Breaching environmental regulations.
The following case illustrates the impact that a prosecution for an environmental offence may have on a business. The Environment Agency (EA) secured a total of £315,000 in fines, costs and a confiscation order, in connection with the illegal operation of a scrap metal yard. The EA found that the site had no sealed drainage system for the hazardous waste and liquids produced by the scrap vehicles, and that vehicle parts were not stored on a suitably impermeable surface. As such, it had the potential for significant environmental damage. The defendants (the company, its director and an officer) were found guilty of breaches of environmental regulations. The court issued the confiscation order for £275,000 on the grounds that the defendants' activities had undermined legitimate businesses.
Understanding the regulator’s approach to the enforcement and prosecution of environmental offences should enable your business to minimise the risk of being prosecuted. It will also help you to reduce the level of any penalties if you are prosecuted and minimise any damage to your business’ reputation.
There are a number of potential implications for your business if it is convicted of breaching environmental legislation:
Penalties
· Fines
All environmental offences are subject to a fine. Many of the more serious environmental offences are also subject to a custodial sentence. Some environmental legislation sets a level of fine in excess of the statutory maximum, for example, up to £50,000 for some summary waste offences. Typically, environmental offences are subject to an unlimited fine in the Crown Court.
· Imprisonment
A court can order a custodial sentence for certain more serious environmental offences.
· Regulatory enforcement
New legislation has given regulators (including the EA and other environmental regulators, such as local authorities) the power to impose civil penalties on businesses, as an alternative to prosecuting.
· Related orders
For more serious offences the court can make related orders, either at the same time as sentencing or in subsequent proceedings.
o Directors disqualification order. The offender can be prohibited from acting as a company director. Breach of a directors disqualification order is a criminal offence.
o Recovery of assets. A prosecutor (usually the EA in environmental cases) can refer cases to the Serious Organised Crime Agency (SOCA) after a conviction, asking SOCA to confiscate assets equal to the financial benefit gained from the criminal environmental activity.
o Anti-social behaviour order. An anti-social behaviour order (ASBO) prohibits a person from acting in an anti-social manner that causes harm or distress to other members of the public. The power to award an ASBO can apply to environmental crimes.
o Serious crime prevention order. A serious crime prevention order (SCPO) can be made after a person has been convicted of a serious offence. A “serious offence” includes a number of environmental offences, for example, a breach of the prohibition on unauthorised or harmful deposit, treatment or disposal of waste. An SCPO can be made against an individual or a business and may last for up to five years.
Adverse publicity
A conviction for an environmental offence may lead to adverse local and, in some cases, national publicity. The EA publicises environmental convictions on its website as part of its “name and shame” policy. Local press also often sit in on criminal court proceedings. There will inevitably be damage to your business’ reputation, even if it is found “not guilty” at the end of the proceedings.
Insurance
A conviction could increase your business’ insurance premiums.
Regulatory relationship
Your business’ ongoing relationship with the regulator may be undermined.
Future sale of your business
A poor environmental compliance record, particularly prosecutions and convictions, can cause difficulties if you decide to try and sell your business, especially if the buyer requests additional environmental warranties and indemnities.
