Update: environment

The Environmental Liability Directive

The Environmental Liability Directive (ELD) aims to prevent and remedy damage to land, water and biodiversity and reinforces the 'polluter pays' principle by making operators financially liable for threats of damage or actual damage. The Environmental Damage (Prevention and Remediation) Regulations 2009 came into force on 1 March 2009 in order to implement the ELD into UK law. The regulations cover damage to protected species or natural habitats, surface water, groundwater and land. The UK government has taken the view that most of the obligations in the directive are already covered by existing UK laws.

The strict liability element of the regulations will only affect a limited number of specified activities, most of which are already regulated. However, the regulations do contain some new obligations requiring immediate action by operators to prevent and notify imminent threats of, and actual, environmental damage, and to carry out complementary and compensatory remediation for damage to natural resources.

As previously reported (see Solicitors Journal 153/8, 3 March 2009) operators are not obliged to take out insurance against their potential liability, but government guidance recommends that any existing insurance policies or other financial guarantees are extended to cover potential liabilities.

In contrast to many EU environmental directives, member states have considerable latitude in how they implement the ELD. So, for example, the regulations extend beyond the ELD's minimum requirement to protect special areas of conservation and special protection areas, to also include any sites of special scientific interest. Therefore, businesses with activities subject to the ELD in more than one jurisdiction should check the way in which the respective member states have implemented the ELD.

While environmental NGOs cannot directly enforce the regulations, it is likely that they will take an active role in notifying enforcing authorities, i.e. the Environment Agency, of imminent risk of, and actual, environmental damage.

The Carbon Reduction Commitment

The Carbon Reduction Commitment ('CRC') is a 'cap and trade' emissions trading scheme for organisations that use over 6,000MWh of electricity from half hourly meters in a 'qualifying year' (see Solicitors Journal 153/11, 24 March 2009). Although the qualification threshold for CRC is likely to exclude many small individual entities, the draft regulations provide special rules for corporate groups and other business models which may mean small companies that are subsidiaries of a larger group will still be caught by the scheme.

For group companies the electricity consumption of all members of the group must be aggregated in order to determine whether a group is over the threshold for CRC qualification. This means that many parent companies will find themselves faced with direct obligations and liabilities on behalf of their groups and that subsidiaries will have to co-operate with parents to facilitate compliance with the scheme. It is also worth noting that for groups without a UK parent, the electricity consumption of UK-based members of the group will still be aggregated in order to determine if the group is over the qualification threshold and commuted to a nominated group company who will be responsible for compliance with CRC.

Other requirements of the draft regulations will see majority stakeholders in joint ventures (JVs) having to include the JV's electricity consumption with their own for the purposes of qualification for CRC and franchisors being responsible for the aggregate energy consumption of all their franchisees within CRC.

In short, many individual legal entities which fall below the 6,000MWh threshold will still have to consider the requirements of the scheme and many parent companies or franchisors may find themselves facing direct obligations under the scheme.

The EU Directive on Protection of the Environment through Criminal Law

The Environmental Crime Directive aims to ensure that certain serious environmental offences are dealt with as criminal offences across all EU member states.

In England, many (if not all) of the activities covered by the Environmental Crime Directive are already treated as criminal offences and punishable by imprisonment and/or a fine.

Under English law, the majority of environmental offences are 'either way' offences, meaning they can be tried either in a magistrates' court or the Crown Court, depending on how serious the case is. The level of the penalty will therefore depend on which court the case is tried in. Although the magistrates' courts are limited in the level of penalties they can impose (usually, a maximum of 12 months' imprisonment and/or a £5,000 fine), if they feel their sentencing powers are insufficient in a particular case they have the power to send the case to the Crown Court for sentencing so that a higher penalty can be imposed.

The Regulatory Enforcement and Sanctions Action 2008 (RESA) received Royal Assent on 21 July 2008 and gives regulators (including the Environment Agency in England and Wales and other environmental regulators in the UK) new powers to impose civil penalties on businesses, as an alternative to prosecution.

