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Brexit and UK environmental law - September update

  • United Kingdom
  • Environment
  • Diversified industrials - Chemicals

11-09-2017

This briefing considers the latest developments in relation to Brexit, including their likely impact on UK environmental law.

It seems clear that the UK will leave the EU by the end of March 2019, two years after the Government’s Article 50 notification. There seems to be broad agreement in Government to look for a transition period commencing at the point of exit and taking us through to our new trading relationship with the EU. But what is not yet clear is what the UK’s relationship with the EU will be during or after that period, nor how long the transition period will last. The ultimate arrangements will depend on the UK’s negotiations with the EU.

In the meantime, the Government has begun to issue a series of position papers setting out its thinking on various aspects of the withdrawal arrangements and the UK’s future relationship with the EU. The EU too has published its own position papers and it’s clear that consensus on a range of issues, including citizens’ rights, is some way away.

The European Union (Withdrawal) Bill

This Bill (also known as the Repeal Bill) was published 13 July 2017. As expected, the Bill provides for the repeal of the European Communities Act 1972 on exit day.

All EU-derived law will be retained as part of UK law, i.e. mainly laws which the UK has passed to implement EU Directives which would otherwise fall away when the 1972 Act is repealed. Examples are laws relating to waste, such as WEEE, batteries, packaging waste and waste management, as well as Restriction of Hazardous Substances (RoHS). The same will apply to environmental permitting, applicable to large industrial facilities in sectors such as energy, waste, water, manufacturing and mining, and public access to environmental information. Equally, the requirement for comprehensive Environmental Impact Assessments (EIA) on the development of large or environmentally significant facilities derives from an EU Directive on EIA.

All EU law which applies directly in the UK without any implementing law will be converted into UK law i.e. EU Regulations such as REACH, CLP (Classification, Labelling and Packaging) and the BPR (Biocidal Products Regulation) which would also disappear unless expressly converted into UK law. The aim is to prevent a regulatory vacuum on day 1 of the UK’s exit from the EU.

The Bill does not deal with any possibility of transitional arrangements.

The real challenge lies in how to adapt this converted law so that it works for the UK post Brexit. The Bill seeks to give the Government sweeping powers, for two years post Brexit, to prevent, remedy or mitigate any “deficiencies” in retained EU law which arise from the UK leaving the EU. The Bill provides a non-exhaustive list of “deficiencies”, which include where the relevant EU law confers functions on EU entities. The powers include transferring a function currently exercisable by an EU entity (e.g. ECHA (the European Chemicals Agency) in the case of REACH) to a UK public authority, whether existing or set up for the purpose.

It remains to be seen how these powers, which grant the ability to amend legislation to a Minister of the Crown and so take it away from Parliament, will be exercised. This is a really contentious part of the Brexit process. There are concerns that they could be used to make changes to policy, rather than operational detail. However, the Bill is clear that where these powers are exercised in some circumstances, including to create a new public authority or to confer on an existing authority a function currently exercised by the EU, the approval of both Houses of Parliament must be obtained.

UK courts must apply CJEU (Court of Justice of the European Union) case law decided before exit, though the UK Supreme Court is given the right to depart from it. They do not have to follow post Brexit CJEU decisions, but can do so if they consider it appropriate.

The Bill provides that UK courts will be able to interpret UK law post Brexit in accordance with “retained general principles of EU law”, defined as general principles of EU law as they have effect in EU law immediately before exit day and in so far as relevant to the Bill’s domestication of EU law and rights. These principles must however have been recognised in CJEU law before exit, (such as proportionality) and they can be modified from time to time.. There may be debate in Parliament as to whether or not this is intended to cover general principles of particular EU law topic areas, such as environmental law. or is limited to proportionality and other principles given as examples in the explanatory notes to the Bill. However, so far as environmental law is concerned the point may be academic as many of what we would see as key environmental principles are already embodied in UK legislation. It’s difficult to imagine that they won’t be retained going forward.

In order to become law, the Bill must be passed by both Houses of Parliament and the Government’s small majority could make the Bill vulnerable. With politics at the heart of the debate, it seems likely that there will be changes to the text of the Bill as it progresses through Parliament.

A transition period

The idea that the Government will seek a transition period of potentially up to three years post Brexit has been welcomed by industry. We do not know what this transition period will entail, as nothing has been published or set out by the Government, and it will need to be negotiated with the EU. The idea will be that it will smooth the path between where we are now and a future treaty-based relationship with the EU. Whether it will take the form of temporary EEA/EFTA membership, or some bespoke transition arrangement remains to be seen.

The three main areas industry is watching in the Brexit talks are migration, customs and tariff-free market access, but the position papers issued recently by the Government still leave key questions unanswered.

What does the UK’s future relationship with the EU look like?

It’s too early to say, save that the Government continues to stress that the UK wants to build a new, deep and special partnership with the EU. Whilst the current political situation presents a number of challenges, it has given the opportunity for the UK’s approach to Brexit to be reassessed and repositioned. The Government’s position papers, outlining its position and principles on various aspects of Brexit, give us the clearest indication yet of the direction it proposes to take on those aspects in negotiations with the EU.

