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Regulatory framework and policy
What is the primary environmental legislation in your jurisdiction?
The European Union and its member states share competence in formulating environmental legislation that is applicable in the European Union. This chapter covers only ‘pure’ EU environmental law, which derives from a number of sources: primary law (treaty articles) and secondary law (regulations and directives adopted by the EU institutions – ie, the Council of the European Union, the European Parliament and the European Commission).
Primary law includes:
- Article 3(3) of the Treaty on the European Union (TEU), which lists environmental protection as one of the European Union’s objectives;
- Article 11 of the Treaty on the Functioning of the European Union (TFEU), which requires environmental protection to be integrated into the definition and implementation of all EU policies. This is also included in Article 37 of the Charter of Fundamental Rights of the European Union, which has the same legal value as the EU treaties (under Article 6(1) of the TEU);
- Article 114(3) of the TFEU, which requires the European Commission to take a high level of protection as its base in proposing environmental protection measures;
- Title XX of the TFEU (Articles 191-193), which contains a specific section on environmental policy; and
- Article 194 of the TFEU, which stipulates that EU energy measures must have regard for the need to preserve and improve the environment.
Secondary law is binding law in the European Union and includes:
- key regulations that are directly applicable in the law of member states, including the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation (1907/2006, as amended) on chemicals; and
- key directives, which must be transposed into national law, including:
- the Habitats Directive (92/43/EEC, as amended);
- the Waste Framework Directive (2008/98/EC, as amended);
- the Air Quality Framework Directive (2008/50/EC, as amended); and
- the Industrial Emissions Directive (2010/75/EU).
Is your jurisdiction a signatory to any international environmental agreements/commitments?
Yes. The European Union is a signatory to a large number of international environmental agreements, including:
- the Geneva Convention on Long-range Transboundary Air Pollution (1979) and its protocols;
- the Cartagena Biosafety Protocol (2000) to the Rio Convention on Biological Diversity (1992) and its Supplementary Protocol on Liability and Redress (2010);
- the Rotterdam Convention on Prior Informed Consent (1998);
- the Stockholm Convention on Persistent Organic Pollutants (2001);
- the Minamata Convention on Mercury (2013);
- the Helsinki Convention on Industrial Accidents (1992);
- the Barcelona Convention (1976), as amended, and its protocols;
- the Helsinki Convention on the Baltic Sea (1992);
- the Convention for the Protection of the Marine Environment of the North-East Atlantic (1992);
- the Bonn Agreement (1983);
- the Lisbon Agreement (1990);
- the Bucharest Convention on the Protection of the Black Sea Against Pollution (1992);
- the UN Framework Convention on Climate Change (1992);
- the Kyoto Protocol (1997);
- the Paris Agreement (2015);
- the Vienna Convention for the Protection of the Ozone Layer (1985);
- the Montreal Protocol (1987), as amended;
- the Aarhus Convention (1998) on access to information, public participation in decision-making and access to justice in environmental matters and its Protocol on Pollutant Release and Transfer Registers (2009);
- the Espoo Convention on Environmental Impact Assessment (1991);
- the Alpine Convention (1991) and its protocols;
- the Convention on Biological Diversity (1992);
- the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of the Benefits Arising from their Utilisation (2010);
- the Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973);
- the Bonn Convention on the Conservation of Migratory Species (1979);
- the Agreement on the Conservation of African-Eurasian Migratory Waterbirds (1995);
- the Bern Convention on European Wildlife and Habitats (1979);
- the Convention for the Protection of Vertebrate Animals used for Experimental and other Scientific Purposes (1986);
- the International Tropical Timber Agreement (1994);
- the Ramsar Convention on Wetlands of International Importance (1971);
- the Agreement on the Protection and Sustainable Development of the Prespa Park Area (2010);
- the Convention for the Conservation of Antarctic Marine Living Resources (1980);
- the UN Convention to Combat Desertification in Africa (1994);
- the Basel Convention on Hazardous Wastes (1989);
- the Helsinki Convention on Watercourses and International Lakes (1992);
- the Danube River Basin Convention (1987); and
- the Rhine River Basin Convention (1999).
The EU Commission lists the main international treaties to which it is a contracting party or signatory at http://ec.europa.eu/environment/international_issues/agreements_en.htm. (Last accessed on April 13 2018).
Which government bodies regulate compliance with environmental legislation and what is the extent of their powers?
