Carbon, climate change and sustainability
The expanding scope of energy use and emissions reporting
On 15 April 2014, the European Parliament approved a new Directive on financial reporting rules which will change existing EU legislation on the disclosure of non-financial information in the financial
accounts of large “public interest” entities. The
current Accounting Directives address the disclosure
of non-financial information in financial statements,
but have proved ineffective with fewer than 10% of
the largest EU companies disclosing information
about their assessed direct and indirect impact on
human rights, the environment, boardroom diversity
or corruption. The new Directive requires that these
topics are expressly covered in financial reports.
In the UK, the Companies Act 2006 (Strategic and
Directors’ Reports) Regulations 2013 already impose
an obligation on quoted companies to report their
annual greenhouse gas emissions. However, the
new Energy Savings Opportunity Scheme (ESOS)
intends to go further than this. ESOS will require
qualifying UK firms to carry out an assessment of
their total energy consumption across a 12 month
period by 5 December 2015 and to repeat the
process every four years.
Total energy consumption under ESOS refers
to assets held and activities carried out by the
participant, and specifically includes energy
consumed through transport for the business and
offshore activities in so far as they relate to UK
consumption. In addition, an energy audit will need
to be undertaken to analyse consumption, identify
ways of improving energy efficiency and recommend
measures in that regard. The scheme is designed to
operate alongside, but be distinct from, the emissions
reporting requirements under the CRC scheme.
The qualifying date for the scheme is set to be
this December 2014. Burges Salmon is hosting a
seminar that will explore the scheme’s structure
and address challenges faced by companies
caught under ESOS in September. Please see
further details in the Recent/Upcoming events
section of this briefing.
European Parliament proposal
to bring stability to the EU
Emissions Trading Scheme
There is an inherent imbalance in the EU Emissions
Trading Scheme (EU ETS) between the fixed supply
of emissions allowances and the flexible demand
for these because of market turbulence, economic
cycles and fossil fuel prices. The guaranteed cap
on emissions set at auction stage provides a
certain environmental objective which goes to the
heart of the emissions trading principle, but the
significant surplus of allowances relative to demand
has meant reduced incentives for low-carbon
investment and is having a negative impact on the
cost-efficiency of climate change measures. For
these reasons, a proposal has been outlined by the
Carbon, climate change
and sustainabilityEuropean Parliament to bring certainty to the trading scheme by
implementing a market stability reserve.
As with federal currency reserves of the kind found in the USA,
the driving purpose of a stability reserve for emissions allowances
will be to bring flexibility into the auction supply and increase
shock resilience when demand for allowances suddenly shifts.
The current proposal is to establish the market stability reserve
at the start of phase 4 of the EU ETS after back-loading (i.e.
postponement of further auctioning of allowances) has taken effect
during the early years of phase 3. The intention is that stability
around the number of allowances in circulation will be established
by using a predefined level when determining the annual auction
volumes to auction. Allowances will be added to the reserve by
deducting them from future auction volumes if the total surplus
at any given time exceeds 833 million allowances. Conversely,
allowances will be released from the reserve and added to future
auction volumes if the surplus falls below 400 million allowances.
By tracking and reacting to the number of allowances in
circulation in this way, the new reserve system is intended to
limit market instability resulting from swings between temporary
surpluses and deficits of allowances. By bringing stability to
the market, the intended result is a tightening of the available
allowance. This could result in an increase in the price of carbon
in the EU. Companies caught under the scheme may need to
adjust compliance programmes and strategies to address a
potential increase in costs.
Burges Salmon has extensive experience in advising on EU ETS
policy and developing commercial instruments for clients to use
to make the most of the EU ETS as a market mechanism.
Market report: incentivising the green deal
As we have previously reported, the Green Deal provides financing
to incentivise the installation of energy efficiency measures for
dwellings, reducing the upfront cost of such improvements and
adding the repayment sums to future energy bills.
At the heart of the Green Deal lies the “golden rule”, a
requirement which aims to balance the final cost to consumers
of an improvement (including installation and financing) with the
estimated savings resulting from the measure. It also requires
that the length of the repayment period should not exceed the
expected lifetime of the improvements. However, the golden
rule has been much criticised for its inflexibility and for favouring
properties with high energy usage (which presumably are also the
least likely to apply for the financing).
