Brexit and Environmental Law

Brexit and Environmental Law Seminar

Speaker: Aidan Thomson

Good afternoon everyone. Welcome to today’s seminar on Brexit and Environmental Law. Welcome from me, Aidan Thomson and the rest of the Environment team here at BCLP, Isabelle Laborde and Sam Levy.  We are going to be speaking for about an hour today.  If anyone has got any questions, you are most welcomed to raise them, you will see the facility for asking those.  We will try and answer as many of those as we possibly can at the end of the session.  But let’s get straight down to it and get on with it.  And start talking about Brexit and Environmental Law and what to expect going forward.

Well, almost unseen, due obliviously to the dense fog of COVID, the Brexit transition period came to an end a month ago.  We have left the EU and its single market.  And our future relationship is going to be governed by the UK, EU, Trade and Cooperation Agreement which was signed at the end of last year.

Now what does all this mean for Environmental law in the UK?

The general impression has always been that Environmental Law was run out of Brussels, so having left the EU we can expect lots of changes to streamline some areas bolstered certain others, etcetera etcetera.  Is that right?  Well, hold on, the actual position is, is actually more complex and that’s what we are going to try and dissect today.  Starting with a little bit of a history lesson, because before the EU joined the EU, the body of law called Environmental Law was very much more limited.  And it was the same in many other countries too; you could write it on the back of a postage stamp.  It was so small, but we joined the EU at a time when the EU was just starting to get going with its’ environmental agenda.  Driven by the European Commission we started getting lots of laws being passed starting with weight and eventually covering a great many areas of the environment.  Now, the laws that were passed, were essentially of two types.

Directives, which set out the result that the EU wants the member state to achieve, but leaves it up to the member state on how to pass an act of Parliament; which details the law that brings about the results mandated by the directive. And businesses in the member state aren’t subject to the directive, rather they are just subjects to the domestic implementing law.  So for example, the EU Energy Efficiency directive requires companies to be subject to annual audits or energy audits periodically.  And we implemented this by introducing the E-Source Regulations which setup the e-source scheme and what all of that entails.  And the Packaging and Packaging Waste Directive as another directive, this one required a certain amount of waste to be collected and returned in member states every year; leaving it up to member states how that was going to be achieved.  And that gave rise to our packaging waste regulations and the packaging waste system of PRNs etcetera that many people will now be familiar with.  Now regulations are a different beast entirely.  They apply directly to businesses in all member states from the moment they come into force; there is no domestic implementing law involved.  So for example, there is the REACH Regulation on Chemical Registration Evaluation and Authorisation.  It applies to companies directly without further ado.  Up and ready so to speak, to use a Brexit expression.  All the UK has to do is work out who is going to enforce it within its territory.

Now, it’s not true to say that the EU legislated in every environmental area.  There are lots of areas that were not covered by the EU or only very lightly indeed.  And in those areas, it was up to the member state to pass their own laws or not, as they saw fit without EU oversight.  Now the sorts of areas, the glaring areas that I am talking about are as follows:

• The first is the area of Civil and Regulatory Liability. This is a huge area but only two directives really encroach on it. And their requirements only really duplicate what the UK had already legislated for on its own account before the EU regulations come along.
• Secondly, Environmental Regulators, say for the European Chemicals Agency, none of our regulators, so the Environment Agency, Natural England, Health and Safety Executive etcetera, have anything to do with EU law. They are all bodies that we effectively dreamt up ourselves, without having been required to do so by the EU. 
• Thirdly, there are Environmental Regulatory processes. In particular here, I am talking about the Environmental Permitting System, through which all environmentally sensitive industries are policed in this country.  The system appeals and grants variations, revocations of permits.  It’s entirely of our own making.  No one from the EU told us to set up that system. 
• And finally, the final area, big area that the EU doesn’t really have any say over, or hasn’t really had any say over, is how we enforce Environmental Regulation. The Environment Agency enforcement policies for example, the system of fines that we have in this country, the system of civil sanctions, that’s all really entirely down to the UK.  They haven’t had any EU inputs over the year at all. 

And in other areas, our law is shaped not by international treaty obligations that we have signed as the UK; not necessarily by the EU.  Although, the EU might itself signed up to those obligations too and issued its own regulations and directives to man the states.  Examples of this sort of thing include our commitments under the Argus Convention, which is a thing in this country that gave rise to all of the laws requiring access to public bodies’ environmental information.  And the laws that give individuals enhanced rights to challenge a government administrative decision making at little or no cost.  Those are, not really environmental, they’re not really EU-based, although the EU did pass some regulations in this area.  But a fundamental requirement on us is an international obligation due to the Argus Convention. 

