Penalties for Breaching Environmental Legislation

June 2016: A Crown Court case decision highlights the potential consequences of breaching environmental legislation. A builder was prosecuted for illegally dumping and burning waste. He was sentenced to 150 hours community service and ordered to pay costs, as well as receiving a five year Criminal Behaviour Order (CBO). The CBO is believed to be the first such order obtained by the Environment Agency. If the order is breached the builder will risk a prison sentence of up to five years.

December 2015: Three recent cases highlight the penalties that can be brought against a company for breaching environmental legislation:

• In the first case, three men and a haulage company were ordered to pay more than £262,000 in fines, confiscation and costs for illegally dumping more than 60,000 tonnes of waste on two farms in Cornwall. The amount of material deposited was way in excess of the prescribed limit of 1,000 tonnes, some of which was tipped on a raised field and slipped into a nearby stream.
• In the second, a company was fined £6,000 and ordered to pay £4,474 costs after pleading guilty to breaching environmental permitting regulations. The Environment Agency prosecuted the company for causing trade effluent to enter inland freshwaters without being authorised by an environmental permit.
• In the third case, two company directors and their company were ordered to pay £25,450 fines for illegally exporting 187 tonnes of hazardous electronic waste to six African countries between 2011 and 2015. The prosecution was brought by the Environment Agency after their officers found 11 shipping containers full of electrical waste destined for Nigeria, Ghana and Tanzania. This sentence is indicative of how seriously the courts now treat environmental crime. In June 2014, an offender convicted of illegally exporting 46 tonnes of hazardous electrical waste to Nigeria, Ghana, the Ivory Coast and the Congo was sentenced to a term of 16 months by Snaresbrook Crown Court. He had a previous conviction for this offence.

April 2015: Due to changes to the Legal Aid, Sentencing and Punishment of Offenders Act 2012, companies and their directors may wish to reconsider their approach to certain offences that, up until now, may have been perceived as relatively minor because of the low fines involved. Section 85 of the Act removes the cap on fines set at £5,000 or more in the magistrates' courts.

This important expansion of magistrates' sentencing powers gives the courts a wide discretion when imposing fines for summary offences. It applies across all business sectors and affects a very wide range of legislation, including commercial, company, financial services, competition, intellectual property, telecoms and media, property, health and safety, and environmental offences.

This business briefing sets out the potential penalties and other implications for a business if it breaches environmental legislation. Understanding the regulator’s approach to the enforcement and prosecution of environmental offences should enable businesses to minimise their risk of being prosecuted. It should also help:

• Reduce the level of any penalties if the business is prosecuted
• Minimise any reputational damage to the business

The main environmental regulators in England are the Environment Agency (EA) and local authorities, and Natural Resources Wales in Wales.

Penalties

Enforcement notices: Environmental regulators can, in some cases, serve an enforcement notice on a business requiring it to rectify a breach of environment law. The regulator may also have the power to order the closure or suspension of the business until the breach has been rectified. Breach of any of these types of notice is a criminal offence.

Clean-up notices: Environmental regulators can, in some cases, serve a notice on a business requiring it to clean up any contamination (including water pollution) they have caused. Breach of this type of notice is a criminal offence.

Fines and imprisonment: Most breaches of environmental law are criminal offences. The penalties are usually a fine and/or imprisonment. For cases tried in the:

• Magistrates’ court, the maximum penalty is, since March 2015, usually an unlimited fine and/or six months’ imprisonment
• Crown Court, the maximum penalty is usually an unlimited fine and/or two years imprisonment

The regulators can also prosecute the business’ directors, managers, secretary or other similar officers (or person purporting to act in any such capacity), if it can be shown the offence was committed with their consent or connivance, or was attributable to their neglect.

Civil sanctions: New legislation has given regulators (including the EA and local authorities) the power to impose civil penalties on businesses, as an alternative to prosecuting, for certain types of breaches (including breaches of environmental legislation). Civil penalties include fixed monetary penalties and enforcement undertakings.

Related orders: For more serious offences, the court can make related orders, either at the same time as sentencing or in subsequent proceedings:

• Directors’ disqualification order. The offender can be prohibited from acting as a company director. Breach of a directors’ disqualification order is a criminal offence
• Recovery of assets. A prosecutor (usually the EA in environmental cases in England) can refer cases to the Serious Organised Crime Agency (SOCA) after a conviction, asking SOCA to confiscate assets equal to the financial benefit gained from the criminal environmental activity
• Serious crime prevention order. The High Court and Crown Court can make a serious crime prevention order (SCPO) after a person has been convicted of a serious offence, including a number of environmental offences, such as disposing of waste without a permit. An SCPO can be made against an individual or a business and may last for up to five years

Sentencing guideline: The Sentencing Council has published a sentencing guideline for environmental offences which sets out a 12-step sentencing process to punish offenders, prevent reoffending and remove financial gain. The guideline requires the court to consider the real economic impact of a fine and how to bring home to both the management and shareholders of a business the need to improve regulatory compliance. It will apply to the sentencing of organisations for environmental offences from 1 July 2014 (regardless of the date of the offence).

Adverse publicity: A conviction for an environmental offence may lead to adverse local and, in some cases, national publicity. For example, the EA publicises environmental convictions on its website as part of its “name and shame” policy. Local press sometimes also sit in on criminal court proceedings. There may be damage to the business’ reputation, even if it is found “not guilty” at the end of the proceedings.

Insurance: A conviction could increase the business’ insurance premiums.

Regulatory relationship: The business’ ongoing relationship with the regulator may be undermined.

Future sale of the business: A poor environmental compliance record, particularly prosecutions and convictions, can cause difficulties during the sale of a business, especially if the buyer requests environmental warranties and/or indemnities.

The content of this Business Briefing is for information only and does not constitute legal advice. It states the law as at June 2016. We recommend that professional advice is obtained on any particular matter. We do not accept responsibility for any loss arising as a result of the use of the information contained in this briefing.