Response to Cabinet Office S BRE Consultation Regulatory Justice: Sanctioning in a Post-Hampton
Response to Cabinet Office’s BRE Consultation – Regulatory Justice: Sanctioning in a post-Hampton World
Introduction
This is the response of the United Kingdom Environmental Law Association (UKELA)[1] to the BRE’s consultation on regulatory justice. UKELA welcomes the review as a timely opportunity to have a full and open discussion of the issues raised. UKELA is the UK forum which aims to make the law work for a better environment and to improve understanding and awareness of environmental law. UKELA’s members are involved in the practice, study or formulation of Environmental Law in the UK and the European Union. It attracts both lawyers and non-lawyers and has a broad membership from the private and public sectors.
The response follows the structure of the questions asked in the consultation document. UKELA has considered questions 1-4 and 20-34 only.
Necessarily, UKELA makes its response primarily on the basis of environmental regulation, but UKELA notes that the review is concerned with regulation generally. UKELA welcomes this approach because regulators, the regulated, the public interested in effective environmental regulation and those deciding cases and appeals need common principles and coherent outcomes.
The Review
Q1 What would you like the review to achieve for your organisation?
UKELA hopes the review leads to a regulatory system that (i) better encourages the regulated (whether individuals or companies) to comply with environmental laws; (ii) provides greater clarity, consistency and certainty in environmental regulation than exists at present; and (iii) enables and/or encourages a more effective use of sanctions.
Q2 Considering the issues set out in Chapter three, what changes would you like to see arising from the review?
UKELA would like to see:
- The introduction of a system of effective environmental administrative penalties (subject to the limitation described further below);
- Improvements in the approach currently taken to criminal prosecutions (as set out in greater detail below).
Q3 What would be the most positive outcome for you?
The above changes (see Q2) implemented in a way which:
- commands the respect of the public, business and regulators;
- provide effective solutions for regulators and the courts to deal with the diverse range of companies and individuals who may commit environmental crime rather than a fixed and inflexible approach; and
- is cohesive, comprehensive and timely.
Q4 What would be the worst outcome for you?
The decriminalisation of large areas of environmental law: UKELA considers that without criminal prosecution as a backstop option underpinning the system generally, this would risk the public losing confidence in the UK’s system of environmental regulation; and would send the wrong signal to business about the importance of complying with environment laws.
Criminal prosecutions
Q 20 Is criminal prosecution an effective tool in dealing with regulatory offences?
Yes although it is more effective in some circumstances than in others. To assist the review, Appendix 1 to this response contains some examples which reflect this range of effectiveness.
UKELA considers criminal prosecution must be part of any effective enforcement pyramid as a backstop to deal with the most serious behaviour by individuals, companies and directors. Criminal sanctions demonstrate society’s opprobrium of offensive conduct in a way that other sanctions cannot. It is this, rather than deterrence and penalty, that sets criminalisation apart from regulatory sanctions (which, if set appropriately, can deter and punish). Criminal prosecution should therefore be reserved for use only when the offence concerned is serious enough to merit this.
In practice, however, circumstantial and practical issues in the use of criminal prosecution can limit its effectiveness as a tool for dealing with some regulatory offences. For example, in some circumstances pursuing a criminal prosecution may:
- appear to be a disproportionate response to the offence alleged;
- inhibit the use of alternative, more flexible sanctions;
- brand a person or company with criminality when the circumstances leading to the prosecution may not be direct consequences of their actions;
- take a long time to come to court – with, for example, business consequences for the respondent concerned who may ultimately be acquitted;
- fail to rectify damage caused by the offence;
- result in high costs in relation to the proper penalty, which may be inefficient for both the regulator and the regulated.
Q 21 Are there benefits in using criminal prosecution?
Yes. See above.
Q 22 Please give your views on whether you think regulatory offences should or could be recategorised with some offences becoming decriminalised.
Although, in principle, UKELA would not oppose consideration of the decriminalisation of some environmental regulatory offences as part of the review, in practice there are very few offences where UKELA considers this would be appropriate. On the whole, UKELA considers that criminal prosecution should be an available backstop for the overwhelming majority of environmental regulatory offences.
Q 23 Please outline your experience with criminal proceedings including the knowledge of Magistrates or Crown Court judges of your regulatory area, the level of fines, the duration of cases from initial proceedings to final resolution and whether cases settle before proceeding to court.
The Tribunal
It is self evident that magistrates (whether lay magistrates or District Judges) and Circuit Judges do not have specialist knowledge of many, or any, of the wide range of regulatory issues which come before them. It is also self evident that the tribunal is being asked to measure a penalty for which there is no independent method of calculation. They are weighing factors and reaching a judgment. UKELA acknowledges therefore: (i) that experienced criminal tribunals are an important source of independent judgment in the difficult exercise of fixing penalties in very widely varying circumstances, i.e. they are trained and experienced in assessing what the offender has done wrong and what the consequences were or might have been, and (ii) it is not practical to do more than provide guidance on principles of sentencing in this sphere of regulation.
