Select Committee on Merits of Statutory Instruments First Report


Draft Environmental Permitting (England and Wales) Regulations 2007

Supplementary Note on the proposed removal of the Due Diligence Defence from sites formerly covered by Waste Management Licensing


1. This note provides further detail to the House of Lords Committee on the Merits of Statutory Instruments on the proposed removal of the due diligence defence from Waste Management Licensed operations that will fall under a common permitting and compliance framework created by the proposed Environmental Permitting (England and Wales) Regulations (the draft Regulations).

Acknowledgement of a significant change

2. The Department acknowledges that the loss of the due diligence is a significant change and regrets that it did not take the opportunity to more fully explain the background to this issue and its reasoning in the Explanatory Memorandum that accompanied the draft Regulations.

Background to the development of the Environmental Permitting Regulations

3. The draft Regulations introduce a single streamlined environmental permitting and compliance regime to apply in England and Wales. They do this by integrating the  existing regimes covering waste management licensing (WML) and Pollution Prevention and Control (PPC). The Explanatory Memorandum to the draft Regulations notes that they replace two different approaches and compromises between these have been required to develop a simpler common system that reduces the administrative burden of regulation while still protecting the environment and human health. The draft Regulations seek to balance the rights of the public to be protected against harm against the rights of industry to operate within a controlled framework.

4. The draft Regulations aim to provide a common and unified approach to permitting and compliance, within Directive constraints. There are no specific Directive requirements concerning due diligence. Initially only the WML and PPC regimes will be unified but the Government has designed a regime that is flexible and capable of incorporating other broadly similar environmental regimes as a next step and is currently considering the costs and benefits of such an extension of the system.

Strict Liability and Due Diligence

5. The existence of strict liability in environmental regulation is the result of a deliberate choice made by successive administrations to secure higher environmental standards in those areas than would otherwise be the case.

6. There are objections to strict liability for environmental offences:

  • they are sometimes not seen as truly "criminal" and are therefore not always treated seriously by the Courts; and
  • legitimate operators can face prosecution without evidence of fault,

but there are significant advantages to a system of strict liability regulatory offences as:

  • it improves deterrence;
  • without criminal offences which do not require the proof of a mental element the regulator's power to advise and warn the regulated would be seriously jeopardized;
  • it is an important tool to secure convictions of corporate entities;
  • business operating in regulatory areas implicitly accept the risk of criminal liability; and
  • perceptions of injustice arising from strict liability are reduced in practice as some aspects of fault influence the choice of enforcement approach.

7. The current due diligence defence changes the nature of the strict liability system and provides a defence to an offence under waste management legislation where a defendant shows "that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence."[1]

8. The existence of a due diligence defence can enable industry to avoid responsibility for the consequences of the actions that they have chosen to conduct. This is because operators only need to do what they think was reasonable to prevent those consequences rather than what was objectively possible to prevent those consequences even though on occasions severe damage can be caused to the environment and/or human health. The draft Regulations cover a range of activities from low to high risk.

How the Due Diligence defence has applied in practice so far

9. WML is the only regime from the 4 largest environmental permitting systems likely to ultimately fall under the common system created by the draft Regulations (PPC/WML/Water Discharge Consenting/Radioactive (RSR) regulation) which currently has a due diligence defence. PPC contains no statutory defences nor does RSR regulation. Water Discharge Consenting contains a single defence covering emergency situations.

10. The due diligence defence applies equally to fly-tipping or to operating a site without a waste management licence or in breach of licence conditions. The Environment Agency's experience is that although the defence is rarely used it is as likely to be raised in fly-tipping cases (where it may be particularly inappropriate) as it is for breach of permit condition. Statistics are not maintained on the number of investigations and subsequent prosecutions where the due diligence defence is raised although the Environment Agency considers that it is raised in relatively few cases.

The concerns expressed by industry

11. The Government recognised in its First and Second Consultations that the proposed removal of the due diligence defence was a significant issue.

12. The waste industry did not provide specific examples of situations where the removal of the due diligence defence would result in an unjust results, but was strongly in favour of retaining the defence for the following reasons:

  • that the due diligence defence is a fundamental right;
  • that there will be problems in recruiting staff as a consequence of its loss, particularly Directors;
  • that there may be problems insuring activities; and
  • that it may cause problems specifically in relation to subjective issues such as odour.

13. The responses from non-Waste industry (to the extent they can be identified) were more mixed with a majority against its removal but some supported the proposals and all welcomed the proposed extension of an emergency defence across the entire system. The emergency defence provides a defence in circumstances where it would be unjust to prosecute, where a person proves:

"that the acts alleged to constitute the contravention were done in an   emergency in   order to avoid danger to human health in a case where—

(i) he took all such steps as were reasonably practicable in the circumstances for minimising pollution; and

(ii) particulars of the acts were furnished to the regulator as soon as reasonably practicable after they were done."

14. In contrast regulators and other public bodies generally agreed that the due diligence defence has caused practical enforcement challenges in the past and supported its removal. An NGO also supported its removal. Regulators generally did not object to the extension of an emergency defence across the entire system.

Why the Government considers that the retention of the defence in a common system is not justified

15. The Government recognises that, in particular, the waste management industry has concerns about Government's proposal. The Government wants to develop a common simplified permitting and compliance system. As noted above, better regulation within a common regulatory system involves balancing the need to continue to protect the environment and human health through adequate regulatory powers and the need of industry to have adequate protections against unreasonable enforcement action being taken.

16. The Government does not consider that an due diligence defence could be applied across the draft Regulations. This is because PPC permit conditions are required to be based on the application of the EU concept of Best Available Techniques[2] - compliance with such conditions therefore implies diligence and non-compliance would imply a lack thereof. The existence of an additional due diligence defence would inevitably undermine this concept.

