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Introduction

1. Proposals for European action on environmental liability will be among the most significant for many years, not only in terms of their potential for furthering environmental objectives, but also in terms of their potential impact on businesses. They will provide a test for whether the EU can match its environmental ambitions to the need to develop "a regulatory climate conducive to investment, innovation, and entrepreneurship", as the Lisbon European Council conclusions put it.

2. Liability for environmental damage is an important part of any developed legal system. In countries, like the United Kingdom (UK), where it has long applied, it helps to ensure that companies and individuals take into account the need to minimise the potential dangers of their investment and operational decisions for the environment and for human health. The UK fully supports the concept of environmental liability, and the need to ensure that those who cause damage to the environment should be made to pay for putting it right.

3. The UK therefore welcomes the publication of the Commission's White Paper, and the consultation process which the Commission has started. We shall play an active and constructive part in helping to develop proposals, and judge the final package on its merits. We need to achieve equity, clarity and ease of effective implementation. Important factors for safeguarding the environment will be clear responsibilities and workable definitions. Important factors for businesses will be the predictability of any regime, the extent to which it makes clear how they can manage their potential liability, and its compatibility with the national legal processes and traditions with which they are familiar.

The Case for EC Action

4. We note the White Paper's arguments that an EC environmental liability régime could contribute to:

a. implementing the provisions of the EC Treaty on the "polluter pays" principle, the precautionary principle and the preventative principle;

b. ensuring decontamination and restoration of the environment;

c. boosting the implementation of EC environmental legislation.

The force of these arguments requires further careful consideration on the basis of further information.

5. Nevertheless, we recognise that there may be a case for some form of EC action to address reparation of environmental damage. The EU has agreed that common rules are needed for the protection of various aspects of the environment, and has developed a wide-ranging set of directives in this field. However, many of these are silent on what is to happen if the protection fails and damage to the environment results. UK legislation - for example, the Environmental Protection Act 1990 – usually provides for the person who has caused damage to the environment in breach of environmental protection rules to be liable for remediation. Subject to further consideration of the requirements of subsidiarity, a case may exist for supplementing EC environmental protection rules in a parallel manner.

6. The most difficult issues, however, are exactly what form any such EC rules should take, and particularly how these should interface with existing Community and Member State law in the same area. We think the White Paper underestimates the difficulty of relating new proposals to the large amount and variety of existing law in this field, at national, EU and international levels. It will be essential to ensure that any EC action adds value rather than uncertainty.

Some General Points

Need for full details

7. Decisions on the main elements of a package cannot be taken until details of all vital elements are available. Examples are the definition of "significant damage", the standards for intervention and remediation, the defences to be available, the arrangements for the alleviation of the burden of proof (if any), and the scope, nature and role of valuation methods,. These, and many other points are all fundamental to the overall scope of the proposals, the impact on Member State legal regimes and the cost implications. A number of aspects are likely to need considerable further work.

Fiche d'impact

8. The White Paper proposals are not yet sufficiently developed to allow a clear assessment of their likely impact. We need to develop proposals which will produce a synthesis capable of safeguarding the environment, enterprise, investment and employment. In line with the agreements on the preparation of a fiche d'impact on legislative proposals, the Commission needs to ensure that there is careful examination, and a thorough analysis of the likely costs and benefits, of all options at an early stage. This should specifically explore the balance between benefits to the environment and impacts on small and medium-sized enterprises (SMEs), including the cumulative effects. This analysis should go hand in hand with the further clarification of the content of the whole package.

Subsidiarity

9. Further development of the ideas in the White Paper must be accompanied by a review of how the reasoning on which the details are based complies with the principles of subsidiarity and proportionality and of how the reasons for concluding that a Community objective can be better achieved by the Community can be substantiated by qualitative or, wherever possible, quantitative indicators, as stated in the seventh Protocol to the Treaty of Amsterdam.

