Logistics sector faces threat of huge environmental fines

11 July 2014 | Simon Colvin

Simon Colvin, partner and national head of environment team at WeightmansThe definitive Sentencing Council Guideline for Environmental Offences came into force on 1 July and with the significant number of reported environmental incidents arising from the transport of hazardous materials in recent years, the transport and logistics sector should sit up and take notice. We face the real prospect of fines for environmental offences outstripping those for health and safety offences, even those that include a fatality. 

This completely alters the face of environmental compliance in England and Wales with the prospect of fines of more than £3 million for the worst offences and a tenfold increase in fines elsewhere.

The Guideline was first published last year for consultation and was issued after strong lobbying by the environmental regulators. They complained of fines that were too low and an inconsistent approach to sentencing by the courts.

The Guideline introduces a 12-step tariff-based system through which fines are based on three principle factors. While the stated intention is that it will not apply to all environmental offences we expect the courts will make use of it wherever they can.

The first of the three factors is the harm arising from an offence. There are four categories with one being the most significant and four the least.

The second factor is the level of culpability of the offender. Were the actions of the offender deliberate, reckless, negligent, or on a lower level of blameworthiness?

The final factor is the turnover of the offender, or where the offender is a charity, or a local authority, the equivalent. There are four further categories: large – more than £50 million; medium ­– between £10 million and £50 million; small – between £2 million and £10 million; and micro – less than £2 million.

These factors are used to determine the starting point for a fine and are the range courts can move up and down within depending on the aggravating and mitigating factors, and certain other considerations.

The new Guideline will mean the potential for environmental fines of more than £3 million per offence for the most significant incidents.

But it’s not all bad news as the new Guideline also offers a few glimmers of hope. First, businesses in the transport and logistics sector should look to align their incident response protocols with the Guideline so that in the event of an incident they are doing all they possibly can from the first opportunity to mitigate any enforcement action.

Second, businesses in the sector need to consider the need to undertake their own investigations and assessments of the level of environmental harm in the immediate aftermath of an incident. There are very significant differences in the starting points for the different categories of harm. If a business can successfully challenge a regulator’s categorisation, they could make potential savings of hundreds of thousands of pounds.

☛ Simon Colvin is partner and national head of environment team at Weightmans


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