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Record Environment Agency packaging fines: law update

Practice group: Environment legal services

17 March 2008

A London based wine importer and distributor, Bibendem Limited, and a Telford based wine company, Western Wines Limited, have received considerable fines in cases that highlight the importance of registering and meeting requirements set by the Environment Agency in relation to waste and recycling.

Bibendem Limited pleaded guilty to failing to register with the Environment Agency as a producer of packaging, an failing to meet its requirements to recover and recycling packaging between 1998 and 2005. Western Wines Limited also pleaded guilty to nine charges relating to the Producer Responsibility Obligations (Packaging Waste) Regulations in 2003, 2004 and 2005.

The Regulations are designed to make companies evaluate the amount of packaging they use, and where possible, limit their consumption. All businesses with an annual turnover of over £2 million that handle more than 50 tonnes of packaging a year must be registered with the Environment Agency or compliance scheme. Each year such businesses must also provide evidence of payment for recovery and recycling of a specified proportion of packaging waste.

As the majority of companies are unable to take back their packaging, a system was set up whereby they purchase Packaging Recovery Notes (PRNs) or Packaging Export Recovery Notes (PERNs) to the value of their obligation. The money from these PRNs/PERNs is used by the reprocessors of the packaging to improve the efficiency of their process, to expand their facilities, and assist with the funding of domestic recycling schemes.

By not purchasing the correct amount of PRNs as required by the Regulations, it was calculated that Bibendem Limited had avoided costs of around £55,000 and Western Wines Limited had avoided costs of £185,059.

Both companies were praised by the Environment Agency for cooperating fully with the investigation and taking steps to ensure future compliance with the Regulations. However, Bibendem Limited was fined £70,000 which included the avoided costs from 1998 to 2005, and an additional fine of £15,000. Hendon Magistrates Court also ordered Bibendem Limited to pay £2,000 in costs to the Environment Agency and to pay compensation of £6,836 to the Environment Agency for lost registration fees. The fines imposed on Bibendem Limited set a record back in September 2007, but on 22 January 2008 the record was broken again when Western Wines Limited was fined £225,000 and ordered to pay costs of £3,230.57 and compensation of £2,486 to the Environment Agency.

Diane Gill, associate in the environmental practice comments: "The historic solution to waste has been to bury it, the focus is now being shifted to tackle the problem at source and businesses are under increasing pressure to clean up their act. The fines levied to the wine companies are the highest fines for any packaging offence in the UK to date and this supports the Environment Agency's stated aim to make businesses take greater responsibility for the packaging used in their operations and reduce the amount of packaging waste going to landfill."

These cases serve as reminders to many businesses that compliance with the Regulations is not only important for the environment, but also for the year-end bank balance.

If you are contemplating buying a company or business that is, or may be, subject to the packaging waste regime, you should consider requesting a packaging-specific warranty.

Legislation Update

The UK laws on packaging waste are based upon the Packaging Waste Directive (94/62/EC) which came into force in 1994. The 1994 Directive is principally implemented in Great Britain by the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 and the Packaging (Essential Requirements) Regulations 2003.

The overall requirement for the UK under the 1994 Directive is to recover at least 60% and recycle at least 55-80% of packaging by 31 December 2008. To achieve this, there has been an amendment to the legislation: the Producer Responsibility Obligations (Packaging Waste) (Amendment) Regulations 2008 which come into force on 14 March 2008.

The 2008 Regulations amend the 2007 Regulations by increasing the overall packaging waste recovery and recycling for Great Britain from:
• 68% to 72% in 2008
• 69% to 73% in 2009
• 70% to 74% in 2010

The increased targets have been implemented following the Government's realisation that the UK's 2008 target would not otherwise be met. The targets are also part of a climate change measure in line with the objectives of the 1994 Directive and the Landfill Directive (99/31/EC). The Government estimates that the revised packaging waste targets will save over eight million tonnes of carbon dioxide in 2008, with this saving increasing by more than 250,000 tonnes annually in 2009 and 2010.

Despite the fact that the packaging waste regime has been in force since 1997, many businesses do not realise that they have obligations under the legislation. Failure to comply with the new 2008 Regulations is a criminal offence, which can carry an unlimited fine if prosecuted in the County Court, as the wine companies mentioned above have discovered.