Scotland gets ahead on new water environment controls

The biggest overhaul of Scotland's water environment law in more than three decades was kicked off in April with a consultation paper from the Scottish Executive.1 Its cornerstone is a new three-tier system of risk-based controls on potentially damaging activities. There will be a several-fold expansion in the number of activities requiring some form of authorisation. Scotland is again ahead of the rest of the UK in implementing the EU water framework Directive - and the Executive's argument for doing so early is starkly at odds with Whitehall's idea of what best serves national competitiveness.

Scotland was well ahead of the rest of the UK in introducing initial enabling legislation to transpose the water framework Directive, with the Water Environment and Water Services (Scotland) Act 2003 being passed in January last year (ENDS Report 337, pp 35-36 ).

The new "controlled activities" regulations on which the Executive is now consulting will be the next major step in the implementation process. To be made under the 2003 Act, their main elements are the replacement of the existing system of discharge consents and the extension of regulatory controls to abstractions and impoundments, and to building, river engineering and other works liable to affect the physical and ecological character of water bodies.

All these disparate activities will be regulated by means of a single unified system of authorisations. As previously announced, the regime will have three tiers - simple registrations, registrations backed up by general binding rules (GBRs), and licences - with the level of control in a particular case being decided after a risk assessment.

The new regime will entail a massive expansion in the scope of regulation - all the greater because, unlike in England and Wales, there has been almost no control over abstractions and impoundments in Scotland until now.

There are an estimated 40-50,000 abstractions and 5-10,000 impoundments in Scotland. Not all of these will come under the new regime - but around half will do so, in addition to about 100,000 point source discharges and smaller numbers of building and engineering works.

A breakdown of the activities expected to be subject to the new rules, as set out in the Executive's regulatory impact assessment, is shown in Table 1.

At more than 125,000, they greatly exceed the activities currently regulated by the Scottish Environment Protection Agency - exclusively discharge consents, and numbering 30,000. In fact, many of the latter are probably dormant, and there are only 8,600 consents which attract cost recovery charges, and even fewer are monitored by SEPA.

To confuse the picture, the consultation paper gives somewhat different figures, suggesting that 24,000 activities will be subject to GBRs and 10,000 to licences. The regulatory impact assessment gives figures of 15,000 and 11,500 or more, respectively.

Whatever the exact numbers, SEPA will need a substantial increase in resources to handle the new workload. The regulatory assessment suggests that the number of operational staff in water regulation will have to increase from the present 75 to a peak of more than 160 as the new system is phased in.

That may not be all. Two further sets of regulations are still being developed. One will deal with the thorny subject of diffuse pollution from farming, forestry and urban runoff. A separate regulatory system for these sources is to be "developed" "prior to" October 2005.

Also to be developed during the coming year are regulations under section 22 of the 2003 Act to enable SEPA or other authorities to carry out, or require to be carried out, remedial and restoration works for the purpose of meeting the water framework Directive's environmental objectives.

The new authorisation regime will be phased in in two tranches. For existing discharges deemed to pose a higher risk - those regulated under the Control of Pollution Act 1974 for which charges are paid to SEPA - applications for authorisation will have to be lodged between 1 April and 31 July 2005. For other, lower-risk consented discharges, the application window will be April 2006 to March 2007. The paper does not explain when authorisations will have to be sought for discharges which are not currently consented.

Identical dates will apply to abstractions and impoundments, with the split between tranches one and two being determined by quantitative thresholds. For building and engineering works, authorisation will have to be sought where the works begin after 1 December 2005.

The transition to new authorisations will not have a practical impact on existing consented discharges initially. Their current consent conditions will be incorporated in their new authorisations, and will apply until December 2012 - when measures required to ensure that the water framework Directive's environmental objectives are met must be made operational.

For the period beyond 2012, new conditions will be imposed by SEPA if they are needed to achieve the Directive's objectives.

These pre- and post-2012 requirements will be set by SEPA over the five years from 2005 as a review of existing consents is carried out, with discharges posing the biggest impacts being reviewed first.

The Executive's intention appears to be to give dischargers at least 2-3 years before the December 2012 deadline to plan and execute any improved controls ordered by SEPA.

The paper is clear on one point: that investments needed to meet the Directive's requirements "would have to be delivered so that the construction of mitigation measures is complete by December 2012."

This approach contrasts with that in Whitehall, which appears set on a course that will delay many investment decisions until 2010 or later - making it impossible to implement tighter effluent controls by the end of 2012, and even putting at risk the achievement of the Directive's environmental objectives by the 2015 deadline.