Climate change is a pretty complicated one. Where did all of those laws come from?  As I say it’s very complicated.  And things like the Paris Agreement, which contains all of the big overarching commitments to reduce greenhouse gas emissions.  They are international agreements that we’re all a direct, we, we at the UK are a direct party to and have to abide by.  The EU is also a party and has passed lots of legislation that we have to abide or had to abide by too; things like the EU Emissions Trading Scheme for heavy emitters and airlines and directives on energy efficiency in buildings.  Though we have also gone in the field of climate change, we’ve gone the extra mile too and been quite proactive in our climate change law.  A lot of it, like our Climate Change Act, goes above and beyond what we were required to do under EU law or international law. 

Now, in the run-up to us leaving the EU a year ago, everyone was thinking about what implications it would have for environmental law.  And now we can start to see just about where things are headed.

Let’s break it down.

The first easy bit, as I’ve said before, there are lots of areas where EU Environmental Law never really encroached to begin with; areas like let’s say Civil and Regulatory Liability, regulated, the regulatory processes, and environmental enforcement.  There is no reason to suppose that these things will change.  They were not previously underpinned by EU directives and the EU regulations if they were not fit for purpose, you’ve thought we might have had a stab at fixing them already.  So the EA, with all of its little characteristics, will still be the same.  The Environmental Permitting System, the logistics of that, with all of its little complexities, that will be the same.  Pollution clean-up requirements under things like Part 2a of the Environmental Protection Act, they will all be the same.  The same goes for the system of fines and penalties.  The tort system of compensation for personal injury and damage to property due to environmental pollution, all of that is likely to not be changed. 

Secondly, as I’ve said before, there are some areas where our law is shaped by our international obligations.  These obligations still remain regardless of the EU law position.  So our laws in these areas again aren’t going to be first in the queue to change.  So things like the access to environmental information, challenge to environmental decision making, those things are probably around for the foreseeable future. 

Third, what about the areas where the EU has regulated?  Let’s just think for a moment where those areas are.  I have talked a lot so far about that the EU has not necessarily had a great impact on.  What about the areas where it has?  Well it is hard to give a list or even summarise, but generally speaking the areas that the EU has been involved with over the years are set out in a slid there.  It’s been very keen to control the environmental safety of what can go on the market for sale through the directive; like the directives on the restriction on powder substances and electrical equipment.  And the chemicals in relation to chemicals going on the market, that is under the REACH Regulation.  The EU has been very, very prolific in the area of waste management.  In particular, how landfills are run, how sewage is dealt with, producer responsibility for packaging waste, end of life vehicles, batteries, waste electrical and electronic equipment.  It has been very prolific as well in controlling industrial processes using something called “Best Available Techniques.”  It has been very keen on maintaining high standards and passing legislation in relation to getting people to sign up to high standards of water quality and air quality, preserving habitats and biodiversity, controlling new lands development.  And also it has done its fair share on climate change.  Now, the EU directives and regulations in these areas have created, I suppose, a heavy mix of obligations.  Some are applying directly to operators and some are applying to regulators and the way that they exercise their functions. 

Now, on leaving the EU, in the absence of any special agreement, the EU’s directly applicable  regulations, they automatically cease to apply.  And our environmental – and our domestic laws implementing the EU’s directives that I spoke about earlier, they fall away.  But letting that happen left unchecked, just leads to difficulties.  It would be a huge Environmental Law vacuum if that happened, without us thinking about filling that vacuum.  And even if we, and that sort of thing can’t be done quickly.  In any event, I suppose, we know that the EU derived Environmental Law is largely popular, largely pretty sound, and we knew that, even if we did a trade deal, we may have to sort of stick with the old EU Environmental Law anyway.  So what’s effectively happened, is for the EU law as it stood on leaving, to be retained in the UK law.  We have essentially kept all of our domestic legislation implementing the directives, after a few administrative tweaks, changing euro signs to pound signs and things like that.  And we have introduced legislation to replace the EU regulations that no longer directly apply in exactly the same terms.  So this means there’s going to be no Environmental Law vacuum at the moment and we’re in theory, free to move away from the EU law at our own pace in the months and years ahead.  Now it’s not plain sailing because in some areas, the retaining of EU legislation does not produce a satisfactory result.  Mainly because we have always been very heavily dependent on EU infrastructure.  I am talking about the Union Registry for the purposes of the EU Emissions Trading Scheme and the European Chemicals Agency for the purposes of chemicals regulation.  Essentially, we have to invent domestic replacements for the EU ETS and the European Chemicals Agency so that they are running parallel systems with the EU regarding emissions trading and chemicals.  So that’s an unfortunate doubling up for industry.  And another wrinkle is relevant to companies that import from or export to the EU.  The EU law may have been retained but UK companies’ status and EU companies’ status under that law has changed.  The UK imports the product and materials from the EU, having previously no responsibility for insuring their environmental compliance, now, takes full responsibility for those goods when they go on the UK market.  And UK exporters of products and materials to the EU, they used to take full responsibility for the environmental compliance of their goods which went into the single market.  Now, they are going to have to find somebody in the EU to do that; probably their EU customer.  So there are some difficult conversations to be had there.  The subject of these things were now the same, as of right now they are the same as we’ve always been. 