The government has not yet indicated how the new Environmental Crime Directive will interact with RESA. In any event, the UK has until 26 December 2010 to implement the directive into UK law.

Renewables Obligation Order 2009

The Renewables Obligation ('RO') was introduced through the Utilities Act 2000 as a way of incentivising electricity generation from renewable sources. Essentially the RO requires electricity suppliers to surrender a certain number of Renewables Obligation Certificates ('ROCs') every year which can only be acquired by purchasing or generating electricity from accredited renewables projects.

Initially one ROC was issued for every MWh of power produced regardless of the technology employed. This approach has not provided sufficient support to ensure the development of emerging renewable technologies. In the Renewables Obligation Order 2009 ('ROO') the government has changed the levels of ROCs that are available for different technologies (i.e. 'banding') and has committed to reviewing the 'bands' every four years or sooner if certain triggers occur, such as the emergence of a new renewable technology or evidence of significant and sustained variation in costs relating to one or more technologies.

To protect investments that have already been made in existing renewable assets, the ROO provides for existing assets to continue to receive ROCs '“ these provisions are known as 'grandfathering' provisions. How they apply depends largely on the accreditation status of the relevant generating station on 11 July 2006 and what technology the generating station is using.

The important thing for those considering investing in renewable technologies or those making changes to existing renewable assets (e.g. adding or reducing capacity) is that the ROO now provides differentiated support and to ensure that they understand the detail not just of what renewable source electricity is being generated from but also what type of technology is being used, as this will determine what level of support is available and ultimately the future returns from any investment.

The Hazardous Waste (Amendment) Regulations 2009

The Hazardous Waste (England and Wales) Regulations 2005 have been amended. One of the changes relates to the requirement for a site to register with the Environment Agency if it produces any hazardous waste. Previously sites could only claim exemption from this requirement if they fell within one of the limited categories defined in regulation 23(3) of the Hazardous Waste Regulations 2005, and the qualifying limitation was being observed and the hazardous waste concerned was being removed from the site by a registered waste carrier or one that was exempt.

In practice, many commercial entities did not fall within para.23(3) meaning the qualifying limitation was irrelevant. This meant that many sites were caught by the obligation to register despite the fact that they were only producing very small volumes of hazardous waste.

From 6 April the new provisions will come into force meaning that any type of premises can be exempt form the requirement to register with the Environment Agency as long as certain conditions are met. One such condition is compliance with the qualifying limitation which has been raised to 500Kg of hazardous waste per calendar year.

As a result operators of many commercial sites which produce low volumes of hazardous waste will no longer be required to register with the Environment Agency.

Sites of special scientific interest

The case of Boggis v Natural England [2008] EWHC 2954 (Admin) involved a group of residents on the Norfolk coast who, concerned for the safety of their properties, constructed their own sea defence which required ongoing maintenance. In 2005 a nearby site of special scientific interest (SSSI) was extended by the government to include the sea defences, meaning the residents were no longer able to lawfully maintain the defences without the consent of Natural England, which was not forthcoming.

Although the initial group appeal against the extension of the SSSI was unsuccessful, an individual resident then appealed against Natural England's refusal of his personal application to maintain the area of sea defence which protected his property. The Secretary of State accepted the inspector's view that the human rights of the appellant in this instance outweighed the wider public nature conservation interest and that the individual concerned should be allowed to maintain his small area of the sea defences.

Meanwhile, the group of residents took proceedings to judicially review the decision of Natural England to extend the SSSI on the grounds that its had acted outside of its powers in designating the new SSSI and that it had failed to undertake an appropriate assessment under European legislation which it was required to do as parts of the SSSI were also protected under European legislation.

The court upheld the challenge on the second ground in relation to the decision to allow the sea defences to erode. This case is interesting as it highlights that 'conservation' does not necessarily mean the preservation of existing features and that a 'human rights' challenge may be successful in challenging the refusal of consent for maintenance works to prevent the destruction of a home.