Case Study on EU Environmental Liability Directive
This case study delves into the Environmental Liability Directive (ELD) and its application in imposing liability on operators for preventing and remediating environmental damage. It covers the aims of the ELD in minimizing risks of environmental harm, preventing future contaminated sites, and reducing biodiversity loss. The liability categories, damage definitions, and operators' responsibilities are discussed, providing insights into the legal framework of environmental protection in the EU.
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EJTN Training on EU Environmental Law 27-28 September 2022 Case Study on the Environmental Liability Directive Valerie Fogleman Consultant, Stevens & Bolton LLP Professor of Law, Cardiff University School of Law and Politics With financial support from the Justice Programme of the European Union
TOPICS Environmental Liability Directive (2004/35/EC; ELD) Preliminary rulings by the Court of Justice of the European Union Developments National liability legislation Case study 2
ELD Application Imposes liability on an operator for preventing and remedying an imminent threat of, or actual, environmental damage caused by its activities Supplements Member State legislation and links the ELD to other EU legislation, especially Birds Directive (2009/147/EC) Habitats Directive (92/43/EEC) Water Framework Directive (2000/60/EC; WFD) Marine Strategy Framework Directive (2008/56/EC; MSFD) Applicable from 30 April 2007 Does not include claims for property damage, bodily injury and economic loss 3
ELD Aims To induce operators to adopt measures and develop practices to minimise the risks of environmental damage To prevent and remediate environmental damage so as to lead to a reduction in the number of future contaminated sites in the EU To assist in reducing the loss of biodiversity in the EU by establishing liability for damage to species and natural habitats protected by the Birds and Habitats Directives (Nature Directives) 4
ELD Liability Two categories of operators Annex III: strict liability Land damage Species and natural habitats protected by the Nature Directives; plus nationally protected biodiversity at the option of a Member State (biodiversity damage) Waters under the WFD and MSFD (water damage) Non-Annex III: fault-based liability Biodiversity damage 5
ELD Liability (continued) Damage is defined as a measurable adverse change in a natural resource [land, waters or biodiversity] or measurable impairment of a natural resource service which may occur directly or indirectly Services and natural resource services are defined as the functions performed by a natural resource for the benefit of another natural resource or the public 6
ELD Liability (continued) Annex III activities 1. Activities under the Industrial Emissions Directive (2010/75/EU) 2. Waste management operations 3. Discharges of specified dangerous substances into inland surface water that require prior authorisation 4. Discharges of specified dangerous substances into groundwater that require prior authorisation 5. Discharges of pollutants into surface water and groundwater that require prior authorisation 7
ELD Liability (continued) Annex III activities (continued) 6. Water abstraction and impoundment 7. Manufacture, use, storage, processing, filling, release into the environment and onsite transport of dangerous substances, dangerous preparations, pesticides and other plant protection products and biocidal products 8. Transport of dangerous or polluting goods by road, rail, inland waterways, sea or air 9. Operation of installations authorised under air pollution legislation 8
ELD Liability (continued) Annex III activities (continued) 10. Contained use, including transport, of genetically modified organisms (GMOs) 11. Deliberate release into the environment, marketing and placing on the market of GMOs 12. Transboundary shipments of waste 13. Extractive waste management 14. Operation of storage sites for carbon dioxide 9
ELD Enforcement Imminent threat of environmental damage; operator must Carry out preventive measures without delay Notify competent authority without delay if measures fail to dispel the imminent threat of damage Environmental damage; operator must Immediately carry out emergency remedial actions Notify competent authority without delay Carry out remedial measures agreed by the competent authority If the operator fails to carry out the above actions, the competent authority must require it to carry them out NB: ELD only applies to environmental damage above specified significance criteria 10
ELD Land damage Significance criterion any land contamination that creates a significant risk of human health being adversely affected as a result of the direct or indirect introduction , in, on or under land, of substances, preparations, organisms or micro-organisms Not linked to EU legislation because no EU legislation on damage to soil Remedial measures Removal, control, containment or diminution of contaminants so that land no longer poses a significant risk of an adverse effect on human health Remediation standard: lawful current use or approved future use 11
ELD Water damage Significance criteria are linked to the WFD and the MSFD any damage that significantly adversely affects: i. the ecological, chemical and/or quantitative status and/or ecological potential, as defined in [the WFD] of the waters concerned ; or ii. the environmental status of the marine waters concerned, as defined in [the MSFD] in so far as particular aspects of the environmental status of the marine environment are not already addressed through [the WFD] 12
ELD Biodiversity damage Significance criteria are linked to the Nature Directives any damage that has significant adverse effects on reaching or maintaining the favourable conservation status of such habitats or species , assessed with reference to the baseline condition, taking account of criteria in annex I Significance is determined by reference to the European territory of the Member States to which the Treaty applies or the territory of a Member State or the natural range of that habitat [or species] Nationally protected biodiversity 13 Member States: Austria, Belgium, Cyprus, Czechia, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Spain, Sweden Significance criteria depend on individual Member States 13
