The Supreme Court revisits nuisance law after Biffa
Common law has, for a long time, provided assistance when a person’s right to enjoy their land has been infringed by activities of their neighbours. But, as the demand for land for residential and commercial development grows, nuisance law becomes more relevant to businesses as they come into closer contact with other land users.
In the recent case of Coventry v Lawrence [2014] UKSC 13 the Supreme Court addresses fundamental questions on the law of nuisance and tests the grounds on which a nuisance claim could be defended.
The facts
The owners of a bungalow (the Appellants) brought a noise nuisance claim against the operators of a speedway racing stadium (the Respondents).
The stadium is located on agricultural land near a bungalow built in the 1950s. Planning permission was granted for the stadium to be used for speedway racing and associated facilities, which was made permanent in 1985. The couple bought the bungalow in January 2006 and three months later complained to the local council about the noise coming from the race tracks. Several noise abatement notices were served on the operators by the
council. In 2008, the Appellants successfully issued High Court proceedings for an injunction to restrict activities on the racing stadium and track, but later lost in the Court of Appeal.
The case was recently referred to the Supreme Court which restored the injunction, finding that the Respondents failed to establish a right to carry out noise-emitting activities which amounted to a nuisance.
Key principles outlined by the case are:
It is possible in limited circumstances to obtain a right to commit what would otherwise be a noise nuisance. To establish such a right of prescription, the defendant needed to show that he had carried on an activity for at least 20 years with uninterrupted enjoyment and the right must not be established by force, or stealth, or permission of the owner.
A defendant cannot normally argue that a claimant came to the nuisance by choosing to move into a neighbouring property. However, where a pre-existing activity becomes a nuisance due to the claimant’s changing use of, or building, on his land, it would be possible for a defendant to contend that the claim should fail.
In line with Barr v Biffa Waste Services Ltd [2013] QB 455, there are some circumstances where planning permission could be relevant for establishing whether an activity constitutes a nuisance. Where details of a planning permission specify that an activity is permissible at a specific time, for a specified duration or up to
a specified magnitude of disturbance then these could carry evidential value when the court assesses a claim.
Generally, a claimant would be entitled to an injunction to stop the defendant from causing further nuisance. However, the court can instead order the defendant to compensate his neighbour in damages if the following conditions are met:
the injury to the claimant’s legal rights is small;
the injury can be given monetary value;
the claimant can be adequately compensated by a small payment; and
it would be oppressive to the defendant to grant an injunction.
The Supreme Court has shown willingness to adopt a flexible approach to the conditions set out
Implications
Although this recent case relates to a speedway racing stadium causing a noise nuisance to a neighbouring domestic premises, the principles would be equally relevant to noise, odour or effluvia from other businesses activities, be they manufacturing, waste, distribution or others with the potential to disturb or upset neighbours.
While it is often impossible to avoid odour or noise altogether from commercial operations, operators should take steps to minimise any potential nuisance and should remember that they would not necessarily be protected from liability just because they were operating before their neighbours moved in.
Although it was not explored in
above, while the burden will be on
this case, depending on the
circumstances, such a defence could potentially apply where new housing estates are built next to industrial sites where no residential premises had previously existed.
the defendant to prove that damages are a suitable remedy. The court may also consider the public interest in deciding whether to grant damages instead of an injunction. The existence of a planning permission
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The success of any such defence
may be an indication that it is in the
is likely to depend largely on the
character of the area.
3. The defendant may argue that his activities can form part of the character of the locality, but only to the extent that those activities do not constitute a nuisance.
public interest to award damages over an injunction.
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Regulatory Issues Chemicals
As yet more chemicals are proposed for the Candidate List and Authorisation List under the REACH Regulation, we are also seeing increased controls on the sale of biocidal products and substances used in electrical and electronic equipment across the EU. This edition identifies how recent legislative changes are expected to affect businesses operating in the manufacturing, engineering and retail sectors. We begin by considering the outcome of the European Chemical Agency’s (ECHA) recent evaluation report…
REACH Round-up:
REACH Evaluation Report 2013
ECHA conducted checks of 914 substance registration dossiers in 2013 as part of its ongoing evaluation activities. This found that 61% of cases concluded last year had dossiers which failed to comply with one or more REACH information requirements.
Its annual Evaluation Report, published on 26 February 2013, shows that ECHA’s follow up requests largely related to substance identity, physico-chemical properties, sub-chronic toxicity studies, pre- natal developmental toxicity studies and exposure assessment.
Non-compliant registrants are given the opportunity to rectify any failures identified in the ECHA evaluation decision, before a follow-up evaluation is conducted. If the follow-up evaluation concludes that the steps identified in its decision have not been implemented, ECHA
will invite Member State authorities to take enforcement action. Of the 222 follow-up evaluations conducted in
2013, 32 were found to be non- compliant and were referred to Member State enforcing authorities. This demonstrates the importance of acting upon ECHA evaluation decisions in a timely manner.
Future and current registrants for the 2018 REACH deadline are recommended to improve their chemical safety report and provide reasons for adapting testing regimes. A useful guide for reference is ECHA’s webinar series on “How to bring your registration dossier in compliance with REACH – Tips and Hints”.
More SVHCs for authorisation
The nomination of five more substances for prioritisation could mean tougher restrictions for chemical and textile industries. ECHA has identified the following substances from the candidate list as priority chemicals to be added to the Authorisation List (Annex XIV):
N,N-dimethylformamide – a solvent used for synthesis and production of coated textiles and synthetic fibres;
ADCA – a blowing agent used in the rubber and plastics industry;
Aluminosilicate and zirconia aluminosilicate refractory ceramic fibres – used in electrical, acoustic and high-temperature industries insulation, and as ceramic and metal composite reinforcement; and
4-tert-octylyphenol ethoxylates
– substances applied in paints and coating products, emulsion and polymerisation.
The substances were recommended based on their widespread application across the EU. A decision will now be taken by the European Commission (the Commission) in collaboration with Member States and the European Parliament.
This marks the fifth recommendation made by ECHA to add priority substances from the Candidate List for authorisation. By way of reminder, the REACH Regulation requires ECHA to periodically recommend to the Commission substances for inclusion in the Authorisation List based on the information provided in registration dossiers on uses and volumes of substances. If a final decision is taken by the Commission to subject the five substances to the authorisation procedure, manufacturers, importers or downstream users would not be able to place on the market or use these chemicals after a given date (the sunset date), unless an authorisation is granted for their specific use, or the particular use is exempted from authorisation by the Commission.
Preparing an authorisation application is a complex and costly process. Many businesses will find that it is more cost-effective to substitute substances subject to authorisation rather than apply for an authorisation. However, it will not be possible in every case to find
cost-effective substitutes, so businesses that use these substances should be planning ahead now if they intend to continue using them.
More Candidate List substances
Four more substances have recently been nominated by Member States to be included on the Candidate List, which currently contains 151 substances. The proposed Substances of Very High Concern (SVHC) are: dihexylphthalate (branched and linear); cadmium chloride; sodium peroxometaborate; and sodium perborate.
The inclusion of substances in the Candidate List triggers immediate obligations for manufacturers, importers and suppliers to provide information on the safe use of a product that contains the listed
substance in a concentration greater than 0.1% weight by weight. Inclusion on the Candidate List also has significant longer term implications, in that it is the first
stage in the authorisation procedure.
ECHA’s consultation on the four substances concluded on 17 April 2014.
Biocidal Products Regulation – further amendments
A further EU regulation has been agreed to improve the regulatory framework for the sale and use of biocidal products (the Amending Regulation). The Amending Regulation was adopted on 10 March 2014 to remove unintended market barriers for suppliers of new articles treated with biocide products.
By way of reminder, biocides are chemicals used to suppress organisms that are harmful to human or animal health, or that cause damage to natural or manufactured materials. Examples of biocidal products are insect repellents, disinfectants and industrial chemicals such as anti-fouling paints for ships and material preservatives.
On 1 September 2013, the regulation of the sale and use of biocides and biocidal products was extended to cover treated articles and food contact materials. Additional restrictions have been placed on businesses involved in the marketing and supply of disinfectants, preservatives, pest control and specialist biocidal products (such as antifouling substances). Under the revised regime, all biocidal products must undergo a two stage approval system before they can be sold in the EU. Firstly, the active biocidal substance must be approved for use in certain product types. Secondly, a specific biocidal product containing active substances must be approved by Member States or the European Commission at Union level.
The revised regime was implemented by virtue of the EU Biocidal Products Regulation (528/2012) (the BPR)
and revoked the former Biocidal Products Directive (98/8/EC). The recent Amending Regulation was adopted to improve the functioning of the BPR.
The main changes to be introduced by the Amending Regulation are:
transitional provisions which introduce the requirement for biocidal products to be approved by Member States or the European Commission before these can be sold on the market have been clarified. The Amending Regulation would allow certain articles treated with biocidal products to be sold in the EU if companies submit application dossiers for Union authorisation by September 2016. This will prevent an unintended market freeze of up to 11 years for commercial goods that have been approved by Member States, but the active substances have not completed the review programme set to run until 2024;
clarification on data protection rules. Under the BPR, during a period of data protection, third parties may not use data that has been submitted by a manufacturer or producer to support their own applications without the permission of the data owner, who is entitled to recover costs for sharing that data. The Amending Regulations set out the details on how the length of protection periods should be defined for new and existing active substances;
clarifying that the ban on biocides containing persistent, bioaccumulative and toxic (PBT) or very persistent and very bioaccumulative (vPvB), substances also applies to mixtures and articles which contain such substances.
Businesses should be aware that a wide range of products are now covered by BPR obligations, which could range from furniture coated with antiseptic paint to textile products with antibacterial properties. Of major significance to businesses operating in the retail
sector is the need to authorise surface biocides used in the manufacture of food contact material for keeping surfaces free from contamination. However, biocides used to manufacture food and released into the food itself as preservatives would be regulated separately by food and flavouring regulations.
In the case of treated articles containing biocidal products, manufacturers must comply with additional labelling requirements. In particular, goods must clearly display a statement and property description about the active substances contained in the biocidal product. Instructions for use, including any precautions, should also be provided.
Companies should revisit their supply chains to confirm whether the products they produce contain active substances. If so, they will need to decide whether to stop selling the products or to re-label treated articles in accordance with the BPR.
Heavy Fuel Oil amendments in force
Heavy Fuel Oil (HFO) has been renamed as a “petroleum product” rather than categorised as being “dangerous for the environment” following an amendment of the Control of Major Accident Hazards Regulations 1999 (COMAH). Heavy fuel oil is essentially a residue from distillation or cracking units in oil refinery processes, largely used in power stations, manufacturing, marine transport and industrial processes in certain off-grid locations.