The last few months have seen a number of announcements from
the Department for Energy and Climate Change (DECC), which
have the aim of streamlining and simplifying the Green Deal with a
particular focus on the effectiveness of the golden rule. Two of the
key announcements are:
a potential amendment of the golden rule to include “top
up loans” and Feed-in Tariff or Renewable Heat Incentive
payments in its calculation, and to decrease the length of time
over which a Green Deal finance plan has to be taken out; and
the launch of the Green Deal Home Improvement Fund (GDHIF)
in June 2014, a new incentive scheme which may entitle
householders in England and Wales to claim up to £7,600
against the cost of installing energy efficiency improvements.
On 27 June 2014, the first full package of statistics on the Green
Deal was released. The statistics show that the market is, slowly,
starting to build. Around 1,800 individuals have been approved to
offer Green Deal assessments in over 200 assessor organisations,
and there are around 1,250 accredited Green Deal installer
organisations. According to DECC, early consumer demand has
been positive. Over 38,000 households have already had a Green
Uptake of the scheme is, however, only half the challenge. As
the scheme gathers momentum and more businesses enter the
sector to meet this demand, the complications and inefficiencies
currently faced by sector participants will be magnified. These
applying licensing requirements under the Consumer Credit
Act to Green Deal business activities;
addressing corporate organisational changes for authorised
Green Deal providers;
passing liabilities and requirements on Green Deal providers,
installers and assessors through the supply chain;
“Companies caught under the scheme
may need to adjust compliance
programmes and strategies to address
a potential increase in costs.”3
Abstraction reform on the horizon
In July 2014 Defra and the Welsh Government published a
summary of consultation responses to their proposals for
water abstraction reform. This is an area of key importance to
many sectors - farmers and landowners, water and sewerage
companies, industry abstractors, food and drink businesses,
energy companies, hydropower companies, horticulture
businesses and many more.
The government says that the purpose of the proposal includes, for
example, maximising the amount of water available to abstraction,
facilitating trading and providing certainty for abstractors. However,
the title of the consultation, ‘Making the most of every drop’, indicates
that this is a legislative response to perceived water scarcity.
The two main options under review in the consultation were “Current
System Plus” and “Water Shares”. Current System Plus would
link water availability to annual and daily volume constraints - more
accurately measured and defined, reducing abstractions in times of
very low flows and relaxing restrictions at times of plenty. The Water
Shares option, which seemed less popular with respondents, would
be based on giving abstractors a share in the water available in a
whole catchment, and therefore a shared incentive to save water.
Under both options, it is proposed to make water trading quicker
and easier, to remove time limits on licences, make improvements
to the measurement of catchment availability of water, reform the
system of abstraction charges, pilot implementation in “enhanced
catchments” and manage the impact of discharges.
These are major changes of considerable importance to a very
wide range of businesses, abstractors and users. The consultation
document talks about legislation “early in the next Parliament” with
important policy arrangements in 2015. In Wales, this will take the
form of completion of the final Water Strategy for Wales.
The UK is now on the run up to the next election, with a new
Secretary of State for the Environment, Food and Rural Affairs,
so there may be many changes and adjustments to the policies
indicated in July 2014. However, it does seem clear that “business
as usual” is most unlikely in the area of water abstraction, and
those affected should instead anticipate fundamental reform.
Water Act 2014 - update
We have reported on the progress of the Water Bill in previous
briefings. The Water Act 2014 finally received Royal Assent on 14
The Act aims to promote competition within the water industry,
to increase the resilience of water supplies to floods and
droughts, and to promote the availability of flood risk insurance
for households. Of key interest are the key changes that allow
most business customers from 2017 to switch their water and
sewerage supplier, with cross border arrangements with Scotland
and easier systems for sales of water between companies. Longterm resilience becomes a new over-arching duty of OFWAT (the
Many detailed provisions on areas such as environmental
permitting for abstraction and impounding, and promotion of
sustainable drainage (or SuDS) schemes will have important
localised impacts. The Act provides a system of Retail Exit for,
in particular, smaller companies to contract out of their licence
obligations in favour of licensed suppliers in all or part of their
areas. In many areas, the Act takes powers for Ministers to make
Regulations, issue Guidance and codes: the way in which it is
applied will be of high practical importance to this legislation.
The government has stated that the market reforms set out in the
Act will grow the economy by £2 billion over the next 30 years.
Consultation on Flood Re
In July 2014, using powers taken under the Water Act 2014,
Defra put out for consultation until September 2014 drafts of
implementing regulations for the establishment of the Flood
Reinsurance Scheme (“Flood Re”). The consultation includes
the main Flood Re Consultation Document, a short guide, and
The Flood Reinsurance Scheme Funding and Administration
The Flood Reinsurance Scheme Administrator Designation
addressing inherent credit risks which arise because of the
nature of that supply chain; and
dealing with the structure of the regime in connection with
retainer requirements and ongoing liabilities for non-compliant
measures (particularly with regard to the revocation period
under the ECO).