What plan does the government have now for moving away or for diverging from the standards we have always previously had? 

In relation to climate change, the road ahead is mapped out and has been for some time in the Climate Change Act and we will keep following that.  But for other things, enter stage left is the Environment Bill.  It should already be the Environment Act 2020, of course, but it’s been delayed and is not likely to feature now for some time.  It includes environmental provisions that prepare the ground for changes to waste, air, water, and biodiversity, which broadly tallies with those areas from a few slides ago, where I indicated where the EU had had the most influence over our environment law.  Most importantly though, it’s going to establish a post-Brexit set of statutory environmental principles and ensure environmental governance through a new environmental watchdog called the Office for Environmental Protection.  Having lost the principle enshrined in EU law and the targets and the direction of EU law; and the oversight role that used to be played by the European Commission, it is very important that when we get some of that old structure back.  Now, time for me to, Isabelle is now going to look in a bit more detail at this Environment Bill, so I am going to hand this slide deck over to her.  Isabelle.

Speaker: Isabelle Laborde

Thank you Aidan.  So, as Aidan said, you have a first Environment Bill that was introduced in Parliament in October 2019 to replace EU derived Environmental Law.  The bill’s progress was halted in December 2019 due to the general election.  The new Bill was introduced in January 2020; the progress has been very slow since then.  A third brief return to Parliament in November 2020, the bill was shelved in December.  It was due to return to Parliament last week on the 26^th of January, but the government took it off the agenda at the last minute and announced that it would be rolled over into the next Parliamentary session.  According to the sentry notes, the Bill sets up the measures needed to ensure that there is no governance gap on withdrawal from the EU.  I am now going to take you on a whistle stop tour of the main provisions of the Bill. 

Part 1 of the Bill, set out the comprehensive framework for legally binding targets to deliver environmental improvements.  The Secretary of State has granted the part to set long-term environmental targets by regulation.  There must be at least one long-term target in each of four priority areas, which are: air quality, water, biodiversity and resource efficiency and waste reduction.  The long-term targets must specify an objectively measureable standard to be achieved by a certain date.  The process of setting targets will necessarily involve choices as to how the targets will be measured, but this is less for regulations.  The Secretary of State is also required to set a legally binding target to reduce fine particulate matter in England’s air by regulation, but it does not have to be a long-term target.  A policy paper covered by Defra in August 2020 provide another view as to how the government intends to set long-term legally binding environmental target.  The paper explains the process for developing target, the scope of the target, and formidable information on the target.  But what the paper doesn’t do, is commit to specific target or the metrics to be used to set them. 

Now there is concern that environmental standards could decline after Brexit.  The provisions on the setting of new targets to check, there are grounds for these fears.  For example, by setting below EU standards targets that England consistently failed to meet when it was member, EU member state.  A target may be lowered or even revoked if the Secretary of State is satisfied that meeting the target would have no significant benefit and the cost of meeting that target, whether environmental, social, economic, or other costs, would be disproportionate to the benefits.  The Secretary of State must review targets and consider whether the significant improvement test is met.  Now that test is met where meeting a target will bring about a significant improvement in the natural environment.  And if the test is not met, then the Secretary of State must set out the steps to be taken to ensure that it is met.  The Bill requires the Secretary of State to prepare an Environmental Improvement Plan to significantly improve the natural environment.  A plan is a long-term plan; it must be for at least 50 years.  The government’s 24-year involvement plan, published in January 2018, is to be treated as the first Environmental Improvement Plan, thus giving it statutory footing.  The Secretary of State is required to report every year on the implementation of the Environmental Improvement Plan and whether the natural environment is indeed improving.  And the Improvement Plan must be reviewed at least every 5 years. 

Now, there are mixed messages about the principles of governance in the Bill.  In January 2020, the government announced the most ambitious Environmental Program of any country on Earth.  But then, in June 2020, it all changed to the drag of new counting and the need to build, build, build.  And these are all statements that are very difficult to reconcile and indeed the Bill doesn’t even try to.  The Bill focuses on the making of government policy and the making of a policy statement by government as to how to take forward Environmental Law and to apply it; this is where the Environmental Principles come in.  So the Bill identifies 5 Environmental Principles:

1. The Integration Principle that is integrating environmental protection into policy making;
2. The Prevention Principle that is preventive action to avoid environmental damage;
3. The Precautionary Principle that only so far in relating to the environment;
4. The Rectification of Source Principle that is environmental damage should be as a priority rectified by targeting its original source; and
5. The Pollutant Pays Principle.