ELD Biodiversity damage (continued) Annex I criteria Number of individuals, role of individuals or area in relation to conservation status at the time of the damage, rarity, capacity for propagation, ability to recover within a short time Damage with a proven effect on human health must be classified as significant damage Three types of damage do not have to be classified as significant damage Negative variations smaller than normal natural fluctuations Negative variations due to natural causes or intervention related to the normal management of sites Species or habitats able to recover to their baseline condition or an equivalent or superior condition without intervention within a short time 14
ELD Annex II defines remedial measures for water and biodiversity damage Primary remediation any remedial measure which returns the damaged natural resources and/or impaired services to, or towards, baseline condition Complementary remediation any remedial measure taken in relation to natural resources and/or impaired services to, or towards, baseline condition 15
ELD Remedial measures (continued) Compensatory remediation any action taken to compensate for the fact that primary remediation and/or services to compensate for the fact that primary remediation does not result in fully restoring the damaged natural resources and/or services Includes compensation for losses from the damage until its restoration to baseline condition Additional improvements to protected natural habitats and species or water at the damaged site or an alternative site Does not consist of financial compensation to members of the public 16
ELD Exceptions Act of armed conflict, hostilities, civil war or insurrection (includes terrorism) Natural phenomenon of exceptional, inevitable and irresistible character Nuclear, marine oil and transportation of dangerous goods conventions Diffuse pollution Activities the main purpose of which is to serve national defence or international security Activities the sole purpose of which is to protect from natural disasters 17
ELD Defences Mandatory defences Intentional act of a third party if safety measures are in place Compliance with a compulsory order Optional defences Compliance with a permit if the operator is not negligent State-of-the-art if the operator is not negligent 18
ELD Defences (continued) Permit defence Belgium (regional level), Croatia, Cyprus, Czechia, Denmark, Estonia (except GMOs), Finland (limited), Greece, Italy, Latvia (except GMOs), Lithuania, Malta, Netherlands (limited), Portugal, Slovakia, Spain State-of-the-art defence Belgium (regional level), Croatia, Cyprus, Czechia, Estonia (except GMOs), France, Greece, Italy, Latvia (except GMOs), Malta, Netherlands (limited), Portugal, Slovakia, Spain 19
ELD Public participation Qualified environmental non-governmental organisations and others may Provide comments to the relevant competent authority on environmental damage Plus an imminent threat of environmental damage at the option of a Member State Seek review of the procedural and substantive legality of a competent authority s decisions, acts or failure to act 20
ELD Other differences between Member States Joint and several/proportional liability Proportional liability adopted (modified liability in some Member States) Denmark, Finland, France, Italy, Slovakia Joint and several liability adopted All other Member States 21
ELD Other differences (continued) Introduction of mandatory financial security for ELD liabilities Czechia, Portugal, Slovakia, and Spain adopted a mandatory financial security system Ireland introduced a hybrid system Italy and Poland introduced provisions to require financial security for a limited number of activities 22
ELD Other differences (continued) Transposition of the ELD as stand-alone legislation or incorporation into pre-existing legislation Designation of one or more competent authorities Adoption of more stringent provisions 23
Court of Justice of the European Union; ELD cases Raffinerie Mediterranee (ERG) SpA v Ministero dello Sviluppo economico (Cases C-379/08 and C-380/08; and Case C-378/08, 2010) Ministero dell Ambiente e della Tutela del Territorio e del Mare v Fipa Group Srl (Case C-534/13, 2015) T rkevei Tejtermel Kft. v Orsz gos K rnyezetv delmi s Term szetv delmi F fel gyel s g (Case C-129/16, 2017) Folk v Unabh ngiger Verwaltungssenat f r die Steiermark (Case C-529/15, 2017) Deutscher Naturschutzring, Dachverband der deutschen Natur- und Umweltschutzverb nde e.V. (Case C-683/16, 2018) Naturschutzbund Deutschland - Landesverband Schleswig- Holstein e.V. v Kreis Nordfriesland (Case C-297/19, 2020) 24
Developments 30 April 2013: Member States submitted reports to the Commission under then article 18(1) of the ELD on their experience in applying the ELD 14 April 2016: Report from the Commission under [then] article 18(2) of the ELD Accompanied by a Staff Working Document that evaluated the ELD and its implementation Overall conclusions Transposition and implementation of the ELD had not resulted in a level playing field across the EU Insufficient information adequately to carry out the evaluation Available information indicated that some Member States continued to implement national laws instead of legislation implementing the ELD 25
Developments Main challenges 1. Low availability of data on ELD cases, especially application of complementary and compensatory remediation 11 Member States did not report any ELD cases 2. Low awareness of the ELD 3. Ambiguities on key concepts and definitions such as significance threshold , preventive action , and favourable conservation status 4. Exclusions and defences may reduce effectiveness and efficiency 5. Insolvency of operators in cases of costly environmental remediation 26
Developments Multi-Annual Rolling Work Programme 2017-2020 Three main pillars 1. Improve the evidence base for evaluation and decision- making for the Commission, Member States, ELD stakeholders (assessment framework and ELD registry) Evaluation of different training formats 2. Support more even implementation through tools and measures (common understanding of terms and concepts, capacity building, and training) Country fiches 3. Ensure availability of financial security, in particular for large losses or in case of insolvency Report on the availability of, and demand for, insurance and other financial security for environmental liabilities at Member State and EU level 27