Having the required back-to-back instruments, framework and
service agreements in place to address these risks is one way to
manage some of the current risks faced by market participants and
companies wanting to get an early starter advantage. However,
further streamlining by DECC, in conjunction with Ofgem, to
address the existing complicated and unclear requirements of the
scheme, as well as the required growth in popularity, is imperative
to the overall success of the Green Deal.
For further information or to sign-up to our regular carbon law
briefings, please contact Rachel Blackburn, Senior Associate,
on +44(0)117 307 6085 or email: firstname.lastname@example.org
The Flood Reinsurance Scheme Designation Regulations 2015
The consultation runs until 16 September 2014. If you would like
us to assist with providing a response to the consultation, please
let us know.
For further information on our water practice (including
previous client briefings on the Flood Re scheme), please
contact Michael Barlow, Partner, on +44(0)117 902 7708 or
email: email@example.com, or William Wilson,
Barrister, on +44(0)117 939 2289 or email: william.wilson@
Biocidal Products Regulation
The Biocidal Products Regulation 2012 (BPR) came into effect
on 1 September 2013. The regulations are of key concern to
manufacturers of biocidal products, particularly in connection with
their active substances, but also to those manufacturing or using
Biocidal products require authorisation before they can be placed
on the market. National product authorisation can take place with
mutual recognition provisions across the EU and there will also be
a possible route of authorisation at Union level. Approval is also
required of biocidal active substances at EU level. The European
Chemicals Agency (ECHA) coordinates substance approval and EU
authorisation. 3,700 products are now authorised under the BPR.
The UK is well in the lead with these numbers, which should result
in some advantages through the mutual recognition provisions.
The BPR also has complex but very important provisions governing
mandatory data and cost sharing.
From 1 September 2015, only ECHA listed BPR substances
will be allowed to be placed on the EU market. Businesses
without access to a “complete substance dossier”, and
therefore not on the ECHA list of approved sources, will be
excluded from the EU market. ECHA’s Approved Sources List
will therefore become a key reference for firms affected.
There are also very important provisions relating to treated
articles in the BPR, which cover substances, mixtures or articles
intentionally containing biocidal products. Treated articles will be
allowed onto the EU market only if all the active substances they
contain are approved for the relevant use. Certain articles also
require labelling, and there are similar “consumer information”
provisions to those under REACH. Guidance on and interpretation
of the “treated articles” provisions of the BPR are complex, and
the application of these provisions is likely to be among the most
difficult issues for the firms and products affected.
In addition, mandatory data sharing requirements under the BPR
are more onerous than under REACH, with short timescales
allowed for the resolution of any disputes.
There have been a number of recent points of note under the
Four new REACH SVHCs - ECHA has added four more
Substances of Very High Concern to the REACH Candidate List,
which now contains 155 substances. The new substances are
cadmium chloride, one phthalate and two boron substances.
Guide on intermediates issued - In June 2014, ECHA issued a
new guide for registrants and downstream users to comply with
the requirements for intermediates under REACH. This will assist in
identifying information required for the Registration dossier.
REACH Registration: Preparing for 2018 - The ECHA
Stakeholders Day in May 2014 drew attention to the importance of
industry preparing in good time for the forthcoming 2018 deadline
for REACH Registration of substances manufactured or imported
in the 1-100 tonne tonnage bands. This Registration round involves
a larger number of substances, often with less data and less
support from suppliers. The fact that registration under REACH is a
continuous process with “no shutdown” was also flagged.
Classification and Labelling ‘CLP’
Regulation and mixtures: 1 June 2015
The deadline of 1 June 2015 for re-classifying chemical mixtures
under the Classification and Labelling (CLP) Regulation is coming
up soon, and ECHA has started a campaign headed ‘CLP 2015 -
Act Now!’, aimed at having formulators and importers of mixtures
to undertake early review of their classifications.
This will entail important reviews of the Safety Data Sheets, where
this has not already been undertaken, and the Safety Data Sheets
may need to be revised and re-issued. By 1 June 2015, mixtures
have to be classified, labelled and packaged in accordance with
the CLP Regulations. Companies supplying mixtures that have not
already started evaluating their mixtures and applying the CLP to
their products are being advised to do so urgently.
