The possibilities under Dutch law for punitive revocation of environmental permits have increased since the introduction of the Environmental Permitting (General Provisions) Act in October 2010. The act combines a number of laws related to the environment, building and zoning. All permits, exemptions, dispensations and similar covered by the General Provisions Act can now be revoked as a penalty, whereas they were previously regulated by different laws, not all of which allowed for punitive revocation.

This seems to be confirmed by recent court decisions dealing with environmental matters.

Under the General Provisions Act, the grounds for revocation from different laws have been unified to form one provision with a much broader scope. For instance, permits and exemptions previously regulated by the Housing Act or the Zoning Act can now be revoked not only when specific provisions are breached but also when general regulations are breached. Another example is permits previously governed by the Environmental Management Act, which can now also be revoked in cases where the permit was granted based on false or incomplete statements - a power previously unknown under the Environmental Management Act. Applications have become very comprehensive and mistakes that are easily made can now be punished more harshly.

Under Dutch environmental law, the revocation of permits can be instigated by the competent authority in case of repeated failure by the permit holder to comply with permit conditions. Since companies are so dependent on permits, there is a need to stay up to date with developments to anticipate possible problems and prevent unnecessary costs. Even though revocation is considered an ultimate remedy, it will be applied only when required. This was confirmed in a May 25 2011 decision of the highest environmental court, the Council of State. Even after having incurred penalties of up to €500,000, and after having adapted its way of operating, a gravel handling company's permit was completely withdrawn as a result of ongoing violations of permit conditions.

Where the law grants the competent authority full discretion in its decision to revoke, it has given the courts the right to review this only marginally. When weighing interests, the administrative body needs to take into consideration the principles of due process, as well as to what extent the permit holder was expecting the permit to remain unchanged. Whether a holder's expectations are justified depends on, among other things, what the enforcement policy of the competent authority has been.

A permit holder must really cross a line before the permit is revoked. Punitive revocation is generally not applied before several warnings have been given and administrative enforcement actions have been taken. Also, prior to revoking a permit, the competent authority is required to give the perpetrator a reasonable remedy period during which it can right its wrongdoings. In the case of the gravel handler, a period of four weeks was deemed to be reasonable to clean up large areas of gravel. Lower courts reconfirmed that rule (in older pending cases) in anticipation of the General Provisions Act.

However, in certain situations, a compelling reason alone is not enough for withdrawing a permit. In order to act in accordance with the principle of proportionality it may be required to give compensation for suffered losses. Nevertheless, compensation is not given in every instance.

In the case of changed policies the compensation is determined partly by whether the losses are considered normal societal risks. The longer ago a permit was granted, the more that a permit holder may expect the permit (conditions) to be changed or revoked. Also, a permit holder may have been aware of upcoming developments and still have decided to invest heavily in certain practices, which could be considered as willingly accepting the risks. Another factor is how drastic the consequences are for a permit holder. However, a very drastic consequence could also have been entirely foreseeable; it is the balance of the factors that determines the level of compensation. Consequently, not all suffered losses will necessarily be compensated for, but only up to a certain degree. The courts have always decided matters of this kind on a case-by-case basis, which is typical for compensation law.

For further information on this topic please contact Norbert de Munnik or Annechien Daalderop at NautaDutilh by telephone (+31 10 224 0000), fax (+31 10 414 8444) or email (Norbert.deMunnik@nautadutilh.com or Annechien.Daalderop@nautadutilh.com).

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