Consultation outcome

Extending civil sanction variable monetary penalty powers: response document

Updated 11 December 2023

1. Introduction

We consulted with stakeholders to get their views on changes we need to make to our enforcement and sanctions policy to implement the legislative changes being made to civil sanctions, specifically variable monetary penalties.

Following the Department for Environment, Food and Rural Affairs’ Strengthening environmental civil sanctions consultation, they announced that legislation would be changed to:

• remove the current £250,000 cap under the Environmental Civil Sanctions (England) Order 2010 for variable monetary penalties and make the amount unlimited
• introduce unlimited variable monetary penalties as a civil sanction in the Environmental Permitting (England and Wales) Regulations 2016 

The changes to legislation came into force on 1 December 2023. We will start using variable monetary penalties for offences from 11 December 2023 – we have published our updated guidance to reflect these changes.

2. How we ran the consultation

We ran the formal public consultation on the Environment Agency’s Citizen Space website and on GOV.UK for 8 weeks, from 14 August 2023 to 8 October 2023.

This document sets out:

• the questions we asked in the consultation
• a summary of the responses we received
• what we will do as a result of the consultation

3. Summary of the main findings and actions we will take

We had 62 responses to the question about our updated enforcement and sanctions policy and when we will apply variable monetary penalties. The majority agreed that our policy is clear. Many comments were supportive. There were some requests for more clarity in certain areas, which we have provided in this response.

We had 62 responses to the question on how we will calculate variable monetary penalties. The largest number supported the use of the sentencing guideline and the clarity and transparency it gives. There were some questions on how we will apply the guideline to our investigations using the Regulatory Enforcement and Sanctions Act 2008 (RES Act) variable monetary penalties, which we answer in this response.

We had 62 responses to the question on the fairness and proportionality of our calculation method. The majority supported our approach.

We had 62 responses to the question on how the appeals process works, with many requesting more information. Mostly this referred to the linked detail found in HM Courts and Tribunal Service (HMCTS) guidance on the civil sanctions appeals process.

As a result of the responses received, we have:

• published our updated enforcement and sanctions policy
• adopted the proposed calculation method in line with the sentencing guideline for environmental offending

4. Responses to consultation questions

When we will use variable monetary penalties

Q1. Is it clear within the enforcement and sanctions policy when we can use variable monetary penalties?

• yes: 54.84% (34)
• no: 22.58% (14)
• I am unsure: 22.58% (14)

Q1. Summary of responses

We had 62 responses to this question with the majority agreeing our policy is clear. Many comments were supportive, but there were some requests for more clarity in certain areas.

There were some requests for more specifics on the circumstances when we would use variable monetary penalties, rather than a different enforcement response such as prosecution. There was a question on how we will use our Common Incident Classification System (CICS) and Compliance Classification System (CCS) to decide if we will use a variable monetary penalty.

Our policy allows us to respond flexibly by choosing the appropriate sanction. We might use variable monetary penalties after the required consideration of all relevant public interest factors, including the environmental impact (CICS and CCS assessments). We will normally use variable monetary penalties for more serious cases where we can achieve proportionate and fair outcomes without prosecution. We will continue to prosecute the most serious cases where we decide prosecution is the appropriate response in the public interest.

Some responders asked how we will consistently apply the policy and interpret the method. There were questions about our variable monetary penalty governance arrangements.

Our area enforcement governance groups will review all cases where a variable monetary penalty is recommended. The national civil sanctions and penalties panel will give oversight, supported by national technical and legal experts. This will help us achieve local and national consistency through robust governance.

Our national legal services team will assess the penalties using the Sentencing Council guideline tables of starting points and ranges. This will ensure a consistent approach across all areas.

A deputy director and a senior managing lawyer will sign off all penalties.

A responder asked how we will communicate decisions and what level of information we will provide to ensure people have a full understanding of:

• why we have issued the variable monetary penalty
• the evidence to support the penalty calculations

We will ensure that a suspected offender understands the case against them by sending them a:

• variable monetary penalty notice of intent
• variable monetary penalty assessment and calculation summary

The variable monetary penalty notice of intent sets out the alleged offence and the reasons for the proposed sanction. Also, if we know of material which undermines our case or assists the defence, we will disclose it.

There was a request for more guidance on how we use variable monetary penalties compared to enforcement undertakings. One responder suggested that, under the RES Act, enforcement undertakings should always be available for offences where we are considering any other RES Act sanction.