The amendment, which entered into force on 20 February 2014, significantly increases the quantities of HFO that can be stored on site before triggering obligations under the Control of Major Accident Hazards Regulations 1999 (COMAH).
Consequently, industrial sites will only qualify as “top tier” COMAH if at least 25,000 tonnes of HFO is being stored. This is a substantial change from the previous threshold of 200 tonnes. Sites that store less than 25,000 tonnes of HFO will be subject to “lower-tier” COMAH requirements. The HSE has advised that sites that will become lower tier should notify the changes to the COMAH Competent Authority as soon as possible. The Competent Authority comprises of the HSE, the Environment Agency, Natural Resources Wales and Scottish Environment Protection Agency.
Under the new regime, the “controlled quantity” for hazardous substance consent required under planning law has also changed. The controlled quantity at which consent for HFOs is required has now been raised from 100 to 2,500 tonnes.
The HSE recommends that sites which are currently classed as top
Regulatory
tier (because of substances other
than HFO) should submit an update to their existing safety report to cover HFO by 31 August 2014 and update their on-site emergency plan by the same date.
This reclassification will be welcomed by businesses that store large quantities of HFO onsite, as it represents a significant easing of the regulatory burden they previously faced.
Review of hazardous chemicals in new Electrical and Electronic Equipment
The European Commission is likely to restrict five additional substances under the revised Directive on the Restriction of Hazardous Substances in Electrical and Electronic Equipment (RoHS 2) by July 2014.
As reported in the April 2013 edition of our newsletter, RoHS 2 entered into force on 2 January 2013. The Directive prohibits the sale and distribution of electrical and electronic equipment (EEE) which contains lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls (PBB) and
More recently, the Commission has launched a consultation to conduct detailed assessment of a fifth substance, the phthalate DIBP, which has been considered for possible restriction. The public consultation closed on 4 April 2014.
Businesses in the electricals and electronics sector should consider carefully whether they may be impacted by these intended restrictions.
Issues Waste
A new wave of waste legislation is underway in 2014. In relation to further controlling transfrontier shipments of waste, the European Parliament has voted on new inspection procedures for international consignments. Meanwhile, the Scottish Environmental Protection Agency (SEPA) has published the long- awaited strategy for managing Naturally Occurring Radioactive Material waste. In England, retailers await finalisation of the carrier bag levy scheme and Material Recovery Facility Operators prepare for a new testing and reporting regime which will be introduced later this year. This edition consolidates the key updates affecting the waste sector, starting with issues raised in the EU.
Draft EU Regulations demand tougher waste shipment
It is estimated that around 25% of shipments containing waste in the EU do not comply with current EU
polybrominated diphenyl ethers
waste shipment rules. On 17th April
(PBDE) in amounts exceeding the
established maximum concentration values. There are also requirements for finished EEE (i.e. EEE which has undergone all manufacturing steps) to be CE marked.
RoHS 2 requires the Commission to conduct a first review of restricted substances by July 2014. To achieve this goal, a working group was set up to undertake the review of a priority list of substances. In February 2014,
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2014 the European Parliament approved proposed amendments to the Waste Shipment Regulation (EC 1013/2006). The proposed amendments will introduce the following key changes:
the provisions relating to enforcement and inspection will be strengthened and Member States will be required to produce inspection plans by 1 January 2017.
four substances were assessed as
The inspection plans should focus
posing exceptional risks to workers’ health or environment, and are due to be added to Annex II of RoHS 2. These are: hexabromocyclododecane (HBCDD) and the phthalates DEHP, BBP and DBP.
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on high risk waste streams as well
as illegal waste operations and contain a control and enforcement strategy based on thorough risk assessments taking into account intelligence based data;
Member States will be required to provide annual reports on the outcome of inspections, including information on enforcement measures and penalties imposed;
exports of hazardous waste to countries outside the OECD (Organisation for Economic
Co-operation and Development) and exports of waste for disposal outside of the European Free Trade Association (EFTA) area will be prohibited; and
additional powers will be granted to competent authorities of Member States to require evidence from waste exporters to demonstrate that shipments meet legal requirements. Evidence may relate to whether the substance is waste, waste treatment methods, technologies and standards applied by facilities in the final country of destination. More importantly, failure to provide sufficient evidence will render shipments illegal.
The new Regulation will apply from 1 January 2016. The Commission may also adopt guidelines for enforcement of the revised Regulation.
It is hoped that effective inspections will translate to cost savings and direct economic benefits for Member States and industry. Currently there are huge differences between Member States with regard to waste inspection and enforcement: some have well developed, functioning systems (such as the UK, Austria and the Netherlands) whilst others lack adequate structures and resources to control waste streams
(e.g. Slovenia). This leads to “port hopping” with waste exporters choosing to send their waste through countries with the least controls. Illegal waste shipment undermines legitimate waste treatment and disposal operators and the changes will hopefully mean more of a level
playing field for business. In addition, stricter enforcement should lead to an increase in the quality and quantity of waste recycled if it is channelled to facilities with better treatment techniques. Companies in the recycling and waste management sectors may then feel more confident to provide further investment in this sector which in turn may lead to further sector growth and employment.
New strategy for NORM waste
SEPA is leading the development of the UK’s new strategy on the management of Naturally Occurring Radioactive Material (NORM) and has revealed plans to boost the waste management market. The strategy, issued jointly by the UK, Scottish, Welsh and Northern Ireland Governments has been published for consultation which runs until 8 May 2014.
NORM occurs in the Earth’s crust as a result of the decay of heavy elements in the earth’s geology. In its undisturbed state it is not considered waste. NORM waste is produced as a result of intrusive activities and therefore the new NORM waste strategy will be most relevant to companies involved in mining and extractive industries (such as oil and gas, uranium and iron and steel production), as well as manufacturing industries where NORM waste is generated as a bi-product of processing minerals. In addition, businesses involved in remediating land contaminated with radioactive substances will be covered by potential changes to NORM regulations.
Key proposals
The proposed strategy seeks to reform the regulatory framework to allow for growth in “NORM-creating sectors”, whilst embedding the waste hierarchy (reduce, reuse, recycle, recover with disposal as a
last resort) and promoting a robust system of waste management. Key regulatory mechanisms suggested are as follows:
regulatory position statements to encourage NORM waste recycling and recovery. These would be analogous to the Environment Agency’s ‘end of waste’ quality protocols which are voluntary end of waste frameworks for specific wastes and end uses;
a proposal for companies handling exempt waste to provide information to subsequent recipients that the waste contains radioactive material. Some types of NORM waste are exempted from reporting and permitting requirements because of the low level of radioactivity. Currently, one of the exemption conditions requires dutyholders to remove any marking or labelling of radioactive waste before disposal where the destination is one where substantial quantities of non-radioactive waste are disposed of. Waste management companies voiced concerns that this condition makes it difficult to decide whether radioactivity levels from exempt waste count towards their permitted limits. Another concern is the health and safety
of employees dealing with exempt waste;
a review of radiation dose limits that apply to NORM waste, in line with the new EU Basic Safety Standard Directive;
a proposal to improve regulations on transfrontier shipment of NORM waste for treatment abroad; and
a strong push for waste authorities to work with environmental regulators and waste operators
to plan for NORM waste management to create opportunities for new facilities.
NORM waste is currently regulated by the Environmental Permitting (England and Wales) Regulations 2010 and the Radioactive Substances Act 1993 in Scotland and Northern Ireland (as amended). Operators must ensure the sites receiving NORM have appropriate permits and that the authorised discharge limits are met. Amendments to this legislation will be necessary if and when the strategy proposals are implemented.
Implications
The strategy covers all forms of NORM waste, solid, liquid and gas, regardless of activity level.
For the Oil and Gas sector, the strategy spells the potential end to the disposal at sea of solid NORM waste that arises from the maintenance and cleaning of offshore equipment. This would lead to an increase in solid NORM waste being brought ashore; meaning operators may need to consider alternative options for dealing with NORM waste. This is likely to lead to an increase in costs for waste handling, especially when contemplating decommissioning activities.
There is much uncertainty about the pace and ultimate scale of fracking as NORM waste will arise from this process, in liquid, solid and gaseous
forms, bringing with it environmental risks relating to the flowback of water. The strategy stresses the importance of ensuring that NORM waste from this process is regulated in an appropriate manner and that treatment capacity is monitored.
It is hoped that the implementation of the strategy will lead to a stronger market for NORM waste management services and arguably paves the way for a wider role for waste brokers to consolidate a larger proportion of NORM wastes into the best available disposal routes as well as for consultancies offering planning and associated advice in this area.
Environmental Permitting – Material Recovery Facilities (MRFs)
Over 160 Material Recovery Facilities (MRFs) in England and Wales will be affected by changes to environmental permitting legislation from autumn this year. MRFs with a capacity threshold of 1,000 tonnes per year that sort mixed dry recyclate from household and commercial
co-mingled collections will be required to measure and sample the composition of input and output materials from their facilities.
The Environmental Permitting (England and Wales) (Amendment) Regulations 2014 (the 2014 Regulations) will introduce a robust testing and reporting regime into the current 2010 Regulations by the insertion of a new Schedule 9A in relation to MRFs (Schedule 9A is often referred to by the waste industry as the “Code of Practice for MRFs”).
From 1 October 2014, operators of regulated MRFs in England and Wales will be required to:
periodically measure and sample the input material received at the facility from each supplier;
measure the total weight of mixed waste being transferred to another MRF;
measure and sample specific output materials leaving the facility;
keep records of each sample taken and its composition for each supplier; and
submit quarterly electronic reports to the Environment Agency and Natural Resources Wales.
Responsibility for policing compliance rests with the Environment Agency and Natural Resources Wales. DEFRA has issued guidance “Materials facilities: how to report on mixed waste sampling” in March 2014 to help operators comply with their obligations.
The 2014 Regulations are expected to appease the concerns expressed by various industry bodies over the level and frequency of sampling, which has been considered rather low. The new measures are likely to result in higher compliance costs for MRF operators, who may seek to shift the financial burden to reprocessors, as well as increased gate fees by local authorities.
The changes will take effect from autumn this year to allow MRF operators time to prepare for the new sampling and reporting requirements. Facilities which are already participating in the Recycling Registration Service (the voluntary registration scheme developed by the Environmental Services Association) may find the transition to the new obligations relatively easy. Waste companies should be mindful of the quarterly reporting periods, timetabled in Schedule 9A of the 2014 Regulations.
UK WEEE collection – downward spiral
The total volume of recycled waste electrical and electronic appliances fell for the second time since 2011. The latest figures published by the Environment Agency show that only 490,750 tonnes of waste electrical and electronic equipment (WEEE) was collected in 2013, compared to 517,142 tonnes three years ago.
