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New Environmental Regulations affect landlords and waste businesses

New Environment Agency and Natural Resources Wales Powers have significant implications for landlords and waste businesses.

The 2018 Waste Enforcement Regulations give environmental enforcement authorities in England and Wales the power to restrict access to a waste site for three days (and for up to six months at a time after this with Court approval) where there is a serious risk that pollution from the waste site will harm the environment or human health. 

The Regulations also give the authorities powers to require the removal of all waste from land where there is no permit or exemption in place even if that waste was originally deposited lawfully.  Significantly, this power applies to the occupier or, if the occupier cannot be found, the owner of the land. 

The problem

The government believes that the improper disposal of waste has significant negative effects both on the environment and the broader economy. 

Limitations on the environmental authorities' (EA) powers were viewed as an obstacle to effectively dealing with the problem of non-compliant operators, so a new suite of powers has been created.  These address two specific perceived problems:

  • Prior to the Regulations, where a permitted site stockpiled more waste than allowed under the permit, the EA's options were limited to restricting access in order to remove waste. But, only where it was causing a serious pollution risk and only after five days' notice.  The EA could simply revoke the permit, but that would clearly not always be a proportionate response in line with the EA's enforcement policies.
  • Similarly where waste was deposited on a site the EA's powers were (according to the relevant Ministers in both England and Wales) limited to requiring removal of waste that had been deposited illegally. This means that clean-up costs of sites abandoned after breach of a permit or exemption were borne by the taxpayer, despite the waste now being present unlawfully.

Restriction Notices

The regulations address the first problem through amendments of the Environment Act 1995 to give the EA the power to issue Restriction Notices against an owner or an occupier where:-

  • a permit or exemption is (or was) in place;
  • there is a risk of serious pollution to the environment or serious harm to human health from waste; and
  • a notice is necessary to prevent the risk from continuing. 

The Restriction Notice prohibits access (for all except the owner or occupier) and the import of waste to the site for up to 72 hours.  The EA can also take steps to secure the premises to prevent contravention and can recover the necessary costs of doing so.

The EA must make an application to the Magistrates Court for a Restriction Order. The Court will grant an Order when there is a risk of serious pollution to the environment or serious harm to human health from waste, and an order is necessary to prevent the risk from continuing, or where:-

  • an unlawful deposit has occurred;
  • no permit is in place;
  • a breach of permit has occurred; or
  • there has been a failure to comply with one of a variety of environmental enforcement notices

This must have caused or failed to prevent pollution or harm to human health and an order must be necessary to prevent that pollution or harm from continuing.

Where the Magistrates Court is asked to hear an application it can grant an adjournment of up to 14 days with a Temporary Order (effectively extending the Restriction Notice) continuing in force. 

Such an adjournment must be to allow parties an opportunity to adduce evidence in support of or opposed to the grant of a Restriction Order.

Such an Order has the same effect as a Restriction Notice but can last for up to six months and can be extended for up to six months at a time through further applications to the Court. 

If an owner, occupier or the EA considers that the circumstances justifying the Order no longer apply, an application can be made to the Magistrates Court to vary or discharge it.

Failure to comply with a Restriction Notice without reasonable excuse is punishable on conviction by an unlimited fine and up to 51 weeks in prison. Failure to comply with a Restriction Order without reasonable excuse, is punishable by an unlimited fine and up to two years in prison.

Power to require removal of waste

The regulations address the second problem by amending the Environmental Protection Act 1990 to grant the EA powers to require removal of waste deposited or being kept on land unlawfully or without a permit.  The EA can serve a Notice on the occupier requiring them to remove the waste from the land within a minimum of 21 days and to take steps to eliminate or reduce the consequences of keeping or disposing of waste.

The recipient has the option to appeal the Notice to the Magistrates' Court if it did not keep, dispose, knowingly cause or knowingly permit the keeping or disposal of waste or if there is a material defect in the Notice. 

Landlords have a separate ground of appeal if they did not have a lawful right of entry onto the land.  An appeal application suspends the Notice until the appeal has taken place.

Failure to comply is an offence punishable by an unlimited fine, a failure to comply without reasonable excuse also grants the EA the power to carry out removal or remediation itself and to recover costs from the recipient or the occupier of the land.

If there is no occupier, the occupier cannot be found without incurring unreasonable expense or the occupier has failed to comply with a Notice, then the EA can follow the same procedure and serve a Notice against the owner of the land.

This power is broad and could have profound effects on the willingness of owners to allow land to be used for waste operations without additional assurances in place. 

It should be noted, however, that this power is not retrospective in effect. It can only be used to require removal of waste lawfully deposited after this section came into effect (8 May 2018).

The implications for waste businesses

For waste businesses these regulations grant the EA significant additional enforcement powers with the potential to disrupt operations where a breach has taken place. 

The EA now has powers to effectively freeze operations where it deems that waste poses a serious risk of pollution. Under the current system relatively minor breaches are often dealt with through voluntary measures that avoid escalation to revocation of permit.  

The risk for businesses is that they might face up to 17 days of restrictions  - a three day Restriction Notice and 14 day Temporary Order, before sufficient evidence is available for the waste business and the EA to present their cases to a Magistrates' Court if the EA have made a mistake. 