17. The provision of separate defences in a common system, apart from failing to deliver an integrated simpler system, would be problematic at permitted sites where, for example, a waste operation and an IPPC activity are carried out. The system would be very difficult to work with in practice and this would have knock-on costs for all. For, example, regulators would have to conduct investigations on the basis that the due diligence defence would apply in every case leading to longer more costly and disruptive investigations. The concerns raised by industry, at paragraph 12 above, are addressed in the following paragraphs.

18. Fundamental right - The Government does not consider that a due diligence defence in this context is a fundamental right. A very significant proportion of the waste industry, those who have fallen under PPC, already do not have this defence. The Government is not aware of any problems that have arisen from the lack of such a defence within the PPC system. There is no objective reason to continue with this defence for residual waste activities in a common system. Further, in 2005, offences under the Producer Responsibility Obligations (Packaging Waste) Regulations were changed so that producers could no longer rely on having taken "reasonable steps" to comply with their regulatory obligations. In addition to its absence from PPC, this form of defence does not exist in radioactive substances legislation nor in water quality legislation.

19. Recruiting staff and Directors - The Government understands that operators in other areas such as those operating PPC activities, water discharge and nuclear sites where this defence does not exist appear able to recruit and retain directors and managers. The Government is not aware of any evidence as to why the Waste Management sector is different. It therefore considers that there are no reasons to draw a different conclusion for the Waste Management sector. The Government does not therefore consider that there would be substantial problems in recruiting staff or directors if the defence was removed.

20. Obtaining insurance - The Government understands that operators in other similar areas where this defence does not exist are able to obtain insurance and is not aware of evidence as to why this sector is different. Operators are not of course, as a matter of public policy, able to obtain insurance against criminal liability.

21. Problems in relation to subjective issues - The Government has provided a right of appeal against permit conditions[3]. The Government considers that the removal of the due diligence defence would not have an impact on subjective issues. Rather then waiting until enforcement issues arise if operators consider that permit conditions are not suitable the Government considers that operators should exercise their rights of appeal against such conditions.

22. Safeguards in the enforcement and prosecution system - There are a number of safeguards in the regime established by the draft Regulations:

  • any system which depends upon enforcement through the criminal courts is protected by the Attorney General's Code for Crown Prosecutors which is adopted by all regulators. These require evidential sufficiency and public interest tests to be satisfied prior to prosecutions being commenced. Further prosecution would also have to be in accordance with a regulators own accessible policy or it will be regarded as an abuse of process;
  • the operator is given a right of appeal against permit conditions (such as those relating to odour)[4] and enforcement notices (the draft Regulations strengthen the rights of the waste industry in this area) before criminal proceedings are brought;
  • whether Courts would be likely to impose small or negligible sentences is a factor to be taken into account in deciding whether or not to prosecute under the Code for Crown Prosecutors;
  • the operator chooses to join the permitting system - the permit makes lawful an activity that would otherwise be unlawful;
  • the emergency defence is being applied across the regime generally.

23. The Government is not aware of evidence that suggests that the Environment Agency or local authorities use their enforcement powers in an unreasonable manner. The Environment Agency considers itself a modern regulator and so focuses its resources on those areas of serious risk / harm. It primarily addresses breach of permit conditions through discussion and, if necessary, through enforcement notices and the safeguards applied above would apply.

24. In 2005 the Agency undertook 883 prosecutions (excluding fisheries) of which 85 related to breach of a permit condition. In 2005 it served 515 enforcement notices (26 prosecutions resulted from breach of those enforcement notices). 29 of the 85 prosecutions concerned waste sites. These statistics need to be read against the scale of the Environment Agency's regulation[5] which demonstrates, it believes, that it is not over zealous in relation to legitimate business in terms of enforcement.

25. Finally, where a defendant raises a due diligence defence, the regulator must test it. The defendant's systems / procedures are scrutinised, increasing the cost of the investigation and of any subsequent proceedings for both the regulator and the regulated. A defendant can at any point refer to the processes and procedures they have adopted to avoid the offence and that will information will be assessed in the decision whether to prosecute and in the scale of any sentence. The Code for Crown Prosecutors requires this.

26 The Government considers that removing the due diligence defence would:

  • improve deterrence and so encourage compliance, particularly among the poor performers;
  • provide an important tool to secure convictions especially of corporate entities;
  • not remove fault from the enforcement process entirely because culpability is always relevant to decisions as to which enforcement options regulators should adopt;
  • reduce the need for the regulated business' systems and procedures to be subject to intense disruptive and time consuming investigations; and
  • decrease the duration and cost of any proceedings.

27. The Government therefore considers for the above reasons that the proposal to remove the due diligence defence from the residual parts of WML that would transfer into the common system is justified.

Department for Environment, Food and Rural Affairs

November 2007

1   See Section 33(7)(a) of the Environmental Protection Act 1990. Back

2   The application of Best Available Techniques is required by the Integrated Pollution Prevention and Control Directive (96/61/EC). Back

3   The right of appeal applies to bespoke permit conditions. No right of appeal lies against the fixed rules in standard permits because they are voluntary mechanisms that operators opt into and instead they can choose to apply for a bespoke permit if they do not wish to accept standard rules.  Back

4   See footnote 3, above.  Back

5   The Agency regulates process industries (around 3,600 permits by 2007), more than 100,000 consents to discharge to inland waters and more than 9,000 waste management licences. It also manages 23,000 water abstraction licences ranging from those for water companies for public supply to licences for individual abstractors Back

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