EU environmental law is implemented by the member states, which monitor and report on this to the commission. The commission acts as the guardian of the treaty on this matter. Under Articles 258 and 260 of the TFEU, the commission may bring infringement actions before the European Court of Justice against member states that it considers have failed to fulfil their EU environmental law (or other) obligations.
The Directorate-General for Environment is the department responsible for fulfilling the commission’s general functions with regard to the environment. In 2010 a new Directorate-General for Climate Action was created, responsible for dealing with consequences of climate change and implementing the EU Emission Trading System. In addition, the Directorate-General for Energy is responsible for energy policy; these three directorate-generals work together, recognising the importance of energy policy in creating a sustainable environment.
Specialised bodies, offices and agencies regulate specific sectors and aspects of EU environmental law and policy. The European Chemicals Agency, for example, is responsible for the registration, evaluation and potential authorisation or restriction of chemicals under the REACH Regulation. Other important bodies are the European Food Safety Authority and the European Integrated Pollution Prevention and Control Bureau.
How would you describe current government policy on environmental regulation and how does it compare on an international scale?
The European Union is a vocal supporter of environmental protection and climate change measures. This is evidenced by the strong language found in the TFEU supporting environmental protection. On the international scene, the European Union actively engages in multilateral treaties across an array of environmental issues, including climate change. The European Union’s leading role was underscored by the President of the European Commission, Jean-Claude Juncker, when, in his 2017 State of the Union Address, he stated: “I want Europe to be the leader when it comes to the fight against climate change.”
Activities subject to permit
Which activities require an environmental permit and how are they classified for such purposes?
The European Union’s Industrial Emissions Directive (IED) (2010/75/EU) requires the following categories of activity to operate in accordance with a permit:
- energy industries (in particular power plants);
- production and processing of metals;
- the mineral industry (including the production of cement and asbestos and manufacturing glass);
- production of organic and inorganic chemicals;
- waste management (ie, the disposal and recovery of waste); and
- other activities, including the production of pulp, paper and cardboard, pre-treatment and dyeing of textiles, tanning of hides and skins, disposal or recycling of animal carcasses, and intensive rearing of poultry or pigs.
A detailed list of activities falling within each of these categories may be found in Annex I of the IED.
Which authority issues permits?
Competent authorities designated by the EU member states are responsible for issuing permits (Article 5 of the IED).
What are the procedural and documentary requirements to obtain a permit?
Article 12 of the IED requires operators to provide a description of the following when applying for a permit:
- the installation and its activities;
- the raw and auxiliary materials, other substances and the energy used in or generated by the installation;
- the sources of emissions from the installation;
- the conditions of the site of the installation;
- where applicable, a state of soil and groundwater contamination baseline report;
- the nature and quantities of foreseeable emissions from the installation into each medium, as well as identification of significant effects of the emissions on the environment;
- the proposed technology and other techniques for preventing or, where this is not possible, reducing emissions from the installation;
- measures for the prevention, preparation for re-use, recycling and recovery of waste generated by the installation;
- any other measures planned to prevent pollution, waste, inefficient energy use, accidents (and to limit their consequences);
- measures planned to monitor emissions into the environment; and
- the main alternatives to the proposed technology, techniques and measures studied by the applicant.
The permit application must also include a non-technical summary of the above.
Do any permit fees apply?
The IED does not impose permit fees, but it does not preclude EU member states from applying such fees.
Validity period and renewal
What is the validity period for permits and how can they be renewed?
The IED does not specify a validity period for permits. Instead, Article 21 provides that the national competent authorities must periodically reconsider permits, ensuring that the installation’s emission levels do not exceed those associated with the best available techniques (BATs, including new and updated BATs) for such an installation, and that the installation complies with permit conditions. Permits are renewed in accordance with conditions that result from national competent authority permit reconsiderations.
Can permits be transferred? If so, what procedure applies?
The IED does not contain any specific provisions on transferring permits, leaving it instead to EU member states to decide on transfer provisions in their national rules implementing the directive.
Are permit decisions subject to appeal? If so, what procedure applies?
The IED leaves the modalities of appealing permit decisions to national law, with the exception of specifying (in Article 25) that member states must ensure that members of the public, demonstrating a sufficient interest and impairment of a right, are able to challenge permit decisions before a court or other independent and impartial body.
What are the consequences of violating permit rules and decisions?
Article 8 of the IED provides that in the event of a breach of permit conditions, the operator must:
- immediately inform the competent authority;
- take the measures necessary to ensure that compliance is restored within the shortest possible timeframe; and
- take any further complementary measures that the national competent authority considers necessary to restore compliance.
