Environment Agency consults on updates to its Enforcement and Sanctions Policy

On 10 August 2026, the Environment Agency (“EA”) launched a consultation on  proposed changes to its Enforcement and Sanctions Policy (“ESP”) and its proposed approach to exercising new and existing enforcement powers under certain new legislation, namely: 

• the Water (Special Measures) Act 2025 (“WSMA”);
• the Digital Waste Tracking (England) Regulations 2026;
• the Deposit Scheme for Drinks Containers (England and NI) Regulations 2025; and 
• the Control of Mercury (Enforcement) Regulations 2017.

The consultation, which is open until 4 October 2026, describes changes to the general policy principles, including how the EA assesses enforcement undertakings, a proposed additional penalty principle to better protect victims and simplified public interest factors to be taken into account when making enforcement decisions.

This article considers the context to the consultation, the key proposed changes to the EA’s existing sanctions policy regime and what this means for regulated businesses operating in the relevant sectors. 

Who should be aware of the proposed changes?

All businesses and individuals regulated by the Environment Agency, including environmental permit holders, waste and resources businesses, producers within packaging regimes, operators affected by digital waste tracking, and businesses subject to mercury or climate change schemes, will potentially be impacted by the proposals.

However, those operating in the water sector (including water undertakers, sewerage undertakers, water supply licensees and sewerage licensees) should pay particular attention to the proposed introduction of Annex 5, which establishes the EA's approach to exercising new civil sanctions powers under the WSMA (detailed further below). 

Background to the consultation

The EA’s rationale for amending its ESP follows a combination of new legal requirements and enforcement powers, aspects of which the EA and Defra have already consulted on. A January 2025 consultation on adding civil sanctions powers for packaging extended producer responsibility (“pEPR”) was issued, the EA’s response to which was published in October 2025, and between October and December 2025, Defra consulted on new penalties for water company offences, the Government’s response to which was published in July 2026.

The proposed reforms to enforcement in the water sector are being introduced against the wider backdrop of the ‘once in a generation’ overhaul of the industry, including those recommended under the Independent Water Commission’s report and affirmed in the Water White Paper. The WSMA, which received Royal Assent on 24 February 2025, significantly strengthens water industry regulators’ powers and introduced new enforcement mechanisms available to the EA in relation to water companies, including automatic financial penalties for specified offences and new civil sanctions which can be imposed on the civil standard of proof. This marks a departure from the requirement to establish an offense to the criminal standard of proof (beyond reasonable doubt) which still applies to non-water company regulated entities and individuals.  

The WSMA also provides the framework for new automatic penalties, new civil fixed monetary penalties and civil variable monetary penalties (unless limited exceptions apply). The consultation therefore seeks to explain how the EA intends to exercise these new powers in practice.

Changes to the EA’s general principles

The consultation introduces amendments to the EA’s overarching enforcement principles. While the EA’s core regulatory principles (including proportionality, consistency, transparency and accountability) and most of its existing penalty principles would remain unchanged, the EA proposes three significant reforms:

1. A revised approach to assessing enforcement undertakings: Detailed enforcement undertaking guidance has been addressed in the main body of the ESP. The consultation explains that the current consistency guidelines have led to a degree of inflexibility and that the revised approach is intended to support a wider-ranging, fair and proportionate use of enforcement undertakings, whilst also promoting greater consistency. The consultation also links the revised approach to a greater focus on environmental outcomes and benefits for third parties. This may afford the EA greater discretion when deciding whether an enforcement undertaking is an appropriate enforcement response.
2. A new penalty principle requiring the EA to consider victims and third parties: The consultation proposes a new penalty principle requiring the EA to consider victims and third parties (where known to the regulator) whose interests have been negatively affected by an environmental incident. This is a departure from the current ESP, which focuses on offender behaviour, remediation and deterrence but does not yet require consideration of those affected by environmental harm. The proposals are also reflected in Annex 1 (further below), which places greater emphasis on identifying affected parties and securing appropriate compensation where possible.
3. Simplified public interest factors: The consultation proposes to simplify the EA's expression of the public interest factors and revise the enforcement decision-making section so that it is framed more generally. The current policy contains a detailed list of public interest factors that the EA weighs when determining its enforcement response, including intent, foreseeability, environmental effect, financial gain, deterrence, compliance history, attitude and personal circumstances. The revised approach is intended to better reflect the EA's enforcement response and make the policy easier to navigate and apply in practice.

Summary of proposed changes to Annexes 1–5

Annex 1 – RES Act civil sanctions and enforcement undertakings

The proposed Annex 1 is narrower and more structured than the current position. It states that it relates only to original Regulatory Enforcement and Sanctions Act 2008 Act (“RES”) sanctions imposed on the criminal standard of proof, and that details of how enforcement undertakings are assessed can now be found in the main body of the policy (as stated above). 

Annex 1 also contains new sections on fixed monetary penalties; variable monetary penalties; restoration notices; compliance notices; stop notices; enforcement costs recovery notices and non-compliance penalty notices. Although many of these enforcement mechanisms were already available under the existing policy, the proposed Annex separates each sanction into its own section and provides greater clarity on when the EA is likely to use each enforcement option. In particular the proposals change how the EA calculates variable monetary penalties to reflect the removal of the previous £250,000 statutory cap from December 2023, confirming that penalties may now be imposed up to the same level as the maximum Crown Court fine for the relevant offence, including potentially unlimited penalties.

