The Environment Agency has used its new civil sanctions powers for righting environmental wrongs 27 times to date (ENDS Report, January 2012). Offenders may return to compliance and repair environmental damage in return for an end to action against them.

Sanctions have so far been applied almost entirely for packaging offences. But the environmental damage associated with failing to recover or recycle packaging is intangible, and the regulator has allowed offenders to make compensatory ‘voluntary donations’ to green causes.

More than £250,000 has been donated to local wildlife trusts, charities and other organisations, but £69,500 of this has gone to councils.

One can imagine a scenario that allows the suspicion of corrupt practice and damages public confidence in civil sanctions.

Consider a company regulated under the local air pollution prevention and control regime, such as a pet food factory, quarry or metal foundry. The company has applied to the council for planning permission to expand and for a consequent change to its environmental permit. Local residents are against the plans, fearing nuisance and disruption.

Vandalism at the company’s oil store causes a significant spill, leading to action by the agency. Rather than prosecute, agency officers decide to issue a civil sanction. An enforcement undertaking is agreed, involving a donation of £50,000 to a council project to improve a park affected by the spill. This project would not have gone ahead without the civil sanction funding.

The project would bring clear public benefit. But there is little to stop the donation being seen as an implicit bribe for the council to grant the extension and the revised permit, against public wishes.

Such practice could compromise the independence of council regulation. “This is potentially an important issue… and doesn’t sound like a very savoury outcome,” said Professor Richard Macrory, ENDS’ legal commentator.

The situation might be avoided if draft undertakings under the civil sanctions regime were subject to public consultation. But the system deliberately avoids this measure because it is seen as an unwarranted delay.

One of the principles enshrined in Professor Macrory’s 2006 report, Regulatory justice: making sanctions effective (ENDS Report, December 2006), was that sanctions should “avoid perverse financial incentives for regulators that might influence their choice of sanctions”.

As a result, the subsequent Regulatory Enforcement and Sanctions Act 2008 required revenues from civil penalties to go to central government funds, rather than to the imposing regulator.

The possibility that revenues from enforcement undertakings could go to another arm of government does not appear to have been foreseen.

Furthermore, schedule 4 of the Environmental Civil Sanctions (England) Order 2010 does not specifically mention whether donations to parties not directly affected by an offence are permissible under enforcement undertakings.

Clause 2(1)(d) states that “where restoration of the harm arising from the offence is not possible, action that will secure equivalent benefit or improvement to the environment” must be specified.

The lack of a direct mandate could mean such donations are illegal, said Professor Macrory. “But I agree that we are in a learning process at present. I would not want to be over-prescriptive, as the idea is that a company should come up with its own enforcement undertaking.”

He added: “In the future, guidance may need to be developed on this subject. Any donations must go to a registered charity, at least.”

But Richard Kimblin, barrister at No 5 Chambers and chair of the UK Environmental Law Association’s litigation working party, believes such concerns are “over-cooked”. “I cannot think of any legal bar to an [enforcement undertaking] resulting in a payment to a local authority,” he said.

Furthermore, councils are familiar with accepting business funds that are hypothecated for particular purposes, such as through ‘section 106 agreements’ under the planning regime. Councils, the courts and the government are also alive to the actual, or perceived, risk of buying permissions, said Mr Kimblin.

“In my view, the necessary guidance is in place to avoid the scenario of undue influence.”

An Environment Agency press officer said: “Guidelines for assessing offers received are already in place to ensure charitable donations are appropriate. These donations are carefully scrutinised at both local and national level.

“The three donations to councils have been specifically to fund recycling campaigns and are considered an appropriate means of offsetting the additional waste generated by the companies who were in breach of the regulations,” she said.

Gareth Simkins covers pollution and environmental regulation for the ENDS Report