We will always consider and review any enforcement undertaking offers made to us and either accept or reject the offer based on the individual circumstances of each case. Our policy says we will not normally accept an enforcement undertaking offer made after we issue a variable monetary penalty notice of intent. But we will retain our discretion to do so if the enforcement undertaking addresses all our concerns about the alleged offending behaviour.

There was a request for information on whether we would consider using variable monetary penalties for offences where permits are in the process of variation (change) applications.

In some circumstances we may consider issuing a variable monetary penalty for offences where a permit variation application is being determined.. This will depend on the seriousness of the matter and the aggravating and mitigating circumstances of the permit breach.

How we calculate variable monetary penalties

Q2. Is the calculation method clear and easy to understand? 

• yes: 46.77% (29)
• no: 27.42% (17)
• I am unsure: 25.81% (16)

Q2. Summary of responses

We had 62 responses to this question. The largest number supported the use of the sentencing guideline and the clarity and transparency it gives. There were some questions on how we will apply the guideline to our investigations using RES Act variable monetary penalties.

One responder suggested a clear worked example would support understanding of our proposed method.

We do not consider it suitable or helpful to put a worked example in our guidance as it could be misleading. There are many case-specific aspects which can have a considerable impact on the overall penalty total. The number of activities covered by the Environmental Permitting Regulations makes it impractical to produce an example that would be helpful to the broad range of organisations that we regulate.

Some responders said more information and transparency is needed on how we calculate the costs of our investigations.

For variable monetary penalties we provide a basic breakdown of our investigation, legal and administrative costs (calculated using a set hourly rate per grade multiplied by number of hours worked) with the enforcement cost recovery notice. Recipients can request a more detailed breakdown if required.

A responder said that guidance is needed on a starting point and range for very large organisations so that companies understand penalty figures. One said that more information is needed on how case law would be applied to very large organisations in both the magistrates’ and Crown Courts.

Guidance of this type does not feature in the sentencing guideline, and we do not believe that it is helpful for us to create guidance specifically for very large organisations. We will, however, follow the most recent precedent decisions from the superior courts in how we apply variable monetary penalties to very large organisations. This will include the judgment in R v Thames Water Utilities Limited (2015) EWCA Crim 960 which held that applying a mechanistic increase or reduction is not considered to be the right approach. We will not rely on magistrates’ court judgments. But Crown Court judgments will provide a guide on how to take account of damage to the local environment. This will include its sensitivity and any designations.

Some responders asked for more detail on what public interest factors we will assess (both mitigating and aggravating).

Public interest factors that we will consider are set out in our enforcement and sanctions policy, but others may also be relevant.

One responder was interested in how we will consider previous convictions of large and very large organisations which hold multiple permits and have multiple convictions. They asked how the calculation will take the scale of the company into account to ensure proportionality.

The variable monetary penalty calculation method requires the assessed penalty to be proportionate to:

• the means of the offender (taking the turnover of a company into consideration)
• the overall circumstances of the case – see the detail in step 4 of our calculation method

In principle, we use variable monetary penalties for more serious or deliberate offending.

Section 8.2.3 of the enforcement and sanctions policy on repeat offending says “Continued repeat offending will normally result in us increasing the level of our enforcement response and imposing or seeking a more severe sanction”. Section 8.2.6 on multiple operations says “We will always have regard to the compliance history of an offender, such as repeated breaches of a similar type or demonstration of overall management failure”.

One responder asked how we will communicate variable monetary penalties to the suspected offender. Another asked what information on evidence we will give to the offender to ensure full transparency and how can companies make early representations (such as comments or giving additional information).

The notice of intent will include:

• details of the alleged offences
• a summary of the evidence
• the stepped approach taken to calculate the penalty figure

We have procedural safeguards in place to ensure the suspected offender understands the case against them. This is by setting out the alleged offence and the reasons for the proposed sanction in the:

• variable monetary penalty notice of intent
• variable monetary penalty assessment and calculation summary

Companies that receive a variable monetary penalty notice of intent from us have 28 calendar days within which to make written representations or objections. We will review the evidence we hold based on our evaluation of any representations we receive.

Companies and other types of businesses can also make representations at an earlier stage by attending a voluntary interview under caution.

One customer asked if safeguards in the Criminal Practice Rules 2023 apply.

