Environmental liability - White Paper

In the run-up to drafting and adopting the Directive on environmental liability implementing the polluter pays principle, this White Paper set out the structure of the planned Community liability regime. It describes the key elements needed to make this regime effective and practicable.

ACT

White Paper of 9 February 2000 on environmental liability [COM(2000) 66 - Not published in the Official Journal].

SUMMARY

Environmental liability aims at making the causer of environmental damage (the polluter) pay for remedying the damage that he has caused (the "polluter pays" principle).

For the principle of liability to be effective:

• polluters must be identifiable;
• the damage must be quantifiable;
• there must be a link between the polluter and the damage.

In addition, the principle of liability cannot be applied for dealing with pollution of a widespread, diffuse character (climate change).

Environmental liability is a way of implementing the main principles enshrined in Article 174 of the Treaty establishing the European Community (EC Treaty), above all the polluter pays principle. Polluters must pay for the damage they have caused. The application of this method will encourage the various parties concerned to take more precautions and will reduce pollution.

In most of the Member States, there are laws on liability for damage caused by activities that are hazardous to the environment, but these laws only apply with respect to damage to human health or property. What is needed is an environmental liability regime which covers damage to natural resources, at least for resources that are already protected by Community legislation ("Wild Birds" and "Habitats" Directives).

Main features of a Community environmental liability regime

The regime must not be retroactive, i.e. it should only work prospectively.'

The scope of the regime has to be defined taking account of:

• the types of damage to be covered- environmental damage: damage to biodiversity and damage resulting in contamination of sites. This distinction seems to be necessary because most Member States do not have administrative rules which cover biodiversity damage, while they do have laws or programmes to deal with liability for contaminated sites;- traditional damage: damage to health or property caused by a dangerous activity;
• the activities which cause such damage.

The scope must be restricted and linked to Community legislation in force ("Wild Birds" and "Habitats"). Site contamination and traditional damage will only be covered if caused by hazardous or potentially hazardous activities which are covered by Community rules. Damage to biodiversity will be covered if it is dealt with in the framework of Natura 2000.

The type of liability is itself a very sensitive matter. There are two options, fault-based liability or strict liability, each of which has its own advantages. Strict liability seems to be more appropriate for damage resulting from activities which are regarded as hazardous, while fault-based liability can be applied to damage to biodiversity caused by a non-hazardous activity. The party liable under an environmental liability regime should be the person performing the activity.

Damage to biodiversity is not generally covered by the Member States' regulations and it would therefore be possible to start by applying a minimum threshold to Natura 2000 areas. The criteria for this should be derived from the interpretation of the Habitats Directive.

It is difficult to evaluate damage caused to biodiversity and this has to be done taking account of the cost of restoration or the cost of alternative solutions if restoration is not possible. Polluters must be required to pay damages or compensation for depollution or rehabilitation. If the polluter is unable to repair the damage as a whole for economic or technical reasons, the value of the unrestored damage should be spent on comparable projects. Insurability is important to ensure that the objectives of an environmental liability regime are attained. At the moment, there is no widespread coverage of environmental damage risks, but progress has been made in some parts of the financial markets specialising in this area.

There must be improved access to justice in cases of environmental damage. The Community environmental liability regime could contribute to the application of the Aarhus Convention, which includes specific provisions on access to justice that form a basis for different actions by individuals and public interest groups.

Possible options for Community action

Community accession to the Convention on civil liability for damage resulting from activities dangerous to the environment (Lugano Convention) would have numerous advantages. The Convention includes liability schemes which cover all types of damage caused by dangerous activities, but its scope is not exhaustive. It goes much further than several Member States whose schemes are restricted in scope and limited and, lastly, it is in conformity with the principle of international subsidiarity. Its only drawback is a low level of legal security and the fact that it does not demand the restoration of resources in a specific manner. Thus, if the Community decides to accede to the Convention, it will be necessary to supplement it with a Community act clarifying the application of environmental liability for environmental damage.

A transboundary damage regime is considered to be inadequate as it would lead to problems being dealt with in completely different ways within Member States. The persons involved in a case of transboundary damage would be pursued, while others responsible for the same activity within the country would be able to benefit from the shortcomings in the national liability regime.

A sectoral scheme based on the biotechnologies would be very difficult to consider as it would be difficult to explain to one sector why it alone had to comply with regulations but not other sectors taking similar risks.

The most coherent solution seems to be to devise a Community directive, which would be able to provide more legal certainty than the Lugano Convention, while limiting the scope and refining the rules covering damage to biodiversity. However, the Convention could provide a source of inspiration.

Subsidiarity and proportionality

The Member States have not optimally implemented the principles of environmental policy (precaution, correction, the polluter pays, etc.) and do not have measures to deal effectively with transboundary environmental damage.

A Community regime complying with the principles of subsidiarity and proportionality could lay down the essential minimal requirements, but leave it to the Member States to chose the ways and means of meeting those requirements.

The overall economic impact of environmental liability at EC level

The impact of a Community liability regime on the EC's external competitiveness must be limited. The data on existing liability regimes have been examined and these show that their impact on the competitiveness of national industries has not been disproportionate. The effectiveness of any legal liability regime depends on the existence of effective financial security based on transparency and legal certainty with regard to liability. The Community regime should be devised so as to minimise transaction costs.

In conclusion, the Commission believes that the optimum solution would be to have a framework directive, which would invoke strict liability on the part of persons performing an activity and authorise certain defences as regards traditional environmental damage, and provide for fault-based liability in the case of damage caused to biodiversity by non-hazardous activities.

Background

The White Paper was preceded by a Commission Green Paper in 1993, a joint European Parliament and Commission hearing in the same year, a Parliament Resolution asking for an EC directive and an Opinion of the Economic and Social Committee in 1994. Interested parties were consulted throughout the White Paper's preparation.

RELATED ACTS

Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage [Official Journal L 143 of 30.04.2004].

The solution put forward by the Commission in the White Paper was accepted, and the process which started over ten years before finally culminated in the adoption of this Directive, the first piece of Community legislation in which implementing the polluter pays principle is one of the main objectives.

Last updated: 03.11.2004