APPENDIX 2: EXPLANATORY INFORMATION
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
Introduction
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
| 