The Review is considering systems of regulation and penalties. However, those systems are implemented by people who have to make judgments. At present there is no criticism of the setting of administrative penalties because there is nothing to criticize. It will be seen elsewhere in this Response that UKELA strongly supports the retention of criminal sanctions. Hence UKELA has considered how the concerns about the experience of criminal tribunals might usefully be addressed. At present there is no environmental or regulatory court. However arrangements could and should be made to list such work in ways which concentrate experience. This would ensure that criminal sanctions for regulatory offences remain in step with penalties in other areas of offending but would improve understanding, consistency and certainty. There appears to be no reason why a list of Circuit judges and Recorders with an interest or practice in the area could not be maintained either on each Circuit or otherwise. Likewise, there is no good reason to prevent such Recorders from sitting as Deputy District Judges in the Magistrates’ Court in appropriate cases.
Level of fines
This is an area in which there has been much commentary which need not be repeated but which is cited in [2005] ELM 17, 109.
Members of UKELA have experience of outcomes of criminal proceedings which were either unduly lenient or manifestly excessive. The latter can be and frequently is corrected by appeal, though for almost all regulatory offences there is no means of dealing with unduly lenient sentences because they do not fall within the scope of offences which may be referred by the Attorney General. This is unsatisfactory.
Guidance
Since May 2001 prosecutors in all areas of regulatory crime have brought the Magistrates’ Association guidelines to the attention of even more Magistrates by literally handing up copies or guiding Magistrates and their legal advisors/clerks through the principles. The Environment Agency regularly produces “friskies schedules”, that is a schedule of aggravating circumstances as per R v Howe and Son (Engineers) Ltd, R v Friskies Pet Care and the Magistrates’ Court Sentencing Guidelines (for Companies for Health, Safety and Environmental Offences). The Magistrates’ Court Sentencing Guidelines has been used since 2001, reinforced since 2002 and endorsed by the Court of Appeal in 2003 in the case of R v Anglian Water Services Ltd. It is felt that these are now percolating through to the Magistrates.
The Review will know that sentencing guidelines in environmental cases are programmed to be reviewed during the course of 2006 (see the Sentencing Advisory Panel’s web site).
Duration of cases
Typically, investigation times are longer in environmental crime than in other spheres of crime. It is not unusual for periods of 1-2 years to elapse between an event and commencement of criminal proceedings.
There is a very wide range of times to complete proceedings. Often, there will be a plea on the return date of the summons. However, proceedings may take 12 – 18 months to complete even in the summary jurisdiction.
Settlement of cases
Assuming this question is directed to the proportion of cases which are listed for trial but resolve beforehand, UKELA can confirm that the very large majority of environmental prosecutions result in a guilty plea. However, there is often significant effort expended in agreeing or litigating (via a Newton hearing) the basis of the plea, i.e. how it is said that the offence was committed or the extent of the harm which resulted.
Q24 In general, do you think that the current system is adequate? If not, how would you suggest that it be improved?
Overall, whilst UKELA considers that the current framework of enforcement is adequate, it could be improved (as could its implementation). UKELA considers that such improvements might include, in appropriate circumstances, the introduction of intermediate and alternative sanctions (as to which, see further below). These measures would only result in an improvement to the system if they were introduced in a way which (i) enhanced the clarity and coherence of the system and (ii) did not compromise or detract from existing sanctions (such as enforcement notices and, ultimately, criminal prosecution). UKELA members have different views on the appropriateness of strict liability in environmental regulatory offences. Some members hold the view that as a matter of public policy in the environmental field it is important that companies are held to account for the acts and defaults of their employees (and that there would be practical problems in proving mens rea if companies were not held strictly liable in such cases). Others think that Parliament simply chooses strict liability as a default option and that it is not a necessary (or even the most effective) means of holding companies to account. It is agreed, however, that there appears to be no overall coherence to how the system operates. In particular, the present system lacks consistency in the point at which the behaviour and/or individual circumstances of the wrongdoer is judged – e.g. should this done at the point of setting the standard for liability (strict or causing/knowingly permitting); or in the punishment.
Intermediate sanctions
Q25 Should the review look to the greater use of administrative penalties as an option for intermediate sanctioning?
Yes, so long as the enforcement of environmental laws and the criminal sanctions within the system is not undermined by such a change. In general, the circumstances of any breach not the type of offence should determine the response by regulators (prosecution or administrative penalties).
Q 26What type of model would be appropriate? Consider the safeguards, appeals mechanisms and standards of proof that the model should embrace.
One approach would be to empower regulators to apply administrative penalties in the alternative to prosecution as a matter of discretion. Where a penalty is applied and accepted prosecution would not occur. Where a penalty is applied but refused prosecution would follow. The discretion to refuse to accept a penalty should mean that, subject to it being Human Rights Act compliant, there would be no need to set up a separate appeals route for those who refuse to accept the penalty so avoiding creating another regulatory system through a review that aims to simplify.