Coherence with domestic laws

10. Community policy is to respect well-established national arrangements and the organisation and working of Member States' legal systems. All Member States have existing systems for ensuring reparation for damage of various types, including systems which have been introduced to implement international or other EC obligations. These relate to damage to both private interests and public interests. Many of these systems may go much wider than the White Paper proposals. We believe that new EC rules must not disrupt the coherence of these systems. There is bound to be potential for creating awkward interfaces in the treatment of cases covered by proposals at EU level and those covered by other areas of law at domestic level. The proposals should therefore aim to avoid creating anomalies or problems of determining which regime is to apply. Examples include domestic systems for workers' compensation and employers' liability for injuries arising from employment, and other areas of traditional damage. As the White Paper says, any EC system should aim at fixing the objectives and results, but the Member States should choose the ways and instruments to achieve these. We suggest that approaches permitting choices in implementation arrangements, rather than prescriptive approaches, could help avoid such difficulties. Care will be needed to ensure that, whichever option is chosen, the agreed objectives are actually achieved.

Transaction costs

11. Environmental liability is a field in which transaction costs (including particularly the legal costs of resolving disputes) can be crucial. The aim must be that any future system has significantly fewer possibilities for dispute, and less need for expert evaluation and investigation. This demands, for example, rules which are clear, unambiguous and stable, in the interest of speedy compensation and remediation and of avoiding the diversion of resources from remediation into lengthy litigation. Those who may be liable should also be able to recognise their responsibilities more readily so that they can be built into their planning.

Insurability

12. We agree with the White Paper argument that the insurability of any proposals is a vital element. We suggest that this objective will be a useful discipline in drawing up proposals that are clear and certain in operation, as well as helping to make resources available for remediation.

Comments on Specific Proposals

Definition of "environmental damage" and related issues

13. Subject to the development of adequate definitions, the UK accepts the White Paper's intention to cover biodiversity damage and damage in the form of contamination of sites. Consideration may need to be given to the case for covering other forms of environmental damage, such as water pollution.

14. The White Paper also proposes to include, in addition to such environmental damage, all traditional damage (personal injury, damage to property, pure economic loss) which is caused by a "dangerous activity". This means that the proposed regime would apply to:

a. cases of environmental damage unaccompanied by traditional damage;

b. cases of traditional damage unaccompanied by environmental damage; and

c. mixed cases where either:

i. the environmental damage is at the same time traditional damage, or

ii. both types of damage arise from the same event.

15. We do not accept that traditional damage unrelated to environmental damage should be covered by the proposals to be developed, since we do not think that an environmental case can be made for applying the regime to cases of traditional damage which is not at the same time environmental damage. We would need to consider whether such proposals, which would clearly affect civil procedure, would not need to be put forward under Article 65 of the EC Treaty rather than Article 175. In addition, apart from questions of the legal base, by changing the basis of many potential claims, the White Paper proposals on traditional damage could disrupt existing insurance arrangements and compensation schemes that are, in general, working well (such as the employers' compulsory insurance schemes mentioned above).

16. For cases involving both environmental damage and traditional damage, careful thought will be needed on the interface between the remediation of the environmental damage and reparation to those who suffer traditional damage.

17. We agree with the proposal to apply the regime to environmental damage that is "significant". We believe considerable care will be needed in defining this threshold in a way that meets the White Paper's objective that the definition of environmental damage should be concrete and quantifiable, and easily applied in relation to the thresholds for intervention. The UK and other Member States have considerable recent experience of developing such thresholds, particularly in the case of contaminated land, and of taking local circumstances into account in individual cases while still providing a uniform, transparent framework of rules. The views of Member States' technical experts in this field (experts who are increasingly co-operating in both technical and policy areas) will be particularly important.

Strict liability

18. The centre of the White Paper proposals is that there should be strict liability - with defences - with respect to environmental damage and traditional damage arising from dangerous activities. In the UK, most provisions under which public authorities can require a polluter to restore a damaged environment are based on strict liability, although there are situations where fault-based liability is considered more appropriate. Equally, forms of strict liability underlie the torts (in Scotland, delicts) of nuisance and breach of statutory duty, while in England and Northern Ireland the rule in Rylands v Fletcher imposes strict liability for the escape of substances brought onto a site for a "non-natural" purpose (such as the storage of hazardous chemicals).