Developments Regulation (EU) 2019/1010 amended article 18 European Commission to collect information from Member States on experience in applying the ELD Data to be collected by 30 April 2022 and every five years after that date 30 April 2023: Commission s evaluation of the ELD Study to assist the Commission in the evaluation is ongoing 28
Developments European Parliament Resolution of 20 May 2021 on the liability of companies for environmental damage Nine recommendations require revisions to the ELD and six recommendations on the ELD do not do so; include Converting the ELD into a Regulation Aligning the ELD with the Environmental Crime Directive (2008/99/EC) Commission to assess introduction of the following Civil liability regime, especially for parental and chain liability, for damage to human health and the environment Financial compensation scheme for victims of environmental damage Mandatory financial security system for ELD liabilities 29
Developments European Court of Auditors, Special Report on the Polluter Pays Principle: Inconsistent application across EU environmental policies and actions (5 July 2021) Two recommendations concern the ELD Include criteria to assess damage to water and land Make more use of instruments that provide financial security Commission agreed to evaluate recommendations in its evaluation of the ELD and its implementation 30
Developments Commission Guidelines on a common understanding of environmental damage as defined in article 2 of the ELD [2021] Official Journal C118/1 Guidelines, but binding on the Commission Guidelines state among other things Biodiversity damage No need for adverse affects to occur at a national or EU level; sufficient for them to occur only at a local level Water damage No need for status of water body to be reduced to a lower classification No need for entire water body to be affected; sufficient for damage to affect only part of a water body 31
National liability legislation Only Germany had complementary remediation (to a limited extent) before the ELD No Member State had compensatory remediation Substantial variation in national liability legislation between Member States includes the following Extensive implementation of environmental permitting legislation instead of the ELD No need for application of significance criteria; breach of a permit condition is an unlawful act Requirement for persons that cause biodiversity damage to remediate it only if they are convicted of the damage Compensation payable to the State instead of requirements for remediation 32
Case Study Solvents Mega Company (SMC) owns and operates a facility that manufactures solvent-based products in Pandonia, a Member State of the EU. SMC is subject to the Industrial Emissions Directive (2010/75/EU; IED). A condition of SMC s IED permit requires it to remediate any soil or water pollution caused by it. On 5 September 2020, a massive fire at SMC s facility caused large quantities of solvents as well as chemicals in fire-fighting water to enter the Long River next to the facility. The river, which is approximately 150 kilometres long, is a surface water body under the Water Framework Directive. The pollution injured or destroyed nearly all the flora and fauna in a 10-kilometre stretch of the Long River, including thick-shelled river mussels (Unio crassus), small lake mussels (Anodonta anatine); painted mussels (Unio pictorum), and many species of fish including sea trout (Salmo trutta). 33
Case Study Thick-shelled river mussels are listed in annexes II and IV of the Habitats Directive. None of the other species of mussels or fish are listed in the Birds or Habitats Directives and/or national Pandonian nature conservation legislation. Two other rivers in Pandonia have viable populations of all the above species of mussels and fish. An angling society that has fishing rights in a five-kilometre stretch of the Long River downstream of the facility has brought an action under national liability legislation (not the ELD) against SMC for compensation due to the inability of its members to fish in the polluted river and loss of revenue from selling sea trout and their eggs. The Pandonian Environment Agency (EA) (the competent authority under the IED and the ELD) ordered SMC pursuant to the IED to remediate the damage caused by it and to prevent further damage to the Long River. SMC complied with these orders. 34
Case Study On 5 January 2021, the EA ordered SMC to carry out the following measures under the ELD: restock the Long River with the three species of mussels specified above, young sea trout, and mussel and trout eggs over a period of at least five years to restore the mussel and sea trout populations in the river; monitor the mussel and sea trout populations until they are fully restored to their condition before the damage; and improve facilities for fishing in the five-kilometre stretch of the Long River in which the angling club has fishing rights. SMC appealed the EA s order of 5 January 2021 on the basis that the order relates only to the ELD and not the IED and that the ELD does not apply to the damage. 35
Case Study The case is now before your court on the following issues. Please provide your rulings. 1. Is the damage to the population of thick- shelled river mussels in the Long River, biodiversity damage under the ELD? Why or why not? 36
Case Study 2. Does the EA have the power under the ELD to order SMC to restock the Long River with mussels and sea trout and to monitor their restoration? That is, is the damage to the mussels and sea trout, water damage and/or biodiversity damage under the ELD? Why or why not? You may wish to check point 1.1.1 of annex V of the Water Framework Directive concerning water damage; https://eur- lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02000L0060- 20141120 37
Case Study 3. Does the EA have the power under the ELD to order SMC to improve facilities in the five- kilometre stretch of the Long River in which the angling club has fishing rights? That is, are such improvements compensatory damage under the ELD? (Assume that SMC would have access to this area to carry out the improvements.) 38