Figures summarising the amount of waste electrical and electronic equipment collected by Producer Compliance Schemes (PCS) and approved authorised treatment facilities (AATF) were released by the Environment Agency on 3 March 2014. As with other EU Member States, the UK is required to achieve 45 per cent overall collection of WEEE by 2016. Recent data shows that the UK has only been able to collect 34 per cent of electrical and electronic goods placed on the market – a significantly lower rate than expected. The fall in tonnages could be due to the “light weighting” of many products: TVs and computers are much lighter than their older counterparts as more and more people switch to flat screen displays.
In light of this falling record, however, there is a greater push from the Government to boost the collection and recycling of WEEE and consequently, individual PCS’ overall collection targets have increased around 3 per cent for 2014 to help the UK comply with its obligations under the WEEE Directive.
Carrier bags – charges rolled out across the UK
While Wales was the first country in the UK to introduce a 5p charge for single-use carrier bags in 2011, this charge is gradually being introduced across all jurisdictions. Since 8 April 2013, retailers in Northern Ireland have been required to charge at least 5p for new single use carrier bags. From January 2015, the levy will be extended in Northern Ireland for all new carrier bags (not just single use bags as required by current law) with a retail price of less than 20p, including low-cost reusable bags, plastic bags, plant-based and paper bags from January 2015. The extension of the levy is intended to encourage shoppers to reuse all types of bags. The money raised by the levy is used to help communities, charities, businesses, schools and voluntary organisations to deliver local environmental improvement projects.
Scotland has announced the introduction of a similar charge from October 2014. In England a 5p levy will be introduced from 1 October 2015 which will apply to single use carrier bags.
The main impacts on retailers are the costs associated with measures to administer the charge, such as altering till points to process and itemise the charge on receipts, train staff and communicate the changes to customers. There will also be costs associated with the requirement to keep records and report. We await to see how the levy will finally be implemented in England, with the current proposals described by the press as a “complete mess” for being too complicated due to numerous exemptions and as a consequence likely to make it difficult for businesses to communicate key messages to customers.
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Regulatory Issues Water
Considering water issues and shale gas
The extraction of shale gas poses a number of environmental challenges. One in particular is the potential impact on water resources.
The EU has recognised that much of its environmental legislation pre- dates the use of high volume hydraulic fracturing to extract shale gas. This means that the risks of shale gas extraction may not be fully addressed in current legislation. In acknowledgment of this, the European Council has published a Recommendation setting out minimum principles which Member States should consider when applying or adapting their legislation relating to high volume hydraulic fracturing. The key points relevant to water are set out below.
Strategic planning and environmental impact assessment
Member States are advised to:
provide clear rules on possible restrictions of activities, for example in protected, flood-prone or seismic-prone areas;
set minimum distances permissible between extraction operations and residential and water-protection areas; and
establish minimum depth limitations between the area to be fractured and groundwater.
Selection of the exploration and production site
A characterisation and risk assessment of any potential site should be carried out to determine if
it is suitable. This should include considering how the geological formation might change (for example changes to geological layers separating the gas reservoir from groundwater) and respecting a minimum vertical separation distance between the zone to be fractured and groundwater.
Baseline study
Before operations start, an environmental baseline should be determined, including for quality and flow characteristics of surface and groundwater, water quality at drinking water abstraction points and the presence of methane and other volatile organic compounds in water.
Operational requirements
Member States are advised to exchange information and take into account good industry practice to ensure that operators use best available techniques. This includes developing project specific water management plans to ensure efficient use of water and ensuring the traceability of water flows. If there is a loss of integrity or pollution of groundwater, operations should be stopped and urgent remedial
action taken.
Monitoring requirements
Regular monitoring should take place, including of the volume of water used for the fracturing of each well.
Although the Recommendation is not binding, Member States are expected to take its principles into account within 6 months and the effectiveness of the Recommendation will be reviewed after 18 months. The Recommendation therefore gives a useful indication of the likely content of any future legislation relating to the extraction of shale gas.
In terms of the UK government’s view, the Department of Energy & Climate Change has produced a regulatory roadmap for shale oil and gas developers. This gives guidance on the permits and permissions which operators need to obtain before drilling for onshore oil and gas. The roadmap highlights that regulators will need to be satisfied that proposed hydraulic fracturing operations will not have an unacceptable impact on the environment and, in particular on principal aquifers, before operations will be authorised. Regulators are
particularly cautious of the risks of groundwater contamination which may arise from surface spillages of chemicals, poor well-design or drilling activities.
Abstraction of water will be rigorously regulated. Currently, operators seeking to abstract more than 20 m3 of water per day must obtain a licence from the Environment Agency. However, as reforms of the current abstraction management system are underway to address the lack of water capacity in many catchment areas, it is likely that tougher restraints will be imposed on future licence applicants. Water may therefore need to be sourced through alternative means, such as recycling or reusing wastewaters.
Finally, managing wastewater will need to be taken into account. As wastewaters from fracking activities are likely to contain concentrations of naturally occurring radioactive material (NORM), operators have an additional duty to ensure that NORM wastes are appropriately disposed of. As discussed in the waste article, the government has introduced a draft strategy to strengthen the regulation of NORM waste. The draft strategy highlights that the oil and gas industries are already struggling to find suitable onshore water treatment facilities. This is likely to mean that the shale industry will need to explore the option of onsite or bespoke facilities for treating NORM waste.
The extraction of shale gas remains a controversial issue. However, it is clear that both the EU and the UK government are taking steps to try to provide potential operators and local communities with more certainty as to how this sector will be regulated.
Water Bill - retail exit? The most recent changes to the Water Bill made by the House of
Lords on 8 April 2014 would allow
the Secretary of State to pass regulations allowing water undertakers to apply to exit the non-household retail market.
Currently, all incumbent water companies are required to provide retail services to their customers. Retail services include all customer- facing activities of a water company, such as removing wastewater and sewage, providing meter readings, billing and handling customer queries.
If retail exit is allowed, this would mean that water companies could choose to stop providing these retail services to current or future non- household customers. They would instead be able to transfer these duties to retail licensees who are authorised to supply water and sewerage services. Exit would be irreversible.
How the exit regulations will take shape remains unclear at this stage. However, the Lords made clear in their discussion that any regulations must ensure that retail exits are made voluntarily and safeguard the ongoing protection of customers. The regulations may set grounds for refusing an application to exit the retail market, and may require an applicant to designate who the services will be transferred to. The Bill is expected to boost competition in the water industry by creating opportunities for more companies
to provide water and sewerage services.
The idea of allowing retail exit has proved controversial. The Consumer Council for Water has expressed a view that allowing water undertakers to exit the market could cause concern among many non- household customers, who are often wary of changing their water or sewerage supplier. However, Ofwat had criticised the absence of a retail exit provision in an earlier version of the Bill.
This latest position is a turnaround from the government policy paper in January which set out the
government’s view that allowing retail exit was unnecessary. The Bill will now go back to the House of Commons, who will consider this as well as other amendments made by the Lords.
Legionnaire’s disease – new Approved Code of Practice
The Health and Safety Executive (HSE) has produced a revised Approved Code of Practice (ACOP) and guidance in relation to legionnaire’s disease and the control of legionella bacteria in the water system. This has been produced as part of the HSE’s ongoing review of its ACOPs following recommendations set out in Professor Löfstedt’s independent review of health and safety legislation.
The core legal obligations which organisations have in relation to legionella have not changed, as ACOPs do not have the force of law. However, if an organisation can show that it is following the advice set out in an ACOP then this is an accepted way of demonstrating that an organisation is complying with its health and safety duties.
Exposure to legionella bacteria can cause various forms of Legionnaires’ disease, which is a serious lung infection. Legionella bacteria are commonly found in natural water systems but can also cultivate in purpose-built water systems under warm temperatures, such as cooling tower systems, evaporative condensers and spa pools.
The revised ACOP gives advice on the requirements of the Health and Safety at Work etc. Act 1974, the Control of Substances Hazardous to Health Regulations 2002 and relevant parts of the Management of Health and Safety at Work Regulations 1999 in relation to the risk from exposure to legionella bacteria.
The ACOP applies to business premises where the way in which water is used or stored means that water droplets could be inhaled, leading to a reasonably foreseeable risk of exposure to legionella bacteria. The obligations rest with the person in control of the premises. This could, for example, be a landlord who has responsibility for building maintenance, or an employer occupying a premises.
The ACOP is also relevant to companies who supply services such as water treatment and maintenance. The ACOP imposes a duty on anyone who designs, manufactures, imports or supplies
The previous ACOP had been in place for 13 years and included technical guidance which had become out of date and has been moved to a separate document. The HSE has attempted to simplify and clarify the language in the new guidance, and ACOP status has been given to:
risk assessment;
the role of an appointed competent person;
what a control scheme should include;
reviewing control measures; and
duties applicable to organisations involved in the supply of water systems.
Affected organisations should already have in place measures to manage the risk of exposure to legionella. However, these measures should be reviewed, and updated if necessary to take into account the updated guidance.
Regulatory Issues Habitats and
Sustainability
Invasive Alien Species Many construction companies, developers and landowners will
already be familiar with the
challenges and costs arising from Invasive Alien Species (IAS) of animals, plants and insects, such as Japanese knotweed and the tiger mosquito.
The Law Commission of England and Wales has recently published its report on the “Control of Invasive Non-native Species”, in which it recommends the introduction of a new power for specified authorities
water systems to be used at work
(to be identified) in England and
to ensure the construction design is
safe for human health. Information about the risk associated with the substance used to install water systems must also be provided
to users.
Stuart Wardlaw
Partner
T: +44 (0)191 279 9136
E: stuart.wardlaw
@bonddickinson.com
Francesca Hodgson
Solicitor
T: +44 (0)191 279 9253
E: francesca.hodgson
@bonddickinson.com
Wales to enter premises where IAS exist and take any measures necessary to address them, recovering the costs of doing so from the owner or occupier of the land to which the species control order relates. The government will consider this proposal, along with others that form part of the Law Commission’s wildlife law project, the full recommendations of which will be published this summer.
Separately, the European Commission is proposing the introduction of a new regulation in early 2015, to take immediate effect in all Member States, to provide a comprehensive framework for the prevention and management of the introduction and spread of IAS in the EU.
Under the draft proposals, IAS of “Union concern” will be included in a list and banned from being introduced, transported, placed on the market, offered, kept, grown or released in the environment within the EU. The list will include a maximum of fifty species, including species that are non-native to the EU as well as species that are native to one part of the EU but invasive
to another. Member States will be required to introduce specific management measures, including physical, chemical or biological actions, for those IAS of “Union concern” that are widely spread in their territory.