Energy and power
Renewable Energy Shared Ownership
Whilst the renewables sector has been focusing on Electricity
Market Reform, the draft Infrastructure Bill also contains
proposals which are likely to have a significant impact on
developers. If passed, the Bill will, among other things, give the
government enabling powers to force developers to offer part
ownership in any new renewables project to the local community.
These provisions follow a wider government trend in encouraging
commercial developers to engage in voluntary community rightto-buy schemes.
As part of this trend, but distinct from the draft Infrastructure
Bill, the Shared Ownership Taskforce’s community ownership
proposals are currently open for consultation. Input from the
developer community is crucial, as the proposals have the potential
to become quasi-law.
Key points from the consultation proposals include:
a proposed obligation on developers with project development
costs in excess of £2.5 million to offer a percentage of their
project to the local community. This would apply to all onshore
renewable energy projects above the threshold, so would
include biomass, wind, heat, solar, hydro, etc.;
for the community’s stake to be offered at fair market value;
that the minimum stake to be offered be between 5 and 25%
(to be decided).
Developments which are not yet in planning by the time the final
consultation report is published (expected to be September
2014) are likely to be affected by the proposals. The window for
responding to the Taskforce’s consultation closes at the end of
More details on the proposals and their implications can be found
on our website.
Burges Salmon has been at the forefront of developing
innovative community energy models and strategies. We
have advised parties on the regulatory rules surrounding joint
ventures with the community, turbine ownership scenarios
and share offerings to the general public and community. If
you require further information, please contact Ross Fairley,
Partner, on +44(0)117 902 6351 or email: firstname.lastname@example.org.
Unconventional Gas - DECC’s proposals
on access rights
DECC has recently published its proposals for a three-stage process
which would remove one of the potential barriers to the development
of shale gas and oil and geothermal projects. DECC is concerned
that the current law, which makes it a trespass to drill under a
landowner’s property without their consent, even at considerable
depths and where no activity is being carried out at the surface, will
create time consuming and costly disputes and inhibit deployment.
DECC has proposed that:
Underground access rights be granted to companies exploring
and/or extracting shale gas or oil or geothermal energy in
land at least 300 metres below the surface (DECC believes
that the landowner is very unlikely to have any use of the land
below this level). Any works about the 300 metre threshold will
continue to require agreement with the individual landowner.
Payment is made in return for that access – industry has put
forward a voluntary offer of a £20,000 one-off payment for each
unique lateral (horizontal) well that extends by more than 200
metres laterally. The payment will be made at a community
level, to a community body rather than split between individual
landowners (DECC’s view is that this will ease the administrative
burden of individual payments and will mean a greater overall
payment, as payments to individuals are normally nominal).
A notification is made to the community, where the project
would set out key facts such as the relevant area of
underground land and details of any payment made in return
for the access. Again, it is proposed this is put in place
voluntarily by industry.
Products already placed on the market before 1 June 2015 are
not required to be re-labelled and re-packaged until 1 June 2017.
However, given the lead-in times and logistical complications,
companies are being advised to act earlier.
For further information about the REACH and CLP Regulations,
Biocidal Products Regulation or other chemicals regulation
issues, please contact William Wilson, Barrister, on +44(0)117
939 2289 or email: email@example.com.DECC hopes its proposal will assist the shale and geothermal
industries, which are both at an early stage of development in the
UK. The consultation closes on 15 August.
For further information on our unconventional gas practice,
please contact James Phillips, Partner, on +44(0)117 902 7753
or email: firstname.lastname@example.org.
Reform to ‘Second Comer’ Rules
DECC has recently consulted on amendments to the “Second
Comer” regulations, which apply when a developer connects to
and benefits from electricity infrastructure which was paid for by an
initial connectee and require that developer to reimburse the initial
connectee for a share of those costs.
DECC has suggested that:
the time limit for initial connectees to be reimbursed is
extended from the current five years; and
the legislation is amended to provide clarification that
independent connection providers (ICPs) are fully within the
scope of the regulations in order to ensure that customers who
use ICPs are also eligible for second comer payments.
Industry hopes that these amendments could help to open up
a more effective market for distributed generator connections,
potentially improving connection costs and times.
We advise clients on distributed generation projects across
a range of technologies including solar, wind and anaerobic
digestion. For further information, please contact James
Phillips, Partner, on +44(0)117 902 7753 or email: james.