But these principles surprisingly are not defined in the Bill at all.  They are not overriding or determinative and there is very limited control over the principles, with only the delay before Parliament of a draft policy statement which is made, meant to give substance and affect to the principle.  So both of them achieved the equivalence on Environmental Principles well, not quite.  The Environmental Principles only apply to the full relation by ministers of policy statements to explain how the principles should be applied by ministers when making policy.  And the need to have dual regard to that phasement [SP] in formulating other policy.  Now the duty to have dual regard is very far from the duty to give courtesy to the Environmental Principle.  In addition, the Environmental Principles have no direct application to regulators, operators, or developers.  And the policy document can be varied by the Secretary of State when politically convenient.  This means that the government will have very wide power to depart from principle, depending on how it may decide to formulate policy.  Indeed, the Bill specified that ministers will have a wide discretion as to how to act as they are not required to do anything or refrain from doing anything, if doing that thing or refraining from doing it would have no significant environmental benefit; or would be in any other way disproportionate to the environmental benefits.  Now interestingly, the House of Commons Committee, which scrutinized the draft bill, concluded that there was a risk of regression on current standards of environmental protection.  Finally, it’s slightly worrying that both the meaning of the Environmental Principle and how the duty is to be applied are found in the explanatory notes rather than the Bill itself.  For example, one would have expected them to be maybe in the definitions. 

But, the Environmental Governance gap caused by Brexit is not limited to the Environmental Principles.  There are also concerns over the loss of the role of the European Commission.  As you know, the Commission monitors, scrutinizes, investigates, and if necessary, takes infractions to the European courts.  The 25-year Environmental Plan commits to setting up a new body to hold government to account, and there is some reflection of that role in the OEP.  But, can this new watchdog achieve the role of the commission? The OEP has two types of function: scrutiny and advice functions and enforcement functions. 

In terms of scrutiny and advice functions, the OEP must monitor and report on environmental improvement plans and targets; monitor and report on Environmental Law and advise on changes to Environmental Law, but only when requested by ministers.  From a governance perspective, the OEP has two sets of enforcement powers in relation to the failure of the public authority to comply with Environmental Law.  And failure to comply with Environmental Law means unlawfully failing to take proper action; proper account of Environmental Law, when exercising its functions or unlawfully exercising or failure to exercise any function it has under Environmental Law. 

Public Authority includes any person carrying out a function of a public nature, but with several meaningful exclusions and although the OEP was intended to be for the UK, its role outside England is going to be extremely limited, as any Public Authority implementing devolve functions under Environmental Law in Scotland, Wales, and Northern Ireland; will not be covered by the OEP in respect to the devolve matter.  Now, the OEP may investigate a failure to comply with Environmental Law upon receiving a compliant or of its own motion.  Where the OEP is satisfied but there has been a serious failure to comply with Environmental Law and I insist it’s a serious failure not just any failure.  Then it must set out in a decision notice the failure and the steps that authority should take in relation to the failure.  However, the decision notice is not binding on the Public Authority.  The OEP can apply to the High Court for an environmental review if it is not satisfied with the response to a decision.  Now the review is not about the failure to accept the remedy or to take the steps that came about in decision notice or to provide the failure to comply with Environmental Law.  For the review, ordinary judicial review principles and remedies apply.  The OEP can also bring its own judicial review claims but only if it is necessary to prevent or mitigate serious damage to the natural environment or human health.  So, although the OEP is intended to replace the oversight and enforcement for all of the commission, one can doubt that it will have similar powers or bite. 

Given the delay to the Bill, there will be a further extended period during which the public authorities will not be held to account or with their compliance with Environmental Law.  In the interim, the government has set up, the Interim Environmental Governance Secretariat, which is under Defra to receive complaints from the 1^st of January 2021.  The Secretariat is intended to support Dame Glenys Stacey the appointed chair of the OEP.  It is stuck with assessing complaints and checking whether they fall within the limits of the OEP; but it does not have an investigative or enforcement role.  And it will only pass complaints on to the OEP once the OEP is established.  Now, given the delay in establishing the OEP, you can have complaints that are going to be sitting there for probably something like a year before they are properly dealt with.  Having covered the government’s part of the Bill, we can now filter through the remaining parts. 

Part 3 on Waste and Resource Efficiency includes the framework to deliver the commitment in the resources and waste strategy.  It allows the government to extend producer responsibility.  It allows the introduction of charges for single use plastic items.  It specifies materials to be collected separately from other waste.  It allows introduction of deposit return schemes.  It allows electronic waste tracking to help prevent waste crime and it improves litter enforcement.  Now, these are all things that the UK could have done under pre-Brexit EU Environmental Law.  And indeed, quite a few member states are already doing.  I have already seen Part 1 of the Bill, requires the Secretary of State to set Environmental targets for air quality and fine particulate matters by regulation. 

