October 01, 2017

Developments in Environmental Permitting in the United Kingdom

Andrew Waite

Traditionally, environmental legislation in the United Kingdom has adopted a sectoral approach: a different regime for each environmental medium or problem type. Among other things, this has involved different regulators and different licensing rules. For example, whether a licence needed to be transferred to the buyer of a facility, and, if so, how, depended on the requirements of the applicable legislation. Such issues can be confusing for those who must comply with a mass of different rules.

The environmental permitting system that was first introduced in 2007 attempts to overcome this problem through a common regulatory framework applicable to a wide range of activities that previously were governed by different regimes. Initially, the new scheme only covered “installations” (explained below) and waste operations. However, coverage under the current regulations, the Environmental Permitting (England and Wales) Regulations 2016 (EP Regulations), has been expanded to also include mobile plant, mining waste operations, radioactive substances activities, water discharge activities, groundwater activities, small waste incineration plants, solvent emission activities, and flood risk activities. Each of these activities is defined in the EP Regulations and is governed by the common regulatory framework. Even so, not all environmental licensing legislation has been ushered into the fold of the EP Regulations. Perhaps the most prominent example is the water abstraction regime (i.e., the regime for taking water), which is still governed by the Water Resources Act 1991, although there are plans to include it within the EP Regulations in the future.

Obviously, each of the various activities mentioned above, although regulated under the same umbrella, requires specific rules to govern it. Those detailed rules are found in the schedules of the EP Regulations. In many cases, requirements exist to transpose applicable European Union (EU) directives. For example, Schedule 7 of the EP Regulations instructs regulators to comply or ensure compliance with specified articles of the EU Industrial Emissions Directive in the case of Part A installations.

“Installations” are listed in Schedule 1 of the EP Regulations under different types of industrial activity—energy activities, production and processing of metals, mineral industries, chemical industry, waste management, and other activities. Each activity may fall into one or more of three categories. Activities listed in Part A(1) are regulated by the Environment Agency (EA) in England (or by the Natural Resources Body for Wales (NRBW)), and activities listed in Part A(2) and Part B both are regulated by the local authority. Only emissions to the air are regulated in the case of Part B activities, whereas all environmental impacts of Part A activities are controlled pursuant to the Industrial Emissions Directive.

As indicated above, the EP Regulations also govern mobile plants, which includes plants used for processing waste, contaminated soil, and other materials that can be removed from the site and used elsewhere when the processing has been completed. A mobile plant is categorized in the EP Regulations as either a Part B mobile plant (designed to carry out a Part B activity) or a waste mobile plant (designed to carry out a waste operation). The two categories are mutually exclusive.

Which regulator? The allocation of functions between the regulators is governed by regulation 32 of the EP Regulations. The allocation of authority for regulating “installations” has been explained above. However, it becomes more complicated when considering the full range of activities regulated under the EP Regulations. Generally, the regulator is the EA with respect to facilities in England and the NRBW for facilities in Wales. These authorities oversee the most heavily polluting facilities, including waste operations. On the other hand, local authorities are the designated regulators for certain facilities considered to be less polluting.

However, although the respective jurisdiction of each regulator may seem reasonably clear cut, it is sometimes less than crystal clear in practice. This is demonstrated by the recent Court of Appeal decision in R v. Recycled Materials Supplies Ltd, [2017] EWCA Crim 58. The 2010 version of the EP Regulations with amendments was in force when the alleged offenses at issue in this case occurred, but there are no material differences for present purposes in the current 2016 EP Regulations.

Recycled Materials Supplies case. The facts are simple. Recycled Materials Supplies Ltd. (RMS) operates a facility for recycling construction and demolition waste, which is crushed and recovered to produce aggregates. The waste includes brick, tiles, and concrete that are not segregated from other materials. RMS was granted an environmental permit by the EA to cover the waste operations on their site. However, the London Borough of Newham (LBN) separately issued a more limited environmental permit for the crushing, grinding, and screening of brick, tiles, and concrete by means of mobile plant. Those activities are Part B activities, and, therefore, should fall under local authority control to deal with air pollution.