For species not included in the list, Member States will be allowed to take emergency measures where, on the basis of preliminary scientific evidence, they find that an IAS is present in their territory or there is an imminent danger of entering their territory. The proposed Regulation also provides for IAS of “Member State concern”. These are species for which specific Member States consider that the adverse impact from their release and spread is of significance in their national territory. Member States will be able to ban the intentional release of these species into the environment.
Mitigation and compensation measures under the Habitats Directive
Increasingly, the provisions of the Habitats Directive are impacting on development projects and it is therefore important for developers, owners of affected land, decision-
makers and other interested parties to keep abreast of court decisions on the interpretation and application of the Habitats legislation.
The Habitats Directive makes provision for the designation and consequent protection of European sites of nature conservation importance that, collectively, form part of the “Natura 2000” network of sites. Natura 2000 sites include candidate and designated Special Areas of Conservation (SAC) designated for flora and fauna and notified Special Protection Areas (SPA) for wild birds. Within England, as a matter of policy, the same level of protection is afforded to proposed SPAs.
A European Court of Justice (ECJ) decision later this year, following a preliminary ruling request from the Netherlands, will consider whether the provision of alternative habitat in a European site is “mitigation” or “compensation” for the purposes of the Habitats Directive. The European Commission’s guidance document (2007/2012) on Article 6(4) of the Habitats Directive records that, in the context of Article 6 of the Habitats Directive, mitigation measures must be clearly distinguished from compensatory measures. The guidance (which is not legally binding) considers that:
“...mitigation measures in the broader sense, are those measures which aim to minimise, or even cancel, the negative impacts on a site that are likely to arise as a result of the implementation of a plan or project. These measures are an integral part of the specifications of a plan or project..., and ... compensatory measures… are independent of the project (including any associated mitigation measures). They are intended to offset the negative effects of the plan or project so that the overall ecological coherence of the Natura 2000 network is maintained.”
The Dutch case concerns a proposed road-widening project, part of which would lie in a European site of nature conservation importance designated as a SAC for its molinia meadows. The project would increase the nitrogen deposits on the meadows and could adversely affect the integrity of the site. It was proposed to plant new molinia meadows elsewhere in the European site to mitigate these impacts. The Dutch government concluded that the project would not adversely affect the integrity of the European site “because the conservation objectives for this natural habitat type are sufficiently met by the planting of new molinia meadows”.
The Dutch government’s decision was challenged on the basis that the alternative habitat was not a “mitigation measure” and, therefore, the government should have found harm to the integrity of the site and only then considered alternative sites and whether Imperative Reasons of Overriding Public Interest (IROPI) justified the grant of consent despite the finding.
When a decision maker concludes that a proposed plan or project will adversely affect the integrity of a protected European site, such a plan or project can then only be permitted if there are no alternative solutions available, there are imperative reasons of overriding public interest and the necessary ‘compensatory measures’ are taken to ensure that the overall coherence of the network of Natura 2000 sites is protected.
The Advocate General concluded that the proposed planting of molinia meadows to replace lost habitat within the same Natura 2000 site could not be classified as a ‘mitigation measure’ because the new meadows would not lessen the effect but, rather, seek to offset it. He noted that the proposed project
would result in deterioration in the quality and extent of the existing molinia meadows. He found that no steps were planned to either reduce the level of effect or prevent the pollution from reaching the areas of Molina meadow nearest to the motorway. He concluded that the replacement habitat was proposed to offset the adverse effects that were predicted to occur and, as such, should be treated as compensatory measure. This meant that the replacement habitat could not be taken into account in reaching a determination on whether there were likely to be adverse effects on the integrity of the Natura 2000 site.
The decision of the ECJ is expected later this year. If the ECJ agrees with the opinion of the Advocate General then the Dutch government will need to consider whether there are alternatives to the project, whether IROPI justify the consenting of the project and whether the compensatory measures proposed in the form of the new Molina meadows are necessary and will ensure that the overall coherence
of the Natura 2000 network is maintained.
Marine Conservation Zones
second tranche to be designated
Marine Conservation Zones (MCZs) are intended to protect the diversity of rare, threatened and representative habitats and species in the marine environment. They are identified following a process in which environmental, economic and social factors are taken into account. MCZs are relevant to operators, developers and investors in the offshore marine environment, including those in the fishing industry, dredging operators and offshore wind farm developers.
In its February 2014 update, DEFRA published a list of sites under consideration for designation in
the second tranche of MCZ designations.
Designation of the first 27 MCZs took place in November 2013. It is
envisaged that a final decision will be made by the end of 2015 on which of the proposed MCZs in the second tranche will be designated. A public consultation is proposed at the beginning of 2015 to help to identify which of the 37 proposed sites (80% of which are in the inter-tidal area) will be designated. The third and final tranche of designations is expected to take place by the end of 2016. Each MCZ has a specific conservation objective that is set out in the relevant Designation Order and requires the implementation of specific management measures for its attainment. Responsibility for the effective management of MCZs rests with a range of public authorities, including the Marine Management Organisation, the Environment Agency as well as the Department of Energy and Climate Change (DECC).
The Future Generations Bill – the Wales we want by 2050
Businesses operating in Wales will be aware of the devolved Administration’s commitment to sustainability, although thus far there has been little to flesh out a high level aspiration. The Welsh government has now launched a National Conversation to prompt engagement with the five identified long term goals in order to enable Wales to be “the best place to live, learn, work, and do business” by 2050. Conversation topics include the fairer use of natural resources, the creation of more resilient and cohesive communities and a more prosperous and innovative economy.
Once agreed, the long-term goals will be embedded in the Welsh “Future Generations Bill”, to be introduced in the Welsh Parliament in Summer 2014. Under the proposed legislation, these goals would be translated into specific targets to be achieved by named public service organisations.
Natural England consultation on changes to General and Class species licences
Wildlife legislation prohibits certain species of animals and plants from being harmed or disturbed. However, some prohibited activities can be authorised in certain circumstances under a licensing system operated by Natural England.
There are three types of licence:
General – these are standardised licences which do not require an application but can be used by anyone who satisfies the eligibility criteria.
Class – these have a standard set of terms and conditions. It is not usually necessary to apply for a class licence but their use must be registered. They represent a ‘middle ground’ between general and individual licences.
Individual – these are tailored licences which must be applied for and which are judged on a case by case basis.
Natural England is consulting on proposed changes to General and Class wildlife licences. Some of the key areas which the consultation seeks views on include:
clarification of the implications of breaching the conditions of a General or Class licence (i.e. that a licence cannot be relied on if its conditions are breached and a General licence may be rescinded);
changes to the lists of species included in specific General and Class licences. For example it is proposed that a Food Premises Class licence would allow certain wild birds to be live trapped within food premises and immediately released to preserve public health and safety;
the creation of new Class licences, for example to permit the disturbance of barn owls and peregrines for pre-development surveys;
Biodiversity Offsetting plans are delayed
Biodiversity offsetting involves the provision of new or enhanced sites for nature to offset the loss of features of biodiversity through development activities. In 2012, the government announced a two year trial in six pilot areas in England, to be completed by March 2014, in anticipation of then launching Biodiversity Offsetting across England. However, it seems unlikely that Biodiversity Offsetting will be able to deliver the boost to new development in the short term that the government had hoped for.
In Autumn 2013 the House of Commons’ Environmental Audit Committee heard evidence from a number of stakeholders and from the Secretary of State for Environment, Food and Rural Affairs, Owen Paterson. In its report the Committee identified a number of concerns. It felt that the proposed biodiversity offsetting metric (the formula used
to quantify the impacts of a specific proposal on biodiversity and so calculate the offset provision required) was too basic, and failed to adequately take into account the complexity of habitats, the value of
assets and the fact that some losses,
e.g. ancient woodland, could not be replaced within a reasonable timeframe. Particular concerns were raised about its suitability in designated sites of nature
pilot projects have yet to be completed and independently evaluated.
In its response to the EAC report, the government acknowledged the need for “more bespoke assessment
approaches” to be undertaken where development would affect such sites. The government has looked to Australia, which has been promoting biodiversity offsetting. However, there is as yet no clear evidence that similar proposals in Australia have demonstrated their effectiveness.
The government is now expected to publish its response to its 2013 consultation on Biodiversity Offsetting following the completion and evaluation of the pilot
project areas.
increased reporting requirements
conservation importance. Other
for certain Class licences; and
introducing a Code of Practice on the live trapping of birds under a General or Class licence.
The consultation is available at
concerns included the lack of
sufficient expertise in local authorities to audit and validate offsetting proposals and the costs to authorities of doing so. From the six pilot areas, the voluntary nature of the scheme was seen to be a barrier
Sarah Holmes
Senior Counsel
T: +44 (0)845 415 7703
E: sarah.holmes
@bonddickinson.com
Wildlife licensing consultation and
to the development of a market in
closes at 17.00hrs on Monday 19 May 2014. Natural England is proposing to introduce changes from 1 January 2015.
offset sites, where landowners may be paid to offer sites for biodiversity offsetting. The EAC Committee concluded that it is too soon to reach a decision on offsetting while the
Duncan Tilney
Associate
T: +44 (0)845 415 7713
E: duncan.tilney
@bonddickinson.com
Carbon
EU ETS backloading update After several months of negotiations and uncertainty, the Commission
Regulation 176/2014 was finally
published in the Official Journal on 25 February 2014 giving power to the European Commission to withhold 900 million carbon allowances from 2013-15 auctions and reintroduce them later in Phase III, a process commonly referred to as “backloading”. The number of allowances in Member States auctions has already been reduced, with Poland stopping auctions altogether.
Backloading is intended to increase the price of carbon allowances and encourage installations to invest in energy efficiency measures to reduce the cost of compliance, rather than simply purchasing additional allowances. Although the implementation of the backloading proposals initially had a positive effect on the carbon prices, the prices have since plummeted.
Without further substantive legislative reform, the future of the EU ETS still remains uncertain. A decision is still to be made on whether more dramatic changes to the EU ETS, like the proposed “reserve mechanism” will be introduced. The reserve mechanism would make it possible for supply to be adapted to meet demand and address the surplus of allowances. Given the difficulties of achieving approval for backloading,
it is likely that a final decision on wider structural reforms will be delayed for some time, calling into question the likely effectiveness of the ETS scheme.
Aviation and EU ETS - Stop the clock set to continue until 2016
On 3 April 2014 MEPs voted in favour of a deal for the EU ETS to only apply to intra-EU flights until 31 December 2016, rather than the whole of the aviation sector (known
as the “stop the clock” process). The new legislation will also require EU member states to report on how they spend revenue from the auctioning
of their allowances. If no international agreement on the reduction of aviation emissions is reached by 2016, then it is proposed that the
full scope of the EU ETS will be reinstated for the next compliance year and will thereby apply also to flights to and from the EU.
