Sectoral Insight: Energy and Environment
‘Henry VIII’ may take the environment's head off in the divorce
Last week, our sectoral insight focused on the risk Brexit poses for the agricultural sector. One such issue was the future of environmental protection in the rural environment. As a study by the Land Use Policy Group (cited in last week’s bulletin) suggests, loss of subsidies could cause higher intensity grazing patterns, potentially damaging certain rural environments irreversibly.
However, there are other Brexit threats stemming not just from a change in farming practices but from a divergences in the legal and regulatory system itself.
The point of reference here is the European Union (Withdrawal) Bill, which aims to translate existing EU law into domestic British law, to stop the UK falling into a domestic regulatory abyss on Brexit Day, and to give the Government sweeping powers (Henry VIII clause) to change certain elements of the laws.
A recent report by UK ELA (UK Environmental Law Association) has found that only ‘minimal changes’ will be required to existing environmental law when it is converted into British law. While the workload of government Ministers thus seems alleviated, another report by Client Earth, a not-for-profit environmental law organisation, is much more critical of the Withdrawal Bill, and sceptical of the Government’s approach to environmental law. Indeed, on all fronts – health spending, retention of agricultural subsidies etc. – the government has promised the earth, but it remains to be seen whether the environment will be one of its priorities when concessions have to be made.
Environmental law will be strongly affected by the legal changes imposed by Brexit because much of the UK’s body of environmental law originated in Brussels. In addition, EU laws which establish environmental and eco-design standards are monitored and enforced at the Union level. With the UK leaving the EU and its various agencies, as well as going beyond the corrective arm of the European Commission and outside the jurisdiction of the Court of Justice (CJEU), it remains unclear who would check the implementation of and adherence to standards set by EU law.
In the future, if the UK fails to uphold its commitments to the environment as laid down in law, there will be no Commission to reproach it and no CJEU to arbitrate. It has been suggested that such grievances could be brought before UK courts by NGOs, environmental organisations or individuals. But this is expensive, and there is not the same level of legal certainty as would be guaranteed by the standard Commission infringement procedure against a Member State. UK judges- operating under Common Law traditions when interpreting a CJEU jurisprudence - may well instead establish new UK-only legal precedents. Divergences will then creep in between EU and UK implementations of similar regulations.
The Grayling View
Although EU and UK environmental law will remain identical for a time, they will eventually diverge. Environmental associations are urging the government not to be too heavy-handed with the Henry VIII clauses to change the law in what is seen as an undemocratic procedure and to prevent lobbying to ‘tweak’ them on the part of business. Indeed, businesses in some cases may see this as an opportunity to change the environmental regulatory landscape in the UK to their favour.
Additionally, after Brexit, the checks and balances, and legal remedies for breaches of environmental regulation will be in upheaval, without the Commission and the Court of Justice to hold the Government to account, removing a source of certainty for business.
Firms and trade associations should be aware of the environmental provisions pertaining to their business, and be conscious of the fact that their own environmental obligations may change in the future – whether they operate solely in Britain, or conduct business in both the EU and the UK.
The highlights from the UK:
MPs and Peers feast on Brexit
Brexit it appears is the flavoring of choice for the majority of ‘dishes’ on the Parliamentary menu/order paper. Ahead of the three week party conference season recess MP’s debated Citizens’ rights and the Commons International Relations Select Committee debated the UK’s post-Brexit role in the Balkans. For their part the Lords were also kept busy with EU Select Committee hearings on reciprocal health care, financial supervision, consumer rights protection, competition and sanctions policy and their own discussion on Citizens’ rights.
However, the plat de jour was undoubtedly the final day of second reading debate on the Government’s EU Withdrawal Bill, which in classic Commons fashion went on deep into the night. Despite vocal opposition from the SNP and Liberal Democrats, as well as Labour Leader Jeremy Corbyn’s decision to whip his MPs to oppose the Bill and its Shadow Brexit minister Keir Starmer’s forensically confident dissection of its democratic deficiencies, it passed second reading. With a rump of Labour MPs defying the whip, including former cabinet minister Caroline Flint, potential Tory rebels Dominic Grieve, Nicky Morgan, Ken Clarke and Anna Soubry are holding their fire until amendments to the text have been put on the table at third reading in October.
