21 Dezember 2023 Francesca Bonner-Evans  -  Jonathan Watson  - Emily Jones - Erin Thompson Dispute Resolution - ESG - Environmental issues

Quicker and cheaper enforcement for environmental offending: Variable Monetary Penalties

Variable Monetary Penalties (VMPs) are discretionary civil fines that can be imposed by the Environment Agency (EA) to sanction the commission of environmental offences. They may be used as an alternative to prosecution where there are strong mitigating factors, or where the criminal standard is not met. Changes to VMPs came into force on 1 December 2023 by statutory instruments amending the Environmental Permitting (England and Wales) Regulations 2016 (the Regulations) and the Environmental Civil Sanctions (England) Order 2010 (Order). As of 11 December 2023, the EA can now impose potentially significant financial penalties on companies that pollute the environment without bringing criminal proceedings. The previous £250,000 cap on VMPs under the Environmental Civil Sanctions (England) Order 2010 has been removed, and the range of offences for which VMPs can be imposed has been expanded. 

These changes follow consultations held by both the Department for Environment Food and Rural Affairs (Defra) and the EA during which stakeholders were invited to comment on the proposed uplift to the EA’s penalty powers (‘Strengthening environmental civil sanctions’) and their incorporation into the EA’s enforcement and sanctions policy respectively (‘Extending civil sanction variable monetary penalty powers’).

Prior to these changes, the EA had the power to impose VMPs up to a value of £250,000 for civil offences other than breaches of the Regulations. Breaches of the Regulations could previously only be subject to civil sanctions to the extent of enforcement undertakings, or alternatively by criminal sanctions if such a conviction could be secured. According to Defra, this meant that monetary penalties could not be imposed “for the majority of EA investigations”.

As indicated in a joint press release from Defra, the EA and The Rt Hon Steve Barclay MP, the scope of the range of offences for which VMPs are available has been expanded to include:

  • Breach of permit conditions from sites that discharge into rivers and seas - for example from sewage treatment works;
  • Unpermitted discharges to water where a permit is required to undertake the activity. For example, the discharge of agricultural pollution from slurry stores;
  • Waste offences, whether illegal, unpermitted or in breach of permit conditions; and
  • Air-polluting activities at manufacturing industries or power stations which breach the required permits, and/or the attached conditions.

These stated offence ranges reflect that VMPs can now be imposed for, breaches of the environmental permitting regime as per the Regulations in addition to the initial prescribed environmental offences listed in Schedule 5 of the Order. For example, non-compliance with a permit condition could now be sanctioned by a VMP.

Going forward, the policy position remains that criminal proceedings will still be pursued for the most serious cases. However, with the greater value of VMPs available and the far wider ambit of offences to which they will apply, we can expect that significant VMPs may be used in serious cases where the EA might previously have brought criminal proceedings to achieve what it considered to be proportionate punishment. VMPs are also a much quicker route to enforcement than potentially drawn-out and expensive criminal prosecutions.

A further change has been made to the methodology for calculating civil sanctions in accordance with the EA’s enforcement and sanctions policy, which will now more closely align with how the courts calculate criminal sanctions for environmental offences. As before, the EA will follow the Sentencing Council Guideline for environmental offences (Guideline) in determining the size of penalty that is proportionate according to culpability and harm of the offence, the size of the company, financial circumstances, the objectives of the Guideline, and proportionality to means of offender and so on. In addition, the civil regime for calculating a VMP now matches that in criminal enforcement whereby, under the Guideline, the starting points for criminal penalties are £1 million for large organisations and £400,000 for medium organisations. We can therefore expect to see significant increases to the value of VMPs imposed on polluters now that the cap has been removed.

Although this amendment to the use of VMPs is applicable across a range of environmental offences, it is part of a number of measures designed to address water pollution in particular through investment, regulation and tougher enforcement. Bearing this mind, we expect higher VMPs to be used against regulated water companies in the first instance.