Where the breach of permit conditions poses an immediate danger to human health or threatens to cause an immediate significant adverse effect upon the environment, and until compliance is restored, the operator must suspend operating the installation.
In addition, Article 79 of the IED requires member states to impose effective, proportionate and dissuasive sanctions for violating permit rules and decisions.
Environmental impact assessments
Projects subject to assessment
What projects require a preliminary environmental impact assessment?
The Environmental Impact Assessment (EIA) Directive (2011/92/EU, as amended by 2014/52/EU) applies to all “public and private projects which are likely to have significant effects on the environment”. Specific examples of projects that may be covered are listed in Annexes I and II.
Scope of assessment
What environmental factors and risks fall within the scope of the impact assessment report?
According to Article 3 of the EIA Directive, the following factors should be considered in the EIA:
- population and human health;
- land, soil, water, air and climate;
- material assets, cultural heritage and the landscape; and
- the interaction between these factors.
Further, the effects on these factors shall take account of the vulnerability of the project to risks of major accidents and/or disasters that are relevant to the project concerned.
Article 5 and Annex IV of the EIA Directive set out what the EIA report must contain.
Who conducts assessments?
According to Article 5(3) of the EIA Directive, the developer must prepare and submit the EIA report. The developer must ensure that the EIA report is prepared by competent experts. In addition, the competent authority must ensure that it has access to sufficient expertise to examine the EIA report and, where necessary, must seek from the developer supplementary information needed to reach a reasoned conclusion on the significant effects of the project.
Are the results of impact assessments publicly available?
Yes. Article 6 of the EIA Directive requires the public to be informed and consulted on the EIA process. Specifically, the public must be provided with the information set out in Articles 6(2) and (3), and is entitled to express comments and opinions until such time as a decision is taken on the request for development consent. Specifically, the timeframe for consulting the public on the EIA assessment report shall be at least 30 days.
Can the results of an impact assessment be contested? If so, what procedure applies?
According to Article 11 of the EIA Directive, members of the public may, in accordance with the laws and procedures of the member state in question, bring a legal challenge to the substantive or procedural legality of decisions, acts or omissions that are subject to the public participation provisions in the directive. It is up to the member states to determine at what stage the decisions, acts or omissions may be challenged (ie, whether the EIA report itself is capable of being challenged, as opposed to the decision to grant or refuse development consent based on that EIA report).
What regime governs liability for soil pollution (including the allocation, transfer and limitation of liability)?
Soil pollution is not comprehensively regulated at EU level. The protection and sustainable use of soil is regulated in measures, resulting in mainly indirect protection of soil – for example, through environmental policies on waste, water, chemicals, industrial pollution prevention, nature protection and biodiversity, nitrates and pesticides, sewage sludge, forestry strategy, climate change adaptation and mitigation, and biofuels.
EU legislation partly tackling soil protection includes:
- the Landfill Directive (1999/31/EC, as amended by Directive 2011/97/EU), which addresses the presence of toxic substances resulting from a land-filling operation;
- the Environmental Liability Directive (2004/35/EC, as amended by Directive 2013/30/EU), which requests liable operators to undertake the necessary preventative and remedial action for a range of polluting activities; and
- the Industrial Emissions Directive (IED) (2010/75/EU), which aims to ensure that the operation of an industrial installation does not lead to deterioration in the quality of the soil.
The European Commission had proposed a Soil Framework Directive (COM/2006/0232 final) in September 2006 that aimed at filling this gap and providing a common strategy for the protection and sustainable use of soil. However, the commission withdrew the proposal in April 2014 as it had failed to be enacted after nearly eight years. The commission hopes to propose legislation on soil again in the future.
What environmental due diligence measures are recommended before concluding land transactions?
As mentioned above, soil pollution is not comprehensively regulated at EU level. National and potentially regional rules need to be considered.
The EU legislation partly tackling soil (as noted in the section “Liability” above) includes:
- the Landfill Directive, which addresses the presence of toxic substances resulting from a land-filling operation;
- the Environmental Liability Directive, which requests liable operators to undertake the necessary preventative and remedial action for a range of polluting activities; and
- the IED, which aims to ensure that the operation of an industrial installation does not lead to deterioration in the quality of the soil.
What remediation and clean-up measures are typically applied and how can remediation costs be recovered?
Soil pollution is not comprehensively regulated at EU level. National and potentially regional rules must be considered.
How are air emissions regulated? What air quality standards and emission limits apply?
