Water companies face strengthened environmental penalties regime in England

Powers enabling the Environment Agency (EA) to impose civil penalties against offences committed by water companies are provided for in The Water (Special Measures) Act (WSMA) 2025. Late last year, the government consulted on the implementation of those measures (31-page / 366KB PDF), proposing the introduction of new penalties for offences committed by water companies that could be enforced against the civil, rather than criminal, standard of proof – the balance of probabilities.

The aim, it said at the time, is to ensure minor to moderate water company offences – which include pollution reporting, storm overflow monitoring and abstraction failures – can be “enforced quickly, cost effectively, and proportionately”.

The government has now issued its response to that consultation in which it confirmed that it will take its proposals forward.

The changes will apply across a suite of penalties that water companies can face for environmental breaches. They include variable monetary penalties (VMPs) the EA can determine for specified offences up to a cap of £500,000, certain fixed monetary penalties (FMPs) the EA can impose that are determined by law, and automatic penalties (APs) that are levied in response to certain incidents of pollution.

Under the new regime, the level of civil FMPs and APs will vary depending on water company turnover.

Some water companies expressed concern, in response to the government’s consultation, about how the new regime might operate in practice. Those concerns include over “a lack of clarity on when civil standard FMPs would apply, including how decisions would be made between issuing VMPs or FMPs; how minor, moderate and more serious breaches would be distinguished; and how liability would be assessed where third-party factors contributed to an incident”.

In response, the government said the circumstances under which the EA will be required to apply APs will be prescribed in secondary legislation. It also confirmed that the regulator’s enforcement and sanctions policy will guide its decision-making around the categorisation of breaches by seriousness and whether it should impose FMPs or VMPs. That policy, it added, “requires a proportionate assessment of the nature of the breach, harm, culpability and circumstances of the event, including the role of any third‑party factors”.

Secondary legislation will set out the procedure the EA must follow to impose each of the new civil sanctions, as well as provide water companies with rights to make representations and bring appeals.

To assuage water company concerns about the potential for duplication of enforcement and in particular that the AP framework would not operate alongside other regulatory routes for the same breach, the government has confirmed that the EA's duty to issue an AP does not apply where criminal prosecution or a VMP is being considered or is in progress for the same breach. 

The government said the new measures will be introduced by secondary legislation when parliamentary time allows.

For “serious or high‑harm incidents”, the EA will retain current enforcement options, which include pursuing prosecution and imposing unlimited criminal standard VMPs.

Changes to the civil sanctions framework for breaches of environmental regulations in Wales are also under consideration.

Under the current Welsh framework, civil sanctions can only be imposed for some environmental breaches – if Welsh regulators wish to take action in other cases, they must pursue criminal penalties. In addition, to impose certain civil sanctions, regulators in Wales must satisfy the criminal standard of proof – beyond reasonable doubt.

In a consultation paper it recently published (115-page / 975KB PDF), the Welsh government outlined plans to commission a review of the current civil sanctions framework and confirmed that consideration is being given to lowering the standard of proof necessary to impose certain civil sanctions. This, it said, could mean sanctions could be imposed based on “a regulator’s ‘reasonable belief’ that a statutory requirement has been breached”. It acknowledged, however, that there are “differing perspectives” on the extent to which the current criminal standard of proof “should be retained or modified”. Its consultation closes on 14 October 2026.