International law firm Gowling WLG (formerly Wragge Lawrence Graham & Co) has assisted its client Hovis in overturning a penalty notice issued under a Climate Change Agreement (part of the Climate Change Levy regime). 

The Climate Change Levy is a tax on carbon emissions produced by organisations. Businesses which commit to carbon reduction targets in the form of a Climate Change Agreement (CCA) pay a reduced rate of the levy. If a party to a CCA fails to meet its target, the Environment Agency, as the administrator of the CCA scheme, can issue a penalty (or 'buy-out') notice for a specified amount.

Hovis is party to a CCA falling under an umbrella agreement between the Agency and the Food & Drink Sector Association. In May 2015, the Agency issued Hovis with a penalty notice, stating that it had failed to meet its target for the 2013-2014 period.

Public Law & Regulation team partner John Cooper led the Gowling WLG team, assisted by principal associate Chris Warburton. They worked alongside Hovis General Counsel Helen Selby.

The team asserted that the Agency had based its calculations on a misinterpretation of the rules of the scheme and also its own policy documents, which led it to take no account of a facility at which Hovis had achieved significant energy efficiency savings. The team argued that these savings should have been taken into account.

The tribunal agreed, concluding that: "the Tribunal finds it plain that the correct interpretation of the agreement and related materials is the one advanced by the appellant". Hovis had met its targets under the scheme and the penalty notice was quashed.

John Cooper said: "We are pleased to have succeeded in securing a positive outcome for Hovis in this appeal. Hovis takes its climate change obligations very seriously and is fully compliant with them, and the Environment Agency's penalty notice never had any legal justification. The tribunal's clear decision vindicates the stance that Hovis took in opposing the notice."

Gowling WLG has been Hovis' legal adviser since 2014. The Environment Agency was advised by Environment Agency Legal Services.

The Public Law & Regulation team advises on a broad range of issues including the interpretation and application of statutory and regulatory frameworks, development of new legislation, human rights and equalities issues, freedom of information, and judicial review. Its work covers a wide range of sectors including energy, water, health and care, education, food and drink, pharmaceutical, telecoms, gambling and transport.