Environmental Update

On November 23, 2016, the Court of Justice of the European Union (CJEU) set aside a judgment by the lower General Court which could have set a dangerous precedent for the protection of business secrets and confidential business information (CBI) in environmental cases in the European Union.1

Background

The case concerns the right of public access to information that companies submit to regulatory authorities as part of approval procedures for plant protection products in the EU. This is a delicate area of EU law involving critical principles of public and private interest. On one hand, providing necessary regulatory and safety information – including CBI – is critical for the authorities to conduct risk assessments and ultimately decide on the granting of approvals. On the other hand, protecting CBI is essential to preserving the value of industry investments, notably in research and development.

Under EU transparency rules, the EU institutions must grant the widest possible access to documents drawn up by them or in their possession. The Transparency Regulation provides for a limited number of narrowly defined exceptions to safeguard certain public or private interests, including the protection of CBI. These exceptions can be rescinded if an “overriding public interest” can be shown (or deemed) to exist. In environmental matters, Article 6(1) of the Aarhus Regulation provides that such “an overriding public interest in disclosure […] shall be deemed to exist where the information requested relates to emissions into the environment” (Emissions Rule).

The key issue in this case revolved around the scope of the Emissions Rule and, more specifically, the interpretation of the concept of “information [which] relates to emissions into the environment.” The General Court had interpreted the rule as requiring EU institutions to disclose upon request any document or information relating to emissions into the environment, “even if such disclosure is liable to undermine the protection of [CBI].” The General Court also interpreted the concept of “information [which] relates to emissions into the environment” broadly as any information that “relates in a sufficiently direct manner to emissions into the environment.”

The Commission, supported by no less than eight interveners (including Germany and various crop protection, chemicals and manufacturing industry associations), challenged that interpretation before the CJEU.

Scope of the Emissions Rule and Protection of CBI

In its judgment, the CJEU agreed that the General Court erred in its interpretation of the Emissions Rule and set aside the General Court judgment on that basis. In so doing, the CJEU provided some guidance on the scope of this rule.

On the one hand, the CJEU refused to give a narrow interpretation to the concept of information relating to emissions into the environment. For the CJEU, this concept must be understood to include, inter alia, data that will allow the public to know what is actually released (or may realistically be expected to be released) into the environment under normal use of the product or substance in question. The CJEU also found it necessary to include information enabling the public to verify the accuracy of the authority’s assessment of actual or foreseeable emissions as well as data relating to the effects of those emissions on the environment.

Importantly, however, the CJEU agreed with the Commission that it is not sufficient that the information relates “in a sufficiently direct manner” to emissions into the environment, in order for it to fall within the scope of the Emissions Rule. The CJEU advised that the Emissions Rule may not be interpreted to include information containing any kind of link – even direct – to emissions into the environment, as this would: (i) deprive of any meaning the (separate) concept of “environmental information” defined in Article 2(1)(d) of the Aarhus Regulation; (ii) deprive of any practical effect the possibility for the institutions to refuse to disclose environmental information on the ground, inter alia, that disclosure would have an adverse effect on the protection of CBI; (iii) jeopardize the balance which the EU legislature intended to maintain between transparency and the protection of CBI; and (iv) constitute a disproportionate interference with the protection of business secrets pursuant to Article 339 of the Treaty on the Functioning of the European Union.

A Step in the Right Direction, but Uncertainty Remains

The CJEU’s judgment is certainly a relief for industry: had the CJEU upheld the General Court’s interpretation, the precedent could have dramatically increased the risk of disclosure of CBI, not only in the crop protection area but also in a wide range of other sectors, such as chemicals, cosmetics and pharmaceuticals which involve similar marketing authorization procedures and potential environmental considerations.

That being said, the judgment is not the end of the story. The CJEU has referred the case back to the General Court, and the latter will have to adjudicate again on whether or not the requested information falls within the scope of the Emissions Rule, this time following the legal interpretation provided by the CJEU. There is the possibility that the General Court’s second ruling could be appealed to the CJEU again. It could therefore take years before the case is ultimately decided. Unfortunately, the scope of the disclosure obligation under the Emissions Rule remains unclear in the meantime. Nevertheless, the CJEU’s recognition of the importance of CBI protection and its more limited interpretation of the Emissions Rule are welcome.