There are 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 to reduce the level of any penalties if the business is prosecuted and minimise any reputational damage to the business.
The main environmental regulators in England are the Environment Agency (EA) and local authorities.
An enforcement notice can be served 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.
A notice can be served on a business requiring it to clean up any contamination (including water pollution) they have caused. Breach of this type of notice is also 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 usually a fine of up to £50,000 and/or six months’ imprisonment. For cases tried in the 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 if it can be shown the offence was committed with their consent or connivance, or was attributable to their neglect.
New legislation has given regulators 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.
For more serious offences, the court can make related orders, either at the same time as sentencing or in subsequent proceedings. Examples include:
- 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 can refer cases to the Serious Organised Crime Agency (SOCA) after a conviction asking for confiscation of 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.
There are sentencing guidelines for environmental offences which require 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. The guidelines apply to the sentencing of organisations for environmental offences from 1 July 2014 (regardless of the date of the offence).
Adverse publicity and other effects
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. Also, local press may sit in on criminal court proceedings. Consequently, there may be damage to the business’ reputation, even if it is found not guilty.
A conviction could increase the business’ insurance premiums and the business’ ongoing relationship with the regulator may be undermined.
A poor environmental compliance record can cause difficulties during the sale of a business, especially if the buyer requests environmental warranties and/or indemnities.