Summary

The UK Government has recently decided that the civil sanction regime should continue to operate as an alternative to criminal penalties in respect of some environmental offences. However, it has also announced its intention to limit the use of certain types of civil sanctions to larger companies only.

The recent announcements open the way for civil sanctions to be applied to a wider range of environmental offences, eg those involving environmental permitting, in future.

What are civil sanctions?

Civil sanctions are intended as a more flexible alternative to a criminal prosecution before the Magistrates’ Court or Crown Court, the traditional enforcement route for many statutory offences. They focus less on deterrence and more on achieving the best outcome to mitigate the impact of a range of ‘middle ground’ statutory offences; more serious ones will still find their way to the criminal courts.

As the regulator effectively acts as the adjudicator when deciding to impose a civil sanction, procedural safeguards prevent the misuse of the power. For example, for the most part, a sanction can only be imposed by the regulator after it has undertaken an investigation and satisfied itself to the criminal standard (ie beyond reasonable doubt) that a relevant offence has been committed. Further, there is an automatic right of appeal to a separate tribunal when most civil sanctions are imposed.

When they were introduced, businesses generally welcomed their introduction as a cost effective means of dealing with less serious offences.

The relevant powers are set out in the Regulatory Enforcement and Sanctions Act 2008 (RESA). There are four main civil sanctions that approved regulators (see below) can make or agree:

  • fixed monetary penalties – a penalty set at £300 for businesses and £100 for individuals, and aimed at penalising minor non-compliance;
  • discretionary requirements – there are three types of discretionary requirements:
    • variable monetary penalties, the amount of which can be determined by the regulator, though in practice, it is likely to be capped at £5,000;
    • compliance notices, which force recipients to come backinto compliance within a fixed period of time; and
    • restoration notices, which require recipients to restore any harm caused through non-compliance;
  • stop notices – a notice that gives the regulator the power to prohibit a company from carrying out an activity specified in the notice if the regulator has a reasonable belief that the activity is causing harm; and
  • enforcement undertakings – unlike the other three offences, a company can offer to take steps to make amends for non-compliance, usually in the form of a payment to a local charity, rather than having the regulator enforce a civil sanction upon it.

Which regulators have these powers?

Before a regulator can exercise these powers, it must be approved by ministerial order. Essentially this means the Secretary of State must be satisfied that a regulator will use the powers in a way that is transparent, accountable, proportionate, consistent and targeted, in compliance with better regulation principles.

So far only the Environment Agency and Natural England have been granted civil sanctioning powers, and these are limited to specified environmental and nature conservation offences. These include minoroffences under the Hazardous Waste Regulations and Packaging Waste Regulations.

Lack of enthusiasm on the part of the Government

RESA was introduced under the previous administration, and there has been much speculation about whether the current Government had gone cold on the civil sanctions regime.

In February 2011, the new Government announced that they wanted to reach a cross-party position on civil sanctions for England generally before they were extended more widely. The main issue of contention appears to have been the ability of regulators to issue fines in the form of fixed and variable monetary penalties to offenders. Oliver Letwin MP, the Minister for Government Policy at the Cabinet Office, expressed disquiet that anyone other than a court should be able to levy such a penalty, regardless of its size, after a full examination of the relevant facts and taking into account any mitigatingfactors. Concerns were also expressed about the effects of monetary penalties on small and medium sized enterprises (SMEs). As a result, plans to extend civil sanctions to the environmental permitting regime, and more widely, had stalled.

Last week’s announcement

Last week, the Government announced plans to limit the full range of civil sanctions to larger companies only. This in turn suggests that civil sanctions are back on the agenda and that the Government has resolved its doubts about their utility.

In future, the Government wants regulators to exercise their powers to impose fixed monetary penalties, variable monetary penalties and restoration notices only where the target company has over 250 employees. However, powers to agree enforcement undertakings and issue stop notices and compliance notices may be granted without restriction as to the size of the undertaking against whom they might be used.

The primary aim of this is to provide a further safeguard as regards new orders under RESA for SMEs that might feel less equipped to challenge the basis of fixed monetary penalties, variable monetary penalties and restoration notices.

What do we think of last week’s announcement?

  • Despite the wide and varied use of civil sanctions for environmental offences, the coalition Government appears to be less committed to the implementation of the civil sanctions regime and has made it clear that instead it favours a general reduction in regulation.
  • While SMEs may gain some benefit from the new safeguard against civil sanctions, it may also mean that they will be more vulnerable to criminal prosecution than larger companies where they commit an environmental offence – on the basis the regulator may take the view the more limited civil sanction remedies available are not appropriate to punish the offence. This will have obvious cost implications for SMEs, particularly if they choose to defend the proceedings.
  • There has also been some criticism of the announcement, on the basis that it is often smaller traders (and not larger ones) who commit offences under eg the Packaging Waste Regulations.
  • It is expected that the decision to reduce the availability of civil sanctions in the case of SMEs will unblock the current impasse towards their use for offences committed under the environmental permitting regime. However, the Department for Environment Food and Rural Affairs has announced that it is still undertaking further work on whether, and when, civil sanctioning should be brought into force for this regime.
  • These proposals are also inconsistent with changes proposed last week to the consumer enforcement regime – where the Government has recommended rejecting the use of civil sanctions under the Act, in favour of an expanded system of undertakings under the Enterprise Act 2002.