United Utilities Water plc v. Environment Agency for England and Wales

The appeal concerned the construction of regulation 5.3(c)(i) and (ii) in Part 1 of Schedule 1 to the Pollution Prevention and Control (England and Wales) Regulations 2000 and, in particular, whether biological or physico-chemical treatment required a permit only when the "final compounds or mixtures" produced and discarded were created and discarded within the same installation.

The House held that the words "which results in final compounds or mixtures which are discarded" should be read purposively and that the relevant treatment falls within the permit regime where it forms part of a process that results in a discarded product, even if the final disposal occurs at a different site. The court emphasised the Framework Directive distinction between disposal and recovery and the environmental protection purpose of the Regulations, and rejected a narrow, literalist reading that would limit the requirement to co-located final disposal.

The appellant, United Utilities Water plc, sought declaratory relief that a number of its sewage treatment plants did not require permits under the Pollution Prevention and Control (England and Wales) Regulations 2000 because the plants performed intermediate biological or physico-chemical treatment and the final product destined for disposal was produced or discarded at a different site.

• Background and facts: United Utilities operates numerous sewage and sludge treatment plants. Some plants performed preliminary treatment and thickening, with further digestion, dewatering and final conditioning carried out at a central facility (Shell Green). Shell Green produced sludge cake which was in part disposed of (incineration or landfill) and in part recovered (spread on agricultural land).
• Procedural posture: United Utilities commenced Part 8 proceedings seeking declarations that 23 (or alternatively 18) plants did not require permits. Seven test sites were tried; the House of Lords heard the appeal after trial and the Court of Appeal decisions ([2006] EWCA Civ 633; reported [2006] Env LR 42 and the trial at first instance [2006] Env LR 32).
• Issues framed: (i) whether the phrase "which results in final compounds or mixtures which are discarded" in section 5.3(c) of Schedule 1, Part 1 requires that the final discarded product be produced and discarded at the same installation; (ii) whether intermediate treatment at an upstream plant is caught by the permit requirement when final discarding occurs downstream.
• Court's reasoning: the House adopted a purposive construction informed by the Framework Directive and the structure of Annex IIA (D1–D15) and Annex IIB of that Directive. The court recognised the clear policy distinction in Community law between disposal and recovery and concluded that reading "final" and "discarded" as requiring co-location would be irrational and contrary to the environmental protection aim. The court examined cited authorities including Marleasing and SITA, and concluded that the domestic provision should be interpreted to cover treatment that forms part of a process producing a discarded product even if final disposal takes place elsewhere. The appeal was dismissed.

The judgment also notes practical consequences for United Utilities' centralised system and records that policy concerns about proportionality of permit burdens are matters for the regulator or legislature rather than the court.

Appeal dismissed. The House held that regulation 5.3(c)(i) and (ii) of Schedule 1, Part 1 of the Pollution Prevention and Control (England and Wales) Regulations 2000 must be read purposively: biological or physico-chemical treatment is caught by the permit requirement where it forms part of a process that results in a discarded product, even if the final discarding occurs at another installation. A narrow reading requiring co-location was rejected as irrational and contrary to the Directive's distinction between disposal and recovery.

First instance: Nelson J ([2006] Env LR 32). Court of Appeal: [2006] EWCA Civ 633 (reported [2006] Env LR 42). House of Lords: appeal heard and dismissed [2007] UKHL 41.