The common law duty of fairness was, and continues to form, a basis upon which aggrieved parties can challenge regulatory decisions in judicial review. More recently, these standards have been given a legislative footing in the Legislative and Regulatory Reform Act 2006 and the Regulators’ Code, published in April 2014 pursuant to s22 of that Act. 

In R (Suez Recycling and Recovery UK Ltd) v Environment Agency [2023] EWHC 3012 (Admin) Mr Justice Fordham considered whether the Environment Agency is in breach of legislative and common law standards by failing to provide a right to the operators of sites regulated under the Environmental Permitting (England and Wales) Regulations 2016 to seek a merits re-evaluation following service of Compliance Assessment Reports (CARs). CARs are documents written and published by the Environment Agency that record non-compliance against permit conditions. The document will record a compliance score and any action required. A negative score can trigger a rise in the annual subsistence payment the operator is required to pay to the Environment Agency.

The main plank of the operators’ argument was paragraph 2.3 of the Regulators Code which states, materially (underlining added): “Regulators should provide an impartial and clearly explained route to appeal against a regulatory decision or a failure to act in accordance with this Code…” The Agency interpreted “regulatory decision” narrowly, such that the Code only requires access to an appeal in respect of a decision that “is adverse to a regulated person by imposing on them a mandatory obligation”. On this basis, it operated a complaints system, with two stages, to allow operators to challenge CARs, but no system for appealing CARs to enable the merits to be re-evaluated. The Agency argued that CARs do not cross the threshold of imposing mandatory obligations upon operators. 

The Judge allowed the claim, finding that a “broad” interpretation of “regulatory decision” was justified as including any function under any enactment of imposing requirements, restrictions or conditions or setting standards or giving guidance (paragraph 37). It was on this basis that the Judge determined that the Environment Agency had erred in failing to provide a merits-based appeal to the operator to challenge the CARs in contention.
However, the case does not establish the principle that regulators, including the Environment Agency, must now establish appellate systems for “regulatory decisions”. The statutory duty of regulators under s22(2) of the 2006 Act is merely to “have regard to” the Regulators’ Code. Therefore, it is open to regulators to depart from the Code by not convening appeals against “regulatory decisions”, where they consciously decide to depart from the Regulators’ Code, and make a record of their decision with reasons (paragraph 38).

The Environment Agency was in error in this case because it departed from the Regulators’ Code on an unlawful basis, without realising it was doing so. The Judgment was handed down on 28 November 2023 and the Environment Agency have yet to publish updated guidance in response. The extent to which the Environment Agency will establish rights of appeal against CARs, in compliance with the Regulators’ Code, remains to be seen. 

Horatio Waller is a barrister at Francis Taylor Building specialising in environmental, planning and public law.