Select Committee on European Scrutiny Thirty-Fifth Report





COM(02) 17

Draft Directive on environmental liability with regard to the prevention and remedying of environmental damage.

Legal base:

Article 175(1) EC; co-decision; qualified majority voting



Environment, Food and Rural Affairs

Basis of consideration:

Second SEM of 24 June 2002

Previous Committee Report:

HC 152-xxix (2001-02), paragraph 3 (15 May 2002)

Discussed in Council:

25 June 2002

Committee's assessment:

Legally and politically important

Committee's decision:

Not cleared; further information awaited




    1. Interest in the responsibility for dealing with environmental damage has intensified in recent years, and has been addressed at Community level in a number of ways. In particular, Article 174(2) of the EC Treaty states that Community policy on the environment should be based on the precautionary principle, and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source, and that the polluter should pay.
    2. In February 2000, the Commission produced a White Paper[23] on the subject, which sought to address what constitutes environmental liability; the case for a Community environmental liability regime, and its possible features; the different options for Community action; and the implications of such action in terms of subsidiarity, proportionality and its economic impact.
    3. As foreshadowed in the White Paper, this was followed in January 2002 by the current document, which would give legal effect to the proposals contained in the White Paper. It would thus:

    • establish strict liability[24] for environmental damage to biodiversity, through a wide range of specified activities[25], and fault-based liability for damage to biodiversity through any other activities;

    • establish a regime under which the competent national authorities would have responsibility for management and enforcement, including the restoration of damage to a baseline condition;

    • introduce the concept of compensation for interim losses, and of compensation remediation being provided elsewhere in cases where full remediation is not possible;

    • in accordance with the "polluter pays" principle, enable the costs of preventive or restorative action to be recovered where operators are liable for the damage, but have failed to act as necessary;

    • require the Member States to assume subsidiary responsibility in cases where the polluter cannot be identified, lacks sufficient resources, or is not required to restore the damage;

    • allow persons adversely affected by environmental damage, or a qualified entity, to lodge a request for action by the competent authority, and to seek judicial review.

    1. The proposal would not cover damage to private interests, which would continue to be dealt with under existing national legislation; environmental damage which is of such a widespread or diffuse nature as to prevent a causal link being established; or where liability for compensation is provided for under specified international conventions, or under the Treaty establishing the European Atomic Energy Community. Nor would it apply to damage caused by activities carried out before 30 June 2005. It also provides for a range of defences and exemptions, including compliance with the terms of any permit issued and with the best available scientific and technical knowledge.
    2. In an Explanatory Memorandum of 2 April 2002, the Minister of State (Environment) at the Department for Environment, Food and Rural Affairs (Mr Michael Meacher) said that the Government considered that action at Community level was "broadly justified" on environmental grounds under Article 175, and that it supported a regime which did not disrupt well-established national arrangements in this area. In this respect, he pointed out that the proposal would allow some flexibility for Member States in implementing the Directive, and that a European-wide liability regime was likely to have environmental benefits in the UK and across the Community.
    3. However, he also stressed that, although the UK currently has a very extensive regime governing liability for environmental damage, the scope and approach of the proposal differs in many respects, notably in envisaging more general protection and containing more stringent provisions on remediation. He therefore considered that extensive changes in UK law would be needed, and that the proposal would have significant implications for national authorities, in that it would increase their ability to pass on the costs of environmental damage to the polluter, but would also increase their enforcement costs substantially.
    4. The Minister concluded that the Government did not have a final position on the details of the proposal pending consultation with affected interests and clarification of a number of key issues, such as the precise scope of the regime, the subsidiary responsibilities of Member States where the polluter cannot be made to pay, the likely impact on different sectors and business, and the nature and implications of the proposed defences and exemptions.
    5. The Minister subsequently submitted a Supplementary Explanatory Memorandum of 30 April 2002, enclosing a partial Regulatory Impact Assessment, though, pending the outcome of the Government's consultation on the proposals, this sought to identify the ways in which the measure might impose additional burdens within the UK, rather than to quantify these (or the benefits).
    6. The Assessment suggested that the main direct effect of the proposal was likely to arise from the introduction of the concepts of equivalent compensation and interim losses, and the need for higher standards of remediation than those required in the majority of the equivalent UK legislation. However, it also indicated that the number of such cases each year might be limited, in that only a few of the pollution incidents currently investigated would be classed as significant under the proposal.

    8. It suggested that benefits could arise in so far as the proposal resulted in restoration which might not otherwise have occurred, in addition to which successful action against polluters would encourage others to improve their performance. However, it added that much would depend upon whether or not the present exclusion from the proposal of damage caused where an operator complies with the conditions of any permit was retained.
    9. In our Report of 15 May 2002, we noted that this proposal was substantially based on the previous Commission White Paper, which had been debated on 14 June 2000, and that the Government considered that the practical effect of its adoption within the UK might be limited. Nevertheless, since this was still a potentially important proposal, we said that we would not want to take a final view on it until we had seen the full Regulatory Impact Assessment, which the Government would be preparing when its consultation exercise concluded on 24 May 2002.
    10. Second Supplementary Explanatory Memorandum of 24 June 2002

    11. The Minister has enclosed with his Second Supplementary Explanatory Memorandum of 24 June 2002 an updated (but still partial) Regulatory Impact Assessment. However, although this examines the implications of the proposal in great detail, it nevertheless highlights the difficulty of assessing the additional costs and benefits which would arise as a result of the proposal being adopted. In part, this is because the UK regimes dealing with environmental damage in some respects go further than the proposal, whereas in other respects the proposal would extend existing law. This difficulty is compounded by continuing uncertainty over the precise meaning of a number of key concepts used in the proposal, such as the baseline for remediation, and the treatment of compensation for interim losses and equivalent compensation, where the Assessment says that the current drafting does not provide a sufficient level of clarity. It adds that one of the UK's main aims in the negotiations will be to resolve these uncertainties, but, in the meantime, it again suggests that, on the evidence so far, both the potential costs and benefits of the proposal could be small, with the main gain perhaps being the harmonisation of regimes across the Community, thereby creating a level playing field for all operators.



    13. Whilst we are grateful to the Minister for this further, and extremely detailed, Regulatory Impact Assessment, we note that a number of significant uncertainties still remain, thus preventing any clear quantification of the costs and benefits of this proposal. We also note that these uncertainties have prevented the Government itself from taking a final position on the details of the proposal.
    14. Since the principle of a Community regime for environmental liability was dealt with in the debate held on the earlier White Paper, the critical consideration now is the likely practical impact of the proposal. Since this cannot yet be established, we will continue to reserve judgement on it, and will await any further information which the Government is able to provide, including an account of the discussions in the Environment Council on 25 June. In doing so, we emphasise the importance we attached in our earlier Report to our receiving any such information in good time for a debate to be held, if we so recommend, before any agreement is reached in the Council.


23   (21012) 6230/00; see HC 23-xiii (1999-2000), paragraph 1 (5 April 2000) and HC 23-xx (1999-2000), paragraph 2 (7 June 2000). Official Report, European Standing Committee A, 14 June 2000. Back

24   Strict liability means that the liability falls on the polluter regardless of any question of negligence, whereas a negligence or fault-based regime is one in which preventive action by the polluter is relevant to determining whether he is liable or not. Back

25   These include the release of dangerous substances/hazardous emissions to water or the air, installations producing toxic chemicals, landfill sites and incineration plants. Back

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