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Tougher sentencing for breaching environmental laws

The UK's Sentencing Council has published new guidance on fines for environment-related offences which will apply to all sentences passed from 1 July this year.

The aim of the sentencing guidance is to enable courts to adopt a consistent approach to sentencing companies and individuals that are found to have committed environmental crimes.

In particular, fines will now reflect not just the severity of the environmental offence committed, but also the size of the company that committed the offence.

Sentencing principles

When sentencing corporate offenders, the court will first decide on the 'category' of offence, which looks at the extent of harm caused to the environment. It will then consider the culpability of the company, such as whether the offence was deliberate or an accident.

Finally the court will look at the annual turnover of the company and use that information to decide on the appropriate level of fine.

Higher fines for 'large' companies

Under the new guidelines, companies with an equivalent turnover of more than £50 million per year can now be hit with a maximum fine of £3 million for high-culpability Category 1 offences.

However, even when the offence in question is an accidental or relatively minor one, large companies can still expect to pay much larger fines than smaller companies.

For example, the biggest companies can be fined up to £25,000 for the significantly less serious Category 4 offences, even with low culpability.

By comparison, 'micro' companies (those with annual turnover of less than £2 million) would pay a maximum of only £700 for the same type of offence.

The guidelines also include separate provisions for 'medium' companies with an annual turnover of between £10-50 million (maximum fine £1 million) and 'small' companies with an annual turnover of between £2-10 million (maximum fine £400,000).

Demand to view company accounts

The guidelines also make it clear that in order to find the appropriate level of fine, the court will ask to see the company in question's accounts.

In the past, some companies with a high turnover have been reluctant to submit detailed financial information to the court ahead of sentencing.

However, in the recent combined appeals launched by Sellafield and Network Rail against heavy fines following health and safety breaches, the Court of Appeal made it clear that any request for financial information made by the court is a mandatory one.

Confiscation

Sentencing is designed to remove any form of economic benefit obtained by the company in committing an environmental offence.

The court may also make a confiscation order to recover any financial gain made by the company as a direct result of the offence, as well as any money saved by not complying with the relevant regulation.

Sentencing individuals

The sentencing guidelines also include provisions for individuals found to breach environmental laws.

This is significant as regulators such as the Environment Agency have frequently shown a willingness to bring charges against individual directors, in addition to those against the company itself.

The sentencing powers available to the court range from low-level community orders to up to 3 years imprisonment for Category A offences with high-culpability.

Fines for individuals are calculated by a percentage of the individual's weekly income, which is fixed in accordance with the severity of the offence.

The most severe Band F fines can be for as much as 700% of the individual's weekly income.

Commentary

Companies with high turnover need to be aware that they are likely to face much more severe penalties than before, even for seemingly insignificant or technical breaches.

The sentencing guidelines cover all waste handling or disposal offences (both hazardous and non-hazardous), as well as incidences of noise, smoke, dust or smells that pose a pollution risk.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2014. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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