19. In this respect, therefore the White Paper approach appears similar to that in the UK as regards environmental damage. However, the details are extremely important. To achieve a clear and workable approach, it will be necessary to establish the conditions under which public authorities should be expected to act to secure remediation of the environment, and the boundaries within which such remediation can be required; and the nature of the acts which should give rise to liability.

Defences

20. It is clearly also essential to establish, as part of the overall package on which final decisions are made, the defences that are to be available. The White Paper states that "when deciding on these defences [that is, those other than Act of God (force majeure), contribution to the damage or consent by the plaintiff, and intervention by a third party] all relevant aspects should be considered". We suggest that considerable further work is needed to enable such consideration to take place.

Emissions explicitly allowed

21. The White Paper floats the idea that a polluter's liability might be shared with the permitting authority where emissions causing damage had been permitted. The UK does not agree with such an approach, which would:

a. undermine the "polluter pays" principle: the operator of the activity which has caused the damage has had the economic benefit of the activity; any environmental costs of that activity should be internalised within it, not transferred to other operators or society at large (which would be the effect of making the permitting authority contribute, depending on whether the authority is financed from permit charges on all operators, or from general tax revenue); and

b. risk encouraging permitting authorities to adopt over-cautious approaches to attaching conditions to permits, in order to safeguard themselves against claims.

Retroactivity

22. The White Paper is clear that any EC regime should not be retrospective: it should only apply to damage in some sense arising after it has come into force. The UK supports the principle that extensions of liability should not affect what has happened before the new rules have come into force. Careful thought will be needed to provide a clear cut-off. The proposed formulation in the White Paper does not address sufficiently the issue of cumulative effects, or the difficulty of defining what is to count as a single incident.

Dangerous activities

23. The White Paper proposes that the strict-liability regime should cover "dangerous activities" regulated by EC legislation. The UK agrees in principle, subject to careful consideration of the detailed drafting. In the case of genetically modified organisms (GMOs), we agree that a single approach is unlikely to be adequate, and that proposals are needed which differentiate according to the problems that might arise (for example, different risks need to be considered in the cases of a high-containment facility and of a deliberate release).

24. We note that some of these dangerous activities may be subject to existing EC legislative requirements relating to remediation, and it is not clear how those will be dealt with. It is also unclear how the proposals relate to EC regulated substances when used in non-EC regulated activities.

Valuation of biodiversity and scale of restoration to be required

25. The White Paper refers to some developments in the valuation of the benefits of a natural resource. However, it is not clear that any approach currently exists which is sufficiently robust to avoid disproportionate disputes or litigation. A workable system would need to be devised and proved before any proposals could be considered that based liability for damage to biodiversity on such an approach. Consideration should also be given to the approach to cases where the costs of remediation may be disproportionate to any environmental benefits, despite the proper importance attached to restoration. We suggest that a programme of work needs to be established to investigate these basic issues before any formal proposals can be made.

26. In relation to site contamination, the White Paper envisages the development of numerical standards for soil restoration. As with thresholds for intervention (see paragraph 10 above), uniform numerical standards may be feasible at a national level, but would seem unworkable at the European level because of the significant differences in the underlying geology, in climate and in crop patterns across the EU. A more risk-based approach to achieving uniform standards would be desirable. Any proposals which might be put forward need to recognise the thinking which is already going on at EU level in this area.

Burden of proof

27. A wide range of arrangements exists within the EU in respect of bringing legal claims. For example, the English and Scottish legal systems provide for the mutual disclosure ("discovery") of all relevant documents between claimant and defendant. Other legal systems may have entirely different approaches. What the White Paper calls the "traditional burden of proof" therefore is likely to vary substantially in practice between legal systems. Many systems already have ways of dealing with the problem of proving facts peculiarly within the defendant's knowledge (for example, the English and Scottish doctrines of res ipsa loquitur). It appears difficult to find any uniform approach, given the divergence of the various legal systems. We do not think that a case has been made for such an approach. It is difficult to comment further in the absence of any details or supporting argument.