These are safeguards which apply to criminal proceedings and do not apply to variable monetary penalties. However, we will apply the safeguards listed in paragraph 1 of annex 1 to our enforcement and sanctions policy.

One responder asked how we will get turnover information to calculate the penalty.

Where it is a registered company, we can get turnover information from Companies House. We can also serve a financial information notice on suspected offenders.

One responder had a specific concern that CICS and CCS do not align with the sentencing guideline criteria. For example, a category 2 CICS could be a category 3 under the guideline. They asked how we will address this.

CICS and CCS do not directly align with the Sentencing Council’s guideline for harm categorisation, but they will form part of the harm assessment that we will do as described in step 3 of our calculation method.

One responder said “Steps 8 and 9 of the guideline refer to penalties being reduced where the offender provides assistance to the prosecution and enters an early guilty plea. Variable monetary penalties do not go through the criminal or court process so if this step is not applied then the variable monetary penalty may be bigger than for the same offence at court. How will the Environment Agency apply these steps?”

Step 8 does not apply to calculating a variable monetary penalty, though it may have been a factor which influenced the choice of sanction (for example whether we choose a variable monetary penalty or prosecution). We may, however, take assistance and co-operation in the investigation and imposition of a sanction into account. Step 9 of the Sentencing Council’s guideline does not apply to calculating a variable monetary penalty as a plea is not required, but we will take an offender’s co-operation into account. We may reduce a penalty where there have been early admissions and prompt assistance with our investigation.

Q3. Do you think that by amending our approach to performing the calculation we will be able to issue proportionate and fair variable monetary penalties?

• yes: 54.45% (35)
• no: 20.97% (13)
• I am unsure: 22.58% (14)

Q3. Summary of responses

We had 62 responses to this question. The majority supported our approach.

One responder questioned if the change would still be enough to change behaviour of environmental offenders. They suggested there should be more direct impact or liability on shareholders and directors.

The law allows for a variable monetary penalty to be issued on the offender, including the directors and company officers in some circumstances.

Some responders in the waste sector are concerned that larger, legitimate organisations may be targeted because of their turnover size., While waste crime operators will be less affected by the change because they can be smaller organisations and often their assets are hidden. There was concern that variable monetary penalties would result in a reduced focus on waste crime.

We will target our enforcement action and mainly direct our regulatory effort: 

• towards those whose activities cause or could cause the greatest risk of serious environmental damage where the risks are least well controlled
• where a breach undermines a regulatory framework where we suspect deliberate or organised crime

We will take action against law breakers and those directly responsible for risk or who are best placed to control it. 

We will monitor (check) permitted or other activities to assess compliance. 

We will categorise incidents and breaches at permitted sites based on one of the following: 

• our classification systems that assess the impact the potential risk to the environment or human health
• the impact on the integrity of the scheme or regulatory framework

We will prioritise and  investigate actions that involve: 

• serious environmental harm or harm to human health
• organised crime overt criminal activity
• substantial illegal gain threats of violence
• other aggravating factors

The size of an organisation is not a basis for targeting investigatory effort, nor is it a factor in deciding the choice of sanction. It is only a factor in calculating the level of penalty.

One responder said that “the calculation should have higher penalties for deliberate offending”.

The level of culpability is a deciding factor in calculating the penalty.

A responder asked for more detail on the definition of what constitutes negligence and mismanagement. Also, on what mitigating factors need to be taken into consideration.

Negligent culpability is defined in the Sentencing Council’s guideline as “Failure by the organisation as a whole to take reasonable care to put in place and enforce proper systems for avoiding commission of the offence”.

The guideline also contains a non-exhaustive list of factors reducing seriousness or reflecting mitigation. This includes factual elements such as:

• no previous convictions or no relevant or recent convictions
• evidence of steps taken to remedy problem
• remorse
• compensation paid voluntarily to remedy harm caused
• one-off event not commercially motivated
• little or no financial gain
• effective compliance and ethics programme
• self-reporting, co-operation and acceptance of responsibility
• good character or exemplary conduct

One responder said “Variable monetary penalties are less conspicuous than prosecution. Full details of variable monetary penalties should be publicly available to ensure companies are held fully accountable”.

Details of variable monetary penalties we have imposed are published periodically on GOV.UK. We may also issue a press release for an individual case.