Electricity Market Reform: An update
Electricity Market Reform continues to move apace. In June, the
Government laid secondary legislation in Parliament including
regulations for the Capacity Market and Contracts for Difference
(CfDs). In July, the European Commission granted State Aid
approval for the two schemes and, most recently, the Department
of Energy and Climate Change (DECC) published the draft CfD
This budget has been keenly awaited, particularly by those
developers of technologies in the “established” pot, which includes
onshore wind (>5MW), solar photovoltaic (>5MW), energy from
waste with CHP, hydro (>5MW and <50MW), landfill gas and
sewage gas. The budget has largely disappointed the developer
community, with the £50 million “established” pot and the
uncertainty around the budget post 2021 dampening expectations.
What is certainly clear is that the budget marks the start of an
increasingly competitive era for the renewables sector.
DECC has also confirmed its intention to implement the offtaker
of last resort (OLR) policy which allows any CfD generator unable
to gain a commercial PPA to enter into a Backstop PPA. The
Backstop PPA is a “bankable” PPA at a set discount in order to
allow the generator to secure project financing. The generator can
then search for a commercial sector PPA at a market price, while
utilising the Backstop PPA in the short term (up to a year at a time,
but accessed at any time during their 15 year CfD contract). A
recent follow-up consultation dealt with the detail of implementing
that policy and the Backstop PPA contract terms are due to be
finalised before CfD applications open on 14 October.
Under the Capacity Market, DECC has confirmed that 53.3GW of
capacity is to be procured for delivery in winter 2018/19. The first
capacity auction will take place in December 2014, for 50.8GW of
generation. The remaining 2.5GW will be auctioned in late 2017
and is intended to attract demand side reduction capacity from
industrial electricity users.
We advise clients on all aspects of energy projects and
continue to monitor the progress of the electricity market
reforms. For further information, please contact Ross Fairley,
Partner, on +44(0)117 902 6351 or email: email@example.com, or Emma Andrews, Associate on +44(0)117 902
6697 or email: firstname.lastname@example.org.
“What is certainly clear is that
the budget marks the start of an
increasingly competitive era for the
Invasive Alien Species Regulation agreed
In March 2014, the EU institutions agreed an Invasive Alien
Species (IAS) Regulation, which will come into force on 1 January
2015. This will require Member States to analyse pathways for the
introduction and spread of such species, to set up surveillance
systems and to put in place action plans for species control. For
invasive alien species which are already widespread, Member
States will need management plans. There will be coordinated EU
bans on species declared to be of “Union concern”.
The UK government estimates that the economic impacts of
invasive alien species is at least £1.8 billion per year. At present,
it has been reliant on voluntary agreements with landowners to
access land and to carry out work to eradicate and control such
species where they are found. However, in a minority of cases
where access has been refused, the government says that this has
impacted on programmes for control.
The IAS Regulation will require Member States to take measures
to eradicate newly arrived species of Union concern within three
months of their detection. The need for further measures in this
area was underlined by an Environmental Audit Committee report
in April 2014.
Defra and Welsh Ministers have agreed to take powers under the
current Infrastructure Bill to enable them to compel landowners
to take action on invasive alien species, or to permit others to
enter their land for control operations. The declared context is
that the powers would only be used in exceptional circumstances
where a voluntary approach did not work. Costs will fall on the
government, unless the landowner has been responsible for the
release of the species.
A new ministerial code of practice will be issued to accompany the
powers, and the powers will be underpinned by new powers of
entry and criminal offences.
For further information, please contact Ross Fairley, Partner
on +44(0)117 902 6351 or email: ross.fairley@burges-salmon.
com, or William Wilson, Barrister, on +44(0)117 939 2289 or
Air quality legislation “not working”
The current body of EU and UK legislation addressing air quality
and controlling air pollution is failing to prevent a reported 29,000
premature deaths in the UK annually (over 400,000 deaths across
In a forthcoming article, ‘Failing Health: Why Air Quality Legislation
is Not Working’, William Wilson, a Barrister in Burges Salmon’s
environmental and energy practice, will try to address why this is and
what is likely to be the legislative response at the EU and UK levels.
He will be considering, in particular, PM and ground level ozone
levels, differences between WHO and EU emission limits,
compliance failings across EU Member States, and the recent
Client Earth case before the Supreme Court and the European
Commission’s commencement of infringement proceedings
against the United Kingdom.