This approach would avoid the need to reclassify current environmental offences as either criminal or civil – when one considers breach of a permit condition (a relatively frequent environmental offence the consequence of and circumstances surrounding which may be inconsequential or hugely significant) how can one sensibly categorise all events as criminal or civil?
The public would be protected by knowing that environmental offences remain criminal but can be dealt with more effectively so freeing up regulator’s resources to focus on other high-risk or unlawful activities. The public could still commence a private prosecution, as now, where regulators fail to act (but not where an administrative penalty was offered and accepted to avoid double jeopardy).
The courts would receive fewer but more significant cases so freeing up court time.
Business would have the confidence that penalties would only be imposed where, as currently, the regulator considers that there is evidence to suggest beyond reasonable doubt that offence has been committed. Those who accept administrative penalties and regulators would be spared the time and resource drain of protracted court proceedings. Business would be protected from unfair penalties through their right of refusal.
The funds from such penalties, other than perhaps covering their investigation costs (as otherwise regulators would generally opt to prosecute), should not benefit regulators – this would avoid the impression that the imposition of penalties was driven by revenue considerations. Such funds could instead be applied to benefit the environment or local community. The courts have had considerable problems collecting fines from offenders and this should be avoided if possible. One way of achieving this might be to empower regulators to prosecute for the original offence if an administrative penalty is not paid on time.
Such administrative penalties could be fixed or variable. Variable penalties (with ceiling limits and some reference to means) backed by clear guidance would seem to met the aims of the review better than fixed penalties. Variable penalties might take account of: investigation costs; profit gained from non-compliance; remediation costs; weighting for environmental impact; and potentially a weighting by turnover of the company (see also response to Q34 below).
An alternate approach to the above would be the introduction of “civil penalties”, the merits of which are clearly set out in the UCL report already cited in the review consultation document. Civil penalties may be less straightforward to introduce in practice than the model of administrative penalties described above, but may have certain advantages that are worthy of consideration, such as greater scope for the recovery of the costs of the environmental damage caused.
Enforcement notices
Q27 Do you feel the current use of enforcement notices requiring compliance in the future achieves their goal?
Yes. Although there are well-recognised difficulties in their application in practice, UKELA supports the use of enforcements notices as an effective and proportionate means of addressing both unlawful activity (such as the fly-tipping of waste), and breaches or potential breaches of environmental permits (including the failure to take reasonable measures to prevent future harm).
The issues to which this question refers have been considered and reported upon relatively recently (http://www.odpm.gov.uk/index.asp?id=1147884).
Q28 Would coupling such notices with an administrative penalty for non-compliance be more effective in securing compliance than the threat of a criminal prosecution?
Compliance tools and prosecution are already intertwined and complementary. An administrative penalties regime would be valuable in “plugging a gap” between the two.
Alternative sanctions
Q29 Should the review consider the case for introducing alternative sanctions by the courts or by regulators in the case of regulatory offences such as reputational sanctions, probation orders or restorative orders?
Yes. UKELA would be in favour of the introduction of all of these sanctions as additional alternatives to existing sanctions (but not as substitutes for them).
Q30 Could the effect of alternative sanctions of this type be as effective as economic or criminal sanctions?
UKELA’s view is that alternative sanctions will generally not express society’s opprobrium for the most serious environmental wrong-doing as effectively as criminal prosecution. In some circumstances, however, alternative sanctions may be more effective that economic or criminal sanctions (e.g. when a firm is unconcerned about its reputation and a fine would be of no consequence it may be more effective to obtain a restorative order). In most instances alternative sanctions would be a valuable additional option rather than an alternative e.g. reputational sanctions (such as negative publicity orders used in Australia) could be used effectively to magnify the opprobrium of a criminal conviction in appropriate cases, but could not be considered a substitute for criminal prosecution.
Financial penalties
Q31 Please tell us if you think the financial penalties handed down in both the Magistrates or Crown Courts are appropriate and effective for regulatory offences?
This issue has been well canvassed and UKELA repeats its response to DEFRA on its review of environmental enforcement in September 2005 (copy attached).
Q32 Should the financial penalty in the case of regulatory breaches reflect the economic gain derived from the non-compliance?
Yes, but ideally in way which also reflects the culpability of the party in breach and does so in a transparent manner. Take, for example, the simple case of a company which breaches a permit and is therefore liable to pay a fine. Intuitively, one would expect the fine to be not less than the financial benefit gained by the breach. In our view, the present system does not sufficiently reflect this expectation in practice; nor in many cases does it satisfactorily reflect the culpability of the party concerned (whose breach may be the result of anything ranging from an innocent mistake to willful avoidance). Ideally, the system should also make a clear and obvious link between financial benefit and culpability on the one hand, and the level of penalty on the other.