Amid the deluge of amendments submitted to the Speaker are 16 Grieve-sponsored initiatives, backed reportedly by nine Tory colleagues, containing a demand for Parliament to have a final vote on the Brexit deal. Labour have non-exhaustively submitted amendments seeking to protect workers’ rights, environmental standards, human rights and equalities law from ‘excessive tweaking’ using statutory instruments.
The Grayling View
Having now appointed Commons Select Committee memberships and with the first major piece of Brexit legislation arriving in the chamber, MPs are finally getting down to the dirty legislative scrutiny demanded by Brexit.
Despite securing second reading passage of the EU Withdrawal Bill, Government Whips will board the train to Manchester Piccadilly aware that conference season provides only a brief hiatus before they return to the trenches. The Bill is likely to be amended in third reading and the Whips will be running a rearguard damage limitation operation, but will eventually secure support in the Commons for the Bill. Much will come down to the Speaker's judgment in choosing which amendments to put forward to the vote.
Perhaps the most pressing concern should be the policy vacuum that Brexit threatens to create elsewhere, due to capacity and resource constrains. The Government also published its 218 page Data Protection Bill but there is a risk that insufficient time will be found to scrutinise it effectively.
The highlights from Brussels:
May accepts European Parliament speaking invitation, with a caveat
Prime Minister May is coming to Brussels and will engage with the European Parliament (EP). However: she will only address some MEPs, not the whole house. Nor is it clear when or how public any meeting will be. An invitation was extended to her to speak before a plenary session which she has declined, instead agreeing to address the ‘conference of presidents’ of the Parliament’s political groups—essentially the party big wigs.
The Conference of Presidents was recently briefed by the EP’s lead Brexit ‘Sherpa’, Guy Verhofstadt, and on the basis of his advice will recommend that the Parliament adopt a Brexit resolution in October focusing on the rights of EU citizens, priorities on the Irish and Northern Irish border and the financial situation. The EP is also unlikely to agree that sufficient progress has been made in the talks to move to Phase 2.
Meanwhile, the respected political observatory, VotewatchEurope, has conducted its most recent survey of MEPs' activity and influence. It confirms, perhaps unsurprisingly, that British MEPs - with a few honourable exceptions - are declining in power in the institution.
The Grayling View
Being asked to address the European Parliament was always going to be problematic. If the Prime Minister refused, she would be seen to snub an institution that prizes its power and that will have a say on the UK’s exit (and future trade deal.) If she accepts, she risks making a speech publicly in the chamber which could be a PR nightmare, given her communications style. So she has instead gone for a half-way measure.
Whatever the forum, the challenge for Mrs May is to recognize the power and key personalities in the Parliament and to use this visit to build relationships for the Brexit long haul. Sadly for her, those power-brokers will not be British Conservative MEPs, who used to have strong roles in the Parliament.
Clients might also use this point in time for some discreet advocacy towards to the Parliamentary groups, who no doubt will relish the opportunity to meet May face to face.
Dates for your diary
22 September 2017 - Key note Speech by Prime Minister May, Florence
24 September 2017 - German Federal elections
w/c 25 September 2017 - Fourth Negotiating Round
28 September 2017 - GBU Seminar - 'The Weakest Link? Brexit and your Supply Chain'
w/c 9 October 2017 - Fifth Negotiating Round
11 October 2017 - GBU Brexit Breakfast Club
8 November 2017 - GBU Brexit Breakfast Club
19-20 October - European Council Summit - Sufficient Progress Checkpoint
14-15 December - European Council Summit
1 January 2018 - Bulgarian Presidency of the Council
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
Autumn 2018 - Spring 2019 - Possible Scottish independence referendum
1 January 2019 - Romanian Presidency of the Council
March 2019 - UK expected to leave EU
Grayling Brexit Unit
Our Grayling Brexit Unit brings together the very best consultants from across the Grayling network and includes those who have direct experience of working alongside the leading political figures charged with negotiating Brexit in London and Brussels.
The Grayling Brexit Unit is here to support, guide and inform the success of your business and identify how the political dynamics will change as a result of Brexit in both London and Brussels. We are your Brexit experts.
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