Dairy Crest Limited t/a Saputo Dairy UK has been fined £1.52 million, the largest fine ever imposed on a South West company, for a range of environmental offences committed between 2016 and 2021. The agreed investigative and prosecution costs amounted to a further £272,747.
The prosecution was brought by the Environment Agency following an investigation into operations at the company's Davidstow Creamery, the UK’s largest dairy processing facility.
What were the reasons for the record fine?
Dairy Crest, which has been owned by Canadian firm Saputo Dairy since 2019, pleaded guilty to 21 offences relating to the company's management of the site's wastewater processing facility. The offences included: consistently exceeding permit limits, the release of biocides and part-treated effluent into the River Inny killing hundreds of fish, foul odours regularly impacting on local residents and failing to comply with its mandatory environmental reporting obligations on seven occasions.
The problems stemmed from the expansion of production when a new facility was built in 2016, leading to more effluent being produced. The upgraded wastewater treatment plant was unable to cope and the site's permit conditions in relation to emissions remained unchanged when the new processes were authorised. Despite the permitting breaches increasing in scale and frequency and the need for notifications for incidents and breaches of permit conditions being raised since early 2017, a decision was taken not to close the site to enable remedial work to take place.
In his sentencing remarks, Judge Carr referred to evidence of senior and middle management failings in respect of planning for and reacting to the upgraded waste water treatment plant not operating as it should, and a culture of bullying and intimidation. He was also critical of the company's attempts to blame the contractors who designed the new equipment and, significantly, found that the primary driver behind the offending was to make good on the company's investment saying Dairy Crest “took a carefully considered commercial decision that turned out to be wrong”.
How was the level of fine arrived at?
Accepting that Dairy Crest had relied on leading waste water treatment experts and taken steps to try to solve the problems by changing the treatment plant's configuration, Dairy Crest's culpability was assessed as negligent with harm adjudged to be Category 2 harm.
Judge Carr treated Dairy Crest as a very large organisation for the purposes of the Definitive Guideline for Environmental Offences, given its annual turnover of £451 million in 2019/20. However, rather than consideration being given to move up one or more categories or sentencing ranges to achieve a proportionate sentence, individual fines for each of the twenty one offences totalling £1.52m were imposed based on the applicable sentencing range for a large organisation.
The level of fines imposed clearly demonstrates the consequences of not acting swiftly enough to minimise and prevent pollution and permitting breaches and a long-term failure by senior management to understand and act on the concerns and risks identified by employees and others.
Enforcement Undertakings – could the prosecution have been avoided?
We have been asked whether Dairy Crest may have been able to avoid prosecution, and therefore the potential for a very large fine, by making an enforcement undertaking offer.
Under the Environmental Civil Sanctions (England) Order 2010, an enforcement undertaking is a voluntary offer made by an offender to put right the effects of their offending, put right the impact on third parties and make sure the offence cannot happen again. Once an enforcement undertaking is accepted, the Environment Agency can no longer prosecute for the offences in question.
In the Environment Agency's recent update on the latest enforcement undertakings accepted by the agency between 1 January 2022 and 31 May 2022, Yorkshire Water agreed to pay £400,000 to a Wildlife Trust for permitting breaches resulting in sewage pollution incidents. This followed the Environment Agency's agreement in 2018 to accept Wessex Water Services Limited's offer of contributing £975,000 to various environmental charities connected with two large sewage spills in the preceding two years.
Given the size of enforcement undertakings that the Environment Agency has previously been willing to accept, the reader may wonder whether Dairy Crest put forward an enforcement undertaking offer (EU Offer).
We do not know if an EU Offer was ever made by Dairy Crest and, if so, the reasons why any offer made was rejected. The reason may, for example, have been due to contrasting positions on culpability, harm risked/caused or the speed or extent to which the treatment plant's deficiencies could and should have been remedied.
The guidance accompanying EU Offer forms explains when and why the Environment Agency may in some circumstances not accept an EU Offer, including:
- For a Category 1 (Environmental Harm) offence
- In cases involving intent or of the most severe environmental impact
- Where the Environment Agency has already determined that a prosecution is appropriate and in the public interest
- Where there is a failure to provide evidence to demonstrate appropriate measures have been taken to prevent a recurrence and return to compliance
- Failing to take steps to identify, consult with and compensate persons affected by the allege offences.
The comments at the end of the Environment Agency's Press Release relating to the fines given to Dairy Crest may hold the answer. Helen Dobby, Area Director of the Environment Agency said:
"The Environment Agency remains deeply concerned about the environmental performance of this site and its impact on the environment. It will continue to monitor the situation and regulate this site closely and urges the operator to make the right decisions and level of investment on site to better protect the wildlife and people of Cornwall."
If you would like to discuss any topics associated with this briefing, including the use of enforcement undertakings, please get in touch.