The proposed text of the revised legislation also confirms that the reporting and surrender deadlines for 2013 aviation emissions will be postponed until 2015. This means that airline operators will not need to surrender allowances by 30 April 2014.
The deal will hopefully prevent any further threat of a trade war from countries such as the USA and China, which have always openly rejected the inclusion of international flights within the scope of the EU ETS. However, the EU is now likely to face legal challenge from the EU’s low cost airlines on the basis that the deal puts them at an unfair disadvantage in the market, given their focus on intra-EU travel.
Although the vote is not the best solution for the protection of the environment, it does at least provide some certainty for airline operators for the next few years.
For background on stop the clock and the previous vote of the European Parliament Environment Committee please click here to read our previous article online.
New emission reduction targets for cars
The world’s toughest carbon emission targets have raised concerns for the European automotive industry as draft Regulations gained approval from the European Parliament on 25 February 2014. The proposed rules would apply to new cars sold in the EU
and seek to limit carbon dioxide emissions from passenger and light commercial vehicles to 95g/km and 147g/km respectively, against the current 130g/km standard for cars and 175g/km for vans.
The draft text gives manufacturers one year to implement the new measures and is likely to require significant changes in vehicle design to meet the new stringent limits.
A new test procedure for measuring real CO2 emissions is expected to be introduced by January 2017.
A particularly attractive provision to carmakers is the extension of the “super credits” scheme beyond 2018 for passenger cars. The scheme, which would be available between 2020 and 2023, will allow manufacturers producing ultra-low carbon vehicles below 35g/km (reduced from 50g/km) to count each low-emitting car as 2 vehicles in their fleet. The super-credit scheme is not proposed to cover light commercial vehicles or the production of vans.
The proposal will now be laid before the Council of Ministers, and is not expected to be finalised until
May 2014.
A further draft Regulation has been introduced to grant more power to the European Commission to legislate on the pollution limit values of cars with positive-ignition engines (ie. a type of engine which causes combustion through creating a spark. This is different from
compression engines which work by injecting a mixture of fuel and air to create power). In particular, the
Commission will be able to adjust the limit threshold for nitrogen oxides for road vehicles.
While most automotive manufacturers have been able to comply with current emission targets, the step change expected to be introduced from 2020 will require greater design planning and investment in advance of introducing new stocks of vehicles.
UK facing legal challenge over air pollution
The Commission has launched legal proceedings against the UK for its failure to meet EU air quality standards. The UK was supposed to meet nitrogen dioxide limits set out in the Air Quality Directive 2008 by 2010, but for some cities these limits look unlikely to be reached until at least 2020.
As we reported in our July 2013 newsletter, on 1 May 2013 the Supreme Court declared the UK in breach of the EU Air Quality
Directive. Following this declaration, on 20 February 2014 the Commission launched proceedings against the UK.
If the air quality limits are to be reached any time soon, the government will have to take significant and rapid action. Actions could include implementing low emissions zones or cutting speed limits.
The UK government has approximately two months to respond to the Commission’s initial request for information.
Government response to CRC consultation
On 25 February 2014 the government confirmed that it will be making further amendments to the ever changing CRC Energy Efficiency Scheme (CRC). The amendments will:
incentivise self-supplied onsite renewable energy;
exclude energy supplies for metallurgical and mineralogical processes from CRC from April 2014;
allow participants to have the flexibility to disaggregate subsidiaries, with the consent of the subsidiary, on an annual basis; and
clarify the wording in the CRC Order 2013 so that landlords can exclude supplies to a tenant’s facility covered by a Climate Change Agreement (CCA) or EU ETS installation when calculating their qualifying supplies for CRC registration.
These amendments should simplify CRC compliance for some participants, and even remove some landlords from the CRC altogether.
Decision delayed on 2030 climate and energy targets
EU Member States have decided to delay a decision on climate and energy targets for 2030 until October 2014. The decision was originally intended to be made before the UN climate summit this September.
In January 2014 the Commission proposed an emission reduction target of 40 per cent by 2030 (against 1990 levels) and a target for Member States to obtain at least 27 per cent of their energy from renewable sources. Although support was shown for adopting a target which would fit with the EU’s 2050 objectives, the European
Council were unable to come to an agreement on the 2030 targets at a
Energy and Projects
meeting on 20/21 March 2014.
The delay is likely to deter potential investors in low carbon energy investment and could lead to planned projects being put on hold until later in the year.
Government responds to RO transition and grace periods
Renewable developers are preparing for the transition from the Renewables Obligation (RO) to Contracts for Difference (CfD) now that further details of the programmes for financial support of renewable energy supply have been announced in the government’s response to its consultation on its latest initiatives. The Department of Energy & Climate Change (DECC) published the government’s response to the two latest consultations on RO transition
and grace period proposals on 12 March 2014.
The transition period is set to begin once the CfD becomes available at the end of 2014 and is due to end when the RO scheme closes to new entrants on 31 March 2017. During this period, developers will be able to opt for the RO scheme, CfD or in some cases enter into investment contracts (an advance form of CfD)
Key decisions taken by the government on RO transition are as follows:
operators applying for the RO
or CfD will be required to provide self-declaration to prevent companies benefitting from both financial support systems. However, a developer who is unsuccessful in applying for a CfD would be eligible to apply
for the RO;
the support available for operators that are co-firing biomass with other fuels will be safeguarded at the rate the government sets.
Co-firing biomass facilities burn renewable waste, such as solid biomass, wood, or agricultural waste, along with another fuel, usually coal. The actual rate is yet to be decided;
in respect of the offshore wind industry, operators will be able to register their turbines in phases, allowing them to install and commission large offshore projects across a number of
provided certain criteria are satisfied.
Georgie Messent
years; and
Partner
T: +44 (0)845 415 6886
E: georgie.messent
@bonddickinson.com
By way of reminder, a CfD is a
long-term contract between a government backed entity and the owners of renewable electricity projects which provides a fixed level
if a generating station that is
co-firing biomass with other fuels wishes to leave the RO to participate in ‘the capacity market’, it can do so. The capacity
of revenue for each project. This is in
market involves paying plants to
Becca Grimes
Solicitor
T: +44 (0)845 415 6722
E: becca.grimes
@bonddickinson.com
contrast to the RO, which involves
the issue of Renewable Obligation Certificates (ROCs) by OFGEM to accredited generators for renewable electricity generated and supplied to licenced electricity suppliers as evidence of them having sourced renewable electricity for which they have mandatory targets.
be available to generate electricity when asked to do so, rather than providing renewable electricity. This is a key feature of the government’s wider Electricity Market Reform. The prohibition on participating in both mechanisms at the same time remains in place.
The consultation also looked at the issue of grace periods, the means by which RO support would continue after 31 March 2017 for certain projects in specified circumstances. DECC has confirmed that grace periods will be available to certain types of projects as follows:
if a project wants to benefit from the RO but cannot achieve commissioning by 1 April 2017 due solely to the absence of a grid connection and/or disruptions to planned installation of radar works, then that project can benefit from a 12 months grace period, enabling it to enter the RO so long as it is commissioned by 31 March 2018.
a 12 month grace period will be offered to projects that demonstrate substantial financial investments have been made before 31 July 2014, where the project is scheduled to be commissioned on or before
31 March 2017. The deadline for application will be 31 October 2014.
Next steps for developers
Developers will need to carefully consider which regime is best for their business. A new Renewable Obligation (Amendment) Order 2014 is due to be introduced by the end of April 2014, which will amend the Renewables Obligation Order 2009 to clarify the process for issuing Renewable Obligation Certificates (ROCs). Grace period policy decisions will be implemented by an RO Closure Order 2014, which is set to enter into force in July 2014, subject to Parliamentary approval.
The key issue for developers is the ongoing uncertainty and complexity regarding the implementation of Electricity Market Reform. While grace periods assist, developers will want certainty that they will benefit from such a period; the risk of not
qualifying is that a project would be forced into the CfD regime at a very late stage in its development and at a time when funds may already be committed to renewables generation.
Home Improvement - Green Deal and ECO
Plans to revamp the Green Deal energy efficiency scheme were announced on 18 February 2014. Subsequent to this, DECC revealed plans to improve the Energy Company Obligation (ECO) in a consultation which closed on
16 April 2014.
Speaking at the Ecobuild conference in March 2014, Ed Davey (Secretary of State for Energy and Climate Change) confirmed government plans for at least one million homes to be upgraded under ECO and the Green Deal by the end of the next financial year.
The ECO and Green Deal programmes are designed to reduce carbon emissions from the domestic and non-domestic building stock.
Green Deal
The Green Deal aims to encourage homeowners to retrofit energy efficiency measures by allowing them to pay back the cost of the improvements through their electricity bills. Financing of the Green Deal was to be achieved through the Green Deal Finance Company (TGDFC). In addition,
a cashback incentive has been introduced to attract early subscribers of the Green Deal. The rate of cashback was set based on the type of installation.
In response to criticisms of the flagship project, DECC has decided to extend the Green Deal Cashback Scheme until 30 June 2014. This is three months longer than the initial end date of 31 March 2014, giving consumers until September to redeem vouchers for retrofit measures.
Following an information consultation last September, the cashback contribution cap has been increased from half to two thirds of the customer’s contribution to the cost of the energy efficiency measure. Revised cashback rates will also apply to any application made or redeemed from 13 December 2013. For instance, the new cashback level for solid wall insulation has increased to £4,000 from £650.
DECC also intends to streamline the Green Deal by introducing an open access system to display Energy Performance Certificate data online to enable energy companies to identify properties that will benefit from energy efficiency improvements.
However, none of these changes tackles the fundamental issue for companies in this sector, which is that it remains cheaper for many mortgage holders to borrow against their mortgage than to use the Green Deal process.
ECO
The ECO scheme requires energy companies to improve energy efficiency for low-income households who will not be able to benefit from the Green Deal because their income is not appropriate for the loan arrangements underlying that scheme.
The ECO was introduced in January last year, setting energy targets to be met by 31 March 2015. Following the autumn statement, DECC has proposed to extend the scheme with new targets from 2015-17. Suppliers will also be able to carry forward a proportion of their delivery against the current 2015 target towards the 2017 obligations.
Companies are currently required to achieve energy targets under three sub-obligations by 2015:
The Carbon Emissions Reduction Obligation (CERO) which aims to reduce emissions from households by 20.9 million tonnes through providing insulation to homes that are difficult to treat due to their structure;
The Carbon Saving Community Obligation (CSCO) which aims to reduce emissions by 6.8 million tonnes through providing insulation measures and connections to domestic heating systems in low-income areas; and
The Home Heating Cost Reduction Obligation (commonly known as “Affordable Warmth”) which seeks to reduce energy bills by £4.2 billion through providing heating and insulation measures, such as boiler replacements, to vulnerable households receiving means-tested benefits or tax credits.
