This review outlines the legislation and regulatory regimes in the United Kingdom related to the environment and climate change. It is primarily focused on the laws of England and Wales, with reference to Scotland and Northern Ireland where appropriate.
The UK is involved in several major environmental and climate change initiatives at national, European Union, regional and international levels (such as its participation in the EU emissions trading scheme (EU ETS)2 and the Paris Agreement under the United Nations Framework Convention on Climate Change),3 as well as various decarbonisation initiatives (discussed further below). Most recently, at this year’s United Nations Environment Assembly in Nairobi, the UK signed, together with other UN Member States, a resolution to tackle the issue of plastic litter in the oceans.4 The government has also instigated a review of environmental regulations to limit bureaucracy and reduce costs as part of the Cutting Red Tape process,5 with the results of the reviews of both the waste and recycling sector and the energy sector published in March 2016.6
Additionally, the UK environmental permitting regime was the subject of an ongoing review to consolidate the various amendments made since its introduction in 2010.7 The Environmental Permitting Regulation 2016 came into force on 1 January 2017, and consolidated the 15 amendments made to the 2010 regulations. The duties under the regulations broadly remain unchanged.
Actions relating to air quality issues include a consultation on the implementation of Clean Air Zones in five cities across England: Birmingham, Derby, Leeds, Nottingham and Southampton. The zones define areas for targeted action to improve air quality, particularly with regards to nitrogen dioxide (NO2) and particulate matter emissions, by encouraging the transition to a low emission economy and placing access restrictions on more polluting vehicles.8 In May 2017, the Department of Environment, Food & Rural Affairs (Defra) published a policy paper outlining the principles for setting up Clean Air Zones based on the government’s response to the public consultation.9
With the launch of the Green Investment Bank (GIB) in 2012, the UK was the first country in the world to create a bank dedicated to the green economy.10 By March 2016 the government had begun the process of privatising GIB,11 and at the end of April 2017, the government announced that it had sold GIB to Macquarie Group Limited in a £2.3 billion deal. To safeguard GIB's environmental mission, part of the deal has involved a ‘special share’ in GIB being held by five independent trustees who have the power to approve or reject any proposed change to GIB’s green focus.12
Certain UK initiatives have been less successful. For instance, the government withdrew funding from the £1 billion Carbon Capture and Storage (CCS) Commercialisation Competition in 2015. This affected the White Rose Carbon Capture Storage project, one of the two bidders brought forward to the planning and design stage, casting doubt on the future financing of carbon capture and storage projects in the UK.13 CCS in the UK has not recovered from this.
On 23 June 2016, the UK voted to exit the EU (Brexit). Depending on the form that Brexit takes, it is likely to have an effect on the UK’s environmental legislation, although this is not expected in the short term, as discussed further below.
II LEGISLATIVE FRAMEWORK
The current legislative framework for environmental and climate change regulation in the UK is composed of a mixture of domestic and EU law. In many areas UK environmental regulation derives primarily from the EU, as the government has identified that over 1,100 pieces of directly applicable EU legislation are ‘owned by the Department of Environment, Food & Rural Affairs’.14 However, the UK has long had its own environmental laws, and the regimes for certain important areas such as contaminated land are solely domestic.
EU environmental law will continue to apply for as long as the UK is a part of the EU, and likely, at least initially, following Brexit. However, depending on the form of new trading arrangements agreed between the UK and the EU, some of this legislation may be impacted, even though the UK has adopted most EU environmental directives into national law. As discussed below, the European Union (Withdrawal) Bill 2017–2019 (EU Withdrawal Bill), formerly referred to as the ‘Great Repeal Bill’, endeavours to incorpate existing EU law into domestic legislation up to the point that Britain exits from the EU.
Certain regimes that implement EU legislation may need to be rewritten in order to incorporate the standards directly into UK law. For example, the UK regime for regulating industrial emissions as currently written refers to compliance with the EU Industrial Emissions Directive,15 as opposed to referring to standards contained within UK legislation. The UK will continue to be bound by any international treaties or conventions to which it is a party in its own right alongside the EU, such as the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, even if it is no longer bound by any EU legislation implementing the results of those treaties.
Much of UK environmental legislation is specific to a particular area of environmental law. Some examples of important legislation, discussed in greater depth below, include:
- a the Environmental Permitting Regulations 2010, which set out the environmental permitting system;
- b the Environmental Protection Act 1990, which regulates contaminated land and waste;
- c the Environment Act 1995, which regulates ambient air quality;
- d the Industrial Emissions Directive 2010, which regulates industrial emissions;
- e the Water Resources Act 1991, which regulates discharges to water;
- f the Water Industry Act 1991, which regulates discharges to sewers;
- g the REACH Enforcement Regulations 2008, which regulate chemicals;
- h the Waste Regulations 2011 and Hazardous Waste Regulations 2005, which regulate solid and hazardous waste; and
- i the Climate Change Act 2008, which sets legally binding targets for emissions reduction.
III THE REGULATORS
The primary regulatory agencies enforcing environmental and climate change rules in the different areas of the United Kingdom are:
- a the Environment Agency (EA) in England;16
- b Natural Resources Wales in Wales;17
- c the Scottish Environment Protection Agency (SEPA) in Scotland;18 and
- d the Northern Ireland Environment Agency (NIEA) in Northern Ireland.19
These agencies are responsible for the regulation of major industry and waste management, the treatment of contaminated land, water quality and natural resources. They also regulate fisheries, navigation of harbours, estuaries and inland rivers, and are responsible for managing flood risks and issues of conservation and ecology.20
Numerous other bodies also play a role, including:
- a Defra, the central government department responsible for environmental protection policy in England and internationally on behalf of the United Kingdom in the EU and elsewhere;
- b the Department for Business, Energy and Industrial Strategy, the central government department responsible for climate change having taken over the functions of the former Departments for Energy and Climate Change and for Business, Industry and Skills;
- c the Scottish government, Welsh government and Northern Irish Executive, which each have devolved responsibilities for environmental policy and legislation in their respective countries;
- d Natural England, which has responsibility for biodiversity, wildlife and habitats in England;
- e the Marine Management Organisation, with responsibility for marine activities and the marine environment throughout the UK; and
- f the Health & Safety Executive, whose remit includes industrial safety, chemicals and asbestos management.
