White Paper on environmental liability draws close

Work on a White Paper on environmental liability is now nearing completion within the European Commission's Environment Directorate, DGXI. The current target date for a collective Commission debate on the paper is June or July, although a delay until after the summer recess is possible. But even with a favourable wind, and assuming that opposition from key Member States can be overcome, an EC liability regime is unlikely to be in place for five years.

The desirability of an EC environmental liability regime has been a highly controversial subject ever since it was first discussed in the early 1980s during the passage of the 1984 Directive on transfrontier shipment of hazardous waste. Following abortive attempts in 1989 and 1991 at a Directive on civil liability for damage caused by waste, the current initiative took off in 1993 with a Commission Green Paper on remedying environmental damage (ENDS Report 218, p 38 ).

Responses to that document revealed sharp disagreements about the need for an EC regime among both Member States and interest groups. To strengthen its understanding of the subject, DGXI sponsored two consultancy studies in 1995-96 on legal and economic aspects of the issue (ENDS Report 256, pp 39-40 ). It also held consultation meetings with other DGs, Member States and interest groups.

The Commission's collective decision in January 1997 to approve the preparation of a White Paper was something of a victory for Environment Commissioner Ritt Bjerregaard, after speculation that opposition to EC liability rules from key Member States and industry groups might have brought the initiative to a halt.

The White Paper will present proposals for a core set of liability rules at EC level. Member States would be allowed to retain some rules of their own, provided they complied with the EC rules and any supplementary rules were stricter. The objective would not be complete harmonisation, but a framework around which national legislation could coalesce instead of drifting further and further apart.

If the White Paper is adopted by the college of Commissioners, a public debate on its proposals would be accompanied by DGXI drafting a Directive to put them into effect. If this, in turn, was approved by the Commissioners, the draft Directive would then have to go through the extended decision-making procedure involving the Council of Ministers and the European Parliament before it could become law.

Ultimately, a qualified majority would be needed in the Council, then a period of 18 months or so for implementing legislation to be enacted in each Member State. So there are still many rounds to go before an EC regime could become law, with 2002-3 probably being the earliest realistic date for this to happen.

Given the formidable opposition to any kind of EC liability regime, it also remains possible that the entire project will be derailed. If this happens, however, there is every sign that national liability rules will continue to tighten and that liability articles will be written into other, sectoral Directives - such as those proposed in the past for hazardous waste, landfills and genetically modified organisms, but which were deleted in favour of a future single, consistent regime.

Many key elements of the liability rules favoured by DGXI were outlined by Ms Bjerregaard and her officials in 1995-96 (ENDS Report 260, pp 38-40 ). Drafting of the White Paper has inevitably reopened some of the debate within the Commission, and so nothing can be taken for granted. Nevertheless, the package is likely to include the following:

  • A strict liability standard, in line with most recent legislation at national and international level.

  • The scope of the regime to be directed mainly at dangerous activities as defined in other EC legislation.

  • Application only to future damage, leaving the rules for dealing with the backlog of historic pollution to Member States, although with some doubts as to how to draw the line between past and future.

  • Provisions on damage to natural resources - the unowned environment - such as habitats and species, subject to some kind of cost-benefit restraints and possibly to development of improved damage valuation and restoration techniques.

  • Rules for apportioning liability in multiple party cases on as fair a basis as possible, although it is still unclear whether that means a proportionate liability scheme or some form of allocation system which keeps joint and several liability as an incentive to settle.

  • A focus on the operator of the polluting activity at the time of the offending pollutant release as the primary liable party, with Member States and other plaintiffs obliged to pursue this polluter before any other responsible parties designated under national law.

  • Definite coverage of contaminated sites and natural resources, plus probable coverage of the traditional causes of civil or common law liability - personal injury and property damage - but with no final decision yet on whether to include those.

  • Defences against liability to be limited to those commonly accepted in existing national and international regimes, such as an act of God, with compliance with statutory permits providing no defence.

  • The burden of proof based on some form of rebuttable presumption, under which an activity which seems likely to have caused the relevant damage is presumed to have done so unless an alternative explanation is provided.

  • No imposition of liability on lenders for damage caused by their borrowers, provided the lender has exercised no operational control of the offending activities.

  • No general requirement for compulsory insurance or financial security, in recognition of the difficulties currently faced by insurers in this field, but retention of a longer-term objective of developing such security instruments and the possibility of special requirements for some high-risk activities.

  • Some form of enhanced access to justice for environmental groups and others not currently allowed legal standing as plaintiffs, possibly introduced in phases.

  • An obligation on plaintiffs to spend any money raised in liability awards on environmental restoration, rather than have it siphoned off for other purposes.

  • A gradual approach to the setting of clean-up standards - in terms of both trigger levels at which damage must be remedied and target values which clean-ups must reach - starting with general principles, probably based on the future use of a site, and moving only slowly towards quantitative criteria.

    In mid-1997, two short consultancy studies were undertaken on contaminated sites and damage to natural resources. A new round of consultation meetings was launched in the autumn involving DGXI, other Directorates, Member States and industry and environmental groups. With the results of these meetings in mind, work is now at the stage of more advanced internal Commission consultations, based on detailed drafts of the White Paper. There is still more of those to come, plus negotiations between the private offices of the 20 Commissioners, before a debate can take place in the college.

    Recent debate appears to have focused on issues such as how to define the cut-off date for future damage - the options including the dates of a pollutant release, the occurrence of an incident, or the discovery of damage - how to implement a liability regime in cases of damage to natural resources, how best to operate a fair system for apportioning liability, and the cost of any proposals.

    Considerable pressure is bound to be applied on the issue of cost, as is now the case with most EC environmental proposals. In the case of liability, however, it is extremely difficult to make intelligent estimates of the marginal cost of an EC regime which would co-ordinate, and in many respects simply confirm, existing national rules and which would apply to future damage whose scale is impossible to predict. Nevertheless, several Commissioners will need reassurances that an EC regime will not be ruinously expensive.

    The Commission debate has to be seen in the context of EC arithmetic. As of 1997, the opponents of an EC regime were the UK, Germany and France. Support of various kinds had been voiced by Austria, Belgium, Finland, Greece, Italy, Luxembourg, the Netherlands, Portugal and Sweden. Denmark seemed to favour a common regime in principle, but subject to qualifications about its content. Ireland and Spain seemed not to have taken positions either way.

    All of that has to be seen as informal, however, until definite legislative proposals are on the table. A blocking minority under the qualified majority voting rules would require either three large Member States, as seemed to be the position last year, or two large Member States plus one or two smaller ones. The key political question is therefore whether the new governments elected during 1997 in the UK and France will take the same view as their predecessors on the issue, or change sides.

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