The targets set out above are divided between energy suppliers according to their share of customers. In the consultation, DECC plans to reduce the 2015 CERO target by 33 per cent, from 20.9 to 14 million tonnes of CO2, to make it easier for suppliers to fulfil their duties. Energy companies would also be able to choose from three additional measures to achieve the CERO target, these are: loft insulation, District Heating connection and insulation of easy to treat
cavity walls.
In relation to the CSCO, the consultation proposed to extend the geographical coverage of households that would be eligible for support from the lowest 15 per cent to the lowest 25 per cent of fuel poverty areas, based on statistics gathered on the Index of Multiple Deprivation.
The key issue here for businesses in the home energy improvement sector is that the duration of the contracts to provide these services are being extended as the government extends the time limit for suppliers to comply with this obligation. This leads to less value coming through in the short term.
Energy Measures in the Budget
Budget 2014 caps the carbon price floor at £18 per tonne of CO2 in 2016, with continued support given to energy intensive industries. For those involved in fossil fuel power generation this is a substantial gain, but is a further sign that the government’s commitment to renewables may be declining.
In a push to boost the UK’s manufacturing export sector, the Chancellor George Osborne confirmed on 19 March 2014 that the compensation scheme introduced last year for energy intensive industries is extended by four years to 2019-20. In addition, a new compensation scheme will be introduced from 2016-17 to protect the energy intensive industries from the costs of electricity associated with the Renewables Obligation and Feed-in Tariff schemes.
On the subject of shale gas, the new tax regime for exploration will be
Litigation and Case Review
implemented through the Finance Bill
2014, which was introduced to the House of Commons for Parliamentary debate on 25 March 2014. In a move to make the UK’s tax regime the most generous in the world for shale gas, the tax rate on a portion of a company’s profit will be reduced from 62 to 30 per cent. Firms investing in shale gas will also benefit from a corporate tax deduction equal to 75 per cent of their capital spend on projects.
In the waste sector, landfill tax will rise to £80 per tonne in April, and any future rise will be related to the Retail Price Index rounded to the nearest 5 pence from 1 April 2015. The Aggregates Levy has been frozen at £2 per tonne in 2014-15. New legislation is due to be introduced to suspend certain exemptions, exclusions and reliefs from the Aggregates Levy while the European Commission continues to investigate State aid issues in the sector, as we have previously reported in our January 2014 newsletter.
Christopher Towner
Partner
T: +44 (0)845 415 6928
E: christopher.towner
@bonddickinson.com
Jennifer Stott
Associate
T: +44 (0)845 415 6929
E: jennifer.stott
@bonddickinson.com
Jackie Gray
Director
T: +44 (0)113 290 4432
E: jackie.gray
@bonddickinson.com
Waste offences – strict liability
Mere knowledge of a waste operation is sufficient to give rise to a strict liability offence. A landowner is said to have “knowingly permitted” waste activities of which he is aware on his land at the time it took place. A recent Court of Appeal judgement Walker & Son (Hauliers) ltd v Environment Agency [2014] EWCA Crim 100 confirms that actual knowledge of unlawful or non- permitted activities was not required for an offence of “knowingly permitting” to be made out against
a land owner.
The facts
The Defendant Company had hired contractors to demolish empty buildings on land which it had purchased for redevelopment. The contractors subsequently used the site as an illegal waste transfer station and for burning and treating waste without an environmental permit. Complaints were received by the local authority from nearby residents of polluting fumes emanating from the site. Neither the company nor its employees were involved in the unlawful waste operation. The director of the company however knew that waste operations were taking place, but understood these to form part of demolition works.
“Knowingly permitting”
The company was charged with the offence of knowingly permitting the operation of a regulated facility without a permit contrary to Regulation 38 (1) of the Environmental Permitting (England and Wales) Regulation 2007. The issue for the Court was whether the offence required the Prosecution to prove the Defendant had knowledge of permitting requirements.
The Court’s decision
The Court of Appeal made clear that the offence related to knowledge of the facts of the waste operation and not as to the existence and scope of the environmental permit. The Prosecution was not required to prove that a defendant knew that matters of which it was aware were not permitted; the law required that he ensure that what was happening was compliant with environmental permitting.
Implications
The judgment emphasises the importance not only of selecting and appointing competent waste contractors but to also carry out adequate monitoring of work undertaken by the contractor. There is greater pressure on landowners to prevent the risk of committing a
“knowingly permitting” offence where waste operations are undertaken by employees or contractors on their land. Practical steps landowners could take to minimise the risk of non-compliance include:
checking whether an environment permit is required before waste operations are planned on land they own, control or occupy. If so, ensure that an appropriate environmental permit covers all planned waste operations and agree the scope of works with the contractor;
inspect the licences or permits of proposed contractors where appropriate, and ensure that contractors have adequate insurance coverage;
before commencing waste operations, landowners should pass a copy of any environmental permit to contractors and request evidence of receipt. Landowners
should also advise contractors that work undertaken outside the scope of a permit is strictly prohibited;
monitor contractors (or employees, if they are undertaking the work) and direct that all work is stopped if activities are suspected to be in breach of
any environmental permit.
New Sentencing Guidelines
environmental offences
The long-awaited sentencing guideline on environmental offences was published on 26 February 2014. The Sentencing Council has confirmed a separate guideline is being developed for health and safety offences, which is due to be ready for consultation later this year.
In sentencing for environmental offences, judges and magistrates will be required to consider turnover as a starting point when calculating fines. This rigorous approach is likely to have the biggest impact on corporate offenders who are expected to receive higher fines, according to the Sentencing Council. The guideline sets out a 12-step sentencing process which will apply to all environmental offenders sentenced on or after 1 July 2014, regardless of the date of the offence.
The main offences covered in the guideline relate to waste handling and disposal, breach of permits and transfrontier shipment of waste, which will be relevant to companies operating in this sector. In addition, the guidelines deal with a wide range of statutory nuisance offences that pose health or pollution risks.
The Definitive Guidelines also include distinct sections on sentencing of corporate and individual defendants. The type of penalties that may be imposed on individuals, which would include directors, company officers and managers, ranges from a conditional discharge to 3 years
custody for a deliberate category
1 offence. For serious offences, the Crown Court may impose a maximum jail sentence of five years as well as an unlimited level of fine.
The recommended financial penalties for firms found guilty of environmental offences range by the company size. The threshold for determining company size has changed since the consultation last year. “Large” organisations are defined as those with a turnover of £50 million or more (previously £25.9 million), while “small” companies are considered to have a turnover between £2 million and £10 million. The starting point for sentencing large companies guilty of a deliberate category 1 offence would be £1 million with a range between £450,000 to £3 million. An example of this offence would be a deliberate failure by an organisation to guard against serious pollution from hazardous chemicals.
The guidelines are particularly significant for defendants as they set out clear starting points and ranges to ensure the level of fines is proportionate to the offences committed. The guidelines also seek to ensure that offenders are
punished, deterred from committing further crime and, if they have obtained economic benefit from the offence, receive the appropriate financial penalty.
UK rules on environmental costs criticised
The Court of Justice of the European Union (CJEU) ruled on 13 February 2014 that certain aspects of the UK’s cost regime fail to ensure reasonable predictability about the final cost of legal fees in environmental proceedings. In Commission v UK (530-11), the UK was found to have breached the Public Participation Directive implementing the Aarhus Convention which guarantees rights of access to information, participation in decision-making and access to justice with respect to environmental matters.
The Commission had brought infringement proceedings against the UK in 2011 for failing to correctly apply the Environmental Impact Assessment and Integrated Pollution Prevention & Control Directives.
A main concern raised by the CJEU was the lack of clear rule of law to ensure environmental litigation is not prohibitively expensive for claimants, based on the following key reasons:
the fact that the CJEU had to assess various decisions of national courts to determine if the UK was compliant with the Aarhus Convention;
lack of requirement for judges to impose a protective cost order (PCOs) where the proceedings would be objectively unreasonable;
limited circumstances in which domestic courts granted PCOs in environmental claims;
the condition that issues must be in the public interest before national courts would grant a PCO was particularly stringent. However, this requirement was subsequently removed in the
Court of Appeal case R (Garner) v Elmbridge Borough Council [2010] EWCA Civ 1006.
Importantly, this case was decided under the UK’s position prior to the Jackson reforms on costs and the new guidance on cross-undertakings in interim injunctions in environmental judicial review introduced on 1 April 2013. Since then, the revised Civil Procedure Rule 45 makes clear that in Aarhus Convention claims fixed caps will be imposed on the claimant’s liability for the defendant’s costs (at £5,000 for individuals and
£10,000 for organisations). The defendant’s liability for the claimant’s costs will be capped at £35,000.
Although changes to the cost regime have already been implemented by the government in anticipation of this judgement, this case will contribute to further reforms expected to be introduced to the judicial review process.
Windfarm vessel collisions highlight offshore safety concerns
A recent report by the Marine Accident Investigation Branch (the “MAIB Report”) following two vessel collisions on the same day has topped the health and safety agenda in the renewable energy sector and brought the importance of effective supply chain management sharply back into focus. The MAIB Report raised a number of safety concerns arising from the operation of workboats supporting the offshore renewables industry and is likely to have significant implications for companies operating in the renewable energy industry.
Windcat 9 incident
The MAIB Report concerns two incidents which occurred on 21 November 2012, both involving high speed passenger transfer vessels returning from wind farms to shore. One incident concerned a wind farm transfer catamaran (Windcat 9) leaving the Lynn and Inner Dowsing Wind Farm which collided with an unlit mooring buoy while transporting technicians to shore.
The subsequent investigation found that the master did not hold the correct qualifications and that navigation processes were weak, including knowledge of navigation equipment and use of lookouts. The investigation also found that the company’s crew assessment procedures were not followed and the master was not formally assessed to determine his suitability for the role.
Following the incident, the company has been recommended to review its procedures for recruitment, qualification checks and for the assessment of masters and crew.
It was also recommended that the company should take steps to improve the crews’ knowledge of navigation practices and use of electronic navigational aids.
Island Panther incident
The second incident involved a wind farm passenger transfer vessel (Island Panther) which collided into an unlit transition piece of a turbine in Sheringham Shoal Wind Farm at a speed of approximately 12 knots, causing passengers to sustain various injuries after being thrown out of their seats.