Whitehall has opted for delay on the grounds that it wants to avoid "gold plating" the Directive, which these days is synonymous with damage to Britain's competitiveness.

The Scottish Executive takes a very different line on the matter. It points out that the Directive will, for the first time, lead to the synchronisation of investment planning in the water sector across Europe. The result will be peaks in demand for consultants and contractors towards the end of each six-year cycle under the Directive - and with them higher prices.

In Scotland, however, the aim will be to begin issuing Directive-compliant authorisations from the end of 2005, with discharges likely to face the highest costs being tackled first to allow ample time for the necessary investments. This, the paper notes, "will provide Scottish industry with a competitive advantage compared to the rest of the UK and potentially the rest of Europe."

The Scottish Executive has also parted company with Whitehall over statutory restrictions on regulators' freedom to review and amend discharge consents.

In England and Wales, the Conservatives extended the statutory prohibition on amending consents within two years of their being issued or amended to four years in 1995. It was claimed that this would provide business with greater certainty, although no evidence was ever provided that any companies had had their consents chopped and changed.

Labour has defended the four-year bar with equal zeal. Rejecting attempts to have it scrapped when the Water Act 2003 was passing through Parliament, Environment Minister Lord Whitty said it gave business "greater certainty in investment planning".

The Environment Agency, on the other hand, regards it as a "significant and unnecessary constraint on its ability to deliver [water framework Directive] obligations," and one that is inconsistent with other regulatory regimes such as waste licensing and IPPC.

The four-year moratorium can only be lifted through a cumbersome procedure which has never been used - though, ironically, its removal may well become more necessary in England and Wales because of the compressed timetable for upgrading discharges which Government policy seems set to produce than in Scotland.

Under the draft regulations, there will be no statutory restrictions on SEPA either reviewing or amending authorisations. It will be under a duty to "periodically review" authorisations and will have the power to do so "at any time". It may also vary an authorisation or the type of authorisation where it considers this "necessary or appropriate" as the result of a review or a request by another authority.

According to the Executive, authorisations will normally be reviewed every six years, in line with the six-year river basin planning cycle. But the power to review them at any time is needed "to ensure that significant changes to pressures on the water environment can be addressed in a timely manner." Guidance will be issued on how the power should be used.

Under the draft regulations, the first step when an application for authorisation is submitted will be for SEPA to conduct a risk assessment of the activity concerned in the particular locality, and decide whether the application falls in the appropriate tier of control.

Curiously, the Executive evidently does not intend to set quantitative thresholds and criteria for the three tiers in the regulations. There will be statutory thresholds for the various activities covered by GBRs, and from these it will be possible to infer which activities will generally be subject to registration alone, though not those which will require a licence.

The consultation paper does, however, contain illustrative, non-exhaustive lists of the activities which will fall into the three tiers. The listing for discharges is shown in Table 2.

GBRs are set out for 20 activities in the draft regulations, and others will be added later for further activities and, possibly, for specific industries. They will require higher technical standards of control, monitoring and maintenance than probably prevails at present for many operators. Numerical discharge limits, for instance, will apply to all types of sewage treatment plant covered by GBRs, among other requirements.

One unexpected decision is that oil storage facilities will be covered by GBRs rather than, as proposed last year to align Scotland with England, by regulations (ENDS Report 339, p 44 ). The requirements will come into force on an accelerated timetable, with existing facilities within 10 metres of surface waters or 50 metres of boreholes being subject to GBRs from January 2006, and all other existing stores following suit in January 2008.

The move to cover oil stores by GBRs is significant because it will require them to be registered - whereas SEPA would not have known their location under the previous proposals. This could mean a great deal of paperwork, since last year's consultation paper suggested that there are 102,000 oil stores in the non-domestic market - seven times the total number of activities identified as falling within the GBR regime by the Executive's regulatory impact assessment.

However, the numbers may come down because the new paper talks vaguely about exempting "certain" oil stores from GBRs. On the other hand, some facilities will now come into the regime - notably those storing vegetable oil and oil from plants, in apparent anticipation of growth in biofuels production, distribution and use.

The authorisation provisions come with the usual paraphernalia. SEPA will have 28 days to determine applications for registration and four months to determine those for GBR registrations and licences, unless a longer period is agreed with the applicant. Failure to make a decision within those periods will mean that the application is deemed refused, forcing the applicant to appeal to Ministers.

SEPA will have the power to impose authorisations where an activity is being carried out without consent. It will also be able to issue time-limited authorisations, though the Executive says that there is no intention to make these the norm.

