This April may bring back memories of 2020’s lockdown heatwave. Such unseasonable dry spells are fun for some, but they place great pressures on arable farmers when combined with the strict conditions and rigid time periods of water abstraction licences. Even minor breaches of these conditions, including abstracting just a day beyond the usual 31 March deadline, can have significant environmental consequences and can attract heavy penalties, financial and otherwise.
The law: criminal liability
Water abstraction is governed by sections 24 -72 of the Water Resources Act 1991. Section 24 states that a person will be guilty of a criminal offence if they abstract water from any source or supply (or cause or permit any other person to do so) unless in accordance with a licence. In procedural terms, that means that anyone found acting in contravention of this provision (or more likely, the organisation they work for) will face an Environment Agency (EA) investigation and possibly prosecution. Notwithstanding the criminal record which may follow and the associated negative publicity, the offending individual or company could also face substantial financial sanctions.
Although it does not refer directly to water abstraction, the Sentencing Council’s Definitive Guideline for Environmental Offences explains the factors taken into account when considering penalties. Offences are graded by separate ‘culpability’ and ‘harm’ scales. The culpability categories are Deliberate, Reckless, Negligent and Low. The harm scale runs from 1 to 4 with the highest, category 1, involving major adverse effect to air or water and category 4 applying where there is only a risk of minor, localised effects. Sanctions are set out on a sliding scale depending on the combination of culpability and harm and the size of the company (there is a different scale for individuals).
For example, the penalty range for medium sized companies (turnover between £10m - £50m) guilty of a deliberate, category 1 offence, is £170,000 to £1,000,000 with a starting point of £400,000. Even the lowest grade of offence has an upper limit of £10,000 – a high price to pay for what could just be an unintentional error by a farm hand…
Basic Payment Scheme (BPS) deductions
The financial implications don’t stop there – in addition to any EA investigation and subsequent prosecution, the Rural Payments Agency has jurisdiction to make deductions from the BPS, often without notice. Confusingly, different criteria apply when assessing the extent of any BPS penalty with ‘negligent’ non-compliance resulting in a deduction of 1 per cent - 5 per cent whereas ‘intentional’ offences can lead to the BPS being withheld in full (although 20 per cent is normal). These potentially very substantial deductions are often applied without the offender being given an opportunity to argue its case and, whilst decisions can be ‘queried’, the process can take several months.
Dealing with a breach
Licence breaches are difficult to police and may often go undetected. However, if an EA inspector turns up unannounced on a sunny April day, weeks after your abstraction period has expired, to find a pump chugging away on the banks of the dyke running through your land – what do you do?
1. Stop: this may seem obvious, but any sanctions will depend on the scale of harm done and the sooner the offending stops, the lower the potential environmental impact.
2. Lawyer up: inform your solicitor as soon as possible. No one likes legal fees but how you respond in the immediate aftermath of a breach could dramatically affect the scale of sanctions and you want to be sure you are advised appropriately.
3. Investigate: take early steps to establish the circumstances of the breach and consider measures to prevent recurrence, such as compliance training and disciplinary action for staff. Such actions will assist when it comes to mitigation.
4. Build your case: the EA will provide a report following their inspection and allow you the chance to respond. Because of the sliding scale nature of the sanctions, compiling as much mitigating evidence as possible will be crucial. Key factors might include:
- The status of the individual responsible: were they a ‘directing mind’ of the company or were they acting of their own volition?
- Meteorological factors: could it be shown that recent rainfall had increased the flow of the water source and therefore lessened the impact of the abstraction?
- Hydrological data: could it be shown that the quantities abstracted were minimal compared to the flow/capacity of the water source?
5. Settle: The EA may consider accepting an ‘enforcement undertaking’ in lieu of prosecution. These will ordinarily involve a donation to an environmental cause and the confirmation of steps taken to prevent recurrence. Proposed donations will likely need to be roughly equivalent to the potential criminal sanction and could therefore be substantial, yet preferable to a criminal record! It is important to take even the most minor, inadvertent breaches as seriously as the EA will.
If you require further information about anything covered in this briefing, please contact Tom Dobson or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, April 2021