Not such a light touch?
The UK's implementation of the EU Environmental Liability Directive ("ELD") is not looking to be as "industry-friendly" as some might have hoped. In addition to introducing a new breed of environmental liability – as clearly required by the ELD – Defra is seemingly not adopting a consistently light touch to implementation and may in some cases be going above and beyond ELD requirements.
The release on 29th February of a Consultation on draft implementing regulations, The Environmental Damage (Prevention and Remediation) Regulations 2008 ("the Regulations") and an accompanying guidance document, sets out the latest proposals.
The UK hopes, following further review after this consultation closes on 27 May 2008, that the implementing Regulations will be made in December 2008.
Who should be concerned?
All sectors with potential to harm species or habitats may be affected by the proposed Regulations, but the impact will be most keenly felt by those singled out for strict liability obligations. This will include most industrial operations, waste management activities, the transportation of dangerous substances, and activities which abstract water. Moreover, as the liability regime in respect of biodiversity damage extends seaward across the Continental Shelf and the water column adjacent to Renewable Energy Zone the provisions will be of importance to offshore oil and gas, and the offshore renewables sector, and potentially in the future to carbon capture and storage operators.
The ELD in outline
The key elements of the ELD are:
- operators of all commercial activities which intentionally or negligently cause biodiversity damage will be subject to new and more extensive remediation obligations (separately from any liability they may have for traditional environmental damage)
- operators of certain commercial activities (those to which a specified range of EU environmental Directives apply) will in the event of an incident arising from their activities be required, on a 'strict liability' basis to take remedial action in relation to various kinds of environmental damage – harm to water, harm to land, and harm to biodiversity
- in the case of biodiversity damage, if harm cannot be fully remediated operators will be required to undertake or pay for other environmental measures
- operators will be required to take all practical steps immediately to prevent environmental damage where there is an imminent threat of such damage
Key UK implementation issues
Although the UK is late in implementing the ELD, the Regulations will operate only from the date on which they come into force in the UK. They will therefore not apply to environmental damage caused by any emission or incident before such date even if the damage occurs after that date. According to draft guidance, where damage occurs as a consequence of an incident which occurs partly before, and partly after, that date, the obligations will apply only to the proportion of the damage attributable to the event or emissions occurring after that date.
'Compliance with permit', 'state of the art', 'damage by third party' and 'compliance with public authority instruction'
The Government has elected to exercise its option to include within the Regulations two optional "defences" or, more properly in legal terms, liability limitations: 'compliance with permit' and 'state of the art'. Two other defences of 'third party damage' and 'following a regulator's instructions' also apply.
These will operate so as to exclude an operator from any obligation to carry out post-event remediation work. They will not, however, absolve operators from obligations to take immediate steps to prevent damage occurring when risks are detected, or to control and contain damage which is occurring.
Joint and Several Liability
In cases where damage, or threatened damage, has been caused by more than one operator the Government has taken advantage of a discretion permitted by the ELD and, as such, the enforcing authority will not be required to apportion liability in advance between responsible operators. Allocation of financial responsibility as between such operators will, instead, be a matter subsequently to be resolved between them by way of civil action claiming contribution. This will make life rather easier for the enforcing authorities, but will add to the burdens of responsible parties – particularly those with the deepest pockets, the most likely immediate targets.
Proactive Notification of Regulators
Where there is an imminent threat of environmental damage, the responsible operator must take all practicable steps to prevent that damage, and to notify the relevant enforcement authority of the threat. The notification duty is only displaced where the actions taken have succeeded in completely eliminating the threat.
Equally, where damage within the Regulations has occurred there will be a duty to take action to contain that damage, and to notify the relevant enforcement authority of all relevant details.
Failure to notify will be punishable as a criminal offence.
There is no requirement under the Regulations for mandatory insurance or other financial security in relation to the specific liabilities imposed.
Damage thresholds for land
The Regulation's definition of 'land damage' differs in certain ways from that in the UK contaminated land remediation legislation (Part 2A of the Environmental Protection Act 1990). The Regulations only cover contamination which gives rise to a significant risk to human health whereas Part 2A covers contamination causing a significant possibility of significant harm to human health and/or the environment.
In assessing risks to human health it will be necessary to take into account likely future use of the land in question; and perhaps significantly this will cover not only uses for which there is present planning consent, but also uses which are envisaged in strategic planning documents.
Damage thresholds for water
The Government has, since its earlier consultation, altered its approach to the threshold for 'water damage' which will trigger obligations under the Regulations. The key will be whether tests reveal an incident which is significant enough to result in a lower water status classification under the EU Water Framework Directive.
Damage thresholds for biodiversity
The Government has decided to extend the scope of the Regulations so as to afford protection not only to species and habitats protected under EU law, but also to those protected through the process of UK designation of particular SSSIs. This requires a different approach to be taken. On SSSIs in relation to both EU-protected and nationally-protected species and habitats the threshold will relate to localised criteria of 'site integrity' (rather than the ELD's rather broader concept of 'conservation status'). Given that the significance of such localised harm cannot be moderated by reference to the ongoing more favourable conservation situation elsewhere, this would seem to set the threshold at a higher standard than that required by the ELD.
Requests for action by interested persons
The Regulations allow for any person affected by environmental damage or who otherwise has a sufficient interest (according to the consultation document, established NGOs will be deemed to have sufficient interest) to notify the enforcing authority, which must then consider the notification and inform the notifier as to the action, if any, it intends to take.
Provision is made for appeals to be lodged – for example, against notices of intent to serve a remediation notice, and against the terms of such notices. Appeal will be to the Secretary of State, but will be handled by the Planning Inspectorate.
The Regulations do not apply to certain categories of damage including damage caused by activities regulated under the Nuclear Installations Act 1965, natural disasters (provided the operator took all reasonable precautions to protect against damage being caused by such an event), or oil pollution from ships (for which liability is determined under the Merchant Shipping Act 1995).
The Regulations only apply to damage caused by pollution of a diffuse nature if a causal link between the damage and an individual operator can be established.
Environmental protection is a devolved matter, and in consequence there will be separate implementing Regulations in England, Wales, Scotland and Northern Ireland. The present Consultation relates to England and Wales, and reveals certain differences of approach between those two countries.
For example, in Wales it is proposed that the 'permit' and 'state of the art' defences will not apply to harm resulting from the deliberate release of GMOs; and also, that operators liable under the Regulations for GMOs will include not only those, such as farmers, who purchase GMOs, but also the producers themselves.
Responses to the Consultation
On a number of key issues Government thinking has moved on since the initial consultation on implementation options in the autumn of 2006. That said, the Government is seeking views on some 32 particular questions, and on those issues there may remain some scope to influence the final implementation outcome.
All businesses with potential to do environmental harm should assess the potential impact of the proposed Regulations on their operations and the measures they can put in place to mitigate against liabilities arising.