The regulatory agencies are overseen by their respective government body, for example, Defra in England or the devolved governments in Wales, Scotland and Northern Ireland.
Certain environmental responsibilities are within the remit of local authorities, including the collection and disposal of municipal waste and the regulation of emissions from smaller industrial plants within their local area to air, water and land. Notably, local authorities play a key role in relation to contaminated land, as laid out under Part IIA of the Environmental Protection Act 1990,21 except where the land is a ‘special site’ regulated by the EA or its equivalent. Special sites include, but are not limited to, sites that have a serious impact on controlled waters or sites contaminated by radioactivity.22
Courts in the UK play a key role in the enforcement of environmental regulation, serving as the venue for criminal prosecutions and civil actions to which they have generally adopted a robust approach. For instance in Lungowe v. Vedanta Resources plc,23 the courts were willing to allow Zambian citizens to bring claims against an English parent company for personal injury and damage to property allegedly caused by pollution from a copper mine owned by a Zambian subsidiary. The following year, when the company launched a jurisdictional challenge, the Court of Appeal upheld the lower court’s decision following the effect of the European Court of Justice decision in Owusu v. Jackson and reinforcing the responsibility of a parent company for the operation of its subsidiary. The case follows the earlier example of Chandler v. Cape plc,24 which upheld the decision of the first instance judge to allow the employees of a subsidiary to bring a claim in negligence against the parent company regarding their exposure to asbestos.25 In this case, the courts maintained that the UK parent company had a duty of care to employees of a subsidiary where the parent possesses higher knowledge of the source of the injury (in this case asbestosis for which the company had established environmental, health and safety (EHS) policies, especially in respect of asbestosis, and also disseminated EHS procedures to subsidiaries).
Environmental groups and other NGOs have also made use of the courts as a means of influencing environmental law and policy, both by bringing claims for judicial review against the actions of public authorities and by seeking to stop the activities of large companies where these may be detrimental to the environment. For example, ClientEarth has engaged in a series of challenges against the government’s air quality plans, forcing new plans to be produced in 201526 and for the reconsideration of these plans in 2016.27 Most recently, a judge has ordered a High Court hearing in ClientEarth’s case against the government, challenging its failure to deal with air pollution.28
Other NGOs have contested the granting of planning permission, such as the legal challenge by Friends of the Earth and Frack Free Ryedale in 2016 against the granting of permission for hydraulic fracturing for shale gas in Ryedale, North Yorkshire. However, their claim for judicial review was dismissed.29
The UK is also subject to the jurisdiction of the EU courts, and as such the European Court of Justice also plays a role in enforcing environmental legislation. For example, in the ‘Welsh NOx’ case30 the UK was held to have failed to correctly apply the provisions of the Large Combustion Plant Directive31 to the Aberthaw Power Station in Wales by allowing the power station to burn highly volatile fuels resulting in emissions of nitrous oxides (NOx) above the levels permitted, even though Aberthaw already benefited from a derogation allowing higher NOx emissions than usual for a power station of its type.
There are various bases for environmental liability in the UK, including criminal law, civil law, public law and company law.
i Criminal law
The primary method of enforcement for most environmental laws is criminal prosecution by the regulator (e.g., the Environment Agency in England and Wales) for breach of environmental legislation. Sanctions include fines and imprisonment, and extend liability to corporate entities as well as individuals. Prior to 12 March 2015, the maximum fine in the lower courts for environmental offences was £50,000. As a result of the Legal Aid, Sentencing and Punishment of Offenders Act 2012,32 the maximum fines for environmental offences in the lower court are unlimited.33
Sentencing guidelines for environmental crimes published in 2014 have established increasing starting points for sentences based on the size of the company at fault, from micro companies to small, medium and large companies.
These guidelines were first applied in the case of R v. Thames Water Utilities Ltd.34 Following criminal prosecution by the Environment Agency, Thames Water was fined £250,000 for the negligent discharge of untreated sewage into a stream that flowed through an Area of Outstanding Natural Beauty. This fine was upheld on appeal, with the court stating that it ‘would have had no hesitation in upholding a very substantially higher fine’.35 The court compared the guidelines to those in relation to breaches of financial services regulation, holding that fines for harm caused by deliberate action or inaction could be imposed up to a ‘substantial percentage’ (i.e., up to and including 100 per cent) of a company’s pre-tax net profit for the year. In general, the approach of the guidelines is for a repeated negligent offender to receive a fine large enough to ‘bring the message home’ to the directors and shareholders of the offending company.36 Additionally, it was noted in the Court of Appeal case of R v. Ineos Chlorvinyls Ltd that when the court is determining an appropriate fine, the judge may take into account the resources of any linked organisation available to that particular offender.37 In March 2017, when Thames Water Utilities Ltd committed a further breach of the Environmental Permitting Regulations on six counts, it was fined £20 million by the Crown Court.38
Other recent cases have resulted in more significant sentences than historically. These have included a £1 million fine for Thames Water for polluting the Grand Union Canal,39 a £1.1 million fine for Yorkshire Water for illegally discharging sewage into the River Ouse,40 and a combined fine of almost £1 million for United Utilities Water Limited and its contractor KMI+ for polluting a stream with bleach.41 A record custodial sentence for environmental crime of seven years and six months has also recently been awarded in relation to a £2.2 million fraud by a waste operator that falsely claimed to have collected and recycled significant quantities of household electrical waste.42
ii Civil law
Private persons may also bring civil law claims in relation to the harms caused by breaches of environmental law. These are typically claims for damages or an injunction under the common law of nuisance, the rule in Rylands v. Fletcher or the common law of negligence, with a nuisance claim generally considered to have the highest chance of success.
