences of interpretation or to restore and maintain compliance is of far more benefit than a contested trial. Perhaps given the advent of the Guideline more queries about the lack of civil sanctions, particularly by international investors used to similar tools, will begin to be asked.