At EU level, air emissions are primarily regulated by:
- the Air Quality Framework Directive (2008/50/EC, as amended by Directive 2015/1480/EU), which:
- sets up a regime for the monitoring and assessment of ambient air quality;
- sets up an air quality management system using a series of environmental quality standards and targets; and
- requires member states to draw up air quality plans and short-term action plans;
- the Industrial Emissions Directive (2010/75/EU), which sets up a scheme whereby large-scale industrial installations must obtain permits in order to operate; and
- the National Emission Ceilings Directive (2016/2284/EU), which has to be transposed into national law by 1 July 2018. This directive sets out 2020 and 2030 emission reduction commitments for five major air pollutants, and maintains other existing commitments.
What are the consequences of non-compliance with air emissions regulations?
At EU level, the commission monitors member states to ensure that they closely adhere to the various targets and standards of EU law pertaining to air emissions. If a member state does not implement EU law, the commission may initiate an infringement procedure based on Articles 258 and 260 of the Treaty on the Functioning of the European Union.
At national level, member states must enforce the EU rules, and enforcement procedures and sanctions are matters of national or regional law.
What rules govern the discharge of wastewater and the protection of water resources?
At EU level, the discharge of wastewater and the protection of water resources are primarily regulated by:
- the Water Framework Directive (2000/60/EC, as amended by Directive 2014/101/EU);
- the Groundwater Directive (2006/118/EC, as amended by Directive 2014/80/EU); and
- the Directive on Environmental Quality Standards (Water Policy) (2008/105/EC, as amended by Directive 2013/39/EU).
What are the consequences of non-compliance with water pollution regulations?
At EU level, the European Commission monitors member states to ensure that they closely adhere to the various targets and standards of EU law pertaining to water. If a member state does not implement EU law, the commission may initiate an infringement procedure based on Articles 258 and Article 260 of the Treaty on the Functioning of the European Union.
At national level, member states must enforce the law, and enforcement procedures and sanctions are matters of national or regional law.
Waste and hazardous substances
How is ‘waste’ defined in your jurisdiction?
The Waste Framework Directive (WFD) (2008/98/EC) regulates the management of waste in the European Union. ‘Waste’ is defined in the WFD as “any substance or object which the holder discards or intends or is required to discard”. Guidance on the interpretation of the WFD explains that:
- ‘discard’ includes items thrown into a waste bin or the transfer of material from a company to a waste collector;
- ‘intention to discard’ includes an operating site that indicates that it will send off-site for appropriate disposal or recovery any of its stock of raw materials that cannot be returned; and
- ‘requirement to discard’ includes stockpiles of banned pesticides that must be discarded and therefore must be managed as waste.
The WFD makes certain exclusions from the scope of waste, such as gaseous effluents emitted into the atmosphere, land (in situ) and uncontaminated soil. It also excludes from its scope certain materials to the extent they are covered by other EU legislation, including wastewater, animal by-products and carcasses, and mining waste. By-products of industrial processes also do not constitute waste if:
- further use of the substance or object is certain;
- it can be used directly without any further normal industrial processing;
- it is produced as an integral part of the production process; and
- further use is lawful.
Material ceases to be waste if it meets certain ‘end-of-waste’ criteria, such as whether a market exists for the material, or it has undergone a recovery operation (including recycling). The concepts of recycling and recovery are defined in the WFD. The European Commission has adopted an interpretative communication on waste and by-products to assist with the application of the end-of-waste criteria.
The fundamental obligations on member states in respect of waste under the WFD are twofold. First, they must take measures to ensure that waste management is carried out without endangering human health or without harming the environment. Second, they must take measures to prohibit the abandonment, dumping or uncontrolled management of waste.
What rules and procedures govern the handling of waste, with particular respect to:
The WFD distinguishes between:
- preliminary storage of waste pending collection; and
- storage of waste pending treatment.
The storage of waste pending collection falls under the definition of ‘collection’ of waste. ‘Permanent storage’ is listed in Annex I of the WFD as a disposal operation. These definitions are relevant for the responsibility for waste management (see Article 15 of the WFD).
Special rules apply for the storage of hazardous waste (see Articles 13, 17, 35 and 36 of the WFD).
The storage of waste prior to recovery for a period of three years or longer and the storage of waste prior to disposal for a period of one year or longer are subject to the Landfill Directive (1999/31).
The transport of waste is included in the definition of ‘waste management’ in the WFD. Article 15 of the WFD requires member states to adopt national rules ensuring that undertakings that collect or transport waste on a professional basis shall deliver waste in a manner respecting the conditions of Article 13 on the protection of human health and the environment.
