Environment Update January 2012
Right to an odour-free home?
In December 2011, the Technology & Construction Court held that a water utility company was liable for causing odour nuisance to neighbouring residents and for breaching their human rights.
The claimants had contended that both odour and mosquitoes resulting from the company’s sewage treatment works had caused a nuisance, and that this was the result of negligence on the part of the water company. They also contended that the company had breached their right to private and family life under Article 8 of the European Convention on Human Rights (ECHR).
Nuisance
In terms of the mosquitoes, the Court held that the company had exercised reasonable skill and care in dealing with them, and had not been negligent. It also noted that it could not be shown that the issues suffered by the claimants were caused by the mosquitoes at the sewage treatment works. The Court therefore held that the company was not liable in connection with the mosquitoes.
However, in terms of odour, the water company was held to have failed in a number of respects to conduct operations at the sewage treatment works with all reasonable regard and care for the interests of the claimants in relation to odour. The company’s negligence had resulted in an odour which exceeded levels which would be expected in an area neighbouring a sewage treatment works.
The rule protecting statutory authorities from nuisance claims, where the operations in question were authorised by Parliament, could not be relied upon in this instance. This was because the company had, in the course of carrying out the authorised operations, been negligent, failing to have all reasonable regard and care for the interests of other persons.
They had therefore caused an actionable nuisance, having caused significant inconvenience and annoyance over that which was inevitable from living near a sewage treatment works.
Human rights
In terms of human rights, the actionable nuisance caused by the company’s negligence was held to be of sufficient severity to constitute an actual interference with the residents’ right to respect for private and family life under Article 8 ECHR. This interference with the residents’ human rights amounted to an unlawful act under section 6(1) HRA 1998, which prohibits public authorities from acting in a manner which is not compatible with human rights under the ECHR.
The Court therefore declared a breach of human rights, and held the company liable to pay damages to those claimants who were property owners.
The case, a test case for a larger group of affected residents, was significant in applying the principle, established in an earlier case, that claimants who are not property owners may nonetheless be entitled to damages for breach of their right to private and family life, even where the owner of the property in which they reside has already obtained damages for nuisance. While the facts in the present case did not support the need for an award of damages to give just satisfaction to those claimants which did not own property, the principle has the potential to have far reaching implications in the context of decisions based on human rights claims, and are likely to be of concern to water companies and other statutory authorities.
Declarations of a breach of human rights remain fairly rare in environmental cases, but this judgment underlines public authorities’ potential exposure to human rights claims where they have been negligent in their duty of care, and their relationship with the more common claim of nuisance.
Striking a balance
SEPA is consulting on how to improve Scotland's water environment without having a negative impact on renewable energy generation.
The consultation, "Water storage schemes for hydropower generation: Improving the water environment without a significant adverse impact on renewable energy generation", considers an interesting conflict between two key environmental issues – protecting and improving Scotland’s water environment and supporting renewable energy generation.
Scotland’s river basin management plans contain improvement objectives for around 70 water bodies considered to be adversely affected by hydroelectricity generation. The objectives are adaptable, and seek to achieve “good ecological potential” for these water bodies by 2027, pursuant to requirements under the Water Framework Directive. Delivering these objectives may require changes to existing hydroelectricity schemes, with the potential to affect the net amount of electricity generated.
The Water Environment (Controlled Activities) (Scotland) Regulations 2011 (CAR) give SEPA the power to review and vary hydroelectricity scheme CAR licences in order to achieve these water improvement objectives. SEPA states that it will prioritise licence reviews based on the relative severity of impacts of different schemes on ecological water quality.
In this context, SEPA recognises that it must strike the right balance between improving the water environment and supporting renewable hydroelectricity generation pursuant to Scotland’s target of achieving 100% equivalent of our gross annual electricity consumption from renewable sources by 2020. The current consultation seeks views on their proposed approach to achieve this balance.
SEPA states that it will work with operators to find the right balance, and indicates that it will seek to avoid making changes that result in a net reduction in the amount of electricity generated. In this context, a reduction in generation will only be required if this would result in a significant environmental improvement. Where improvements would cause significant electricity generation reductions either at a scheme level or cumulatively on a national level, those improvements will not be required.