Private nuisance requires the defendant’s activities to have caused substantial and unreasonable damage to neighbouring land, the damage to be reasonably foreseeable and the activity to be unreasonable, even if it is lawful.43 The creator of the nuisance may remain liable even if they have subsequently disposed of the land, and a new owner who is aware of the nuisance but does not attempt to abate it may also be liable.
The rule in Rylands v. Fletcher44 creates liability where the defendant brings onto their land, collects or keeps on it something that is likely to cause damage if it escapes, provided that the damage is reasonably foreseeable and the defendant’s activities on the land are ‘non-natural’ (e.g., industrial activity).
The threshold for bringing a claim for negligence requires that the defendant (who may have either caused the contamination or allowed it to continue) owed a duty of care to the claimant, that the duty was breached, and that the claimant suffered loss or damage as a result of that breach. It is a defence to negligence to show that the defendant exercised reasonable care in carrying out their activities. Such a defence does not apply to nuisance or Rylands v. Fletcher, where it is sufficient that the environmental damage occurred.
iii Public law
Under the Regulatory Enforcement and Sanctions Act 2008,45 environmental regulators have the power to impose civil sanctions as an alternative to prosecution in relation to certain environmental breaches. Civil sanctions include fixed monetary penalties, discretionary requirements, stop notices and enforcement undertakings.
Enforcement undertakings involve the offender making an offer to perform some act or to pay money to restore or remediate any harm caused by their breach of environmental legislation. Enforcement undertakings are the most common sanction, and since 2015 their usage by the Environment Agency in England has been extended to include breaches under the environmental permitting regime (as discussed below).
Civil sanctions may also be imposed under other environmental legislation, including in relation to the EU Emissions Trading Scheme (as discussed below).
iv Company law
Under the Companies Act 2006, directors are subject to a statutory duty to promote the success of the company for the benefit of its members as a whole.46 In doing so the directors must take into account, among other factors, the impact of the company’s operations on the community and environment. A director in breach of this duty could be subject to a derivative action by the shareholders on behalf of the company even if that director has not themselves benefited from the breach. However, such an action is likely to be difficult given the requirement to prove subjective bad faith on the part of the director, and the general discretion given to directors to balance competing interests. Furthermore, the courts have proven to be generally unwilling to interfere in the business decisions of a company.
V REPORTING AND DISCLOSURE
i Reporting and disclosure
There are several mechanisms by which companies may be required to report on or disclose environmental issues.
It is common for Environmental Permits (as discussed under Environmental Protection below) to include reporting conditions in relation to discharges to water, air emissions and other operational matters, and a number of environmental regimes impose further reporting requirements.
In addition, under the Environmental Damage (Prevention and Remediation) (England) Regulations 2015, operators are required to notify the relevant regulator of any imminent threats of environmental damage or any activity that has caused environmental damage, and to provide information to regulators upon request. The regulators themselves have wide powers to conduct investigations. For example, the EA is entitled to require that certain information is provided, gain access to premises, obtain samples, interview site employees and carry out emergency works. However, the EA must notify the operator in advance of entering a site, and cannot generally use information provided under compulsion in the prosecution of an offence.
Companies may also be required to disclose environmental liabilities as part of their strategic report under the Companies Act 2006. At present, all companies except certain small companies are required to produce a strategic report setting out a fair review of the company’s business and a description of the principal risks and uncertainties it faces. This is a stand-alone document, and is separate from the directors’ report. However, the extent of environmental reporting required varies. Large unquoted companies must consider environmental issues as a non-financial key performance indicator in their analysis of the company, but their obligations extend no further. The requirements for large or medium quoted companies are more extensive. They must report on environmental matters specifically, including the impact of the company’s business on the environment, the company’s environmental policies and the effectiveness of those policies. Small companies and medium unquoted companies are not subject to any environmental reporting requirements.
The Companies Act 2006 has broadly similar requirements to those under the Non-Financial Reporting Directive 2014. In 2016, the government conducted a consultation on the implementation of the Non-Financial Reporting Directive, as well as on wider reforms outside its scope. At the end of 2016, the government subsequently published the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, incorporating the requirements of the Non-Financial Reporting Directive by amending the current strategic report regime under the Companies Act 2006, which came into force in early 2017.47
In the context of an acquisition, there are no specific statutory requirements for a seller to disclose environmental issues to a purchaser. Nevertheless, it is commercially reasonable for environmental due diligence to form a part of the acquisition process, given the potential liabilities faced by the purchaser. Environmental due diligence may include environmental reports, whether an internal audit report, phase 1 site assessment report or phase 2 report, depending on the business and the level of environmental issues identified, the appointment of specialist environmental consultants, the incorporation of environmental warranties in the disclosure letter to flush out information from the seller and provide grounds for a breach of contract claim, and the incorporation of environmental indemnities for the buyer against any losses incurred by the purchaser as a result of the seller’s breaches of environmental regulation.
Whistle-blowers in England and Wales are protected under the Public Interest Disclosure Act 1998,48 both in relation to any unfair dismissal of the whistle-blower for making a protected disclosure and in relation to any unlawful detriment suffered by the whistle-blower as a result of making a protected disclosure. The potential liability to the employer is extensive, as there is no upper limit on compensation for unfair dismissal of a whistle-blower and the employer may be vicariously liable for the acts of its employees in causing detriment to the whistle-blower where it does not take all reasonable steps to prevent this.
The application of whistle-blower protections to environmental issues is considered explicitly in the legislation, and disclosures of environmental issues may be protected on several fronts. The legislation applies to disclosures that tend to show the current, future or past occurrence of a criminal offence or a breach of legal obligation, both of which may apply to breaches of environmental regulation. It also applies specifically to disclosures that tend to show that damage to the environment has occurred, is occurring or is likely to occur in the future.49
This legislation has been enforced in relation to environmental whistle-blowers on multiple occasions, including where the subject of the protected disclosure was a previous employer, highlighting the importance to companies both of maintaining an adequate whistle-blower policy and avoiding breaches of environmental regulation.50
VI ENVIRONMENTAL PROTECTION
i Environmental permits
Environmental permits in England and Wales are dealt with through the integrated environmental permitting (EP) regime, which has steadily incorporated and replaced the various distinct permitting systems that were previously in place. The Environment Agency, Natural Resources Wales and, in certain cases, local authorities have the authority to issue permits in relation to a range of regulated activities, and an operator must hold a permit in order to carry on any regulated activity.