There are specific rules on the shipment of waste, set out in the Waste Shipments Regulation (1013/2006). This regulation applies to shipments of waste within the European Union, as well as into and out of the union. It implements into EU law the provisions of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their disposal (1989) and the Decision of the Organisation for Economic Cooperation and Development on the Control of Transboundary Movements of Waste Destined for Recovery Operations.
The disposal of waste is considered to be a ‘waste management’ operation under the WFD. ‘Disposal’ is defined in Article 3 to mean “any operation which is not recovery even where the operation has as a secondary consequence the reclamation of substances or energy. Annex I sets out a non-exhaustive list of disposal operations”. Member states are required to ensure that waste disposal operations meet the provisions of Article 13 on the protection of human health and the environment (see Article 12).
The WFD also establishes an obligation for operations recovering or disposing of waste to have a permit or to be registered (Article 23). (Member states can allow exemptions from the requirement for a permit for the disposal of non-hazardous waste at the place of production and for waste recovery operations.) In accordance with the ‘polluter pays’ principle, the costs of disposing of waste must be borne by the holder of waste, by previous holders or by the producers of the product from which the waste came.
The following legislation also governs the disposal of waste:
- the Industrial Emissions Directive (2010/75/EU) which contains provisions regulating waste incineration plants; and
- the Landfill Directive (1999/31/EC).
The WFD defines the concepts of ‘recycling’ and ‘reuse’ in Article 3. In some situations, waste will cease to be waste where it has undergone recycling operations and also complies with the end-of-waste criteria established in Article 6.
Article 11 requires member states to promote reuse and recycling. It establishes recycling targets for the member states and requires separate collection of at least paper, metal, plastic and glass.
What is the extent of a waste producer’s liability after transferral of waste (eg, to a waste disposal agent)?
In order to determine a waste producer’s liability fully, it is necessary to check national law. Article 15 of the WFD establishes rules at EU level on the responsibility for waste management (which includes the disposal of waste). In particular:
- original waste producers are liable for carrying out the treatment of waste or having treatment handled by a dealer;
- as a general rule, when waste is transferred from the original producer or holder to a dealer or undertaking carrying out waste treatment operations for preliminary treatment, the responsibility for carrying out a complete recovery or disposal operation shall not be discharged; and
- EU member states may adopt national legislation specifying the conditions of responsibility and decide in which cases the original producer is to retain responsibility for the whole treatment chain or in which cases the responsibility of the producer and the holder can be shared or delegated among the actors of the treatment chain.
The Waste Shipments Regulation establishes specific rules on liability for shipments of waste.
Are waste producers bound by any waste recovery obligations?
Some obligations are set out at EU level, but member states have a certain discretion in how they implement the rules.
At EU level, Article 14 of the WFD states that in accordance with the ‘polluter pays’ principle, the costs of waste management (which include recovery and disposal) shall be borne by the original waste producer or by the current or previous waste holders. Member states may decide that the costs of waste management are to be borne partly or wholly by the producer of the product from which the waste came and that the distributors of such product may share these costs.
Article 8 of the WFD allows member states to adopt national legislation establishing extended producer responsibility for natural or legal persons that professionally develop, manufacture, process, treat, sell or import products, to include – for example – obligations to accept returned products.
The following rules establish producer responsibility regimes for specific materials:
- Directive 2012/19/EU on waste electrical and electronic equipment;
- Directive 2006/66 on batteries and accumulators and waste batteries and accumulators;
- Directive 2000/53 on end-of-life vehicles; and
- Directive 94/62 on packaging and packaging waste, as amended.
Waste disposal agents
How are the business activities of waste disposal agents/landfill operators regulated?
Certain rules are established at EU level, but in general regulation is undertaken at national or regional level.
EU rules provide that undertakings that collect or transport waste on a professional basis, as well as waste dealers and brokers, are subject to a registration requirement under the WFD (Article 26). Any undertaking intending to carry out waste treatment must also obtain a permit from the competent authority (Article 23), subject to certain exemptions (Article 24).
Undertakings that collect or transport waste on a professional basis must deliver the waste in accordance with the requirements of Article 13 on the protection of human health and the environment.
What special rules, regulations and safeguards apply to the handling and disposal of hazardous materials?
The WFD contains rules for the control of hazardous waste (which includes waste that is oxidising, flammable, toxic, ecotoxic, carcinogenic, mutagenic, corrosive or infectious). In particular, hazardous waste cannot be mixed or diluted unless:
- the business has a waste management permit;
- the operation conforms to the best available techniques; and
- there is no increased adverse impact on human health or the environment.