SEPA proposes to consider the following factors in determining whether a reduction in electricity generation would be "significant", and seeks views on whether they are appropriate in this context:
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the impact of the potential reduction on the hydroelectricity scheme concerned;
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the cumulative impact on hydropower generation within the RBMP cycle; and
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the significance of the benefits expected to result from the improvement to the water environment enabled by the reduction.
While ideally the improvement objectives would be achieved without any impact on volumes of hydroelectricity generation, this may not be possible, and SEPA states that it will consult with licence holders on a case-by-case basis to agree mitigation requirements. As a certain degree of generation reduction is likely to be necessary to achieve water improvement objectives, SEPA proposes ensuring that the cumulative net generation reduction across Scotland resulting from mitigation requirements should not exceed 2%. This percentage will be phased in alongside increasing renewable energy generation, so as not to impede achievement of renewable energy targets, beginning with a maximum of 0.25% reduction up to 2015.
Aside from the impact in terms of cumulative renewable electricity generation at a national level, there will also be a need to consider the significance of any net generation reduction to an individual hydroelectricity scheme. SEPA proposes to take account of the following factors when assessing the significance of any reduction at an individual scheme level:
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the quantity of water that would no longer be available for generating hydro electricity compared with the quantity of water currently available;
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the net reduction in the current annual average hydro electricity generation;
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the reduction in the annual average electricity hydro generation compared with the typical annual variation in the scheme's electricity generation; and
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the magnitude and importance of the environmental benefit compared with the estimated annual average reduction in electricity generation.
The consultation document seeks views on the above proposals as well as inviting suggestions regarding potential means of assigning any necessary cumulative loss of generation to individual operators within and across cycles and means of measuring the relative importance of the environmental benefits that may be delivered by additional mitigation.
The consultation period closes on 30 January 2012.
Natural England empowered to use civil sanctions
Natural England now has the power to apply civil sanctions in enforcing certain laws relating to habitats and wildlife, rather than prosecuting companies in the criminal courts.
These will supplement Natural England's specialist civil sanctions under the Environmental Damage (Prevention and Remediation) Regulations 2009, which enable them to require remediation and restoration of land, habitats and the water environment where certain operations cause damage to them.
In summer 2011, Natural England consulted on the introduction of various civil sanctions for regulatory non-compliance. Widespread public support for the proposals encouraged ministerial approval on 21 December 2011, and Natural England has, therefore, since 3 January 2012 had the power to impose the following civil sanctions, as an alternative to criminal prosecution. The sanctions include:
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Compliance notice – This written notice outlines the measures necessary to bring a party into compliance within a specified period.
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Fixed monetary penalty – This sanction is relatively self-explanatory, comprising a notice outlining a fine of £100 for individuals, and £300 for companies for minor, clear-cut offences.
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Restoration notice – This written notice sets out restoration measures to be taken in order to repair any harm caused by non-compliance.
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Stop notice – This is a written notice prohibiting the continuance of an activity either indefinitely or until specific actions are taken.
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Variable monetary penalty – Natural England may impose a fine representing the financial gains of a party’s non-compliance or to act as a deterrent.
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Non-compliance penalty notice – Non-compliance with a Compliance or Restoration Order may prompt Natural England to issue a non-compliance penalty notice, requiring the offending party to pay a fine based on the compliance costs which the party is avoiding.
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Enforcement undertakings – Voluntary undertakings to ensure compliance, remedy harm, or surrender financial gains can be offered by offending parties in an attempt to escape civil or criminal sanctions.
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Third party undertakings – Voluntary undertakings aimed at local communities affected by non-compliance can also be offered by offending parties.
The particular sanctions that can be imposed for different offences varies, but they are generally available for use in relation to certain offences relating to Sites of Special Scientific Interest (SSSI), Environmental Impact Assessment (EIA), habitats and species licensing.
Revised Enforcement Guidance outlines how Natural England aim to ensure that fair and proportionate enforcement measures are chosen on a case-by-case basis. Incidents of non-compliance are assessed according to factors relating to the environmental impact of the particular non-compliance, including the rarity or the scale of the habitat or area affected and severity of the harm caused. Various aggravating and mitigating factors are also considered, together with the desirable enforcement outcomes, for the purpose of categorising any incident as technical, minor, medium or significant. The Guidance indicates that the new civil sanctions are primarily intended for offences categorised as “medium”.