Role of public-interest groups

Judicial review

28. We agree that, where public authorities have functions to impose requirements on polluters for remedying damage to the environment, public-interest groups should be entitled to seek review of any failure of such authorities to discharge these functions adequately. In England, any public-interest group can seek judicial review when it has "sufficient interest" in the matter to which the application relates. This can include consideration by the court of where the public interest lies. Slightly different arrangements apply in Scotland.

29. While a list of public-interest groups entitled to seek judicial review, or more detailed criteria for judging their standing, might be useful in a transboundary context (where the public-interest group is based in one State and the court is in another), we do not agree that such arrangements should lead to the exclusion of other bodies or individuals from taking appropriate legal action or to the removal of all discretion by the courts to determine whether a body or individual has, or has not, a sufficient interest in any particular case. Such an approach would risk being inflexible, and might inhibit the possibility of ad hoc groups (for example, a group of neighbours) seeking review.

Direct actions against defendants

30. The White Paper can be read as proposing that, where a public authority is thought to be in default, a public-interest group should be able to proceed directly against the defendant - as if it were taking over the role of the public authority for the specific case. In general, the UK emphasises the importance of maintaining the primary role of public authorities in taking action to require the restoration in the public interests of damaged environments. For cases in the private-law field, it should remain with the person whose private-law rights have been affected. However, the role of public-interest groups in taking legal action for the benefit of those with direct interests could be further considered.

31. We accept, furthermore, that public-interest groups could have a role in bringing an environmental damage issue before the appropriate court, since there must be effective ways to ensure that public authorities discharge their obligations to require the restoration of damaged environments. The UK would also be prepared to consider further how the legal costs (expenses in Scotland) and damages régimes might be used to enable public-interest groups to fund, in the public interest, litigation aimed at protecting the environment.

Interim injunctions

32. The White Paper proposes that public-interest groups should be able to seek interim injunctions to restrain enterprises in cases where harm or pollution has not yet occurred but is imminent. Except where the State is the applicant (and in some cases not even then), most legal systems require the applicant for an interim injunction to provide some form of guarantee (in England, the "cross-undertaking in damages") to make good any loss caused by the interim injunction, if it should prove that the injunction was not justified. Such arrangements are essential, so that when an enterprise successfully challenges such a claim, it does not face the injustice of being vindicated from any blame, but losing money because of the interim injunction. With such safeguards, applications by public-interest groups for judicial review should be able to include claims for interim injunctions, as is possible in the UK at present.

Conclusion

33. A clear framework for environmental liability is an important element in any legal system to ensure the implementation of the "polluter pays" principle. Developing proposals for a framework which could apply in the different legal systems of the EU will not be an easy task, as is clear from some of the issues set out in the White Paper, and commented on above. Any EC legislation on environmental liability needs to improve environmental safeguards, be clear, certain, consistent and coherent in its effects, respect the Member States' legal systems and abide by the principle of subsidiarity. Therefore, in addition to proposals for a the framework, careful attention will need to be paid to evaluating the possible benefits to the environment, the potential impact on firms, particularly SMEs, and the interrelationships with existing national legal provisions. The Commission will want to ensure that it engages in a full dialogue with representatives of firms and SMEs, of environmental public-interest groups and of lawyers active in this field. The Commission will need the active help and cooperation of Member States and of other stakeholders to ensure that its proposals would deliver clear environmental benefits at the European level, while also being consistent with the needs to avoid unnecessary regulatory burdens and disturbance to national legal systems. Any EU proposals need to well-informed, and to get it right first time. The UK is fully committed to playing an active and supportive part in this process.

Marine, Land and Liability Division
Ashdown House
123 Victoria Street
London SW1E 6DE
Tel: 020 7944 5287
Fax: 020 7944 5279
E-Mail: landquality.enquiries@defra.gsi.gov.uk

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Published 7 September 2000

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European Commission White Paper on Environmental Liability: Summary of Responses seen by DETR

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Consultation Paper on European Commission White Paper on Environmental Liability

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Environmental Protection Consultation Papers Index

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Environmental Protection Index