But the main provisions on air quality are found in Part 4 of the Bill, and they include a new duty of the Secretary of State to review the air quality strategy at least every five years and to report annually to Parliament on progress.  There are stronger requirements for local authorities under the local air quality management framework; new powers for local authorities to impose civil penalty notices for the emission of smoke in smoke control areas in England.  And the power for the Secretary of State to make regulations for the recall of products that do not meet emissions standards.  Now immediately, one might think of the VW scandal.

Part 5 of the Bill, set outs provisions to secure long-term resilient water and waste water services.  It includes duties of water undertakers in relation to Water Resources Management Plan and Drought Plan.  There is a new power for the Secretary of State to direct water undertakers to prepare joint proposals identifying how and [inaudible] to work together.  There is a new duty on sewage undertakers to prepare drainage and storage management plans.  There is a creation of stronger information on battery powers.  There is a revised process for the specification of the appointment conditions of water and storage undertakers.  There are amendments to the Water Resources Act 1991 in relation to the variation and repercussion of the water extraction licenses and new contribution to internal drainage holes.  But maybe the most interesting part, is the fact that it gives the Secretary of State the power to make regulations about substances to be taken into account in assessing the chemical status of surface water and ground water and to specify standards for those substances.  Now this power could effectively effect the Level Playing Field.  For example, by relaxing standards which give, which could give a significant competitive advantage to the UK, farmers and manufacturers would no longer have to comply with stringent EU standards.  However, I failed to explain this is governed by the Trading Corporation Agreement. 

Parts 6 and 7 deal with nature and biodiversity.  I am not going to deal with those parts because they were covered in quite a lot of detail in our webinar in December. 

And finally, Part 8, Miscellaneous and General Provisions including Breach gives the Secretary of State the power to amend the European REACH Regulation.  But this power excludes those articles which set out the fundamental aides and principles of the REACH Regulation.  As we’ve seen there are a lot of very high level provisions in the Bill with very little detail; and as usual, the devil will be in those details.  As Sam will explain, our ability to depart from European Environmental Law will be governed largely by the provisions of the Trade and Corporation Agreements.  Back to you Aidan.

Speaker: Aidan Simpson

Yes. Well thank you, thank you for that Isabelle.  And well certainly let’s hope that there are no more delays to the infrastructure envisaged by the Environment Bills becoming established.  But we are now going to hear from Sam and Sam is going to look at the question of whether we actually have freedom of action in relation to those areas previously controlled by the EU, in the new Environmental Law.  There is a small matter of the Trade and Cooperation Agreement, which is going to restrict the EU UK’s ability to be completely independent.  But to look into that a little bit more, we now have Sam, so Sam the slide is over to you. 

Speaker: Sam Levy

Thanks Aidan.  Now, before I launch into the environmental side of the TCA, I think it’s necessary for us to just quickly run through a few core general points about the agreement to get us started.  So, as we all know, going down to the wire, the TCA was secured just before Christmas to govern the UK/EU relationship following the UK leaving the Customs Union and the Single Market at the end of the transition period on the 31^st of December.  It’s been provisionally applicable since the 1^st of January.  When I say provisionally applicable because there wasn’t enough time for the full EU administrative process to be completed, so it still needs to go through EU ratification.  On the UK’s side on the other hand, the TCA was implemented in international law before the end of the transition period by the European Union Future Relationship Act of 2020, which is becoming known as EUFRA; and I’ll come back to the relevance of that in a moment. 

Now the TCA at its heart is a Free Trade Agreement and it achieves the zero tariffs zero quoted deal on quoted on goods, which many industries are crying out for; however, it certainly does not establish the framework for frictionless trade, which was so often spoken about during the Brexit process.  In terms as of the way we read the TCA as a Free Trade Agreement, it’s a type of public international law document.  Now this means that it sits above the domestic legal system of the EU and the UK.  It’s fundamentally about the rights and the obligations of the EU and the UK.  It isn’t about the private rights and obligations of the businesses or individuals.  So don’t expect anyone to bring actions in the UK courts directly under the TCA, whether environmental or otherwise, because this isn’t what the agreement is about.  However, although the TCA itself isn’t directly relevant to the rights and obligations of businesses or individuals.  It may be indirectly relevant in the UK by Section 29 of EUFRA, which I mentioned a moment ago.  Section 29 is described as a glossing mechanism which basically requires existing UK law to be read with magnification and applied with the TCA.  So this has potentially incredibly complex and challenging implications, effectively modified UK law without making actual textual amendments to the law.  So Section 29 may well operate as a sort of back door to the TCA; the indirectly relevant to the rights and obligations of UK businesses or individuals, leading potentially to major interpretation issues, not just in UK Environmental Law but also in many, many upper areas. 

