The Polluter Pays: record-breaking fines for water companies

Part 1: Recent fines and the law relating to relating to water pollution

This Article is part of a 3-part series which will look at the following:

Part 1- Recent fines and the law relating to water pollution

Part 2- Criminal and civil penalties for water pollution

Part 3- The future regulation of water pollution and conclusion

Introduction

It is a long-established principle in environmental law that the polluter should pay for damage caused by their unlawful pollution. This principle serves both as a deterrent (before environmental damage occurs) and as a restorative measure (where harm has occurred).

The Environment Agency (EA) have recently flexed their regulatory muscles regarding this principle, prosecuting water companies for illegal water discharges and contravention of environmental permit conditions resulting in record-breaking fines issued by the Court:

South West Water

• On 26th April 2023 South West Water (SWW) were fined £2.15m

• Ordered to pay £280,000 costs; and

• a victim surcharge of £170.

Anglian Water

• On 27th April 2023, the SWW fine was quickly surpassed as Anglian Water (AW) were fined £2.65m

• Ordered to pay £16,520.09 costs; and

• a victim surcharge of £170.

Thames Water

• In a press release on 4th July 2023, the EA confirmed Thames Water (TW) were fined £3.34m at Lewes Crown Court; and

• Ordered to pay £128,961.05 costs.

• This brought the total fines payable by Thames Water to £35.7m (between 2017- 2023) leading to questions about its commercial viability due to mounting debt.

Since 2015, the EA has brought more than 56 prosecutions against water and sewerage companies and secured fines of over £141m. Alan Lovell (Chair of the Environment Agency) stated in relation to the SWW fine:

“We welcome this sentence. Serious pollution is a serious crime- and we have been clear that the polluter must pay…. The Environment Agency will pursue any water company that fails to uphold the law or protect nature and will continue to press for the strongest possible penalties”.

The facts of the cases

I. South West Water- pleaded guilty to a total of 13 offences, including 6 charges of illegal water discharge and 7 charges of contravention of environmental permit conditions. The offences took place over a 4-year period. On sentence, the Court heard how SWW had caused harmful chemicals to escape from their sites on several occasions. This resulted in significant environmental damage, including the killing of thousands of fish, some of which were protected species.

On other occasions, raw sewage was pumped into a river for more than 12 hours despite alarm systems being in place which should have prevented this. During another incident, sewage was illegally discharged for more than 35 hours into a stream leading to a beach at the Watergate Bay area. Effluent from another SWW sewage treatment works was discharged into a Site of Special Scientific Interest (SSSI) which was also within a Special Area of Conservation (SAC).

ii. Anglian Water- were charged with discharging untreated sewage into the North Sea contrary to Regulation 38(1)(a) and Regulation 12(1)(b) of the Environmental Permitting (England and Wales) Regulations 2016. This was in contravention of AW’s EA permit which allowed discharges only during storm conditions. The charges were brought following a routine inspection carried out by the EA. The Court referred to previous offences committed by AW and reflected this fact in the level of the fine. Data was available to indicate storm flows were occurring in dry weather which should have prompted an investigation by AW. There was also no alarm in place to indicate regular storm overflow operation and prompt further investigation by AW.

iii. Thames Water- were prosecuted and pleaded guilty to 4 separate breaches of the Environmental Permitting (England and Wales) Regulations 2016 after millions of litres of raw sewage was discharged into 2 rivers close to Gatwick Airport in October 2017. The illegal discharge occurred following the malfunction of a pump at TW sewage treatment works. This resulted in a storm lagoon being filled with untreated sewage and overflowing into the 2 rivers, despite there being no significant rainfall. The EA described the incident as having a ‘major environmental impact’ which resulted in 1,400 fish recorded dead, though it was estimated the true figure was far higher. Alarms were in place to warn of the malfunction, but TW did not respond to these in what was described as a “reckless failure” not to put in place systems to avoid such pollution. In a damning judgment, Judge Christine Laing KC (Deputy Lieutenant for West Sussex) found that TW had ‘deliberately misled the EA during their investigation’.

The Government has instructed water companies to install monitors on all storm overflows by the end of this year. However, the most recent case highlights that this will not be enough, and that action needs to be taken where alarms are sounded with the correct systems and procedures to tackle breaches of the Regulations put in place and adhered to.

The Law - Environmental Permitting (England and Wales) Regulations 2016

The main offences relating to water pollution are contained in the Environmental Permitting (England and Wales) Regulations 2016 (EPR 2016) notably regulation 12(1) and 38(1). The offences are strict liability offences, meaning proof of intention to commit the offence is not required. Causing such an offence will suffice. The offences are usually prosecuted by the EA, as in the recent cases mentioned above.

Regulation 12(1) states a person must not, unless authorised by an environmental permit:

• operate a regulated facility such as sewerage treatment works; or

• cause or knowingly permit a water discharge activity or groundwater activity.

The permit must be complied with in full, including all conditions of the permit, otherwise an offence may be committed.

Contravention is an offence under Regulation 38(1). In particular, it is an offence to:

• cause or knowingly permit the discharge of any poisonous, noxious or polluting matter, waste matter, trade effluent or sewage effluent to surface water (water discharge activity), or

• cause or knowingly permit the discharge of a pollutant or other discharge that might lead to the input of a pollutant to groundwater (groundwater activity);

unless in accordance with an environment permit or if the discharge is exempt.

A Regulation 38 offence includes any waste operation which does not comply with the criteria of a relevant exemption.