The Waste Shipments Regulation also contains specific rules for the shipment of hazardous waste, which is generally subject to notification procedures with the prior written consent of all relevant authorities of dispatch, transit and destination.
Annex III of the WFD sets out the main characteristics for waste to be classified as ‘hazardous’ and Decision 2000/532/EC establishes the classification system for waste, including hazardous and non-hazardous waste.
Chemical and product regulation
What environmental regulations and procedures apply to the production, transportation and sale of chemicals and other products?
Chemicals are primarily regulated by:
- the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation (1907/2006, as amended by 2018/35/EU);
- Regulation 1272/2008 on the classification, labelling and packaging of substances and mixtures (as amended by 2017/776/EU);
- Regulation 528/2012 concerning the making available on the market and use of biocidal products (as amended by 334/2014/EU);
- Regulation 649/2012 concerning the export and import of hazardous chemicals (as amended by 2018/172/EU); and
- Directive 2008/68/EC on the inland transport of dangerous goods (as amended by 2018/217/EU).
Types of liability
What types of liability can arise for environmental damage (eg, administrative, civil, criminal)?
The Environmental Liability Directive (ELD) (2004/35/EC, as amended by Directives 2006/21, 2009/31 and 2013/30) sets out EU-wide rules on liability for environmental damage. On the basis of the ‘polluter pays’ principle, Article 8 of the ELD requires EU member states to hold operators listed in Annex III strictly liable for carrying out dangerous activities that cause environmental damage. Operators carrying out other activities may be liable for fault-based damage to protected species or natural habitats, provided there is a causal link. There is no financial cap to liability. Member states may provide rules for the allocation of shared liability.
Directors’ and officers’ liability
Can directors and officers be held personally liable for company environmental offences? If so, can liability be limited through insurance coverage and/or contractual indemnities?
Environmental liability can be attributed to an ‘operator’ of an activity that has caused environmental damage or, where there is imminent threat of such damage, defined as:
any natural or legal, private or public person who operates or controls the occupational activity or, where this is provided for in national legislation, to whom decisive economic power over the technical functioning of such an activity has been delegated, including the holder of a permit or authorisation for such an activity or the person registering or notifying such an activity.
The ELD does not provide for supplementary liability of an operator company’s directors or officers. In light of the risk of personal liability, directors and officers liability insurance is available to cover this. It is not possible to contract out of statutory liability.
Liability for authorised activity
Can environmental liability arise even in the course of authorised activities (eg, operations subject to environmental permits)?
Yes. Article 2(6) of the ELD specifically provides that activities causing environmental damage for which an operator may be liable include where a permit or authorisation has been granted to an operator for that activity, or where the operator has notified or registered the activity.
What defences are available to environmental offenders?
The ELD contains a number of exceptions where liability does not arise (Article 4). These are valid where the environmental damage is caused by or arises from:
- an act of armed conflict, hostilities, civil war or insurrection;
- a natural phenomenon of exceptional, inevitable and irresistible character;
- an incident (eg, oil pollution by sea-going ships) in respect of which liability or compensation falls within the scope of:
- the Civil Liability for Oil Pollution Damage Convention 1992;
- the Establishment of an International Fund for Compensation for Oil Pollution Damage Convention 1992;
- the Civil Liability for Bunker Oil Pollution Damage Convention 2001;
- the Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea Convention 1996; and
- the Civil Liability for Damage Caused during Carriage of Dangerous Goods by Road, Rail and Inland Navigation Vessels Convention 1971;
- activities covered by the Treaty Establishing the European Atomic Energy Community (including nuclear risks) or incidents or activities in respect of which liability or compensation falls within the scope of:
- the Brussels 1960 and Paris 1963 Third Party Liability in the Field of Nuclear Energy Conventions;
- the Vienna Convention on Civil Liability for Nuclear Damage 1963;
- the Supplementary Compensation for Nuclear Damage Convention 1997 on the Application of the Vienna Convention and the Paris Convention 1988; and
- the Brussels Civil Liability in the Field of Maritime Carriage of Nuclear Material 1971;
- pollution of a diffuse nature, where there is no causal link between the damage and the activities of an individual operator;
- activities the main purpose of which is to serve national defence or international security; and
- activities the sole purpose of which is to protect against natural disasters.