So, importantly from an environmental perspective, Section 29 has the potential to effect any area of UK Environmental Law; not just those areas that Aidan mentioned, which historically has been linked to EU law.  So for example, you might envisage a court case where a provision of UK Environmental Law is an issue and the provisions in the TCA have an impact on the interpretation of that provision as a result of Section 29.  So watch this space and let’s see if a case like that comes along. 

Right, moving onto the specific Environmental Provisions in the TCA, I am going to focus on two core areas: the Level Playing Field provisions and then the Technical Barriers to Trade provisions. 

Looking firstly at Level Playing Field, we should remember that this is an area where the negotiating battle between the UK and the EU was particularly fierce.  The Level Playing Field is basically trade policy concept of insuring fair competition between businesses operating in the EU and the UK by having similar rules and standards across the EU and the UK.  For example, in relation to Environmental Regulation: this way for instance a business operating in the UK isn’t at a competitive advantage to its rivals in the EU because it has to comply with, say lower Environmental regulatory standards.  Of course, this therefore links up with that central UK negotiating objective of restoring sovereignty.  So, following intense negotiations, what we have ended up with here is a compromise which can be summed up from the general provisions in Title 11 of the Trade section of the TCA.  If general provisions make clear that the UK and the EU are determined to maintain and improve their high regulatory standards, and they understand the importance of the Level Playing Field preventing distortions of trader investment.  But this does not mean that the UK and the EU are agreeing to harmonise their standards.  Both parties have the right to set policies, determine levels of protection, modify laws as long as they comply with their international commitments, including the Level Playing Field commitment in the TCA.  This is really important because in the EU we were trying to harmonize standards, but now we aren’t.  Now the focus is instead on preventing distortions of trade or investment between the two parties, while the Level Playing Field is standard.  So on the next slide I will now focus in on the environmental areas relevant to this Level Playing Field approach. 

Chapter 7 sets out two types of Environmental Regulation caught by the Level Playing Field.  As you can see, the Environmental Levels Protection concept covers a very broad range of areas.  And this list is very similar to the list of areas in Environmental Law closely linked to EU law historically which Aidan mentioned earlier.  You’ve got Industrial Emissions which presumably referenced out to the EU industrial emission directives and the best available techniques: air quality, biodiversity, waste and aquatic environment chemicals, which I will come back to again shortly and agricultural and food production.

As a separate concept there’s also reference to climate level of protection.  But this is essentially focused on greenhouse gas emissions with expressed referenced to the UK and EU carbon pricing systems.  Which again I’ll come back to in a moment.  Ultimately this slide illustrates just how wide reaching the scope of the level plan field is when it comes to environmental regulation. 

Now this slide shows what the Level Playing Field is really all about.  Non-regression from environmental standards and improving environmental standards.  Firstly on non-regression, the wording is “a party shall not weaken or reduce in a manner affecting trade or investment between the parties, its environmental level of protection or its climate level of protection below the levels that are in place at the end of the transition period, including by failing to effectively enforce its environmental law or climate level of protection.”  So just unpacking this briefly starting with timings you can see that any UK or EU environmental regulation in that wide ranging list on the previous slide which is in place at the end of the transition period, i.e. the end of last year, can’t be weakened by either the EU or the UK.  So that’s our starting point neither parties environmental regulation is allowed to regress from what it was at the end of 2020.  However, critically this restriction on regression is only in relation to regression which effects trade or investments between the EU and the UK.  So, even if the UK weakened its environmental regulation in an area which really didn’t result in any competitive advantage for example for UK businesses over their EU rivals, then that might be the sort of regression which isn’t actually restricted by the Level Playing Field.  Now you can also see just as an aside that there’s a requirement at the end of the non-regression language at the UK and EU to effectively enforce environmental regulations.  This is clearly to close the loophole of the EU or the UK having Level Playing Field compliant laws in place but not actually enforcing those laws and thereby giving their businesses a competitive advantage by non-enforcements.  So, ultimately the UK is still fenced in to an extent on environmental regulation but not has much as it was when it was part of the EU.  So, then finally very briefly on improving standards the wording is “the parties shall continue to strive to increase their respective environmental level of protection or their respective climate level of protection” referred to in this chapter.  This is pretty vague starting comparisons for non-regression language.  But it’s clear that the intention is to encourage both parties to continue on the trajectory of improving environmental standards as the years go on.  But perhaps querying the effective meaning for this provision it does feel as if it might not have a huge amount of practical force.

