What should be done if a stakeholder makes a request to the government for enforcement to rectify violations in a scenario where the offender does not have full power to comply because of a reliance on third parties? The Administrative Division of the Dutch Council of State ruled on 23 January 2019 that an administrative body cannot simply reject an enforcement request in such a situation, but must consider whether, for example, the imposition of an order subject to a penalty payment may provide an incentive for the actual termination of the violation.
In this artikel we discuss the lessons for practice, the case and the outcome.
- What should companies that depend on third parties for compliance with legal requirements learn from this? What can they do to ensure compliance with standards? This judgment shows that they cannot avoid enforcement solely by stating that they are dependent on third parties. They will have to demonstrate that they will continue their efforts with concrete measures (e.g. changes in the business operations) in order to come as close as possible to the standards applicable to them.
- Compliance with legal standards is a headache in enforcement practice if the addressee of the standard does not have full control over its ability to meet the standard due to its dependence on third parties. The most simple solution for all parties involved (addressee of a standard, government and third parties) would be to amend the law or regulation so that it is based on a feasible standard (i.e. a standard that can be achieved with the necessary efforts within a certain period of time).
- If that does not happen (as in this case) an administrative body cannot simply refrain from taking enforcement action – especially not in the case of a violation that has been going on for years. It is then up to the authorities to give proper reasons for their decision whether or not to refrain from taking enforcement action. The relevant circumstances of the case must be weighed, including the measures that the offender has taken and possibly still intends to take, as well as the question of whether enforcement can lead to an incentive to take additional measures that will eventually lead to the termination of the infringement.
- Recycling Network has been working for years to ensure that the recycling standard for glass packaging (laid down by law in the Packaging Management Decree 2014) is met. In principle, this standard is aimed at producers and importers. However, it can be determined that producers and importers are jointly responsible for meeting this standard; in which case the obligation to comply with the recycling standard does not apply to producers and importers, but to the legal entity to which they pay a waste management fee. Stichting Afvalfonds Verpakkingen (Afvalfonds) is such a legal entity, and is therefore responsible for compliance with the recycling standard. In order to comply with this standard, Afvalfonds depends on third parties, including glass producers and importers.
- It has been established that Afvalfonds has not been able to meet this standard for a number of years. Recycling Network has therefore submitted a number of enforcement requests to the State Secretary for Infrastructure and the Environment (State Secretary). The State Secretary rejected these requests by pointing out, among other arguments, that Afvalfonds is dependent on third parties and had in fact taken additional measures (including a plan of action) following an earlier warning.
The question in this case was whether the State Secretary could have rightly refrained from taking enforcement action, under the given circumstances.
Outcome of the case
The Division ruled that the State Secretary should not have simply refrained from taking enforcement action against Afvalfonds. According to the Division, the State Secretary did not provide sufficient justification for her decision not to take enforcement action in this case, for example by pointing out the fact that the Waste Fund is dependent on third parties for compliance with the recycling standard.
Although Afvalfonds is dependent on third parties for compliance with the statutory standard – the recycling standard for glass packaging – this does not alter the fact that measures could have been (for example) prescribed in the form of an order for periodic penalty payments, to bring the recycling standard closer to being met. An order for a penalty payment can act as an incentive to actually put an end to the violation, if necessary by means of other or additional measures. By not taking enforcement action, this incentive was lacking, according to the Division. As a result, the Division considers the State Secretary’s decision to be in conflict with the obligation to state reasons, and that it must decide again on the Recycling Network’s request for enforcement.