The integrated EP regime was initially established in April 2008, combining the pre-existing Pollution Prevention and Control regime permits and waste management licences into a new system of environmental permits. From April 2010 the EP regime has also incorporated water discharge, groundwater discharge and radioactive substances registration and authorisation, with pre-existing consents converted automatically into environmental permits.
The current regulations for the EP regime are found in the Environmental Permitting (England and Wales) Regulations 2010.51 However, in October 2016 the government published the Draft Environmental Permitting (England and Wales) Regulations 2016 with the intent of consolidating the various amendments and regulations already in place. As mentioned above, these new regulations came into force on 1 January 2017.52
The Water Act 201453 introduced a right for the Secretary of State in England and the Welsh Ministers to extend the EP regime to include water abstraction, water impounding, fish pass approvals and flood defence consents, with a further update in 2016 to incorporate flood risk activities.
Further amendments to the EP regime were made in 2013 pursuant to the Industrial Emissions Directive,54 which consolidated various earlier EU directives, and in 2015 pursuant to the Energy Efficiency Directive.55
The integrated EP regime now covers a wide range of key activities, including:
- a various industrial and power generation activities and installations specified in Schedule 1 to the Environmental Permitting Regulations;
- b waste operations, including mining waste operations;
- c mobile plant used in connection with a Schedule 1 activity or waste operations;
- d water discharge activities;
- e groundwater activity;
- f solvent emission activity;
- g radioactive substance activities;
- h flood risk activities; and
- i small waste incineration plants.
The level of regulation applied to the environmental permit varies depending on the activity in question. Those activities that cause the most pollution are regulated both in terms of all their emissions and energy efficiency, whereas lesser polluting activities may only see their air emissions regulated. A single environmental permit may be issued for multiple installations on a particular site, potentially reducing the burden on those carrying out multiple regulated activities. In addition, standard permits with standard conditions exist for a number of less-polluting waste activities, with scope to extend these permits to other industries in the future, and certain low level waste management activities are fully exempted, subject to compliance with registration and notice obligations.
Environmental permits do not have a fixed expiry date, and are subject to periodic review by the regulator. The regulator may suspend permits if there is a risk of serious pollution, or may revoke the permit where ‘appropriate circumstances’ exist. In most circumstances environmental permits may only be transferred to a new operator by joint application to the regulator, and the surrender of many environmental permits also requires application to the regulator. This enables the regulator to ensure that appropriate environmental standards will be maintained either by a new operator or after the activity has ceased.
ii Air quality
There are two main forms of regulation relating to air quality. Ambient air quality regulation focuses on limiting the concentrations of specific pollutants in ambient air, whereas point source pollution regulation focuses on limiting the emissions to air of certain pollutants, primarily from industrial installations. Other methods used in the UK to regulate air quality include: substance bans, such as the ban on chlorofluorocarbons; emissions trading under the EU Emissions Trading Scheme; and taxation such as the Climate Change Levy.
Ambient air quality
Regulation of ambient air quality derives from three key sources: the UK National Air Quality Strategy (NAQS), the local air quality management (LAQM) system in England and Wales and the EU Air Quality Directive 2008.
The NAQS, a requirement of the Environment Act 1995,56 establishes a framework for improving ambient air quality across the UK, sets standards and objectives for a number of key pollutants and explains the various measures in place to achieve those objectives. The standards set are aimed primarily at improving human health; however, the objectives in relation to nitrogen dioxide and sulfur dioxide are also set with regards to the protection of vegetation and ecosystems.
The Environment Act 1995 also sets out the LAQM system,57 which requires local authorities to review local air standards, and to assess whether the standards specified in the NAQS are being met. If not, the local authorities are required both to designate air quality management areas and to prepare and implement remedial action plans. However, the obligation on local authorities is limited to acting ‘in pursuit of the achievement’ of the relevant air quality standards, as much air pollution regulation and enforcement lies outside their control.
The Air Quality Directive 2008,58 implemented into English law by the Air Quality Standards Regulations 201059 and Air Quality Standards (Amendment) Regulations 2016,60 sets obligatory limit values and non-obligatory target values for a range of air pollutants similar to the NAQS, and also requires the government to produce air quality plans setting out measures for meeting the required standards and action plans in the event that certain alert thresholds are breached. The regulations also incorporate the Fourth Daughter Directive,61 which sets minimal target values for certain carcinogenic pollutants. The UK’s air quality plans were successfully challenged by ClientEarth in both 2015 and 2016,62 and as such the UK produced new air quality plans in July 2017.63 These plans are the subject of a High Court hearing expected in February 2018.
iii Point source pollution
Emissions from industrial installations and mobile plant are regulated primarily under the Industrial Emissions Directive 2010,64 which replaced the former Integrated Pollution Prevention and Control regime, as well as the Medium Combustion Plant Directive 2015.65 These directives have been implemented into UK law via the EP Regulations, and as such an environmental permit is necessary in relation to activities falling within their scope.
In November 2016 the government consulted on proposals to introduce additional controls on NOx emissions from diesel generators, including requiring an environmental permit from 2019 and imposing emission limits. In the Autumn Budget 2017, the Chancellor established a £220 million Clean Air Fund for local authorities to use in order to reduce air pollution. There is an ongoing consulation as to how the Clean Air Fund can best be used to tackle NO2 pollution in local areas.66 There are various further specific regimes relating to greenhouse gas emissions, volatile organic compounds, petrol vapour recovery controls, ozone-depleting substances, fluorinated greenhouse gases, vehicle emissions, shipping emissions and aviation emissions.67
The Clean Air Act 199368 also imposes restrictions on point source pollution, enabling local authorities to designate smoke control areas69 and making it an offence to emit ‘dark smoke’ from industrial or trade premises. The Clean Air Act is currently under review as part of the Red Tape Challenge.
iv Water quality
Discharges to water
Water pollution in England and Wales is regulated under the Water Resources Act 1991,70 which applies to all ‘controlled waters’ including territorial waters, coastal waters, inland freshwaters and groundwater. A discharge to water may require various different consents, depending on: the type of activity creating the discharge; the substances in the discharge; whether the discharge is to groundwater, surface water or into a sewer; and whether the discharge occurs as part of some wider industrial activity.