For further information or to discuss any of the issues on air
quality arising from this article, please contact William Wilson,
Barrister, on +44(0)117 939 2289 or email: william.wilson@
“The UK government estimates that
the economic impacts of invasive alien
species is at least £1.8 billion per year.”8
1. Identify the hazardous substances that are currently used, produced or
released at the installation
Deciding whether a baseline report is required 2. Identify which substances are “relevant hazardous substances”
3. Assess the site-specific pollution possibility
4. Provide a site history
Determining how a baseline report
is to be prepared
5. Identify the site’s environmental setting
6. Use the results of stages 1-5 to characterise the site
7. If further information is required, carry out an intrusive site investigation
Determining the content of the report 8. Produce the baseline report, quantifying the state of soil and
groundwater pollution by relevant hazardous substances
Reporting and management
Guidance published on Industrial
Emissions Directive baseline reports
On 6 May 2014, the European Commission published guidance
on preparing baseline reports as required under the Industrial
Emissions Directive 2010 (IED).
The IED was established with the aim of avoiding or reducing
emissions to air, land and water from certain industrial installations.
One of its specific goals is the prevention of potential soil and
groundwater contamination. To this end, the IED provides for the
definitive cessation of activities involving the use, production or
release of relevant hazardous substances.
One of the IED’s key tools for achieving this aim is the baseline
report, which must be drawn up by site operators where an activity
involves the use, production or release of relevant hazardous
substances and there is a possibility of soil and groundwater
contamination. The report must be prepared before starting the
operation of the installation, or before a permit for the installation is
updated for the first time after 7 January 2013. The baseline report
forms the basis for a comparison with the state of contamination
upon definitive cessation of the activities.
The report must provide information on the state of soil and
groundwater contamination by relevant hazardous substances, in
information on the present use and, where available, on past
uses of the site; and
where available, existing information on soil and groundwater
The Commission’s guidance takes a practical approach, clarifying
the wording and intent of the IED in order that Member States
can implement it in a consistent matter. It provides a detailed
explanation of the eight issues which should be addressed when
preparing a baseline report, as summarised in the following table:9
Regulator’s power to seize documents in
Two recent cases highlight the relative lack of remedies available to
an entity being investigated in circumstances where the regulator
has overstepped the limits of its power to seize documents.
In The Environment Agency v Churngold Recycling Ltd, the
Environment Agency (EA) seized a great number of documents in
the course of its “Operation Durable”, including material that it was
not entitled to seize. At first instance, the High Court judge had
held that the EA had unlawfully seized Churngold’s documents,
and that the Court had the power to order delivery up of electronic
copies back to Churngold. The case went to the Court of Appeal
in early July, and the tort of conversion was pleaded by Churngold
as the legal basis justifying the return of the documents. The tort
of conversion concerns the unlawful interference with a person’s
goods by a third party, in a way which is inconsistent with the
rights of the true owner. The Court of Appeal overturned the High
Court’s decision and held that the tort of conversion did not apply
to electronically stored information and that, consequently, the
Court did not have the power to order that the electronic copies be
returned to Churngold. This left Churngold with no remedy, despite
the EA’s unlawful act.
In John Sweeney v (1) Westminster Magistrates’ Court (2) London
Regional Asset Recovery Team & Environment Agency, the EA
conducted a raid of premises under a warrant. The basis of the
search was challenged. The judge agreed that the warrant had
been unlawful because it was vague as to the offence allegedly
committed and there had been insufficient consideration of
whether the deposits made by the claimant had indeed been
deposits of waste. However, the High Court did not address
whether any remedies might be available to Mr Sweeney as a
The lesson to be taken from these two cases is that early action
is better than waiting to challenge a regulator after the event.
Our environment team has significant experience of regulatory
investigations and incident response.
Manchester Ship Canal, Supreme Court
The Manchester Ship Canal Co Ltd and another v United Utilities
Water plc, a long-running case concerning the rights of sewerage
undertakers, has come to a close in a decision handed down by
the Supreme Court at the beginning of July.
United Utilities Water plc argued that the interplay between the
Water Act 1989 and the Water Industries Act 1991 (WIA) enabled
it to discharge water into third party watercourses without the
consent of the landowner. The Water Act 1989 was enacted to
facilitate the privatisation of the water industry and transferred
Case law update
We have advised extensively on the changes brought in by the
IED and presented various webinars on the subject, recordings of
which we can provide on request.
Ofgem fines npower for failure of reporting
Ofgem has fined npower and its subsidiaries £125,000 for failure
to comply with their reporting requirements under the Renewables
Obligation (RO) and the Feed-in Tariff (FiT) scheme.
The RO places an obligation on electricity suppliers to source
an increasing proportion of the electricity that they supply
to customers from renewable sources. In order to monitor
compliance with the requirements of the RO, Ofgem requires UK
licensed electricity suppliers to report information relating to the
amount of electricity supplied by them to customers in England,
Wales and Scotland by a specified date.