The availability of the new civil sanctions to Natural England should help to bridge the gap between soft enforcement measures such as warnings and criminal prosecution. This in turn should allow for more proportionate enforcement in the context of “medium” offences.
Natural England’s first course of action for enforcement will remain verbal or formal warnings and advice to secure future compliance.
Therefore, for those operating under a species licence, or on or near a Site of Special Scientific Interest, or undertaking EIA for certain agricultural land, it is worth bearing in mind the broader range of enforcement measures now available to Natural England in the event of non-compliance. Some of these have the potential to impact on project timescales, such as stop notices, whilst others may enable a developer to offer undertakings to avoid prosecution.
Sustainable consumption and production
The European Commission is consulting on sustainable consumption and production, green public procurement and improving the environmental footprint of products and organisations.
Sustainable production and consumption is increasingly seen as a key factor in maximising economic growth and conserving natural resources. Recent years have seen real progress in this respect with the launch of Europe’s 2020 Strategy, followed by publication in 2008 of the Commission’s Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan (the Action Plan). The Action Plan set out both legislative and non-legislative measures to drive sustainable production and consumption, as well as overarching measures, such as green public procurement.
The Commission committed to review progress towards implementing the Action Plan in 2012, and the present consultation follows an interim assessment in September last year, which concluded that there was a need for more ambitious policy in the field.
The proposals focus on the four following areas for improvement:
1. Sustainable consumption and production and sustainable industrial policies
Several proposals to improve the existing Action Plan and instruments are presented in the consultation. The primary aim is to better align the cost of products and services with their environmental impact by:
a. Ensuring more resource efficient and environmentally friendly products. A key priority is to stimulate the supply of products designed with resource-efficiency and life-cycle considerations in mind. To this end, various proposals are considered, including:
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strengthening existing regulatory instruments, which often focus on energy consumption, to include resource efficiency;
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improving consistency between existing regulatory instruments and measures;
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working to optimise the resource efficiency of packaging;
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strengthening requirements for product durability;
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increasing competitive rewards for environmentally friendly products, potentially linked to their environmental footprint or that of the organisation producing them.
b. Promoting sustainable consumption. Consumers must also be incentivised to buy more environmentally friendly products, with support from policy measures to drive this trend if required. The Commission proposes measures to:
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increase the quality of information provided to consumers on product environmental performance, including harmonised labelling requirements and improved and standardised communication;
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prevent misleading green claims, or "greenwash", including potential voluntary codes of conduct for green claim in advertising;
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encourage retailers to stimulate sustainable consumption, for instance by setting up incentives to encourage the use of marketing tools to promote green products and better inform consumers;
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incentivise the purchase of better performing products, through measures such as tax rebates or applying VAT based on environmental performance.
c. Sustainable Industrial Policy. In terms of the industrial sector, the Commission notes the need to marry sustainability and competitiveness in practical terms, and the need to engage with SMEs to break down barriers in this regard. Actions proposed include:
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improving waste management and recycling, by providing a framework allowing for the value of waste and by-products to be realised, including through clear end of waste and recycling criteria and strengthened measures to combat illegal waste shipments;
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helping SMEs contribute to the resource-efficient economy by promoting networking, co-operation and exchange of best practice and providing technical and economic assistance.
2. Green public procurement
Recent progress in this area has included the creation and ongoing development of common green public procurement (GPP) criteria for eighteen product and service groups with accompanying legal guidance. In order to increase and rationalise the development of Member States’ GPP Action Plans, the consultation considers both voluntary and legislative measures to strengthen the current approach, ranging from simply strengthening existing criteria, to introducing new voluntary measures, such as Life Cycle Costing methodologies or mandatory inclusion of environmental criteria in tendering procedures and EU Funding programmes.
3. Product environmental footprint
The Commission considers how it could use its common life-cycle based methodology for measuring the environmental footprint of products, known as the Product Environmental Footprint (PEF) methodology, to improve the environmental performance of products.
In this context the aim is to harmonise and bolster the manner in which environmental performance of products is communicated along supply chains, and proposals include the promotion of a single market for sustainable products, either providing a legislative framework for the use of the PEF methodology or introducing voluntary schemes to this end.