Most discharges to surface water are regulated under Schedule 21 of the EP Regulations, while most discharges to groundwater are regulated under Schedule 22. In each case an environmental permit will be required where the discharge falls within the scope of the EP regime.
Discharges of trade effluents to sewers are instead subject to the Water Industry Act 1991,71 and require the operator to obtain a trade effluent discharge consent from the relevant sewerage company. The sewerage company itself will require an environmental permit to discharge the waste from its sewers into water, as discussed above.
Any facility regulated under some other branch of the EP regime is likely to include some form of discharge to water or sewers. In such cases the environmental permit granted to the facility is likely to include conditions governing any discharges, for example by monitoring the discharges which occur or minimising the emission of particular substances.
However, certain industries require a specific permit for their discharges to water pursuant to the Priority Substances Directive 2008.72 These include the paper, textiles and food industries, with the requirement of a separate environmental permit triggered upon the concentration of certain hazardous substances released to water exceeding the relevant level specified in the EP Regulations. A separate trade effluent discharge consent would also be required for the discharge of these substances into sewers.
UK water quality
Under the Water Framework Directive 2000,73 the UK was required to achieve good ecological and good chemical status across all types of surface water bodies, groundwater bodies and heavily modified or artificial water bodies by 2015. Implemented in England and Wales by the Water Environment (Water Framework Directive) (England and Wales) Regulations 2003,74 the Water Framework Directive encourages a more robust approach both to point-source pollution and to diffuse water pollution. The Regulations were amended in 2015 to require that, by 2018, the laboratories testing the water, must establish a preliminary programme of measures for each river basin district to measure the compounds added to the priority substances list in the EU directive.75 The 2009–2014 river basin management plans were updated in 2015, setting out a continued strategy of protection and improvement until 2021.76
Chemicals in the UK are regulated under the EU Registration, Evaluation, Authorisation and Restriction of Chemicals regime (REACH), as set out in the REACH Regulation 2006.77 The purpose of the regime is to ensure that chemicals are used in a manner that minimises any unacceptable risks to human health or to the wider environment, based on the transparent sharing of information throughout the chemicals supply chain. The requirements of REACH are being phased in over a 10-year period, with the final stage (registration of substances of 1 tonne or more per year) due to come into force in 2018.
REACH is enforced in the UK via the REACH Enforcement Regulations 2008,78 with the role of enforcing authority taken on either by the relevant environmental regulator, the Health & Safety Executive, local authorities or the Department of Business, Energy and Industrial Strategy as appropriate. All these bodies are required both to cooperate and to share information with regards to REACH compliance. The European Chemicals Agency (ECHA) is not an enforcing authority in its own right, but it may request enforcing authorities to act on its behalf.
The key provisions of REACH relate to the four limbs of registration, evaluation, authorisation and restriction. Those wishing to supply a substance must first register that substance with the ECHA. The ECHA may therefore exert considerable control over the chemicals industry by refusing registration to a given substance, rendering any manufacturing, import or downstream usage illegal. The supplier will also be subject to an evaluation process by the ECHA and national authorities. This evaluation could include a compliance check of dossiers, an evaluation of testing proposals and a substance evaluation to determine whether the substance in question poses a risk to human health or the environment.
Certain substances identified as ‘substances of very high concern’ (SVHCs) by the ECHA or national authorities will require specific authorisation to permit their use or sale. There are four broad categories of SVHCs: substances that are carcinogenic, mutagenic or toxic to reproduction; substances that are persistent, bio-accumulative and toxic; substances that are very persistent and very bio-accumulative; and substances that give rise to similar concerns to those in the previous categories. In addition, substances that are the subject of a restriction proposal by a Member State or the ECHA may be either restricted or banned entirely. Examples of restricted substance include asbestos and acrylamide.
The REACH Enforcement Regulations 2008 also place various obligations on companies operating in the chemicals sector. Failure to comply with these obligations constitutes a criminal offence. Some of the key obligations include:
- a neither manufacturing nor placing on the market any substance that has not been registered;
- b supplying appropriate instructions to the recipient of a substance;
- c providing a safety data sheet;
- d providing workers with access to information about the substances they may encounter in the course of their work;
- e the application of appropriate measures to control risks; and
- f compliance with the conditions of any authorisation.79
As the REACH regime derives from EU legislation, it is likely that a legislative review process in this area will be necessary as a consequence of Brexit.
vi Solid and hazardous waste
The regulatory regime for solid waste covers the entirety of the waste cycle, from generation to transport to disposal. The extent of regulation depends on whether or not an operator is carrying out a ‘waste operation’, as defined in the EP Regulations.
Waste operations include the recovery or disposal of waste, as well as any preparation of the waste prior to recovery or disposal, and are a regulated activity under the EP regime. As such they require the operator to hold an environmental permit, and the operator must comply with Schedule 9 to the EP Regulations. In addition there are certain further requirements that apply to specific types of waste operations such as landfill sites, treatment of end-of-life vehicles, treatment of waste electrical and electronic equipment, waste incineration, treatment of waste batteries, mining waste operations, radioactive waste and packaging waste.
A business that merely produces waste will not require an environmental permit, as it is not carrying out waste operations. However, such businesses must still comply with the waste hierarchy and the waste duty of care.
Under the Waste Regulations 201180 organisations involved in waste must take reasonable steps to apply the waste hierarchy when transferring waste. This sets out a priority order for waste management from prevention, re-use, recycling and recovery to environmental disposal as a last resort.
