Commentary on provisions of the Act Section 8: Automatic penalties for certain offences
This section imposes a duty on the environmental regulators (the Environment Agency and the Natural Resources Body for Wales) to impose automatic penalties for specified offences committed by a water company (as defined in section 7(5) of the Act).
	The offences that may fall within scope will be set out in secondary legislation (subsections (3) to (5)). This is limited to the offences included in section 7(3) of the Act.
	Exceptions to the duty to apply an automatic penalty include where the regulator determines that there are exceptional circumstances which mitigate the company’s culpability. This could include circumstances where breaches occur for reasons outside the water company’s control, such as IT failures or where there has been third-party interference with company assets. Exceptions are also applied where alternative enforcement action is contemplated or in progress, such as criminal proceedings or variable monetary penalties.
	Regulations applying the new duty will have to make provision that follows the procedure for imposing a penalty set out at section 40 of the Regulatory Enforcement and Sanctions Act 2008 ("the 2008 Act"), effectively requiring regulators to issue a notice of intent (section 40(2)(a) of the 2008 Act), as well as offering the company the opportunity to make representations about the proposed penalty (section 40(2)(c) of the 2008 Act). Companies will have a right of appeal to the first-tier tribunal for the existing grounds set out in the 2008 Act, but may be prevented from making an appeal against the regulator’s determination as to whether exceptional circumstances apply which mitigate their culpability – subsection (7).