New sentencing regime means companies risk millions in fines for damaging the environment

19 May 2014

Construction companies face massively increased fines for breaching Environmental Legislation from July 1st 2014 onward, warns Siltbuster’s CEO Dr Richard Coulton. This follows publication of the first set of guidelines produced by the Sentencing Council for this type of breach. For the worst offence a larger PLC could be fined up to £3 million pounds!

Prior to this, fines have been issued on an ad hoc basis – and without any guidelines, there has been little or no consistency in the sentences handed out. The fines issued, when reviewed by the Sentencing Council, were deemed to be far too low and often not reflecting the seriousness of the offence committed.

These recently published Guidelines (entitled Environmental Offences – Definitive Guidelines), mean that as of July 1st, a clear sentencing rationale based on culpability, harm and size of the responsible organisation will be used to determine the size of fines imposed on companies polluting the environment.

The guidance, sub-divides the culpability factor into four classes, ranging from “low to no culpability (for example where the incident was the result of accident or action of a rogue employee) through to Deliberate where there was an intentional or flagrant breach of the law by those in position of responsibility.

Similarly the harm factor is split into 4 categories comprising:

Category 1 – Covering major incidents where there is a release of hazardous/noxious chemicals into the environment resulting in major clean up or rehabilitation costs
Category 2 – Incidents causing significant environmental (or human health) damage resulting in significant clean-up/rehabilitation costs
Category 3 – Minor localised damage resulting in low clean up/rehabilitation costs
Category 4 – Incidents where there was a risk of minor localised damage

The guidelines state that the Court should determine the offence category based solely on these two and then assess the fine based on upon tabulated values depending on the Company’s turnover, which is again split into 4 ranges, namely:
Large – (greater than £50 million turn over)
Medium – (£10 to £50 million turnover)
Small – (£2 to £10 million turnover)
Micro – (Turnover not more than £2million)

Potential fines vary from a minimum of between £100 and £700 for an incident by a micro company resulting in a risk to the environment, through to between £450,000 and £3,000,000 of a deliberate act causing a major pollution incident by a large company. Whilst this represents the upper range a typical pollution incident as a result of negligence by a large company could result in a fine of between £22,000 and £750,000 depending on its severity.

Consequently, with the risk of potential fines of this magnitude, it is now even more important that construction companies carefully manage the environmental risk imposed by their operations and in particular actively address how they manage the disposal of waste. A good starting point would be to look at how to prevent the 3 most common causes of water pollution from construction sites, namely disposal of silty water, oil contamination and the treatment and safe discharge of high pH water from Construction sites.

The aim of the Guidelines is to facilitate a more consistent approach to environmental sentencing whilst ensuring that the sentence handed down reflects the seriousness of the offence and the size and culpability of the company. It also removes any financial benefit that can be achieved through deliberately failing to comply with the law. It will no longer be cheaper to offend than to take the appropriate precautions to protect the environment.