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Types of liability
What types of liability can arise for environmental damage (eg, administrative, civil, criminal)?
Liability of polluters for damage to the environment at large is usually challenged before civil courts – for instance, based on tort, custodial possession (garde de la chose) or neighbourhood disturbance (trouble anormal de voisinage).
Directive 2004/35/EC on environmental liability was also transposed into the French Civil Code to provide for indemnification of damage to protected species and habitats or to water with significant adverse effects, or to land with significant risk of adverse effects on human health. Potentially eligible generating events must have occurred before April 30 2007. The statute of limitations is 30 years from the generating event (and not the actual observation of the damage).
After many years of legal debate, a standalone ecological damage regime (préjudice écologique) was also introduced into the Civil Code, for events having occurred before October 1 2016 and having had a substantial effect on ecosystems, their functions or the collective human benefit derived from the environment. Governmental entities and certified environmental groups may request compensation in kind or, where this is not possible, indemnification to be allotted to environmental remediation measures. The statute of limitations is 10 years from the date on which the plaintiff was or should have been aware of the damage. Indemnification of material and moral losses resulting from environmental damage may still be claimed for on civil grounds.
In addition to fines or even prison sentences, the criminal courts may also order that the polluting activity stop, and that remediation be either imposed (including with daily penalties) or executed at the operator’s cost. A victim can also identify itself as a civil party to the criminal proceedings and thus seek damages.
Comparatively, the administrative courts seem overall reluctant to impose indemnification for environmental damage.
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?
Corporate entities can be held liable and receive fines up to five times those applicable to individuals. Alternatively or additionally, directors and officers can be held personally liable for company environmental offences. Liability can be limited through insurance coverage and/or contractual indemnities as provided for by the company.
Liability for authorised activity
Can environmental liability arise even in the course of authorised activities (eg, operations subject to environmental permits)?
Yes. The fact that the polluting activity may be duly permitted is not a valid defence. In essence, if an activity is a source of environmental liability, it is also non-compliant.
What defences are available to environmental offenders?
Available defences include the absence of risk for human health or the environment, adequate existing emergency procedures and prevention measures, rapidly implemented remedial measures and long-term prevention measures.
Liability in share sale/asset purchase
What rules govern the transfer of environmental liability in share sales and asset purchases?
Private law agreements for the transfer of environmental liabilities that are set out in the environmental code may be effective between their signatories, but will be ineffective vis-à-vis the authorities. Environmental authorities will turn to the operator/permit holder as the liable party for compliance and remediation issues. The parties will thus need to tailor their agreements, bearing in mind who the officially exposed liable party will be: the operating/permit holding entity will generally not change in a share sales, whereas it may in an asset purchase.
What environmental due diligence measures are recommended before concluding share sales/asset purchases?
It is recommended to conduct:
- a compliance audit, including vis-à-vis regulations that are yet to be implemented; and
- soil and groundwater investigations taking into account the French national methodology on the management of contaminated land. The consultant chosen should be fully conversant with the French national methodology on the management of contaminated land, especially since such methodology, initiated in 1999 and substantially reformed in 2007, was further updated in April 2017.
Can lenders be held liable for environmental offences?
Not in this sole capacity: environmental offences are found by environmental authorities, which will regard the operator as a liable offender.
Reporting and disclosure obligations
Under what circumstances must environmental damage be reported to the authorities?
Any incident or accident occurring at a facility classified for environmental protection purposes (ICPE) must be reported to the environmental authorities as soon as possible. A report must be further issued describing:
- the circumstances and causes of the event;
- its effects on human health and the environment; and
- the measures implemented and contemplated to avoid a similar event in the future, and to prevent its medium or long-term effects.
Is information on environmental damage/compliance available in a public register?
The CEDRIC database on ICPEs and some local prefectures publish injunctions against industrial operators; they are, however, not always fully up to date. The ARIA database also provides feedback on technological accidents over the previous year.
Are regular environmental audits required?
Monitoring duties have been reinforced over the years for ICPEs and generally include the provision of regular reports on discharge levels and controls. Operators are also expected to report their discharge and waste volumes to national registries on a yearly basis. Regarding soil and groundwater condition, a baseline report (rapport de base) must be carried out at plants designated under the Industrial Emissions Directive (2010/75/EU).
What environmental disclosures are required in sales transactions?
Extensive environmental disclosures are required in any sales transaction, as failure to do so may render environmental representations, as well as warranties and related liability transfers, ineffective.
Specifically in any real estate sale, the seller has an extensive duty to inform its buyer of present and past industrial activities, and of related risks, soil, groundwater and waste issues. If the seller fails to do so, the buyer may claim for rescission of the sale, or reimbursement of part of the price of sale, or remediation at the seller’s cost (if not disproportionate to the price of sale).
The seller also has a duty to provide the buyer with various studies regarding the environmental condition of the buildings (with respect to asbestos, lead, termites, fungus, etc).
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