Overhaul in sight for the appeal of Compliance Assessment Reports (CARs)

  • Market Insight 16 January 2024 16 January 2024
  • UK & Europe

  • Casualty claims

Suez Recycling and Recovery UK Ltd, governed by an environmental permit at one of its sites in relation to odour emissions, received two Compliance Assessment Reports (CARs) in relation to two breaches of Suez’s odour control condition.

The case in a nutshell

The Environment Agency (EA) imposes an annual Subsistence Payment upon operators, the sum of which is determined through an assessment of the operator’s compliance the year prior. The two CARs attracted a high ‘Compliance Score’ which placed the plant in ‘Compliance Band E’. This resulted in a 50% increase in Suez’s Subsistence Payment. Thus, the CARs resulted in a direct financial implication for the operator.

Suez sought to challenge the CARs through Judicial Review, absent a route to appeal the merits of the CARs direct to the EA. Permission for the initial Judicial Review claim was refused as Suez had not exhausted the EA’s complaints procedure. The Judicial Review was allowed to proceed once Suez had subsequently exhausted the internal complaints procedure in place at the EA. Ultimately when the CARs were sought to be challenged on their merits by Suez, it was argued there was no re-evaluation appeal on the merits undertaken by the EA. It was argued this produced procedural unfairness with the adverse regulatory consequences and detriments CARs can have on businesses. 

The Judicial Review succeeded. The court held that the EA had failed to comply with its regulatory duty [1] to consider the provision of a right of appeal (or merits re-evaluation) against the adverse CARs. 

Implications for the industry

With the Regulators’ Code clearly stating all regulators should provide an impartial and clearly explained route to appeal against regulatory decisions, the court considered whether the EA had complied with its relevant duties to provide the right of appeal against an adverse score on a CAR. The decision is significant insofar as the EA will be required to consider whether to allow appeals/full merits evaluations against CARs moving forward. 

Ultimately the court found the EA had made a “material misdirection” as to the meaning of regulatory decisions and found that the two CARs issued to Suez constituted regulatory decisions. It was therefore found that the EA’s decision not to acknowledge a right to, or allow, an appeal by Suez was inconsistent with the Regulators’ Code – the EA should have considered and documented its decision accordingly. 

The decision is significant insofar as the EA will now be required to consider whether to allow appeals/full merits evaluations against CARs moving forward. The judgment is clear that: “there must be a post-CAR right to request merits re-evaluation; in other words, a merits appeal”. The ruling clearly creates an opportunity now for the EA to reconsider its position, and for a fair and transparent appeals process to be put into place. Undoubtedly for businesses operating in the waste sector this is a welcome development and something all will be closely monitoring. 

[1] Prescribed by s.22 Legislative and Regulatory Reform Act 2006 and the Regulators’ Code 2014


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