The appeal process

Q4. Do you think our current policy on appeals gives enough information and clarity to customers to understand the process?

• yes: 33.87% (21)
• no: 35.48% (22)
• I am unsure: 30.65% (19)

Q4. Summary of responses

This is the area where most of our respondents were most unsure or less positive about the proposals. We had 62 responses to this question with many requesting more information on the appeal process. Often this referred to the linked detail found in HMCTS guidance on the civil sanctions appeals process.

One responder requested a plain English short summary of the appeal process in annex 1 and said “All the links are difficult to follow. Also, real world examples of appeals would be helpful. Related documents should show this hyperlink rather than it being a general link in the work document, this link brought up security concerns on my computer so may be blocked by larger organisation’s firewall”.

Our main enforcement and sanctions policy and section 6 of its annex 1 includes information on how to make representations and appeals about variable monetary penalties and other civil sanctions. A short summary is in section 6.2 on representations and appeals. We are not responsible for the civil sanctions appeals process or published guidance. We refer customers to HMCTS for all steps after they receive the final notice.

We do not consider it appropriate for us to provide examples of appeals because these changes have not yet been the subject of any appeals as they have not yet gone live. If a defendant wishes to appeal a variable monetary penalty final notice, they should seek independent legal advice.

Some respondents seemed to think the appeal process is for the public and those affected by environmental offending rather than those who have a variable monetary penalty imposed on them. This is not the case.

It is only the offender who is subject to a final notice who has a right of appeal to the tribunal.

One customer responded “We note that the only additional information on appeals to the tribunal contained in the policy is a link to an HMCTS guidance webpage, which gives general guidance on appeals to the tribunal. There is no variable monetary penalty-specific guidance at the HMCTS webpage and, for instance, nothing readily explaining how to begin an appeal (there is a link to form TR35 for appeals, however it is apparent that this is for nitrate zoning appeals only). As stated above, greater clarity and transparency is required for the benefit all parties”.

Our main enforcement and sanctions policy and its annex 1 includes information on making representations and appeals about variable monetary penalties and other civil sanctions. We are not responsible for the civil sanctions appeals process or published guidance, so would refer you to HMCTS. We are contacting HMCTS to tell them about the perceived limitations of their guidance.

One responder said “If the Environment Agency’s CAR (compliance assessment record) forms are used as part of the submission of evidence by the regulator for the issuing of a civil sanction, then it is vital that the Environment Agency establishes a fully independent and impartial process for appealing CAR report decisions, to ensure a fair opportunity for those making an appeal to outline their position and to put forward mitigation for objective review prior to any civil sanction”.

For all circumstances where a variable monetary penalty is imposed, the regulator must be satisfied beyond reasonable doubt that the person has committed a relevant offence.

One responder asked “What happens to Environment Agency action during period of appeal process? What happens if an appeal is upheld but the Environment Agency has already taken action?”

Variable monetary penalties are suspended pending appeal. We would not expect anyone who had appealed against a variable monetary penalty to the first tier tribunal to have paid the penalty amount. But we would act in line with the tribunal’s decision if they had. This would include a full or partial refund if ordered.

There was also a question on what would happen if a person disagrees with the tribunal’s decision. This would be a matter between the person and the tribunal and they should seek independent legal advice.

One customer asked how we will assess comments fairly and independently when they are made at the notice of intent stage.

The reviewing lawyer for the case would normally assess written representations or objections, helped by the lead investigator. The matter can also be referred to our national civil sanctions and penalties panel, if our evaluation of any comments is likely to have a significant impact on the penalty amount or choice of sanction. This two tier process allows for fair assessment of the recipient’s comments before we issue the final notice. The recipient retains the right to appeal the final notice to the first tier tribunal.

5. Next steps

We have published our summary of the main consultation findings. We have published our updated enforcement and sanctions policy and associated annexes which will apply to offences that occur from 11 December 2023.

Please contact [email protected] if you want to talk about your responses or points made within this document in more detail.

Annex A: consultation questions

In the consultation we asked the following.

Q1. Is it clear within the enforcement and sanctions policy when we can use variable monetary penalties?

Q2. Is the calculation method clear and easy to understand? 

Q3. Do you think that by amending our approach to performing the calculation we will be able to issue proportionate and fair variable monetary penalties?

Q4. Do you think our current policy on appeals gives enough information and clarity to customers to understand the process?