There is still no suggestion that the UK will seek a “Norway model”, involving membership of the European Economic Area (EEA) or a “Switzerland model”. What does seem clear however is that the Government is inclined to a “softer” Brexit than was the case before the election in June 2017.

Continuity in the availability of goods for the EU and the UK

A key concern is to minimise supply chain disruption by ensuring that goods available at the date of withdrawal continue to be available post Brexit. The Government’s current thinking is set out in its position paper “Continuity in the availability of goods for the EU and the UK”, published 21 August 2017.

The Government proposes:

  • that goods placed on the Single Market before we leave should continue to circulate freely in the UK and the EU, without additional requirements or restrictions. Currently available definitions of what is meant by goods “placed on the market” will apply.

This principle is consistent with an earlier position paper published by the European Commission “Goods placed on the Market under Union law before the withdrawal date”; and

  • where businesses have undertaken compliance activities prior to exit, they should not be required to duplicate them in order to place goods on the UK and the EU market after exit, regardless of where the activities took place. This includes approvals, certificates and registrations issued prior to exit being recognised for both UK and EU markets.

The Government gives pre-exit collecting and submitting data on the hazards and risks of a chemical substance as an example of such activities. This would avoid a need for significant duplicative compliance activity after exit, for example collecting and submitting data again.

This second proposal suggests that the Government is looking for some form of “mutual recognition” for pre-exit compliance activities. This is a welcome development for the chemical sector as, it would appear to include REACH registrations made pre-exit. Where this ends up will depend on the outcome of the UK’s negotiations with the EU.

Impact on industry

  • UK law which implements EU Directives, including those relating to environmental permitting and waste are already administered and enforced by UK based bodies (e.g. the UK Environment Agency and/or Local Planning Authorities), so its conversion into UK law should be relatively straightforward.
  • Regulatory equivalence between the UK and EU may be achievable in the short term through the Bill. However it is likely to be difficult for the UK to maintain over time without any formal opportunity to input into and influence EU law, as well as EU-derived technical guidance, research and standards coordinated by the European Commission. The UK will lose its seat at the EU table post Brexit, along with its right of UK representation on Member State Committees.
  • UK industry is not arguing for lower regulatory standards but for regulatory consistency and continuity. The UK has spent time and money setting up complex producer responsibility arrangements to deal with ever increasing waste streams such as WEEE. So far as legislation relating to product compliance is concerned, e.g. the RoHS Directive, it seems even less likely that there will be any major change as industry has moved on in response to it.
  • There are however concerns that around the time of the UK’s exit from the EU, there will be new waste recycling targets in the EU in the form of the Circular Economy Package. The UK is already struggling to meet 2020 targets for household recycling, and the UK could fall further behind if future EU regulations are not applied domestically. There has been some industry comment that the UK faces “a stroll to the bottom” if it fails to implement ambitious regulations and standards post Brexit.
  • Careful consideration will need to be given to the EU ETS (Emissions Trading Scheme) in terms of conversion into UK law. The UK will leave the EU before Phase III of the scheme expires, and with negotiations underway for Phase IV (commencing on 1 January 2021), the timing is challenging. The CIA is calling for a UK alternative to the EU ETS that not only delivers CO2 emissions reductions but supports the ability of UK chemical businesses to compete on a global scale.
  • Although mutual recognition is on the agenda from the Government’s perspective, it’s too soon to say how this will be resolved in negotiations with the EU. For the chemicals sector, a key priority now is consideration of available options in the light of the upcoming 2018 REACH registration deadline. Flexibility in new data access agreements is also essential, so a review of SIEF Agreements, Consortium Agreements and Letters of Access is recommended to include where possible the ability to transfer data access to an entity in the new-EU/consider if rights are sufficient to allow access for UK REACH purposes.
  • HSE looks set to lose its current insights and input into biocidal regulation at EU level when the UK leaves the EU. It seems that the European Commission does not envisage any ongoing role for the HSE post Brexit in risk assessment and other procedures for biocidal products, plant protection products and medicinal products. It has stated that the Withdrawal Agreement must ensure that any which are ongoing at the withdrawal date are transferred where appropriate to the competent authority of another Member State.

Equally UK HSE has indicated that it can’t say whether it can commit to any new substance evaluation or risk management option analyses until the negotiations are finalised.

  • Continuity of supply on exit day is a key concern for any business selling from or into the UK. It’s not too early for supply chain discussions to minimise the risk of market disruption when the UK leaves the EU in March 2019. The Government’s position paper, “Continuity in the availability of goods for the EU and the UK” referred to above merits particular consideration.

The Government has confirmed that it will continue to engage with businesses and consumer organisations to understand more about their concerns, in view of the UK’s objective to provide legal certainty and avoid business disruption. It’s essential for industry to stay close to Government with a view to influencing the Brexit process.

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