Pollution fines: are they tough enough?

Severn Trent’s £480,000 fine for polluting farmland, a pond in a private fishery, and a brook in Wickersley is not only the third largest in UK water company history, but is also the latest in a long line of fines to be handed out for the offence.

United Utilities, South West Water, Southern Water, and Thames Water have also recently been hit with pollutions fines after failing to prevent sewage spilling into the environment.

Collectively, these fines total more than £1.5 million, which critics blast as “token gestures”. This disapproval comes despite new, stricter guidelines being introduced, designed to make the penalties for environmental offences tougher and more consistent.

These guidelines, developed by the Sentencing Council, set out a step-by-step process on how the level of a fine is worked out.

Why the change?

The previous penalty regime was criticised for handing out feeble fines that did little to deter water companies from allowing incidents to occur, or to seriously penalise them in the aftermath.

Despite this, in 2013, it emerged than 1,000 pollution incidents in the preceding eight years had resulted in only £3.5 million in fines being issued. The then-Environmental Audit Committee chair Joan Walley called the penalties “pitiful” and called on the Sentencing Council to ensure fines were large enough to act as a deterrent.

Tamsin Wray, associate director, environment, at design and engineering firm AECOM added that “prior to the guidelines changing, the average fine for one utility company was between £7,000 and £10,000.” Hardly a significant deterrent for a company that potentially turns over hundreds of millions of pounds per year.

At the same time as the 2013 uproar, the Sentencing Council was already consulting on the new penalty guidelines, which enable fines of up to £3 million to be issued to large companies. These were introduced on 1 July 2014.

The new regime

The new sentencing guidelines provide a 12 step process for the setting of a fine for individuals or organisations found guilty of environmental offences.

The aim of the process is to prevent the inconsistencies that occurred previously when different levels of fines were issues for similar offences.

Wray said: “The Sentencing Council found that magistrates in particular were unfamiliar with sentencing offences relating to the disposal and treatment of waste, and inconsistency in judgements was apparent across the country.”

The first two steps in the process set out whether compensation needs to paid to any victims of the offence, and whether any property needs to be confiscated.

After these initial steps have been completed, the court then sets about establishing what the fine will baby determining the culpability of the company, and the harm caused. This is combined with the size of the organisation – in terms of revenue – and then a starting price for the fine is arrived at. Large companies – those with a turnover of £50 million or more – face fines of up to £3 million under this regime, if an offence is deemed deliberate and is in the highest of the four harm categories. This decreases as the size of the company decreases, as the level of harm falls, and if the culpability falls to reckless, negligent or low/no culpability.

Once a starting point for the fine has been reached, further steps are taken to assess, among other things, whether there mitigating steps by the company, whether a guilty plea has been made, and if the fine is payable for the company.

This, according to Wray, will lead to higher penalties, especially for the larger companies, and this will “help to raise awareness and even greater focus on the requirement for environmental compliance”.

Are they tough enough?
The new guidelines give the courts the power and the ability to set tougher fines against water companies – and any organisation or individual. They will also be more consistent as there is set structure for courts to follow.

Since coming into force in July 2014, three of the UK’s highest pollution fines dealt out to water companies have been issued. United Utilities has hit with a £750,000 fine in March this year, Southern Water with £500,000 in November 2014, and Severn Trent with £480,000 this week.

Thames Water, which was one of the first businesses to be hit by a fine under the new regime in August 2014 when it was found guilty of polluting Chase Brook two years previously, appealed against the ruling hoping to have its penalty reduced.

This failed, and in June this year, the Court of Appeal upheld the £250,000 fine, and added it would have also upheld a “substantially higher fine in this case” as well. This shows the new, stricter regime is standing up to scrutiny and a precedent was set.

However, the new rules have not pleased everyone. The environmental charity, Surfers Against Sewage, which campaigns for cleaner bathing waters, is continuing calls for regulators to issue the “strongest possible fines” rather than “token” ones.

Wray is more reserved in her judgement, saying it will take time to see whether the new regime will “will lead to a substantial reduction in environmental breaches”.

However, she does accept that the fines are harsher against pollution offenders, and that this will “create an improved understanding among businesses about the impact of environmental offences and their responsibilities.”