The EA has not amended the criminal standard of proof requirement for this section and retains the requirement that the EA must be satisfied beyond reasonable doubt that an offence has been committed before imposing a RES Act civil sanction (other than stop notices).

Annex 3 – Control of Mercury regime

The consultation does not propose any material changes to how the EA calculates mercury civil penalties or to the maximum penalty levels available, but instead seeks to provide greater transparency and consistency regarding the EA's overall enforcement decision-making to align its approach more closely with other regulatory regimes. In particular, the EA proposes that criminal sanctions will generally be reserved for breaches that create a serious risk of harm, cause actual environmental or public harm, involve fraud, bad faith or misleading conduct, or otherwise undermine the integrity of the regulatory regime. Administrative or lower-level compliance failures are more likely to be addressed through civil penalties imposed on the balance of probabilities.

Annex 4 – Environment Act 2021, waste and resources

The proposed changes to Annex 4 are more substantial than those proposed for Annexes 1 and 3.  The existing Annex 4 primarily explains how the EA will apply Environment Act 2021 civil sanctions to the pEPR regime, whereas the proposed Annex 4 expands the scope of the policy from a pEPR-focused Annex to incorporate the EA’s enforcement approach for both the Digital Waste Tracking (“DWT”) and the Deposit Return Scheme (“DRS”) regimes.

The proposals introduce detailed guidance on the civil sanctions available under DWT and DRS, including fixed monetary penalties, variable monetary penalties, compliance notices and enforcement cost recovery notices. For DWT in particular, the consultation proposes a dedicated enforcement framework, including a £1,000 fixed monetary penalty for lower-level breaches and variable monetary penalties, compliance notices and cost recovery notices for more serious or persistent non-compliance.

This Annex also develops further the concept of “regulatory integrity" as a form of harm when assessing breaches, stating that it is appropriate to rely on harm to the integrity of the regulatory system when considering how to apply the categories of harm.  In both the pEPR and DRS contexts, the EA proposes that variable monetary penalties should take account of the impact of non-compliance on the trust, transparency and effectiveness of the regulatory framework itself, even where there is limited direct environmental harm. Protecting the integrity of regulatory systems is therefore being viewed as an enforcement objective.

Annex 5 – water sector enforcement

Annex 5 introduces an entirely new enforcement framework containing substantial proposals affecting water companies only. It applies to water undertakers, sewerage undertakers, water supply licensees and sewerage licensees, and introduces three further types of civil penalty that can be imposed on the civil standard of proof: civil fixed monetary penalties, civil variable monetary penalties and automatic penalties:

• Civil fixed monetary penalties (“FMP”): proposed to be available for specified permit and abstraction/licensing offences, with the penalty amount depending on the water company’s turnover (the maximum being £20,000 for water companies with turnover of £250 million or more, which will apply to every statutory water and sewerage undertaker in England). Water companies would be able to discharge liability for a civil FMP by paying 50% of the penalty value within 28 days of receiving the notice of intent.
• Civil variable monetary penalties (“VMP”): proposed to be available for specified offences under the Environmental Permitting Regulations 2016 and Water Resources Act 1991, including operating without or other than in accordance with a permit, contravening permit conditions, failing to comply with notices, failing to keep required records, unlicensed abstraction or impounding, contravening abstraction or impounding licence conditions, contravening drought orders or permits, and failing to comply with water resources information notices. The EA would have discretion whether to impose a civil VMP and discretion as to amount, subject to a maximum of £500,000.
• Automatic penalties: proposed to be civil fixed monetary penalties that the EA must impose for conditions deemed into water company permits and licences by the Regulations made under the WSMA, subject only to exceptions where there are exceptional circumstances mitigating culpability, or where alternative enforcement action such as prosecution or a civil or criminal VMP is in contemplation or in progress. The WSMA similarly states that automatic penalties must be imposed unless exceptional circumstances mitigate culpability or alternative enforcement action is contemplated or in progress.

The EA also explains in Annex 5 that, as a starting point in deciding which enforcement option to use, it will base its assessment on harm and culpability and will decide whether a breach was committed with low or no culpability, negligently, recklessly or deliberately, in line with the Sentencing Council Guideline approach. Broadly, category 1 water company offending would normally lead to prosecution or criminal-standard VMPs, category 2 may lead to prosecution, criminal VMPs or civil VMPs depending on culpability, and category 3 or 4 cases may move into civil VMPs, civil FMPs, warnings, advice or guidance depending on seriousness and culpability.

What does this mean for regulated businesses?

The consultation represents the most significant update to the Environment Agency's ESP in recent years, introducing substantial new enforcement frameworks, particularly for the water sector under the WSMA. Compared with the current policy, the proposed ESP reflects a broader and more flexible use of civil sanctions; a greater focus on affected third parties; a new emphasis on protecting regulatory integrity and expanded powers to impose fixed, variable and automatic financial penalties. Regulated businesses should carefully review the proposals as the changes extend the enforcement mechanisms available to the EA and the circumstances in which they are likely to be used.

If you would like to discuss what the the Environment Agency's proposals might mean for your business, please get in touch with a member of our Environment Team. 

This article was written by Philippa Shepherd and Alex Bones.

The consultation describes the changes that we are proposing to make to our Enforcement and Sanctions Policy.

https://consult.environment-agency.gov.uk/environment-and-business/enforcement-and-sanctions-policy-consultation/