Environmental Planning Act & Sanction Law: Three Key Points for Businesses
It has likely not gone unnoticed that the Environmental Planning Act (“Omgevingswet”) came into effect on 1 January 2024. In the area of sanction law, three specific changes are particularly important for businesses.
Administrative fines for Seveso violations
The first change is that, for violations of environmental regulations under the Seveso Directive (previously addressed in the BRZO 2015), an administrative fine may now be imposed instead of a criminal sanction. This fine can be as high as €1,030,000 or, if higher, 10% of the company’s annual turnover. By comparison, for intentional violations of such regulations, the criminal court may impose a fine of €103,000. Only in cases where this fine is deemed insufficient for a company can it ultimately rise to 10% of annual turnover.
The authority to impose administrative fines does not give the government a free pass. Without a well-founded penalty policy and a properly substantiated penalty decision, it is likely that an increasingly scrutinising administrative court will overturn the penalty decision.
Duty to report unusual incidents – Increased penalties
A company is no longer required to report every incident to the relevant authorities. An unusual incident now only triggers a reporting duty if it involves an event, regardless of its cause, that deviates from the normal course of activities and leads to or threatens to cause “significant adverse effects on the physical environment.” The term “significant” is minimally defined in the Environmental Planning Act (EPA). The courts will need to clarify this concept, which will inevitably lead to legal debate. However, it should be noted that the authorities may still impose a reporting obligation for unusual incidents without such significant adverse effects through a permit or tailored regulation for environmentally harmful activities, as was possible under the Environmental Management Act.
The legislator has almost quietly and significantly increased the maximum penalty for failing to report an unusual incident (or reporting it too late). For intentional failure to report such an incident (or reporting it too late), a prison sentence of up to six years (previously two years), a community service order, or a fine of up to the fifth category (€103,000; previously fourth category = €25,700) can now be imposed. For businesses, this increase also means that fines for intentional failure to report (or reporting too late) can rise to 10% of their annual turnover. This gives companies an extra reason to review their internal incident reporting policies carefully.
Specific duty of care obligations
A third change under the EPA is the increase in the number of criminally sanctioned duty of care obligations, known as “specific duty of care” provisions. These provisions merely define the objective that must be achieved in protecting the physical environment, leaving it to the company to determine how to fulfil that obligation. The consequence of such an open standard is that it may not always be clear in advance whether a company is complying with such a duty of care. This will likely be a subject of legal debate and thus a potential line of defence.
Enforcing a specific duty of care is only possible in the case of a “clear violation” of that obligation. In cases of doubt, enforcement authorities would often do well to first clarify to the company what the specific duty of care entails in the given situation before taking administrative or, even more so, criminal enforcement action. This is especially important given that the same severe penalties apply to the intentional violation of a specific duty of care as for failing to report an unusual incident (or reporting it too late).
Many questions and severe sanctions
The entry into force of the Environmental Planning Act brings numerous changes and will undoubtedly raise many (legal) questions. These changes can have significant consequences, particularly given the severe penalties for violations of this law.