In addition, the ELD is without prejudice to the right of an operator to limit its liability in accordance with national legislation implementing the Convention on Limitation of Liability for Maritime Claims 1976 or the Strasbourg Convention on Limitation of Liability in Inland Navigation 1988.
Member states may also allow an operator not to bear the cost of remedial actions where the operator can demonstrate that it was not at fault or negligent and that the
environmental damage was caused by:
- an emission or event expressly authorised by, and fully in accordance with the conditions of, an authorisation conferred by or given under applicable national laws and regulations; or
- an emission or activity or any manner of using a product in the course of an activity which the operator demonstrates was not considered likely to cause environmental damage according to the state of scientific and technical knowledge at the time when the emission was released or the activity took place (the ‘state of the art’ defence).
Liability in share sale/asset purchase
What rules govern the transfer of environmental liability in share sales and asset purchases?
The ELD does not contain any such specific rules.
What environmental due diligence measures are recommended before concluding share sales/asset purchases?
It is always necessary to conduct environmental due diligence before concluding share sales/asset purchases where there is a risk of liability attaching to the transaction. EU-level liability provisions under the ELD, as well as national specific implementing provisions, must be checked.
Can lenders be held liable for environmental offences?
The ELD provides that only operators as defined can be held liable.
Reporting and disclosure obligations
Under what circumstances must environmental damage be reported to the authorities?
Article 6 of the Environmental Liability Directive (ELD) (2004/35, as amended by Directives 2006/21, 2009/31 and 2013/30) provides that operators (ie, persons carrying out an economic activity) must, without delay, inform the national competent authority of all relevant aspects of the situation where environmental damage has occurred. In addition, operators must take all practicable steps to control, contain, remove or otherwise manage immediately the relevant contaminants and/or any other damage factors in order to limit or prevent further environmental damage and adverse effects on human health or further impairment of services. They must then take necessary remedial measures at their own cost, as decided upon by the competent authority, or bear the costs of remedial measures taken by the competent authority.
Is information on environmental damage/compliance available in a public register?
The ELD does not foresee an environmental damage/compliance public register. However, under the Non-Financial Reporting Directive (2014/95/EU), large companies with more than 500 employees must disclose in their management reports relevant and useful information on their policies, main risks and outcomes relating to, among other things, environmental matters. The European Commission has issued a number of reports on the operation of the ELD, most recently in 2016 (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52016DC0204).
Are regular environmental audits required?
Not under the ELD, although such audits may be required by the law of EU member states. That said, the European Commission operates a voluntary Eco-Management and Audit Scheme (pursuant to Regulation 1221/2009 as amended by Regulation 2017/1505), in which companies and other organisations may participate. The scheme provides a mechanism to help participants to evaluate, report and improve their environmental performance.
What environmental disclosures are required in sales transactions?
EU environmental law does not require environmental disclosures in sales transactions, although such disclosures may be required by the law of EU member states.
What types of environmental insurance are available and what do they cover?
The types of environmental insurance available and what they cover vary between EU member states. The most common insurance types offered are general third-party liability, stand-alone environmental damage, business activities cover, professional indemnity and property insurance. It is typical for insurers to exclude from cover across these types:
- wilful acts and wilful failure to comply with regulations;
- damage caused by normal operations (ie, foreseeable accidents);
- gradual and accidental pollution (eg, seepage of chemicals); and
- previously genetically modified organisms, although it is becoming increasingly common for insurers to offer cover.
At least eight member states now require compulsory insurance to cover environmental liability risks.
Is environmental insurance mandatory and/or commonly purchased?
Neither the Environmental Liability Directive (ELD) (2004/35, as amended by Directives 2006/21, 2009/31 and 2013/30) nor any other piece of EU legislation requires companies and other organisations to purchase environmental insurance. However, a key element of the ELD (Article 14) requires EU member states to encourage the development of financial security instruments and markets, including financial mechanisms in the case of insolvency, with the aim of requiring operators to purchase compulsory insurance to cover their responsibilities under the ELD.
A 2010 European Commission report (COM (2010) 581 final) found that a majority of economic operators in the European Union, particularly small and medium enterprises (SMEs), had not adapted their insurance policies to cover ELD liabilities. However, in 2014 – some 10 years after the ELD was enacted – an Insurance Europe study found increasing levels of awareness and purchasing, with the biggest growth among SMEs.
What environmental taxes are levied in your jurisdiction?