The investigation found that one of the causes of the incident was an over reliance on visual cues by the master and, similarly to the Windcat 9 incident, insufficient use of lookout and navigation equipment. There was also no formal assessment of new masters. In addition, the turbine transition piece which the vessel collided with had been reported as unlit. However, the system for reporting defects did not result in a navigation warning being issued. Following the incident, recommendations have been made to the wind farm operator and the vessel owner aimed at improving the safety of wind farm passenger transfer vessel operations.
Implications of the MAIB Report for the renewable energy industry
The MAIB Report notes that approximately 400 workboats offer support to the offshore renewable sector. These workboats are normally small high-speed passenger craft which transport personnel from ports to offshore sites often in difficult weather conditions. The manning crews selected for workboats may often lack the skills for operating
high-speed vessels in the offshore sector as they are often recruited from the leisure and fishing industries. The two incidents above highlight that companies should adopt robust processes to ensure that crews have sufficient competency and are given sufficient training to operate vessels safely. This is of particular importance as the number of accidents may increase as operational conditions become more challenging when the renewable energy industry moves further offshore.
The MAIB Report is also significant as it highlights the compelling need for the offshore renewables industry to develop and expand its “best practice” guidance for crews of offshore renewable energy passenger transfer vessels to include guidance for owners. The National Workboat Association and International Marine Contractors Association have also been advised to implement procedures for reporting marine safety lessons and ensure these are communicated to the widest possible audience.
Whilst the incidents arose during offshore renewables projects, the issues raised in the MAIB Report
Health and Safety
regarding training, competency and vessel safety will impact on all offshore work related activities. Following the MAIB Report, regulators will be paying closer
scrutiny in the future to the planning and monitoring of vessel movements and vessel suitability, as well as the selection and management of marine transport contractors and the monitoring of vessel operators.
The MAIB Report also serves as a timely reminder that in terms of compliance, contractor management can be somewhat of an Achilles
heel and remains a key risk area for those operating in the offshore renewables industry.
Corporate Manslaughter –
first publicity orders on conviction
In recent months, we have seen the fifth and sixth companies successfully convicted of corporate manslaughter offences facing
sentence in the courts. One of these was Prince’s Sporting Club Limited, convicted following an incident in which an eleven year old girl died due to injuries she suffered when she fell from a banana boat ride operated by the defendant. The girl fell from the ride but the driver of the motor boat that was towing the inflatable did not spot her in the water and subsequently ran over her as the
ride continued. The company was criticised for failing to identify an obvious risk, gross breach of its duty of care and systemic failure on the part of senior management to properly address health and safety matters. The defendant was fined
£134,459.
The most recent corporate manslaughter conviction was of
These cases are very similar to the
corporate manslaughter convictions that have gone before: relatively small businesses, a small directorship who have active involvement in the day to day management of the business and both companies ceased operations between the incident occurring and the case coming to court for sentence. This meant there were very modest financial assets available to the sentencing court. In both cases the Judge remarked that the fines imposed took all financial assets left in the business and had the companies been wealthier the fines would have been considerably higher and above the sentencing guideline recommended minimum
of £500,000.
Whilst then there is nothing remarkable about the court’s approach to the imposition of penalties, there is one area in which these two cases do stand out. They are the first in which a publicity order was imposed as part of the
Mobile Sweepers (Reading) Limited.
sentence. Publicity orders can be
Stephen Panton
Senior Associate
T: +44 (0)845 415 7813
E: stephen.panton
@bonddickinson.com
The company was prosecuted following an incident in which an employee was crushed to death whilst carrying out repairs to a road sweeper. In passing sentence, the Judge commented that this case
applied to any corporate
manslaughter offences which occurred on or after 15 February 2010 and, if imposed, require the convicted company to publicise certain details of the offence in a manner specified by the court. The
was one of the “most serious of its
details that must be included in the
Ruth Wintersgill
Solicitor
T: +44 (0)191 279 9488
E: ruth.wintersgill
@bonddickinson.com
kind the court is ever likely to hear”. The company was fined £8,000, plus
£4,000 in costs. Its director, Mr Mervyn Owens, was convicted under section 37 of the Health and Safety
order are:
the fact of conviction;
specified particulars of the offence (as order by the sentencing
at Work etc Act 1974 and fined
£183,000, plus £8,000 in costs.
Judge);
Georgie Messent
Partner
T: +44 (0)845 415 6886
E: georgie.messent
@bonddickinson.com
Under section 37, where a company is found guilty of a health and safety offence and this offence is found to have been committed with the consent, connivance or neglect of a director, the director is also guilty of the health and safety offence.
the amount of the fine imposed; and
the terms of any remedial order imposed (if relevant).
The final content of the publicity order is decided by the sentencing Judge but it is open to the Prosecution to request that an order is made, they can suggest the wording to be included in the order, how and where it should be published. Clearly, in very serious cases or in cases involving high profile, wealthy defendants who would not struggle to pay a fine,
the Prosecution is likely to want the order to be publicised as prominently as possible so that it has maximum influence.
The impact of the publicity orders in these cases has been limited, not least because the companies were not well known before the incident and then ceased operations before the order was imposed. However, as the precedent has now been set for imposing such orders, it is likely that we will see more of them in future. The fact there has been two such orders in just over three months shows that the Crown Prosecution Service is keen to request this as part of the penalty and the courts are obliging.
The potential reputational impact of
a publicity order on any business, but particularly well-known names and consumer facing organisations, is huge and could far outweigh the direct costs of even a very large fine. Moreover, the ultimate fate of Princes Sporting Club and Mobile Sweepers is yet another warning of the potential consequences of a corporate manslaughter conviction, bringing to an end those businesses.
HSE Triennial Review
The Department for Work & Pensions has recently published the Health and Safety Executive’s (HSE) Triennial Review Report. This is an independent review of the function, form and governance of the HSE. The report concluded that there is a continuing need for the HSE and that it should stay as a “non-departmental
public body”. This means that it will continue to operate at arm’s length from the government, but with funding from the Department of Work and Pensions. However, there were some notable recommendations.
Performance indicators
A number of stakeholders expressed concern at the amount of time it can take HSE to complete an investigation. The report therefore recommends that 95% of non-fatal accident investigations be completed within 12 months of the accident and that suitable targets be set for completing fatal investigations where HSE is the lead investigator.
If these proposals are followed through, this will have a significant impact on organisations which can often be under the pressure of an HSE investigation for a number of years following an incident.
Funding
HSE is now carrying out fewer proactive inspections which has led some organisations with mature health and safety management systems to express concern that they are not being sufficiently pushed to deliver continuous improvement. These organisations have indicated that they would be happy to pay HSE for providing additional support and the report suggests HSE should look into providing a voluntary, fully chargeable inspection service for such organisations.
This suggestion contrasts with the report’s view of the Fee for Intervention initiative (FFI) as a “dangerous model” which has damaged HSE’s reputation for acting impartially and independently. The report recommends that as a matter of urgency the first formal stage of the FFI appeals process include at least one independent person.
More controversially, the report proposes that if HSE’s next review of FFI does not adequately address a number of key concerns, FFI should be phased out.
While it is no doubt the case that concerns about the FFI regime are at risk of dominating organisations’ relationship with HSE, it is far from clear what could replace FFI funding. All stakeholders will therefore anxiously await the outcome of the planned FFI review.
Safety and environmental fines – the direction of travel
The Court of Appeal has signalled a much tougher regime for the sentencing of companies convicted of health and safety and environmental offences. There is likely to be a much more forensic examination of a company’s ability to pay based on the financial information which will be required to be provided to the Court and the
prosecuting authority. The case was R v Sellafield Ltd; R v Network Rail Infrastructure Ltd [2014] EWCA Crim
49. Judgment was given on 17
January 2014.
Sellafield Ltd
Following the entering of guilty pleas in the Magistrates’ Court to seven environmental offences in relation to the management and disposal of radioactive waste (and thereby ensuring full credit for a guilty plea), Sellafield Ltd was committed to Carlisle Crown Court for sentence. The sentencing Judge, having accepted that the seriousness of these failures amounted to ‘medium’ culpability, that no actual harm had been caused and that the risk of harm was very low, fined the company £700,000. Sellafield’s annual turnover was £1.6 billion and annual profit £29 million. The Court made the point that the fine imposed equated to 2.3 per cent of the company’s weekly income.
Network Rail
Likewise, Network Rail entered a guilty plea in the Magistrates’ Court to a single health and safety offence for failings at an unmanned level crossing which led to a serious but non-fatal accident involving a ten year old boy. The company was committed to Ipswich Crown Court where the sentencing judge found that the actual harm was serious, even greater harm was foreseeable and the risk had existed and been obvious for many years. The company was fined £500,000. Network Rail’s annual turnover was
£6.2 billion with an annual profit of
£780 million, all of which was reinvested into the rail network as there were no shareholders in the company.
Both companies appealed, arguing that that the starting point for sentencing was too high. In relation to Network Rail, it was submitted that a starting point of £750,000 was only appropriate where there was more than one fatality (or some significant aggravating factor), or in cases involving a public disaster and where the Defendant had been convicted of corporate manslaughter.
The Court of Appeal’s approach to the sentencing process
The Court began with the fundamental principles of sentencing as set out in the Criminal Justice Act 2003. Having considered and determined the seriousness of the offence and culpability of each defendant, the Court explicitly made a number of points of principle relevant to cases of this nature:
it will always be necessary in the case of larger companies to examine with great care and in some detail the structure of the company, its turnover and profitability as well as the remuneration of Directors;
it is not appropriate to consider a fine of £1 million as apposite only to a major disaster;
there is no ceiling on the penalty that can be imposed. Fines should reflect a business’s ability to pay and be large enough to deliver a message to whoever can influence management behaviour, be that shareholders, Directors or the remuneration committee.
Applying those principles to the two cases, it was considered that the fine of £700,000 on Sellafield was entirely appropriate. The penalty on Network Rail was considered to be on the low side. Were it not for the fact that the profit generated by NR was reinvested for the public benefit,
any fine was likely to be considerably higher.
And in the same vein…
Within a week of hearing these cases, the Court of Appeal reinforced this approach in the case of R v Southern Water Services Limited. The Defendant appealed against a fine of £200,000 where there had been no actual harm caused by discharge of raw sewage over a six month period when it failed to repair pumps. The Court of Appeal dismissed the Appeal.
The Court noted the absence of an explanation by the Defendant of steps taken to prevent the risk of harm and observed there would have been no basis for interfering with the fine even if the lower court had imposed a substantially higher one. This is a clear signal to lower courts to be more robust with large companies.
Practical implications of the judgments
The sentencing practice in Sellafield and Network Rail is reinforced in the new sentencing guidelines for environmental offences published on 26 February 2014. Please click here to read about the guidelines.
It is going to be increasingly difficult to persuade Magistrates’ Courts to accept jurisdiction in cases involving large corporate defendants, even where the degree of risk or actual harm is not great.
