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Enforcement Undertakings in the chemical industry

  • United Kingdom
  • Diversified industrials - Chemicals

11-05-2017

The Environment Agency now has access to powers to apply civil penalties, known as ‘Civil Sanctions’ for certain environmental offences as an alternative to prosecution when taking enforcement action. The most popular of such sanctions is the Enforcement Undertaking. We consider their use below, including examples of where they have been used after chemical contamination incidents, and we have set out some practical tips for companies who may need to consider them.

What is an Enforcement Undertaking?

An Enforcement Undertaking is a legally-binding voluntary agreement proposed by an individual, partnership or company to the Environment Agency and can be offered at any time before legal proceedings commence where the Environment Agency has reasonable grounds to suspect that a specified offence (as set out below) has been committed. An Enforcement Undertaking typically requires the payment of funds to a charity or remedial works to address any environmental impact of an offence. Enforcement Undertakings are a unique form of enforcement action; the primary purpose of the Enforcement Undertaking is to allow the offender to restore and remediate any environmental damage they may have caused, because they enable businesses to take control of a post-incident investigation or non-compliance and propose the steps they are prepared to take to remedy the situation rather than waiting for the regulator to impose sanctions.

When can an Enforcement Undertaking be used?

Enforcement Undertakings are available for a limited range of environmental offences regulated by the Environment Agency, Natural England and Natural Resources Wales in the following areas:

  • Environmental Permitting (there are roughly 90,000 Environment Agency permits regulating a range of facilities from landfill sites, water treatment works, to chemical plants)
  • packaging, oil storage, water pollution, dangerous substances, land drainage, nitrate pollution, waste and hazardous waste, fisheries and sludge
  • Natural England for a limited range of wildlife and habitats offences, notably in relation to sites of special scientific interest

Acceptance of an Enforcement Undertaking is at the discretion of the Environment Agency.

The Scope of an Enforcement Undertaking

When a business makes an Enforcement Undertaking proposal it must:

  • address the conduct causing the breach, for example, putting in place control mechanisms to ensure such failures do not occur again
  • rectify the consequences of any breach, which may include restoration works
  • offer reparations to those impacted by the incident

Importantly, once the Enforcement Undertaking is accepted, the regulator can no longer prosecute for the breach in question. However, subsequent failure to comply with the terms of an Enforcement Undertaking may result in a criminal prosecution.

The advantages of an Enforcement Undertaking

There are an number of advantages for a business when making an offer to the Environment Agency pursuant to an Enforcement Undertaking. An Enforcement Undertaking:

  • can avoid a potential criminal prosecution and the associated negative impact (reputational damage, loss of management time, legal costs, uncertainty, loss of control). There are also commercial implications arising from a criminal record including increased insurance premiums or difficulties in procurement tendering
  • can allow businesses a degree of control. Enforcement Undertakings allow proactive negotiations and allow the matter to be brought to an end quickly and for an agreed financial sum
  • prioritises the restoration of harm and renewed compliance and it is a legal mechanism which allows the offending party to offer direct restitution to the local community which is most affected by the harm

Outcomes

The use of Enforcement Undertakings by the Environment Agency therefore provides the possibility of better outcomes for both the business and the environment. It potentially also encourages more open relationships between the Environment Agency and those it regulates, as the process is less adversarial, and encourages better co-operation. The use of undertakings also allows the Environment Agency to devote their limited time and resources to pursuing the worst offenders.

Examples of accepted Enforcement Undertakings:

There have been a number of six-figure payments agreed pursuant to Enforcement Undertakings since 1 January 2016 including:

  • a water utility company agreed the largest single payment pursuant to an Enforcement Undertaking; paying £375,000 in lieu of prosecution for pumping raw sewage into a tributary of a river. This sum comprised several payments to charities, the company also agreed to take steps to bring it into compliance. This included site improvement works, permit reviews and updates to the company’s asset planning and management system

A number of recent Enforcement Undertakings have been related to chemical contamination including:

  • a waste management company paid £50,000 to a local wildlife trust following allegations of pollution. Upon further investigation, Environment Agency officers found dead fish and low ammonia, indicating that pollution had taken place. A number of dead fish were counted with officers estimating that 403 fish had been killed over a 4.4km stretch of watercourse. A leak as well as some blockage issues were found on site
  • a steel manufacturer will make a donation of £73,000 to its local nature partnership following incidents on at a local beck involving a heavy red-coloured lubricating oil at three nature reserves
  • a global drinks manufacturer paid £160,000 plus over £12,000 to cover the Environment Agency’s legal costs following an incident at one of their production plants in August 2014, when a container of ammonia-contaminated water was emptied to a surface water drain which connected to a brook leading to the deaths of between 2,000 and 3,000 fish

Practical Tips

  • early action -early action is considered best practice because any undertaking has to be offered prior to legal proceedings commencing, as soon as a regulatory breach has been identified, a business should start considering whether it will make an offer
  • legally binding agreement - Enforcement Undertakings are negotiated, and legally binding, with regulatory consequences for non-compliance. The Environment Agency will not accept an offer that is poorly drafted or which is disproportionate to the harm caused. Businesses must ensure that they have identified the cause of the non-compliance and have taken action (or at least planned action) to address it. They should recognise the damage done and, if it is not possible to remediate, they should offer payments to a charity or organisation whose activities are closely related to 
the environmental impact in question

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