RMS was prosecuted by LBN for failing to comply with a condition of their environmental permit requiring vehicles transporting aggregates to be fully enclosed. RMS’s conviction by the Crown Court was overturned by the Court of Appeal on the ground that dual regulation, although possible in some cases, was unlawful in the present circumstances. The court pointed out that regulatory functions in respect of regulated facilities including waste operations and waste mobile plants are allocated to the EA (or NRBW) under regulations 32(1) and (1A) of the EP Regulations unless they are specifically allocated to local authorities under regulation 32(2), which includes:

(b) . . . Part B mobile plant but not in respect of any of the following regulated facilities carried on . . . by means of mobile plant—

(i) a waste operation (unless it is a Part B activity) . . .

The Court of Appeal accepted that this wording in the EP Regulations indicates that a waste operation may also be a Part B activity. However, the local authority would only have the function of issuing an environmental permit if the activity on RMS’s site was a “Part B mobile plant which was ‘by the tortuous route of double exceptions’ carrying on a Part B activity.” Opinion of Lord Justice Gross in the Recycled Materials Supplies case.

However, the crushing, grinding and screening of brick, tiles, and concrete were never carried out as separate activities but always as an integral part of the waste operation on RMS’s site. For that reason, the activity could not be considered a Part B activity, and the plant, if it was mobile, was a “waste mobile plant” that is regulated by the EA and not “Part B mobile plant.” Under those circumstances, the EA alone had jurisdiction, and the LBN environmental permit was, therefore, invalid. It followed that RMS had not committed an offence by failing to comply with a condition in an invalid environmental permit.

The Court of Appeal added that a defendant prosecuted for breach of a permit condition can challenge the validity of an environmental permit during a criminal trial. However, the court added (without ruling on the point) that there was some force to the argument that any challenge to a permit condition may have to be made through the appeal process set out in the EP Regulations—an appeal to the secretary of state (DEFRA) in England or to the Welsh ministers in Wales. Such appeals must be made within six months of the grant of the environmental permit, so it may be too late to wait until the permit holder is prosecuted for failure to comply with a condition.

Lessons learned. Several lessons can be learned from the Recycled Materials Supplies case. First, if more than one environmental permit governs the same activity on a site, one of them may be invalid. Dual regulation generally is frowned upon. An exception contemplated by the EP Regulations is the operation of mobile plant on the site of another regulated facility. In the event of inconsistency between the requirements of the two permits, the requirements of the environmental permit for the other regulated facility prevail.

Second, if any condition of an environmental permit is unduly onerous to the permit holder, an appeal should be made promptly. Otherwise, it may be too late to challenge it. The question of whether a direct challenge can be made to a permit during criminal proceedings is a problematic area of administrative law. As this case makes clear, a challenge to the validity of the permit is more likely to succeed than an attack on an individual condition.

Third, although not relevant in the Recycled Materials Supplies case, the court noted that the secretary of state (or the Welsh ministers) is authorized under regulation 33 of the EP Regulations to direct that the regulatory functions of the EA or NRBW shall be exercised by the local authority or vice versa. Such a direction can apply to a single facility or to a class of facilities. The power to make directions has been used where the experience of the “other” regulator is more appropriate to a particular facility.

Finally, the problem in determining the appropriate regulator in this case was caused not only by poor drafting in the EP Regulations but also by the fact that a potential exists for overlap between different activities regulated under a common regulatory umbrella, making it difficult to determine under which category the activity falls. The brave attempt at simplification by the EP Regulations was, at least to that extent, frustrated.

Andrew Waite

Mr. Waite is a senior solicitor with Prospect Law in London, England, United Kingdom, and is a contributing foreign correspondent to Natural Resources & Environment. He may be reached at ajw@prospectlaw.co.uk.