New EA enforcement and sanctions guidance for CRC, EU ETS and CCAs

Practical Law UK Legal Update 3-594-0486 (Approx. 6 pages)

New EA enforcement and sanctions guidance for CRC, EU ETS and CCAs

by Practical Law Environment

Background: consultation on changes to the EA's Enforcement and Sanctions Guidance

In January 2014, the Environment Agency (EA) launched a consultation on its proposed approach to enforcement of the three climate change regimes it is responsible for enforcing:

EU Emissions Trading Scheme (EU ETS).
CRC Energy Efficiency Scheme (CRC).
Climate change agreements (CCAs).

The consultation closed in March 2014.

The EA proposed to set out the guidance on enforcement of the three climate change regimes in an annex to the EA's general Enforcement and Sanctions Guidance. The EA considered that specific guidance was needed for the enforcement of the EU ETS, CRC and CCAs, in particular because civil penalties under those regimes are distinct from civil penalties under the Regulatory Enforcement and Sanctions Act 2008 (RESA 2008). For more information on the consultation, see Legal update, Environment Agency consults on enforcement and sanctions guidance for CRC, EU ETS and CCAs.

For more information on environmental enforcement and sanctions in general, see:

For more information in general about the three climate change regimes, see:

Response to consultation and revised Enforcement and Sanctions Guidance

Response to consultation

In December 2014, the EA published its response to the consultation, in which it explains what changes it has made to the version of the guidance it consulted on in January to March 2014.

New Annex 4

The response to the consultation is accompanied by a revised version of the EA's Enforcement and Sanctions Guidance, which now contains a new Annex 4 relating to the three climate change regimes the EA is responsible for enforcing in England and Wales:

EU ETS.
CRC.
CCAs.

Annex 4 to the Guidance explains:

Which breaches are covered by the Guidance.
How the EA will calculate the level of the civil penalties.
The requirements under each regime for publishing any civil penalties that the EA imposes (see Publication of penalties below).

Annex 4 is divided into:

Section A: General principles.
Section B: EU Emissions Trading Scheme.
Section C: CRC Energy Efficiency Scheme.
Section D: Climate Change Agreements.

Annex 4 also explains (in Section A) that the general guidance applicable to the EU ETS, CRC and CCAs will also be applied to enforcement of the Energy Savings Opportunity Scheme (ESOS) (see ESOS below).

Public interest factors

In considering whether to exercise its discretion to enforce a breach of one of the three climate change regimes, the EA will take into account a number of public interest factors, including financial implications, whether there has been any previous non-compliance and the attitude of the offender.

In particular, the EA will not normally impose financial penalties on individuals or corporate entities that are subject to an insolvency procedure and action taken by an organisation to correct its non-compliance will be taken into account.

Procedure

The EA will first serve a "notice of intent" giving the person an opportunity to make representations within a reasonable time (normally 28 calendar days).

Where the EA has decided to impose a penalty, it will provide a summary of the reasons for doing so and notify the person of their right to appeal.

Failure to pay a civil penalty is recoverable as a civil debt, and in the case of a failure to pay a CCA penalty, the CCA may also be terminated.

Publication of penalties

Unlike some of the other environmental regimes, there are no requirements to have public registers under the EU ETS, CRC and CCA regimes.

However, the EA has decided that when it imposes a penalty under one of these three regimes, it will normally publish information (for a period of 12 months) about the:

Person on whom the penalty was imposed.
Legal requirements that were not complied with.
Amount of the penalty.

In addition, when the EA revokes an EU ETS permit or terminates a CCA, it will generally also publish information about this.

The EA will not publish information about a penalty until any appeal has been determined or the time for appealing has expired.

Details of penalties will be published on the gov.uk website. The EA does not consider it appropriate to issue a press release each time it publishes a penalty, unless there is sufficient justification in a particular case.

CRC

Annex 4 to the Guidance applies to breaches of both phases of the CRC. However, in respect of the first phase, the EA is also required to have regard to the Department of Energy and Climate Change's Statutory Guidance: Civil Penalties under the CRC Energy Efficiency Order 2010 (April 2011).

Annex 4 also clarifies the EA's treatment of new entrants and the discretionary criteria it will apply when considering CRC reporting errors.

For more information on the enforcement of CRC breaches, see Practice note, CRC Energy Efficiency Scheme: enforcement and penalties.

ESOS

The Guidance states (in Section A.2) that the EA has decided to apply the same general principles in Annex 4 (in particular, the public interest factors) to its enforcement of ESOS. ESOS requires larger companies and non-public sector organisations in the UK to calculate their total energy consumption, carry out energy audits and identify where energy savings can be made. The scheme came into force on 17 July 2014.

The EA states in its response to the consultation (response to Question 3) that it will consult on the specific details of how it will enforce ESOS in due course. In the meantime, in the interests of consistency and transparency, the EA will apply the same general principles in Annex 4 to its enforcement of ESOS.

The reason why the EA did not include ESOS in the consultation on the revised Enforcement and Sanctions Guidance is because ESOS came into force after the consultation closed in March 2014.

For more information on ESOS in general, see Practice note, Energy Savings Opportunity Scheme (ESOS).

Comment

In a separate but related development, the EA will also be given the power, in 2015, to accept enforcement undertakings (but not to impose other civil sanctions) under RESA 2008 for certain breaches under the Environmental Permitting regime (see Legal update, Environmental Permitting civil sanctions: draft regulations introduce enforcement undertakings in England).

For more information on enforcement of RESA 2008 civil penalties by the EA, see:

Sources

End of Document

Also Found In

Resource ID 3-594-0486

Published on 30-Dec-2014

Resource Type Legal update: archive

Jurisdictions

England
UK
Wales