The European Union does not itself levy any environmental taxes. However, the union’s 28 member states levy a variety of national energy, transport, and pollution and resources taxes. Energy taxes (which include taxes on transport fuels) represent by far the highest share of overall environmental tax revenues, accounting for 76.9% of total EU-wide environmental taxation in 2016, with transport taxes representing 19.7% and pollution and resources taxes a relatively small 3.4%. Overall, in 2016 total environmental tax revenue across EU member states amounted to €364.4 billion, or 6.3% of EU total government revenues from tax and social security contributions (source: Eurostat).
Climate change issues
Emissions, renewables and efficiency
What regulations, targets and/or incentive schemes are in place to:
(a) Reduce greenhouse gas emissions?
The European Union considers itself to be a global leader in limiting emissions.
As part of its 2030 Climate and Energy Framework, the European Union and its member states have committed to reducing greenhouse gas emissions by 40% compared to 1990 levels, producing 27% of EU energy from renewables and improving energy efficiency by 27% (October 23-24 2014 European Council Conclusions).
The centrepiece of the European Union’s climate change regime is its Emissions Trading Scheme (ETS, under Directive 2003/87/EC, as amended). Over 11,000 power stations and industrial plants in 31 countries (28 EU member states and three European Economic Area/European Free Trade Agreement states), as well as aviation activities, fall within the scope of the ETS. In practice, this means that the ETS covers around 45% of the European Union’s greenhouse gas emissions.
The ETS is a ‘cap and trade’ system. It works by putting a limit on overall emissions from industry sectors emitting high levels of greenhouse gases, and the limit is reduced over time. Within that limit, companies may buy and sell emissions allowances as needed. Each allowance represents the right to emit one tonne of carbon dioxide equivalent (CO2e) emissions. The number of allowances issued determines the volume of emissions permitted, and in that way emissions are ‘capped’. The idea is that the cap – and thus emissions – are reduced over time.
Allowances are distributed, by allocation or auction, to installations and can be freely traded on the market. Each year, installations must surrender allowances equivalent to the amount of CO2 emitted. This way, the price is (at least partially) determined by the market.
(b) Promote renewable energy/energy efficiency?
The 2030 Climate and Energy Package adopted by the European Union includes the Renewable Energy Directive (2009/38/EC, as amended by Directives 2013/18 and 2015/1513) and the Energy Efficiency Directive (2012/27/EU, as amended by Directive 2013/12/EU).
The Renewable Energy Directive requires the European Union to fulfil at least 20% of its total energy needs with renewables by 2020 – to be achieved through the attainment of individual national targets. All EU countries must also ensure that at least 10% of their transport fuels come from renewable sources by 2020. In November 2016 the European Commission published a proposal for a revised Renewable Energy Directive, revising its target to meeting at least 27% of its total energy consumption with renewables by 2030, bringing it in line with the 2030 Climate and Energy Framework.
The Energy Efficiency Directive establishes a set of binding measures to help the European Union reach its 20% energy efficiency target by 2020. Under the directive, all EU countries are required to use energy more efficiently at all stages of the energy chain, from production to final consumption. In November 2016 the European Commission proposed an update to the Energy Efficiency Directive, including a new 30% energy efficiency target for 2030, and measures to update the directive aimed at ensuring that the new target is met.
What regulations are in place to protect biodiversity and natural areas?
At EU level, nature and biodiversity are protected by a variety of measures, including:
- the Wild Birds Directive (2009/147/EC);
- Habitats Directive (92/43/EEC, as amended by Directive 2013/17/EU);
- Regulation 1143/2014 on the prevention and management of the introduction and spread of invasive alien species;
- Directive 1999/22/EC on the keeping of wild animals in zoos;
- Regulation 3254/91 prohibiting the use of leghold traps in and the importation into the European Union of products that involved the use of leghold or other inhumane traps; and
- Regulation 1007/2009 on trade in seal products.
The Habitats Directive establishes the Natura 2000 network, a network of sites that have been designated by member states as special areas of conservation. Natura 2000 also includes the special protection areas classified under the Wild Birds Directive.
Annexes I and II of the Habitats Directive list the types of habitat and species whose conservation requires the designation of ‘special areas of conservation’. Some of these are defined as ‘priority’ habitats or species in danger of disappearing and for which there are specific rules. For ‘special areas for conservation’, EU member states are required to introduce appropriate conservation objectives and measures.
Articles 12 and 16 of the Habitats Directive are aimed at the establishment and implementation of a strict protection regime for animals that have been designated as “animal species of Community interest”. The European Commission has adopted further guidance on the protection of animal species (http://ec.europa.eu/environment/nature/conservation/species/guidance/pdf/guidance_en.pdf).