AGCO Limited v Environment Agency
[2024] UKFTT 241 (GRC)
Scania (Great Britain) Limited v Environment Agency
7 November 2023
[2023] UKFTT 947 (GRC)
First-tier Tribunal
Scania was fined £200,000 for not having the right permits for a type of gas. A judge decided the fine was too high because the government used the highest possible price of the permits, not the price Scania actually paid. The fine was lowered to £90,511.
Key Facts
- •Scania (Great Britain) Limited appealed a £200,000 civil penalty imposed by the Environment Agency for failing to obtain sufficient HFC authorisations before placing HFCs on the market.
- •The breach related to Article 14(1) of EU Regulation 517/2014 and the Fluorinated Greenhouse Gases Regulations 2015.
- •The Agency calculated the avoided costs using the maximum 2021 HFC quota authorisation cost (£25/tCO2e), resulting in a £195,900 avoided cost figure.
- •Scania argued the penalty was unreasonable, citing the use of the maximum cost as disproportionate and a failure to consider mitigating factors (self-reporting, attempted remediation, lack of actual environmental harm).
- •Scania's initial representations to the Notice of Intent were not received by the Respondent due to an incorrect email address.
Legal Principles
The Tribunal's role is to determine if the penalty was erroneous due to factual or legal error or unreasonableness.
Schedule 5 of the Fluorinated Greenhouse Gases Regulations 2015
The standard of proof for imposing a civil penalty is the balance of probabilities.
Schedule 4, paragraph 1(2) of the Regulations
The maximum penalty is £200,000.
Schedule 4, paragraph 1(4) of the Regulations
The Environment Agency's enforcement policy (ESP) sets out a stepped approach to determining penalties, based on the Definitive Guide for the Sentencing of Environmental Offences.
Environment Agency enforcement and sanctions policy (ESP)
The penalty should reflect the extent to which the offender fell below the required standard and remove any economic benefit derived from offending.
Sentencing Council’s Environmental Offences Definitive Guidelines
Outcomes
The appeal was allowed.
The Tribunal found the use of the maximum £25/tCO2e cost in calculating avoided costs to be unreasonable, given it was an outlier and not reflective of the actual cost likely incurred by Scania. The Tribunal also found the Respondent erred by adjusting the penalty based on financial gain at Step 3, rather than Step 4 of the ESP, inadequately considering mitigating factors.
The £200,000 penalty was varied to £90,511.
This reduced penalty reflects a more accurate calculation of avoided costs (£78,360 using the £10/tCO2e figure actually paid by Scania in 2021), along with appropriate consideration of mitigating factors (self-reporting, cooperation, and attempted remediation, although ultimately unsuccessful) and aggravating factors (slowness in understanding regulations despite guidance).