Moving on to Carbon Pricing, which I very briefly mentioned earlier the key component of Level Playing Field concept of climate level of protection.  Interestingly, there is a specific article in this chapter for addressing Carbon Pricing systems in both the UK and EU.  Now this article basically requires both parties to maintain a Carbon Pricing system which effectively in the European world means both parties have an emission trading system or ETS.  I won’t go into huge amount of detail on this in this webinar because this could be a whole webinar in its own rights.  But in essence after some thoughts about toing and froing about whether the UK would deploy its own ETS or have alternatively a carbon tax.  Near the end of last year, it became clear that the UK wouldn’t be, wouldn’t stick with its own version broadly like the UK version of the EU ETS.  This UK ETS is now getting up and running.  So operators with permitted installations in the UK and UK air crop operators who were previously complying with the EU ETS will now need to comply with the UK ETS instead or in some cases, as well as EU ETS.  And since the EU and UK systems will start off being extremely similar, it’s no surprise that the TCA has a section which encourages cooperation and importantly requires them to give serious consideration to linking the two systems.  You can see a quote on that there on that slide.  So, I think we can expect that the discussion about this linking in the relatively near future.  Interestingly though when you compare this language against the Energy white paper from the end of last year which also made reference to the new UK ETS, you can see that the white paper was significantly softer on this point.  It didn’t say anything close to the serious consideration language with the TCA.  It just vaguely talks about the UK being open to linking its ETS internationally without even referring to the EU by name.  And despite the vagueness of the white paper it is definitely a point to watch in the near term.  Because the fact that Carbon Pricing was given its very own section in this chapter seems to be an indication of just how important the UK and the EU view this area as part of their future environmental relationship. 

Lastly, on Level Playing Field, I suspect a lot of you are thinking what happens if the EU or UK breaks the rules and lower environmental standards in a manner affecting trade or investments, thereby giving a competitor’s advantage to one sized industry over the other.  Well we simply don’t have time in this webinar to work through the complex disputes mechanisms in the PCA.  But this slide gives you a flavour of the sort of mechanism relevant to Level Playing Field disagreements.  In short, there are general requirements that dialogue consultation, exchange information and cooperation to address disagreements.  But there are also more detailed dispute settlement provisions regarding formal consultation to resolve disputes with any resolutions following that formal consultation made public and then if this formal consultation doesn’t work, a panel of experts can get involved.  And this panel of experts may include environmental law experts to deal with environmental points.  The panel would deliver a report on the matter, which again is to be made public and then future dispute resolution pathways will slow down from this report.  Overall this is a new world of potential trade disputes effecting UK Environmental Law, which is all very uncertain.  But the one thing that is clear is the dispute resolution processes are very likely to be highly public and transparent so the whole world can see. 

Now moving away from the Level Playing Field, I am now very briefly going touch on a key environmental point in the context of trading goods between the UK and the EU.  Technical barriers to trade which is a totally separate Level Playing Field.  So as I mentioned earlier, on a basic level the TCA does achieve zero tariffs, zero quotas of trading goods.  But it certainly doesn’t achieve frictionless trade, so the TCA includes provisions to assist with the flow in goods and liberalized trade arrangements between the parties, including technical barriers to trade provisions.  The objective of these provisions, is to facilitate trading goods between the parties by preventing, identifying, eliminating unnecessary technical barriers and the scope is essentially regarding standards and technical regulations effecting trading goods.  So that scope can capture an environmental standard, regarding forms of product stewardship and environmental compliance ratings.  So just to give you an example, on the next slide am going to focus in on chemicals.  Now this is a useful example in this context because this is a sector heavily regulated from the environmental perspective, hugely important to the UK goods economy as well.  The TCA attached the sector specific technical barriers to trade annex the chemicals which is quite common to free trade agreements.  And this annex is an example of a very thin aspect of the TCA but it doesn’t facilitate close regulatory alignment.  And as a result it doesn’t include many of the provisions, which the chemical sector was hoping for to provide regulation consistency across the EU and the UK, for example, in relation to European Chemicals Agency and the EU REACH system for chemicals which Aidan mentioned earlier.  Instead were looking at a world with two separate REACH compliance regimes for the regulation of chemicals.  EU REACH which many businesses will already be familiar with and also in the UK REACH, which really should be call the GB REACH because it’s only applicable to Great Britain not Northern Ireland.  So given the thinness of the technical barriers to trade annex here, chemicals could be an area where there is regulatory divergence in the future.  And it’s certainly an area to keep an eye on.  Particularly, because the Environment Bill includes provisions to allow the Secretary of State to make amendments to the UK REACH system which Isabelle mentioned earlier.  The fact that REACH singled out this way in the Environment Bill does imply that reform into the chemicals world in the UK may well be uncast.  So just to sum up few key takeaways on the Level Playing Field, the TCA doesn’t require UK Environmental Law to be harmonised to the EU law anymore, but it does require non-regression, meaning that neither party can weaken Environmental Law if that would affect trade or investment between them.  On disputes between the UK and EU on Environmental Level Playing Field matters would likely be complicated, public, transparent, and open but also very uncertain.  And finally on Technical Barriers to Trade or the aspiration clearly was to facilitate trade in goods by preventing unnecessary barriers.  For example, environmental standards query whether this “thin” deal achieved this.  For example, in the chemical sector in the context of REACH.  And with that I’ll hand back over to Aidan to conclude.