A similar reporting obligation is found in the FiT regime, under
which financial incentives are offered to suppliers which
produce electricity using small-scale renewable and low-carbon
technologies. As with the RO, eligibility for the benefits of the FiT
scheme is dependent on the supplier making appropriate reports
to Ofgem on the amount of electricity it supplies.
npower admitted that it had under-reported the amount of
electricity that it had supplied. Ofgem estimated that this underreporting led to npower receiving excessive payments in the region
of £842,000 under the RO and £63,000 under the FiT regime.
In assessing the level of the fine to be imposed, Ofgem took into
account a number of mitigating factors which included:
npower’s self-reporting of the breach;
the cooperation with Ofgem throughout its investigation; and
the proactive steps taken by npower to address the harm
suffered by other stakeholders in the market.
This case should be taken as a reminder of the importance of
complying with reporting requirements, as well as of the benefits
of adopting a transparent and cooperative approach to dealings
with the regulator in the event of any breaches. We have advised
for many years on the requirements under the RO and FiT Scheme
and can assist with both reporting requirements and all other
aspects of the schemes.
For more information, please contact Sam Sandilands,
Associate, on +44(0)117 307 6963 or email: sam.sandilands@
“property, rights and liabilities” of the old water authorities to
sewerage undertakers. Under the Water Act 1989, sewerage
undertakers enjoyed the implied right to discharge water into
private waters without the consent of landowners. However, this
right was removed in the WIA, and British Waterways Board v
Severn Trent Water Ltd  entrenched the requirement for
In Manchester Ship Canal, United Utilities argued that it
nevertheless had a right to discharge water without landowner
consent, provided the water was discharged through outfalls
constructed before 1 September 1989. The Supreme Court
agreed with United Utilities for several reasons. Of note was the
observation by the Court that, unless the right to discharge into
private waters survived transfer of rights to private sewerage
undertakers, such discharges would have had to cease on 1
December 1991. The obvious consequence of blocked drains and
backwashing through the system could not have been intended by
Parliament when drafting the WIA.
This decision will come as a relief to sewerage undertakers,
though some may be disappointed that British Waterways was
upheld, confirming that discharge through outfalls constructed
after 1 December 1991 still require landowner consent. Burges
Salmon has extensive experience advising on water law and can
assist those grappling with the constant development of this
Court of Appeal dismisses the use
of the Aarhus Convention in private
The issue of funding private nuisance actions remains a topic of
debate. In Austin v Miller Agent, the Court of Appeal rejected a
claimant’s appeal for a protective costs order on the facts but
accepted that private nuisance actions are capable of falling within
the scope of the Aarhus Convention. The case considered the
proper application of Article 9(4) of the Convention, which states
that review procedures should not be prohibitively expensive.
The claimant’s private nuisance action was against the owner of
an open-cast coal mine located near her home. Her application
for a protective costs order was denied at first instance. On
appeal, she sought to use Article 9(4). The court found against
her on the basis that:
1) For the Convention to apply, two conditions must be satisfied:
a. First, that the nature of the claim pertains to the particular
environmental matters regulated by the Convention.
b. Secondly, that the claim, if successful, would confer
‘significant public environmental benefits’. The claim failed
on this ground.
2) Even where the Convention applies, Article 9(4) provisions are
no more than a factor to be taken into account by the court
when considering protective costs orders.
3) The fact that an individual has a personal interest in the
litigation does not of itself rule out the granting of a protective
costs order. However, a claim which principally concerns
private property and which would bring only limited public
benefit to reduce environmental harm cannot rely on the use of
This decision provides a framework to consider where a claimant
seeks a protective costs order in private nuisance claims. Whilst
the principle of affordable access to justice contained in the Aarhus
Convention may apply to such cases, judges will scrutinise the
public environmental benefit before granting protective costs
orders. Burges Salmon’s environmental litigation specialists have
significant experience in nuisance litigation.
Solar PV companies succeed in claim
Since the release of DECC’s proposal in October 2011 to reduce
retrospectively the Feed-in-Tariff (FiT) support mechanism for solar
photovoltaic (PV) installations, the PV industry has sought to bring
DECC to account. DECC’s October 2011 proposal was to reduce
the support available to any small-scale PV installations which
had not registered for FiT before 12 December 2011 from 43.3p
per kilowatt hour to 21p per kWh. However, many PV companies
had relied on the previous version of the FiT scheme, under which
lower tariffs would only apply to PV installations not registered for
FiT by 1 April 2012, and were forced to abandon their operations.