Under the Environmental Protection Act 199081 anyone handling controlled waste is subject to the waste duty of care, and therefore must ensure that the waste does not cause harm to the environment and is only transferred to an authorised person.
Hazardous waste is subject to additional regulation under the Hazardous Waste Regulations 2005,82 as amended to reflect the requirements of the Waste Framework Directive 2008.83 Waste is classified as hazardous where it is listed under the EU List of Wastes84 or the Environmental Protection Act 1990,85 or where it is specifically determined as hazardous pursuant to the Hazardous Waste Regulations 2005.
Environmental permits are required to carry on waste operations involving hazardous waste as discussed above, and the waste hierarchy and waste duty of care apply. While the requirement for the registration of premises where hazardous waste is produced, collected or removed ended in April 2016, it is still necessary for all parties involved with hazardous waste to maintain detailed records of the production, transport, treatment and disposal of hazardous waste, whether by tipping or some other method of discharge or recovery. In addition there are restrictions on the mixing of hazardous waste, and specific requirements relating to the transport of hazardous waste to ensure consignments are properly tracked.
The operators of landfill sites are currently required to make financial provision to cover the costs associated with the closure and aftercare of the site; however, no other operators are required to make financial provisions.
A consultation by Defra and the Welsh government in 2015 found a clear majority of respondents supported the reintroduction of financial provision for all permitted waste operations, and that this provision should be sufficient to cover both the cost of returning the land to a satisfactory state and any foreseeable clean-up costs of any environmental accidents. There was also majority support for increasing the financial provision in relation to landfill sites, although this was more limited. The government accordingly expressed an intention to bring forward proposals.86
vii Contaminated land
The rules on identifying and remediating contaminated land are set out in the Environmental Protection Act 1990.87 The purpose of the contaminated land regime is to encourage the remediation of significant historic contamination. As such, it is not an offence in itself to contaminate land, but it is an offence to fail to comply with a remediation notice.
Local authorities are first required to identify contaminated land. Once contaminated land has been identified, the relevant enforcing authority must serve a remediation notice to the relevant persons requiring them to remediate the contamination. The enforcing authority is typically the local authority, but may be the relevant regulator (i.e., the Environment Agency, Natural Resources Wales, SEPA or NIEA) where the contaminated land in question constitutes a ‘special site’.
In its remediation notice the enforcing authority will identify the reasonable steps required to remediate the land. These steps are determined by reference to the efficacy of any proposed remediation actions, the environmental and health impacts of the remedial actions, the cost of the remediation and the benefits of the remediation in relation to the harm. Ideally, remediation should be aimed towards restoring the land to a position where no further risk of environmental harm is posed, such that the land no longer qualifies as contaminated. The enforcing authority cannot require a higher standard of remediation. However, where the application of this standard is not practical, the enforcing authority can consider a lesser standard.
Liability for clean-up
In the first instance, the person who either caused or knowingly permitted the contamination is liable. Such a person is categorised as a Class A person. In the event that no Class A person can be found, the current owner or occupier of the site becomes liable, and is categorised as a Class B person. The Class B person does not need to have been aware of the contamination occurring in order to be liable for it. Given the potential scale of remediation costs, the process of identifying the presence of contaminated land therefore forms a key issue in property transactions or corporate acquisitions involving the transfer of land. A Class B person cannot, however, be liable for water pollution. Where multiple Class A or Class B persons exist, the enforcing authority will apportion liability according to the rules set out in the Environmental Protection Act 1990.88
The enforcing authority also has step-in rights to carry out remediation itself in certain situations, such as in the event of an emergency, where a remediation notice has been breached, where the enforcing authority would not recover all of its costs from the appropriate person, or where no appropriate person can be found.
Recovery of costs
In recovering its costs, the enforcing authority must consider the Contaminated Land Statutory Guidance.89 The polluter should pay for the cost of remediation where possible, however enforcing authorities should aim for a result that is as fair and equitable as possible, including the cost to the taxpayer. The enforcing authority should not consider financial hardship in the process of attributing and apportioning liability; however, it may waive or reduce the final remediation costs should it consider the resulting financial hardship on those liable to be too severe.
As an alternative to recovering the costs of remediation directly, the enforcing authority also has the power to defer recovery by taking a statutory charge over the property in question, provided that the owner of the land caused or knowingly permitted the contamination.90
VII CLIMATE CHANGE
The Climate Change Act 200891 lays out regulation regarding greenhouse gas (GHG) emissions. It requires the UK to reduce its GHG emissions to 80 per cent below 1990 levels by 2050. The relevant GHGs include carbon dioxide; methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.
There are three primary methods used by the government to restrict GHG emissions: the Climate Change Levy; the Emissions Trading Scheme coupled with the Carbon Price Floor; and Climate Change Agreements.
i Climate Change Levy
Adding approximately 15 per cent to energy bills of businesses and public sector organisations, the Climate Change Levy (CCL) is a carbon tax designed both to encourage the use of energy from renewable resources, and to encourage the use of less energy more generally. There are four categories of taxable commodities that are subject to the CCL: electricity; natural gas as supplied by a gas utility; petroleum and hydrocarbon gas in a liquid state, including liquid petroleum gas; and solid fuels. Solid fuels are categorised as: coal and lignite; coke and semi-coke of coal or lignite; petroleum coke; and low value solid fuel with an open market value of no more than £15 per ton. However, exemptions were introduced in 2014 for energy used in metallurgical and mineralogical processes, and for solid fuels used in certain gasification processes. The rate of CCL has increased almost every year since 2007, broadly in line with inflation determined with reference to the retail price index.92
ii Emissions Trading Scheme and Carbon Price Floor
The Carbon Price Floor (CPF), introduced in April 2013 as part of the government policy of Electricity Market Reform, places a minimum price on GHGs emitted by the power sector. The CPF is designed to supplement the EU ETS transposed into the UK’s domestic GHG emissions trading regulations, which require companies to buy permits to emit greenhouse gases while generating electricity. Since the price of these permits can fall, the incentive to reduce emissions decreases. The CPF therefore imposes a minimum price that companies must pay in order to pollute, providing a baseline incentive for companies to cut emissions. In the 2014 Budget, the government declared that the Carbon Price Support (i.e., the difference between the future market price of carbon and the floor price that acts as one component of the CPF) would be capped at £18 per ton/CO2 from 2016 to 2020.93 This cap was extended in the 2016 Budget until 2021.94
iii Climate Change Agreements
For energy-intensive businesses looking for discounts on the CCL, Climate Change Agreements (CCAs) were introduced in 2012. These are voluntary agreements made between the Environment Agency and sector associations and their members. The agreements set targets for industries to improve energy efficiency or reduce CO2 emissions. Meeting set targets makes the industry eligible for the discount CCL tax rate. From 1 April 2013, the discount received is 90 per cent. However, failure to meet the set targets under a CCA can result in the imposition of a financial penalty. If operators of CCAs fail to meet their requirements, they can continue to be eligible for the discounted tax if they pay a buy-out fee to cover the deficit.