Speaker: Aidan Simpson

Thank you very much Sam.  Yes, the final slide now everyone and anyone has a few questions one or two have come in but just a reminder to everybody if you do have a question please do ask it now.  Because I think there will be two or three minutes at the end.  So just to sum up where we got to today after the presentations from everyone, I’m pleased to say at this very early stage nothing has really changed as far as UK operators are concerned except for those three things that I talked about earlier.  People who are now in the EU ETS have now had to join the UK ETS in doubling up their compliance responsibility there, people who were having to comply with EU REACH now before are now having to also to comply with UK REACH.  And as I said before everyone needs to be careful right from the get go that they understand where they are in their supply chains, whether they are now responsible as importers or manufacturers in the EU or the UK because the previous analysis doesn’t really apply anymore.  So those three areas are some like those things or more less as they were. 

Looking forward well as I said a lot of what we have always seen in relation to Environmental Law in this country a lot of that is going to remain and going to change which is quite comforting and reassuring.  But also things are going to somethings whether EU has been legislating in the past, they are going to change.  But in order to that on a stable and sure footing, as Isabelle was saying those Environment Bill out there and that needs to get passed so the principals, the targets, the plans etc. all become enshrined in our law and that’s going to take a while yet.  As Isabelle said there are one or two things that stuck out in the Environment Bill; things that the government is probably looking to try and effect sooner rather than later in areas like air pollution and water pollution.  As Isabelle said, the stuff that is proposed so far doesn’t look to be earth shattering and doesn’t look to be the sort of stuff that we couldn’t have done while we were members of the EU in any event.  But anyway, those things are on the cards and we will see what happens with those things for those areas that Isabelle mentioned. 

Coming up to what Sam said, while we straight jacketed to any expense and what we can now do to diverge from EU law, and yes there is great to freedom action than before, but we do need to be careful in whatever we do that we don’t distort trade; and that does sound like a fairly woolly concept to me.  It may be with the best of intentions that we may introduce a lower than we hope won’t distort trade, but some years down the line it is discovered that there is an unintended consequence that it does, and things will have to be unpicked from there going through the rather complex mechanism that Sam described.  So, plenty of stuff to watch out for over the year.  It’s going to be interesting to see how all of this develops.

Now, that’s the end of a formal bit of proceedings, and one of two questions, and we do have a couple of minutes; so perhaps it was one question which Isabelle you might just have a view on, and which is as follows:

• Is the Environment Bill delayed because of COP26? Is there any indication of measures that might emerge from COP26?

Speaker: Isabelle Laborde

Well I don’t believe, Aidan, that there is a delayed due to COP26, but the reason given by government is just that it’s been delayed by the pandemic and it doesn’t appear to be much if anything in the Bill that would relay to COP26 and effectively, if it haven’t been delayed by the pandemic, it would have gone back to Parliament last week, so I don’t think the two are related.

Speaker: Aidan Thomson

Right, OK.  Sam, do you have any view on the following question; which is:

• Are there likely to be any trade-offs going forward? For example, the UK does more on climate change, but below EU standards on water quality.  Is there any chance that, you know, we might get into some horse trading there…or is it pretty strict? There is no regression from any of these standards?

Speaker: Sam Levy

I think that’s a tricky one. That’s the sort of thing that you can imagine going through a dispute, but I think that it boils down to the point you were just making Aidan, about this being about distortions of trades or investments.  So the question really is, you know, whether or not there is sort a bit of horse trading or trade-offs between two areas.  If something that either party has done, effecting trade or investments between the EU and the UK giving a competitive advantage to one party’s industries over the other, and I think, you know, there might be discussions about trade-offs, but the disputes will arise in the event that those distortions of trades or investments; and that’s the key point, to keep bearing in mind whenever there is any changes to any rules.

Speaker: Aidan Thomson

1. Thank you. Final question:

• Is the government still taking consultation on the delayed Environment Bill, or is it now all down to civil servants and politicians?

I think the answer to that is that yet this is now in Parliament, and I don’t believe that there are any ongoing consultations on the Environment Bill.  Although, so much of the Environment Bill is just creating a framework for how things are going to work in the future.  Every chance it seems to me that once the Bill is passed, there will be opportunities for… in fact, there’ll be a lot of fine tuning of things and the result of that may well be that there are consultations on individual aspects as we go forward.

I think we’re probably going to have to leave it there unfortunately because we are a couple of minutes over one hour slot.  So, it just remains for me to say thank you everybody for tuning in today.  Thanks from me, from Isabelle, and from Sam.  I hope you found that interesting.  It certainly is an area that’s going to keep us all interested over the next few years.  So thank you all again for attending today and joining us.  Thank you very much.