Judicial Review proceedings were brought against DECC, followed
in December 2011 by a High Court ruling (R (Friends of the Earth
“Under the Water Act 1989, sewerage
undertakers enjoyed the implied right to
discharge water into private waters with
the consent of landowners.”11
and Others) v Secretary of State for Energy and Climate Change)
that DECC had acted unlawfully by breaching the statutory scheme
for modifying FiTS.
Taking heart in this result, 17 solar PV companies commenced
civil proceedings against DECC in January 2013 (Beyer Group
plc and others v DECC ). The claims were advanced on the
basis that DECC had breached Article 1 of the First Protocol of
the European Convention on Human Rights (A1P1) by interfering
with the claimants’ peaceful enjoyment of their possessions
(being the solar PV installation, supply and generation contracts).
This loss was reasonably foreseeable, argued the claimants, and
arose from the loss of signed and concluded contracts entered
into before 31 October 2011 with occupiers, financiers, and other
parties, and which assumed the entitlement to a higher tariff.
Having considered the consultations carried out and orders made
at the time of developing the FiT scheme in 2010, the High Court
ruled on 9 July 2014 that concluded contracts were possessions
protected by A1P1, and that DECC had unlawfully interfered with
these possessions. This preliminary decision on liability may well
expose DECC to payment of damages totalling £140 million.
Burges Salmon’s full service environment and energy team advises
on the complete spectrum of energy issues, from regulatory advice
on support mechanisms (such as FiT), transactions, and financing,
to energy disputes such as the legal challenge in this case.
Costs and nuisance actions
The latest judgment in the ongoing Coventry v Lawrence nuisance
litigation concerned, amongst other things, liability for the costs
of nuisance actions. The legal costs for the dispute about noise
nuisance from a race track now exceed £1 million, causing the
Supreme Court to voice its “grave concern” and to accept the
proposition that such costs might infringe human rights. The
matter may now be referred to the Attorney-General before being
relisted before the Supreme Court.
Often dismissed as “neighbour disputes”, this case is a reminder
that environmental nuisance actions are often highly technical and
factually complex. Our specialist environmental litigation team has
extensive experience of managing nuisance actions and achieving
timely and cost-effective resolution of difficult disputes.
For further information on our specialist environmental
litigation practice, please contact Michael Barlow, Partner, on
+44(0)117 902 7708 or email: michael.barlow@burges-salmon.
com, or Simon Tilling, Senior Associate, on +44 (0)117 902
7708 or email: email@example.com.
“Often dismissed as “neighbour
disputes”, this case is a reminder that
environmental nuisance actions are often
highly technical and factually complex.”Ian Salter
+44 (0) 117 939 2255
Environment and Energy team partners
One Glass Wharf
Bristol BS2 0ZX
Tel: +44 (0) 117 939 2000
Fax: +44 (0) 117 902 4400
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London EC4A 3BF
Tel: +44 (0)20 7685 1200
Fax: +44 (0)20 7980 4966
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information only and is not
intended to be an exhaustive
statement of the law. Although
we have taken care over the
information, you should not rely
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does rely on its content.
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Simon Tilling, Senior Associate addressed the
South West branch of Women In Property on
environmental issues for real estate specialists on 27
May 2014 and also spoke at the 6th Northumbria
Information Rights Conference in London on 13 June
2014 on protecting commercially sensitive information
from disclosure by public bodies and issues under
the Freedom of Information Act 2000 and the
Environmental Information Regulations 2004.
Michael Barlow, Partner and Simon Tilling,
Senior Associate ran a training workshop for local
government lawyers and practitioners on 29 May
2014 on preparing for and dealing with a protest or
trespass resulting from major infrastructure works.
This workshop is suitable for both government and
private sector bodies and can be tailored to address
specific projects or client concerns. For more
details please contact Mike or Simon on michael.
firstname.lastname@example.org or simon.tilling@
We are running an event on 18 September
2014 in our London office on the new Energy
Savings Opportunity Scheme (ESOS). This event
will explore the scheme’s structure and address
challenges faced by companies caught under ESOS.
For further details or if you would like to attend
please contact Rachel Blackburn on rachel.
+44 (0) 117 902 7708
+44 (0) 117 902 7753
+44 (0) 117 307 6998
+44 (0) 117 902 6351
Law is collated
Attwood, Associate. For
further information or to receive
further details of any events
and publications please contact
Joanne on +44(0)117 902 7257
or email: joanne.attwood@
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Nuclear Law - Spring 2014
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