The Committee on Climate Change (CCC), established as part of the Climate Change Act 2008, is an independent body that advises the government on how it should meet its carbon budgets and carries out annual assessments as to whether the government is meeting its requirements. In 2014, UK emissions were 35 per cent below 1990 levels. The first carbon budget was met by the UK government, and the CCC has predicted that the government will be able to meet its second and third budgets. However, meeting the fourth budget (2023–2027) will not be possible without further measures. In order for the UK to cut its emissions by 80 per cent below 1990 levels by 2050, domestic emissions must be reduced by at least 3 per cent a year.95
iv The UNFCCC, the Kyoto Protocol and the Paris Agreement
The UK is also a party to the UNFCCC,96 and accordingly a signatory to the Kyoto Protocol97 and most recently to the Paris Agreement,98 which entered into force on 4 November 2016. The Paris Agreement places various requirements on its signatories to limit global temperature increases by, among other things, meeting nationally determined contributions (NDC), peaking GHG emissions as soon as possible and progressing towards zero net emissions, minimising the loss and damage from climate change and supporting climate change adaptation, providing financial support to developing countries and cooperating with other signatories to transfer technology, achieve NDCs, build capacity of developing countries and improve public awareness and transparency.
However, the decarbonisation target under the Paris Agreement was agreed at an EU level, and therefore an allocation must take place to assign an NDC to the UK that may be affected by Brexit. Nevertheless the government has itself committed to a legally binding target of cutting carbon emissions to 57 per cent below 1990 levels by 2032.99 Furthermore, several of the UK’s decarbonisation initiatives, such as the closure or coal fired power plants, are domestic in origin and should not therefore be affected by any change in circumstances following Brexit.
VIII OUTLOOK AND CONCLUSIONS
The UK government is planning numerous environmental reforms envisioned to take effect over the coming years. These will define the UK’s future environmental and climate change policy and the mechanisms to apply it.Water abstraction is a key focus, with Defra and the Welsh government concluding a consultation in January 2016 and committing to implement reforms of the current abstraction licensing system by the early 2020s. In December 2017, a Water Abstraction Reform Plan was published that proposes to focus reform on addressing unsustainable abstraction, developing a stronger catchment focus for rainwater and modernising the system for abstractors.100 The intention of the reforms is both to improve flexibility in addressing short-term water availability, and to improve long-term sustainable management supporting growth and investments. In particular, proposals include the introduction of water trading in areas of water scarcity and the incorporation of water abstraction and water impounding into the EP regime.101
The UK government is also proposing a simplification of the regulatory regime relating to business energy efficiency through the closure of the CRC Energy Efficiency scheme from April 2019 and its replacement with an increased CCL.102 The proposals also include a consultation on a new simplified energy and carbon reporting framework, again with the intention of introducing the new framework in April 2019.103
Finally, the regulatory framework for hydraulic fracturing of shale gas continues to develop in response to industry studies as well as community and NGO pressure. In August 2016 the government launched a consultation on a Shale Wealth Fund,104 which would include options to use a significant proportion of the proceeds to provide funding for local households and communities.105 Most recently, the government published a response to this consultation in November 2017 outlining successive steps to be taken to further develop the structure and implementation plans for the Fund.106
The government has also previously proposed that operators making use of underground rights of access to sources of gas, oil and geothermal energy be required to make additional voluntary payments to local communities for lateral wells (with those payments becoming mandatory if operators fail to participate),107 in addition to any payments under the industry Community Engagement Charter.108
The future development of UK environmental legislation is to some extent uncertain, as it is likely to be affected by the outcome of the country’s Brexit negotiations with the EU. In November 2017, the government announced its plans to consult on setting up a new, independent body for environmental standards that would hold the government to account after leaving the European Union. It is unclear to what extent this would prove a robust alternative to the work of the European Commission. The European Parliament has resolved that any future agreement between the EU and the UK is conditional on the UK’s continued adherence to the EU’s standards and policies on the environment and tackling climate change.109
The EU Withdrawal Bill, formerly referred to as the Great Repeal Bill, was published in July 2017 and intends to incorporate all existing EU legislation into domestic law so that it shall remain in force after the UK departs from the European Union.110 There is no specific reference within the EU Withdrawal Bill to the retention of environmental provisions; however, the supplemental ‘factsheet’ of the impact of Brexit on environmental protection emphasised an intent of preserving environmental principles where they are included in existing EU directly applicable environmental regulation and case law.111 It also stated that the correcting power within the EU Withdrawal Bill for the government to amend legislation could only be used to correct deficiencies arising from the UK’s withdrawal from the EU.112
While it is not anticipated that Brexit will result in any immediate significant alterations to environmental regulation in the UK,113 there is some speculation that the review of environmental regulation following Brexit may be used by the government as an opportunity to deregulate in certain areas, such as air quality and sewerage, where the UK has historically struggled to meet EU standards.114 The UK is a leader among EU Member States when it comes to adopting EU directives; however, ultimately, the fate of UK environmental and climate change legislation may be in a holding pattern for the near future.
