White Paper on Environmental Liability

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Courtesy of European Commission, Environment DG

 Executive Summary

This White Paper explores various ways to shape an EC-wide environmental liability regime, in order to improve application of the environmental principles in the EC Treaty and implementation of EC environmental law, and to ensure adequate restoration of the environment. The background includes a Commission Green Paper in 1993, a joint hearing with the European Parliament that year, a Parliament resolution asking for an EC directive and an opinion of the Economic and Social Committee in 1994, and a Commission decision in January 1997 to produce a White Paper. Several Member States have expressed support for Community action in this field, including some recent comments on the need to address liability relating to genetically modified organisms (GMOs). Interested parties have been consulted throughout the White Paper’s preparation.

Environmental liability makes the causer of environmental damage (the polluter) pay for remedying the damage that he has caused. Liability is only effective where polluters can be identified, damage is quantifiable and a causal connection can be shown. It is therefore not suitable for diffuse pollution from numerous sources. Reasons for introducing an EC liability regime include improved implementation of key environmental principles (‘polluter pays’, prevention and precaution) and of existing EC environmental laws, the need to ensure decontamination and restoration of the environment, better integration of the environment into other policy areas and improved functioning of the internal market. Liability should enhance incentives for more responsible behaviour by firms and thus exert a preventive effect, although much will depend on the context and details of the regime.

Possible main features of a Community regime are outlined, including: no retroactivity (application to future damage only); coverage of both environmental damage (site contamination and damage to biodiversity) and traditional damage (harm to health and property); a closed scope of application linked with EC environmental legislation — contaminated sites and traditional damage to be covered only if caused by an EC-regulated hazardous or potentially hazardous activity; damage to biodiversity only if protected under the Natura 2000 network; strict liability for damage caused by inherently dangerous activities, and fault-based liability for damage to biodiversity caused by a non-dangerous activity; commonly accepted defences, some alleviation of the plaintiffs’ burden of proof and some equitable relief for defendants; liability focused on the operator in control of the activity which caused the damage; criteria for assessing and dealing with the different types of damage; an obligation to spend compensation paid by the polluter on environmental restoration; an approach to enhanced access to justice in environmental damage cases; coordination with international conventions; financial security for potential liabilities; and working with the markets.

Different options for Community action are presented and assessed: Community accession to the Council of Europe’s Lugano Convention; a regime covering only transboundary damage; a Community recommendation to guide Member State action; a Community directive; and a sectoral regime focusing on biotechnology. Arguments for and against each option are given, with a Community directive seen as the most coherent. A Community initiative in this field is justified in terms of subsidiarity and proportionality, on grounds including the insufficiency of separate Member State regimes to address all aspects of environmental damage, the integrating effect of common enforcement through EC law and the flexibility of an EC framework regime which fixes objectives and results, while leaving to Member States the ways and instruments to achieve these. The impact of an EC liability regime on the EU industry’s external competitiveness is likely to be limited. Evidence on existing liability regimes was reviewed and suggests that their impact on national industry’s competitiveness has not been disproportionate. The effects on small and medium-sized enterprises (SMEs) and financial services and the important question of the insurability of core elements of the regime are dealt with. The effectiveness of any legal liability regime requires a workable financial security system based on transparency and legal certainty with respect to liability. The regime should be shaped in such a way as to minimise transaction costs.

The White Paper concludes that the most appropriate option would be a framework directive providing for strict liability for damage caused by EC-regulated dangerous activities, with defences, covering both traditional and environmental damage, and fault-based liability for damage to biodiversity caused by non-dangerous activities. The details of such a directive should be further elaborated in the light of consultations. The EU institutions and interested parties are invited to discuss the White Paper and to submit comments by 1 July 2000.

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