Other new features of the draft regulations include:

  • Responsible person: The proposal breaks new ground by requiring applicants seeking a GBR registration or licence to nominate a person "who shall secure compliance with the terms of the authorisation." Unless this is done SEPA will be barred from granting the authorisation.

    The innovation may raise concerns about the personal liability of the responsible person for any offences.

  • Surrender: The draft regulations introduce new provisions in UK water law governing the surrender of authorisations.

    The Executive has not attempted to justify them except to observe that the new process "is very similar to that of other environmental legislation." True enough - such provisions were introduced ten years ago for waste licences, and now apply to IPPC permits - but the case for extending them to all activities affecting the water environment does not appear to have been made.

    Where an authorised activity has ceased or is about to do so, the "responsible person" will have to make a surrender application to SEPA, which will need to satisfy itself that appropriate steps have been taken to avoid any risk of harm to the water environment and leave it, "and any land affected by it", in a state which permits the achievement of the water framework Directive's objectives.

    SEPA will be able to require the applicant to submit a report on the condition of the relevant part of the water environment and any land affected by it, as well as any further information it requires to determine the application.

    The regulations allow SEPA three months to determine a surrender application. If no decision is made in that time, the application will be deemed accepted unless a longer period has been agreed with the applicant.

    The consequences of SEPA refusing an application are not spelled out, but it will have an enhanced array of enforcement powers to minimise risks to the aquatic environment.

  • Enforcement: SEPA will gain several new enforcement mechanisms.

    At present, the Agency can serve an anti-pollution works notice requiring damage caused or threatened to a water body to be remedied. Drawing on other environmental regimes, the Executive now intends to provide it with powers to serve enforcement notices setting out how a breach of an authorisation must be remedied, and suspension notices requiring an activity to cease where it poses a risk of serious harm to the water environment.

    To back up these new powers, the regulations provide for SEPA to apply to the courts for an injunction where it believes that prosecution is likely to provide an ineffectual remedy against someone who has failed to comply with a notice. This power was first introduced by the Environmental Protection Act 1990 for the old IPC regime.

    SEPA will also be given a new power to revoke authorisations. The draft regulations do not spell out the grounds on which it may do so, but the consultation paper says that the power will be used only in exceptional circumstances, where an operator was not complying with an authorisation and had already been the subject of enforcement action and prosecution. The paper adds that, alternatively, the power could be vested in Ministers.

  • Offences and penalties: The draft regulations list 18 offences which are in line with existing environmental law.

    However, they make three innovations as to penalties. For the first time, courts will expressly be allowed to impose daily fines for as long as an offence is continued after a conviction - at £50-200 in the lower courts, and an unlimited sum in the upper courts.

    Secondly, higher courts will be able to impose a prison sentence of up to five years. The norm until now has been two years.

    Lastly, the courts will, in addition to or instead of imposing a punishment, be able to order an offender who has breached an authorisation or failed to comply with an enforcement or suspension notice to remedy those matters within a set time.

  • Defences: Two defences are provided in relation to any discharges which would otherwise be unlawful. First, it will be legal to make such a discharge where it is due to an act or omission and made "in accordance with" permits under the waste and industry regulation regimes operated by SEPA.

    Secondly, discharges would be lawful "if the provisions of Article 4(6) of the [water framework] Directive apply."

    Article 4(6) sets out the circumstances in which temporary deterioration in the status of water bodies will not be a breach of the Directive. These are circumstances "which are exceptional or could not reasonably have been foreseen, in particular extreme floods and prolonged droughts, or....circumstances due to accidents which could not reasonably have been foreseen." Various conditions have to be met before such cases are treated as permissible breaches.

    Referring to Article 4(6), which relates to water bodies, in a regulation intended to provide defences for individual dischargers is an odd way for the Executive to proceed.

    To the extent that the proposed defence will ever be invoked in such cases, it may be seen as weakening current standards, since existing water pollution law has a standard close to absolute liability, and does not allow a foreseeability defence.

    The regulations also contain provisions on public registers, appeals, cost recovery charging schemes, discharges to groundwater, and a few other matters.

    In passing, the paper observes that "in the longer term the implementation of the proposed river basin planning process may require a new type of environmental appeals system to be introduced, perhaps more akin to that in place for the planning system." Proposals for change in this area may also emerge from a current Executive review of environmental appeals processes.

    Clearly, some significant changes in water law are brewing in Scotland. The big question for England and Wales is whether the Government will stick in its anti-gold plating vein or take the opportunity to make innovations of its own. If it does not, water legislation in the constituent parts of the UK will drift a fair way apart.