It is more important than ever, therefore, to comply with the terms of your permit.  If breaches do take place it is important to consider whether these are widespread or geographically isolated to a specific part of the site.  If they are isolated, then a Restriction Notice or Order should not apply to the whole site. 

If a Restriction Notice is being contemplated, the EA must inform you of their intention and consult about the arrangements for access required by the owner/occupier. 

This gives the waste busines an opportunity to discuss whether you can agree a suite of measures on a voluntary basis to preclude the requirement to serve a Notice, if an intention to serve a Restriction Notice is indicated.  

If a Notice is to be served, seek to address any specific circumstances where the prohibition should not apply, for example:

  • to exempt certain persons who need access to the site (for example contractors who are helping to remedy the underlying problems)
  • to only restrict non-waste access during certain hours, or
  • to not apply to certain categories of waste or certain parts of the site. 

Such exceptions are explicitly contemplated by the legislation and, if no consideration is given to these matters in the Notice, you should record your discussions with the EA to help with any subsequent application to the Court.

A Notice must be cancelled once the conditions justifying it no longer apply. It must also be varied if those conditions no longer apply to a particular part of the premises. 

It is important to remember to emphasise to the EA that the Regulations themselves suggest that the Notice should not prevent you from addressing the defects that led to it being served.

Legal advice is recommended to support in:

  • responding to the subsequent Court hearing,
  • requesting suitable variations in any Temporary Order granted, and
  • to put forward your case resisting the grant of a Restriction Order and subsequently applying to have it varied or lifted.

It is also worth noting, particularly for multi-site waste businesses, that if a permit is revoked or an exemption is deregistered for any reason in respect of a site, you may now face a vastly greater clean-up bill if the EA exercises its powers to require you to remove all waste from the land. 

Given that such clean-up costs routinely reach six or seven figure sums for relatively small volumes of waste (compared to cleaning up a fully operational waste processing facility) the costs could represent a real threat for waste businesses. 

This highlights the importance of maintaining a good relationship with the EA and seeking to address issues promptly and comprehensively to avoid this situation arising. 

Finally, the recent Scottish case of Re Doonin Plant Limited [2018] ScotCS CSOH 89, which considered clean-up costs following service of a waste removal notice under 1990 Environmental Protection Act,  established that clean up liabilities can survive into liquidation and (in Scotland at least) take precedence in the order of payment of creditors. 

This means liabilities can potentially make winding up a waste business problematic.  Whilst English law differs from Scottish law and there is no clear English authority on this point, Scottish decisions are of persuasive value. 

This could make distributing monies free from long-tail liabilities more difficult. It is therefore important to plan what will happen to the permits or exemptions for your sites if you are considering ceasing trading.

The implications for landlords

Landlords have always faced a residual liability to deal with waste unlawfully deposited on land. This can even extend to criminal liability for a failure to clean up the site promptly after a tenant ceases trading (see our recent Insight). 

But, the extent of a landlord's liability to clean-up of a site has now increased significantly, particularly if a tenant was previously operating a lawful waste business. 

The landowner must now clean up all waste on site, even if it was originally deposited lawfully.  This will be particularly onerous in insolvency situations where the original "occupier" ceases to trade and has insufficient means to cover any clean-up costs. 

Even where a tenant is solvent on discovering a breach, the use of both Restriction Notices and Notices requiring removal of waste by the EA could well have the effect of pushing a tenant into insolvency, leaving the landlord to pick up the tab.

Landlords would be well advised to consider these issues when letting to tenants, in particular:-

  • where a waste operation is not being proposed, explicitly preclude such operations in the lease;
  • ensure waste uses and responsibilities are clearly addressed and defined in the lease;
  • confirm whether the tenant has provided the EA with sufficient “financial provision” – this should be a pre-requisite for certain types of environmental permit (such as landfill) consisting of a bond, escrow/trust account or similar that contains sufficient funds to clear up the site in the event of insolvency nature of the sub-tenant's activities are considered before granting consent;
  • obtain indemnities wherever possible to address any prospective residual liabilities including clean-up costs;
  • ensure the lease requires the tenant to notify the landlord of any material change in permit or exemption and to promptly rectify any breaches; and
  • whether to regularly inspect the tenant's premises to ensure that there are no obvious breaches of permit conditions - the more a landlord can evidence the steps it took to prevent unlawful deposits the greater the chance of establishing that no knowingly permitting took place. 

Many of the above will also be relevant to lenders seeking to ensure financial viability is not undermined by such issues.

If a landlord does face a potentially significant clean-up it should obtain legal advice and seek to proactively engage with the EA. 

If, for example, the site was broadly compliant but the tenant encountered financial difficulties, then it would clearly not be in the public interest for wholesale clean-up to be ordered if another viable waste business could be established. 

Similarly, clean-up of a single problem issue or area might well render the entire site marketable as a site for a compliant waste operation; again making wholesale removal undesirable. 

It remains to be seen how the EA will use these new powers. Its Enforcement and Sanctions policy simply states that it will use Notices "where appropriate". 

Given their potentially draconian effects on waste businesses and on innocent landlords it is important to seek advice when contesting the service of a Notice. 

The EA's own policies indicate their enforcement should be: outcome focused; proportionate; with regard to economic growth; consistent; transparent; targeted; and accountable and any dispute should be framed by reference to these principles.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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