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UTILITY WEEK | 11TH - 17TH MARCH 2016 | 15 Policy & Regulation Market view W e all knew the referendum was coming, but what we did not know was when. That question has now been answered: 23 June 2016. Now that the majority of politicians have decided whether they want to support the In or the Out campaign, businesses are start- ing to ask themselves what an exit from the European Union would mean for them. In the utilities sector one of the key impacts of an Out vote would be in relation to the environmental controls that opera- tors are subject to. Many EU environmental controls have come in the form of European directives, which have then required imple- menting legislation in the UK. There are, however, a number of direct EU controls in the form of regulations, such as the Trans- frontier Shipment of Waste Regulations. These have direct effect and do not require any implementation at a member state level. Alongside the legislative controls, there is case law that originates in the European Court of Justice. This court has been par- ticularly active in interpreting the many and complex EU environmental laws. In addition to the legislative controls and the case law, we also have European-based policy in relation to environmental protec- tion, such as the Seventh Environmental Action Protocol, which determines the focus of EU environmental controls from 2014-20. So what happens if on 23 June the UK votes to leave the EU? If the decision is to leave the EU, there will be a managed exit. The European Treaty provides for a two-year negotiation period, meaning it is not something that would hap- pen overnight. Post-exit, there would be period of renegotiation in which the post- Brexit model was implemented. Many com- mentators think this could take ten years to finalise depending on the model chosen. That is, a Norwegian-style European free trade agreement, or the Swiss approach of multiple bilateral agreements. During this post-Brexit hiatus, it is unlikely the government would introduce any wholesale changes to environmental controls in the UK. It is, however, likely the government would have to move to plug any regulatory gaps le as a result of Brexit, such as the sudden absence of directly applica- ble controls, or where a UK Act or regula- tion contained "referential" draing (that is, completed by reference to the relevant EU controls as opposed to specifically address- ing the issue), or where you have EU-wide ment for Environment, Food and Rural Affairs (Defra) has already looked at what environmental regulation might look like aer Brexit, but Defra is not prepared to share the details of its study. It is known that the department has gone as far as con- sidering what a complete rewrite of envi- ronmental controls might look like: a single Environment Act, much like the Health and Safety at Work Act 1974. That sounds quite radical, but in a post-Brexit world might not be that far-fetched. Any decisions of the European Court of Justice would no longer be binding. They would no doubt still be influential in terms of the UK courts' interpretation of environ- mental controls, but inevitably the UK courts might be asked to reconsider points that had already been decided by the European court. The UK government would also need to step into the policy vacuum it has created over recent months in the environmental arena by setting out its detailed plans for the protection of the environment, something to date it has been reluctant to do. There might be the added complication of Scotland then requiring a further referen- dum of its own in relation to independence from the UK. If Scotland voted to leave the UK, it might re-join the EU, meaning further fragmentation of environmental controls north and south of the border. At present, the UK strongly influences the form and content of EU environmental con- trols. Once outside the EU we would lose that ability, but through the adopted post-Brexit model might have to continue complying with a number of EU environmental controls. It is clear that the environmental arena is one area where the UK could be signifi- cantly worse off if it decides to the leave the EU. That is because of the short to medium- term uncertainty as to what environmental controls would apply during the interim hia- tus, but also because of the complete lack of long-term clarity as to what the post-Brexit model would mean for environmental con- trols in the UK. Keep that in mind when vot- ing on 23 June. Simon Colvin, partner, Weightmans Brexit and the environment Much of our environmental legislation is based on EU directives and case law, so what might Brexit mean for rules safeguarding the environment? Simon Colvin explains. schemes such as the EU Emissions Trading System. Only once the long-term future was cer- tain, and the post-Brexit model agreed and being implemented, could the government consider how it might wish to remodel the package of UK environmental controls. According the post-Brexit timeline, that could take ten years or more. It is widely understood that the Depart- The UK would be "the frog in the boiling saucepan of water" if we vote to remain It would be the biggest "gamble of the century"if the UK votes to leave Average of six polls from 13 February 2016 to 23 February 2016 Source: www.WhatUKThinks.org/EU VOTING INTENTIONS 60% 50% 40% 30% 20% 10% 0% Remain Leave 45% 55%