1 Tallat S Hussain is environmental counsel at White & Case LLP. The author was assisted by Alex Field and Dan Pront, trainee solicitors at White & Case LLP.
2 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance); http://ec.europa.eu/clima/policies/ets_en.
3 The Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCC) was adopted on 12 December 2015 and entered into force on 4 November 2016; http://unfccc.int/paris_agreement/items/9485.php.
9 Department for Environment, Food and Rural Affairs May 2017: Policy Paper (Gov’t Publication) on Principles of setting up Clean Air Zones in England. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/612592/clean-air-zone-framework.pdf.
14 http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-energy-and-environment-subcommittee/brexit-environment-and-climate-change/written/45974.pdf (accessed 18 December 2017).
15 Industrial Emissions Directive 2010/75/EU.
20 The NIEA is also responsible for the preservation of the built environment in Northern Ireland, fulfilling a similar role to organisations such as English Heritage.
21 Environmental Protection Act 1990 c. 43.
22 Regulation 2 Contaminated Land (England) Regulations 2006/1380.
23 Lungowe v. Vedanta Resources plc  EWHC 975 (TCC).
24 Chandler v. Cape plc  EWCA Civ 525.
25 Lungowe v. Vedanta Resources plc  EWCA Civ 1528.
26 R (ClientEarth) v. The Secretary of State for the Environment, Food and Rural Affairs  UKSC 28.
27 ClientEarth v. The Secretary of State for the Environment, Food and Rural Affairs  EWHC 2740 (Admin).
28 https://www.clientearth.org/uk-government-will-face-court-hearing-toxic-pollution/. It is expected that the High Court will hear ClientEarth’s case before 23 February 2018.
29 R (Friends of the Earth Limited) v. North Yorkshire County Council  EWHC 3303 (Admin).
30 Commission v. United Kingdom  Env LR 6.
31 Large Combustion Plant Directive 2001/80/EC.
32 Section 85 Legal Aid, Sentencing and Punishment of Offenders Act 2012 c. 10.
33 Magistrates’ powers to impose imprisonment are specified by Section 78 PCC(S)A and Section 133 Magistrates’ Courts Act 1980 (MCA): six months for one offence or 12 months for two.
34 R v. Thames Water Utilities Limited  EWCA Crim 960.
35 Ibid. Mitting J at para. 46
36 Ibid. Mitting J at paras. 38–42.
37 McCombe LJ at para. 20, R v. Ineous Chlorvinyls Ltd  Env LR 7(2016).
43 Bamford v. Turnley (1860) 122 ER 25; Cambridge Water Co Ltd v. Eastern Counties Leather plc  1 All ER 53.
44 Rylands v. Fletcher  UKHL 1.
45 Part 3 Regulatory Enforcement and Sanctions Act 2008 c. 13.
46 Section 172 Companies Act 2006; note that the Companies Act applies to all UK companies.
47 The new regulations came into force on 26 December 2016. The amendments apply in relation to the financial years of companies and qualifying partnerships on or after 1 January 2017. www.legislation.gov.uk/uksi/2016/1245/regulation/1/made. The Companies Regulations 2016 amend the Companies Act 2006 to implement the Directive in the text – see Part 15 of the Companies Act 2006, which has now been amended.
48 Public Interest Disclosure Act 1998 c. 23.
49 Ibid Section 1.
50 Wharton v. Ward Recycling Ltd ET/2800817/2008; BP plc v. Elstone and another UKEAT/0141/09.
51 Environmental Permitting (England and Wales) Regulations 2010/675.
52 Environmental Permitting (England and Wales) Regulations 2016/1154.
53 Water Act 2014 c. 21.
54 Industrial Emissions Directive 2010/75/EU.
55 Energy Efficiency Directive 2012/27/EU.
56 Part IV Environment Act 1995 c. 25.
58 Air Quality Directive 2008/50/EC.
59 Air Quality Standards Regulations 2010/1001.
60 Air Quality Standards (Amendment) Regulations 2016/1184.
61 Fourth Daughter Directive 96/62/EC.
62 See notes 26 and 27 above.
64 Industrial Emissions Directive 2010/75/EU.
65 Medium Combustion Plant Directive 2015/2193/EU.
66 https://consult.defra.gov.uk/airquality/additional-measures/. See also May 2017 for Consultation:
68 Part I Clean Air Act 1993 c. 11.
69 Smoke control orders have now been implemented in most of the UK’s major towns and cities.
70 Water Resources Act 1991 c. 57.
71 Water Industry Act 1991 c. 56.
72 Priority Substance Directive 2008/105/EC.
73 Water Framework Directive 2000/60/EC.
74 Water Environment (Water Framework Directive) (England and Wales) Regulations 2003/3242.
75 Reg 10A The Water Environment (Water Framework Directive) (England and Wales) (Amendment) Regulations 2015.
77 Regulation (EC) 1907/2006.
78 REACH Enforcement Regulations 2008/2852.
79 Schedule 1 REACH Enforcement Regulations 2008/2852.
80 Waste (England and Wales) Regulations 2011/988.
81 Section 34 Environmental Protection Act 1990 c. 43.
82 Hazardous Waste (England and Wales) Regulations 2005/894.
83 Waste Framework Directive 2008/98/EC.
84 Commission Decision on the European List of Waste (COM 2000/532/EC).
85 Section 62A Environmental Protection Act 1990 c. 43.
87 Part IIA Environmental Protection Act 1990 c. 43.
90 Part IIA Environmental Protection Act 1990 c. 43.
91 Climate Change Act 2008 c. 27.
99 The Carbon Budget Order 2016/785.
109 European Parliament resolution of 5 April 2017 on negotiations with the United Kingdom following its notification that it intends to withdraw from the European Union (2017/2593(RSP).
110 European Union (Withdrawal) Bill 2017-19 (HC Bill 5).