There is likely to be a much more forensic analysis of a company’s finances and ability to pay and indeed the way in which those who manage the company are financially rewarded.
The prosecuting authorities are likely to play a more significant role in sentencing by making more detailed recommendations to the court as to the level of sentence.
Companies will be required to provide much more by way of financial information to enable the required financial analysis to take place.
There is likely to be a significant upward trend in penalties on corporate defendants in health and safety and environmental cases, even where the degree of risk or harm is modest. We have already seen further evidence of this in R v Southern Water Services Limited.
Such penalties will go hand in hand with the reputational damage that will accompany convictions and the ensuing adverse publicity.
Duty of care – occupier’s liability
A recent High Court case clarifies what duty of care is owed by an occupier to its contractor’s employees working on his premises or land.
In Jamie Yates v National Trust [2014] EWHC 222 (QB), the Claimant was one of three workers engaged by a tree surgeon who in turn had contracted with the National Trust (the Defendant) to take down a large horse chestnut tree which was diseased. The Claimant had climbed up the tree and was in the process of lopping off branches before the main trunk was to be cut down in sections. The Claimant fell 50 feet and suffered serious injury. The Claimant’s case was that the Defendant:
owed a duty of care to him as an employee of the contractor to ensure that the methods of the tree surgeon were competent and safe;
breached this duty of care by taking insufficient steps to establish the competency of the tree surgeon, as evidenced by deficiencies in appropriate tree felling qualifications and insurance;
knew or should have known that the Claimant himself lacked the qualifications or experience to carry out the work that he was doing and that he was not properly supervised.
Despite the Judge’s sympathy for the Claimant’s situation, he ruled that there were no special circumstances leading to such a duty of care and that even if there had been a duty, he did not consider that there had been any negligence on the part of the Defendant.
Civil liability – implications on the scope of the duty of care
Where a client engages a contractor who has employees, the client will owe a duty of care to the employees as visitors under the Occupiers’
Liability Act 1957, but will not owe a duty of care in relation to how the work is carried out unless:
the level of control the client has over the contractor creates a significant degree of proximity with the employees; or
the activity being carried out is exceptionally dangerous not only to the employees of the contractor but to all potential visitors to the premises.
Practical steps
This case serves as a reminder of the importance of properly managing contractors. In particular, clients engaging contractors should:
ensure that the contractors have appropriate insurance for both public and employer’s liability risks;
carry out a thorough assessment of the competency of the contractor and its expertise. In the context of potential criminal liability, this is a minimum requirement to discharge the non-delegable duties to ‘non- employees’ (members of the public and employees of contractors) under the Health
and Safety at Work etc. Act 1974 and related health and safety regulations;
decide, agree and record the limit of any instructions and how much the contractors will be supervised. This will depend on the level of specialisation of the work, the expertise of the contractor and how dangerous the work is; and
keep a note of any assessment of the contractor, any certificates of competence, method statements and risk assessments, and the level of expertise of the contractors.
Anna Hart
Associate
T: +44 (0)191 279 9295
E: anna.hart
@bonddickinson.com
Steven Brooker
Senior Associate
T: +44 (0)845 415 7804
E: steven.brooker
@bonddickinson.com
Key Legal Developments
Refrigerant gases – don’t get left out in the cold
1 January 2015 will see the final stage of the phase out of hydrochlorofluorocarbons (HCFCs) across the EU.
HCFC refrigerant gases, such as R22, are widely used in air conditioning, refrigeration and heat pump systems as an alternative to CFCs, which were banned in the 1990s. HCFCs are being phased out to comply with the EU Ozone Regulation (EC/1005/2009) which was drafted to meet the obligations of the international Montreal Protocol on Substances that Deplete the Ozone Layer.
The use of HCFCs in new equipment has been prohibited since 2004 but HCFCs can still be used in existing systems. However, these systems often require maintenance involving “topping up” the HCFC refrigerant gases which they use. To allow for this, limited exceptions have been permitted on a transitional basis which has allowed HCFCs to continue to be used where maintenance or servicing of existing systems is required.
Guidance produced by Defra indicates that “maintenance or servicing” means “all activities, excluding recovery and checks for leakage, which entail breaking into the circuits containing or designed to contain fluorinated greenhouse gases”. Until January 2010, it was still possible to use HCFCs (both new and recycled/reclaimed) for maintenance or servicing of existing systems. Since January 2010 this exemption has been limited to the use of recycled and reclaimed HCFCs only.
This exemption is due to come to an end on 31 December 2014. This
means that from 1 January 2015, although equipment containing HCFCs will still be allowed to be used, any maintenance or servicing of this equipment containing HCFCs which involves breaking into the refrigerant units will be prohibited and become a criminal offence, subject to a fine.
It should also be noted that the Ozone Regulation imposes additional obligations on operators of HCFC systems such as taking precautionary measures to prevent leakages, checking for leaks and keeping certain records, which are unaffected by the phase-out date for HCFCs, meaning that continued compliance will be required wherever HCFCs are being used.
Given the frequency with which leaks in the air conditioning, refrigerant and heat pump systems which commonly use HCFCs can occur, this means that consideration needs to be given as to how to manage the phase-out well in advance of the
1 January 2015 deadline.
With the final state of the phase-out now less than a year away, it is crucial that planning for these changes is undertaken well in advance of the deadline, to prevent additional costs and difficulties in the future.
New Measures to Protect Workers from Exposure to Hazardous Chemicals
On 20 February 2014, the EU Council of Ministers adopted a new Directive (2013/0062 (COD)) relating to measures to protect workers from exposure to hazardous chemicals. This is part of the phased in implementation of Regulation (EC) No 1272/2008 on the classification,
labelling and packaging of substances and mixtures (the “CLP Regulation”).
The CLP Regulation replaces the Dangerous Substances Directive (67/548/EEC) and the Dangerous Preparations Directive (1999/45/EC) and changes the classification system for identifying, describing, labelling and packaging hazardous chemicals before they can be placed on the market. It came into force in January 2009 but its requirements are being introduced over a number of years to allow time for products to be moved to the new system. The new system adopts the Globally Harmonised System of Classification and Labelling of Chemicals which is intended to give greater protection to workers by introducing a common set of hazard criteria and labelling elements for chemicals.
The new Directive amends the following five directives:
Directive 92/58/EEC on the minimum requirements for the provision of safety and/or health signs at work;
Directive 92/85/EEC on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding;
Directive 94/33/EC on the protection of young people at work;
Directive 98/24/EC on the protection of the health and safety of workers from the risks related to chemical agents at work; and
Directive 2004/37/EC on the protection of workers from the risks related to exposure to carcinogens or mutagens at work).
These five directives contain references and terminology which relate to the previous classification and labelling system. The new Directive updates these so that the legislation protecting workers using chemicals, as set out in the five directives, is brought into line with the rules for the supply of chemicals set out in the CLP Regulation.
The requirements of the five directives have been transposed into UK law by a number of regulations including the Management of Health and Safety at Work Regulations 1999, the Health and Safety (Safety Signs and Signals) Regulations 1996 and the Control of Substances Hazardous to Health Regulations 2002. Member states have until 1 June 2015 to implement the new Directive into national legislation and so the necessary amendments to UK legislation should follow soon.
In the meantime, the adoption of the new Directive serves as a reminder to manufacturers, suppliers and users of chemicals that their employees and customers need to be aware that during the transition period for the CLP Regulation, they may stock and use chemicals labelled according to both the old
and new labelling systems. This label information is a key component of workplace risk assessments and it is therefore crucial that both types of label information, and the level of risk they describe, are properly understood.
At what price growth?
The Deregulation Bill (the Bill) forms part of the government’s Red Tape Challenge. It is intended to amend or repeal 182 pieces of legislation and is predicted to save businesses and society up to £10 million. The Bill proposes a number of measures with considerable implications for the environmental sector, including the de-criminalisation of household waste offences and the repeal of local authorities’ powers in England to establish noise abatement zones.
However, it is the new “growth duty” imposed on non-economic regulators, including the Environment Agency and Natural Resources Wales, which has proved particularly controversial and led some commentators to question whether
it will lead regulators to prioritise economic growth at the expense of the environment.
The growth duty will oblige regulators to have regard to economic growth when making decisions by considering the economic impact that their actions are likely to have
on businesses and industry sectors. Draft guidance on the growth duty issued by the Department for Business Innovation & Skills in January suggests that regulators can do this by:
keeping the burden on business productivity to a minimum by ensuring regulatory activities are as time and cost efficient as possible;
being proportionate in their decision making and ensuring that interactions with businesses are necessary and proportionate to the risks posed by non- compliance and the ability of the business to incorporate change; and
tailoring regulatory activities based on an understanding of the business environment and lifecycle.
The Regulators Code, published in April, already tells regulators to carry out their activities in a way that supports those they regulate to comply and grow, and of course regulators are expected to consider the public interest when carrying out their activities. It is therefore far from clear that the proposed growth duty is necessary. Indeed the House of Lords and House of Commons Joint Committee Report on the Bill (the Report) refers to the Local Government Association’s view that “there is an irony that a deregulation Bill should introduce a new duty where one is not needed”.
Notwithstanding the question mark over whether the growth duty is necessary at all, one of the key concerns raised by the Report is that the growth duty could compromise the independence of regulators. In response to this, the Report recommends that any guidance issued by the government on the implementation of the growth duty must not compromise regulators’ independence.
At first reading, the recent draft guidance does appear to take this recommendation on board. It sets out that economic growth is a factor to be taken into account alongside regulators’ other statutory duties, with no obligation to place a particular weight on growth. It also specifies that the growth duty does not compromise the independence of regulators or supplant or replace their existing duties and that regulators have decision making autonomy. At the same time, however, it indicates that regulators must be able to demonstrate that they have factored economic growth into their decision making. This means that regulators are, somewhat implausibly, being advised that they have both autonomy and accountability.
As currently drafted, the Bill and draft guidance do create a risk that regulators will feel under pressure to give undue consideration to economic growth in their decision making, potentially at the expense of the environment. However, regulators are already accustomed to taking into account a number of factors as part of their decision making, and indeed are already expected to avoid imposing unnecessary regulatory burdens. Both this and the government’s assurances that regulators will maintain their independence should go some way to assuaging fears that the price of economic growth could be environmental harm. However, with parliamentary scrutiny of the
Bill still underway, the debate is set to continue.
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CRC – Are you ready to benefit from the forecast allowances price? New strategy for NORM waste
EIA and “further environmental information” – what triggers formal publication obligations?
EU ETS Update – ITRE’s vote on backloading and new reform proposals Energy Efficiency Framework 2030 Announced
Further tax boost for Fracking
Environmental and safety fines – higher and higher
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