Thames Water fined 'record-breaking' £1 million for pollution offences

The company was ordered to pay a fine of £1 million, plus costs and a 'victim surcharge' payment, by St Albans Crown Court after pleading guilty to two charges under the 2010 Environmental Permitting (England and Wales) Regulations. The fine is the highest ever issued to a water company in a prosecution brought by the Environment Agency (EA).

Environmental law expert Alison Messenger of Pinsent Masons, the law firm behind Out-Law.com, said that recent environmental sentencing cases had shown "a steep upwards trend in fines", particularly against organisations with high turnovers.

She said "the court's comment in this case clearly shows that organisations need to carefully review any 'at risk' sites or equipment now and take action as soon as possible to rectify any areas of concern".

"It is not sufficient to merely identify areas for improvement - organisations need to actively manage those improvements and evidence the results. Indeed, in this case, there had been repeated discharges but Thames had shown an improvement in compliance, and had spent £30,000 on replacing inlet screens," she said. "The poor performance of the screens had caused equipment at the treatment works to block and discharge sewage, but Thames' remedial expenditure doesn't come close to the £1,018,233.08 bill the company now faces on top of its own legal costs"

In his sentencing remarks, Judge Bright QC said that "the time has now come for the courts to make clear that very large organisations … really must bring about the reforms and improvements for which they say they are striving because if they do not the sentences passed upon them for environmental offences will be sufficiently severe to have a significant impact on their finances".

The EA began investigating Thames Water after receiving complaints from the Canal and Rivers Trust, and from the general public, about pollution in the Wendover, Hertfordshire arm of the Grand Union Canal. The company has a permit to discharge treated waste from Tring Sewage Treatment Works into the canal, subject to conditions which aim to prevent any negative impact either on the canal itself or on any activities such as boating and fishing which take place on or in it.

The court heard that poorly performing inlet screens at the site had caused equipment at the works to block, leading to sewage debris and sludge being discharged into the canal. When working properly, these screens are supposed to remove most of the debris from the waste water before discharge. The company explained to the court that it spent £30,000 on replacing the screens among other steps which had improved its recent environmental performance, and that there was no financial motivation for or gain from the offences.

A new sentencing guideline for environmental offences, which came into force in 2014, was widely expected to lead to an increase in the fines set by courts in these cases, particularly those involving the largest businesses. The guideline sets a range of appropriate fines based on the size of the business and the seriousness of the offence, and allows courts to consider a wider range of relevant factors including an offender's financial circumstances when setting the level of the fine.

Last year, in another case against Thames Water, the Court of Appeal warned that companies needed to appreciate the seriousness of regulatory breaches and that penalties should bring home the gravity of the offence to management and shareholders alike. In particular, the judge commented that higher fines were likely to be imposed for second or repeat offences, and that fines of as much as £100m might even be appropriate where a repeat offender has a large turnover.