4. Environmental footprint of organisations
The Commission proposes developing sector-specific environmental footprint methodologies to enable more systematic assessment, display and benchmarking of organisations' environmental performance. This will facilitate comparison of different organisations' environmental performance, and it is envisaged that incentives for the improvement, measurement and reporting of environmental performance will support this move. The consultation considers various options for the implementation of common measuring and reporting methodology, including voluntary measures or mandatory measures for larger organisations.
The consultation closes on 3 April 2012.
Environmental tax reform in Europe – just around the corner?
The European Environment Agency has published reports of two studies it commissioned to improve the understanding of how environmental tax reform (ETR) impacts on income distribution and innovation. Both reports detail the findings of a complex literature review and modelling exercise and draw key conclusions in terms of the scope for ETR in the EU.
In this context, ETR is defined as a shift in the burden of taxes, for instance on labour, to environmentally damaging activities, such as resource use or pollution. This has the dual effect of making environmentally damaging behaviour more expensive, and thereby deterring it, whilst also providing an opportunity to recycle the revenues raised back to support positive social and economic objectives, such as increasing employment.
One study examined the implications of distribution of revenues raised from ETR, while the other looked at opportunities for driving eco-innovation.
Distributing revenues
The first report, “Environmental tax reform in Europe: implications for income distribution”, kicks off with analysis of the literature review to compare environmental taxation approaches between Member States and the resulting distributional impacts. This reveals that the impacts of various environmental taxation measures – such as increased tax on energy and vehicle fuel consumption – adopted in different EU Member States vary across the EU, and are likely to impact unevenly on low income, high income, rural and urban households. It notes that in some Member States, such as the UK, energy and carbon taxes are strongly regressive, impacting significantly on lower income households.
The EU and its Member States must therefore strike a delicate balance between protecting low-income households from the negative impacts associated with some forms of environmental taxation, but without jeopardising efforts to encourage energy and resource efficiency. Key to this is the management of recycling the revenue raised to offset the negative effects on lower income households. This can result in significant wider social and economic benefits, such as increased employment levels.
Significant environmental benefits also accompany environmental taxation. Although the distribution of the benefits within society proved difficult to measure, the study suggests that low-income households tend to ultimately benefit more from environmental improvement, largely on the basis that they suffer poorer environmental conditions to begin with.
The literature review is followed by a modelling exercise, based on taxing energy and material inputs and using revenues raised to deliver a corresponding reduction in employers' social security contributions and income taxes. This demonstrates an overall benefit to all income groups, but the benefits were again variable across these groups. The report suggests that there is a real risk that ETR, if adopted without appropriate compensation to counteract the effects on lower income households, could be regressive, and there is therefore a real need to design any significant ETR with consideration to how redistribution of revenue is best implemented. The modelling exercise reiterates that both employment levels and the environment stand to benefit from ETR.
Driving eco-innovation
The second report, “Environmental tax reform in Europe: opportunities for eco-innovation” confirms the conclusion of a recent OECD study that environmental taxation encourages innovation, and is key to driving economic growth within environmental constraints.
The report notes that environmental regulation and price-based policy instruments, such as environmental taxes and investment subsidies, increases innovation and drives the commercialisation and uptake of environmental technologies. However, it finds that this varies over sectors and innovation types.
Factors such as the rate of tax and certainty of the rate of tax over a certain period have the potential to significantly affect the relative success of ETR in terms of fostering eco-innovation. The rate of tax must be high enough to drive the trend towards more environmentally friendly technologies and products, whilst there must also be certainty over the long term picture, so that investors have confidence in the future benefits of their investment.
The modelling exercise revealed that a small negative reduction in EU GDP could be expected, but that there would also be a positive impact on employment, with jobs created as innovation is driven by taxation. It therefore concluded that ETR could potentially deliver environmental objectives, create jobs and trigger eco-innovation, but noted that there would be winners and losers in this context, and that revenues raised should be used to help soften economic and social impacts.
Together the reports conclude that ETR is an effective component in a range of policy measures which the EU should continue to explore in pursuit of its 2020 targets. Whilst ETR must be strategically designed to share the income benefits and detriments between societal sectors, the wider economic and environmental benefits should not be underestimated.
The matters covered in this ebulletin are intended as a general overview and discussion of the subjects dealt with. They are not intended, and should not be used, as a substitute for taking legal advice in any specific situation. Semple Fraser LLP will accept no responsibility for any actions taken or not taken on the basis of this publication.
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