On 11 July 2014, the Polish Parliament adopted the draft of the Bill to amend the Environmental Law and certain other acts (“Bill”). The Bill will soon be signed by the President and published, and will enter into force after 14 days from the date of its publication. Generally the Bill is aimed at implementing the Industrial Emissions Directive, 2010/75/EU ("IED"), but it will also introduce some other important amendments to the Poland’s Environmental Law.
Government representatives admit that the Bill will have a significant influence on the functioning of large installations in various industrial branches (e.g. energy, chemical, metallurgical, food, paper and pulp). Once the Bill comes into force, operators of such installations will have to face a number of issues, including legal ones.
The Bill amends the procedure for obtaining the IPPC (Integrated Prevention Pollution and Control) permit (Polish: pozwolenie zintegrowane). Such permit is crucial for the functioning of an installation (the voivodship environmental protection inspector must suspend operation of an installation in the event that its operator does not hold the proper permit). In other words, an industrial site cannot function without an IPPC permit.
One of the most important changes in the IPPC permitting procedure consists in the introduction of an obligation to prepare a baseline report – a document containing information on the groundwater and soil status of the industrial site. Such report will be preceded by an investigation of the site. This obligation will make the procedure of acquiring or amending the IPPC permit much more costly and time-consuming.
It is worth noting that the first draft of the Bill stated that all IPPC installations must prepare such a baseline report. The current version of the draft stipulates that a baseline report will have to be prepared only for those installations that meet both of the following two conditions: (i) the chemical substances and mixtures used, produced or emitted on the site cause a risk, and (ii) there is a possibility of groundwater and soil pollution.
The baseline report will be used to compare the site’s initial status and its final status following the end of activities. Upon definitive cessation of activities, the (final) operator will be obliged to once again assess the state of the soil and groundwater contamination with the relevant hazardous substances. If contamination has occurred, the operator will have to take certain remedial actions. Industry representatives may need legal help in order to assess whether a baseline report is required in specific cases and in order to successfully go through the procedure of acquiring or amending the IPPC permit.
Best Available Techniques
The Bill also obliges the operators to comply with the relevant Best Available Techniques (“BAT”) conclusions adopted by the European Commission. The “BAT conclusions” is a document that sets out, amongst other things, a description of BAT, conditions for their application, and the targeted emission levels. These emission levels are generally stricter than the levels that have been applicable so far.
It should be noted that due to continuous developments in technology, the BAT conclusions will continue to change and develop. The adoption of new BAT conclusions will make it necessary to update the IPPC permit and introduce adequate changes to the installation. The Bill also sets out an obligation to monitor those emissions that may cause pollution to soil and groundwater. For more information on BAT conclusions, please see our previous article on the matter.
Definition of remediation
The Bill also introduces a definition of a remediation that refers to cleanup obligations on the part of the operator. The remediation is performed in order to bring the site to a state that does not cause a threat to the environment or to public health.
Transitional periods and exemptions
Polish politicians admit that the Bill will have a very strong financial impact on the country’s industry. In order to reduce this economic burden, the Bill will introduce transitional periods and certain exemptions.
The Transitional National Plan (“Plan”) will cover only certain installations and will move the deadline for compliance with the emission standards to the middle of the year 2020. The Plan sets out an overall maximum total annual emission volume for all of the installations covered by it. This common ceiling of emissions will be decreased each year in order to meet the IED criteria in 2020.
The Bill will also introduce special transitional periods and exemptions for the district heating plants.
Consequences for the industry
The Bill will have certain important consequences for the stakeholders. Significant investments will have to be made in various branches of the industry in order to observe the new emission levels. The justification enclosed to the Bill points out that the amendments will affect especially those installations that were meeting only the minimum emission standards.
According to an estimate from the Warsaw University of Technology, the total costs of introducing the new emission standards in just the energy sector will amount to approx. EUR 535 million until the end of 2016 and will exceed EUR 1 billion by the end of 2025.
The Bill will also influence corporate transactions. The environmental issues relevant for IPPC permits will have to be even more carefully examined during the M&A transactions and the SPAs will have to properly address the risks connected with the changes introduced by the Bill. For more information on consequences of the IED for M&A transactions please see our previous article on the matter.
In order to assess the detailed consequences of the adoption of the Bill for their production sites, the industry representatives should carefully analyze both the factual and legal situations of their individual installations.