11 ENVIRONMENTAL LIABILITY
(23199)
6568/02
COM(02) 17
| Draft Directive on environmental liability with regard to the prevention and
remedying of environmental damage.
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| Legal base | Article 175(1) EC; co-decision; QMV
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration |
Minister's letters of 5 and 11 July 2003 and fourth SEM of 11 July 2003
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| Previous Committee Report |
HC 152-xxix (2001-02), paragraph 3 (15 May 2002), HC 152-xxxv (2001-02), paragraph 9 (3 July 2002) and HC 63-xxv (2002-03), paragraph 4 (18 June 2003)
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| Discussed in Council | 13 June 2003
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared
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Background
11.1 In February 2000, the Commission produced a White
Paper, which sought to address what constitutes environmental
liability; the case for a Community regime; and the implications
of this in terms of subsidiarity, proportionality and economic
impact.[34] This was
followed in January 2002 by the current document, which would
give legal effect to the proposals contained in the White Paper.
11.2 In an Explanatory Memorandum of 2 April
2002, the Government said 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. However, it also stressed that the
scope and approach of the proposal differed in many respects from
the arrangements currently in force in the UK, and that it did
not have a final position, pending consultation with affected
interests and clarification of a number of key issues.
11.3 We subsequently received a supplementary
Explanatory Memorandum of 30 April 2002, enclosing a partial Regulatory
Impact Assessment. However, as this sought to identify the ways
in which the measure might impose additional burdens, rather than
to quantify these (or the benefits), we said in our Report of
15 May 2002 that we would not want to take a final view until
we had seen a full Regulatory Impact Assessment.
11.4 This was followed shortly afterwards
by an updated (but still partial) Assessment, which, although
it examined the implications of the proposal in great detail,
again highlighted the difficulty of assessing the additional costs
and benefits which would arise, particularly as there was continuing
uncertainty over a number of key concepts. In the meantime, and
on the evidence so far, the Government had concluded that both
the potential costs and benefits of the proposal could be small,
with the main gain perhaps arising from the harmonisation of regimes.
11.5 In our Report of 3 July 2002, we noted
that a number of significant uncertainties still remained, which
had prevented the Government itself from taking a final position.
We added that, since the principle of a Community regime
had been dealt with in the debate on the earlier White Paper,
the critical consideration now was the proposal's likely practical
impact, and that, since this could not yet be established, we
would continue to reserve judgement, and would await any further
information which the Government was able to provide. In doing
so, we emphasised the importance we attached to receiving any
such information in good time for a debate to be held, if we so
recommended, before any agreement was reached in the Council.
11.6 Despite this, we heard nothing until
the Minister of State (Rural Affairs and Urban Quality of Life)
at the Department for Environment, Food and Rural Affairs (Mr
Alun Michael) sent us a third supplementary Explanatory Memorandum
on 2 June 2003, outlining a number of proposals made by the Commission
and other Member States during the course of negotiations, on
which the Government had expressed reservations.
11.7 This Memorandum was accompanied by
an updated Regulatory Impact Assessment, which suggested that
the benefits in the UK arising from the remediation of environmental
damage (estimated at between £16 and 50 million) would be
broadly equal to the additional costs which operators would have
to bear, but that there would be major additional costs, ranging
from £130 million to £1.8 billion, if one of the new
provisions (compulsory insurance) were to be required.[35]
11.8 We subsequently received two letters
from the Minister. The first — dated 11 June 2003 —
said that the Greek Presidency had made clear its intention to
reach an agreement at the Environment Council due to be held on
13 June, and had produced a number of compromises, most of which
ran counter to the UK's objectives. In view of this, the UK was
proposing to vote against, a position which might well be shared
by other Member States, such as France and Italy. However, the
Minister added that, given the Presidency's determination to secure
agreement, it could offer concessions which effectively delivered
the UK's priorities, and that, not to agree to the proposal in
those circumstances —_even though the House would not have
had the opportunity to consider the latest supplementary Explanatory
Memorandum and Regulatory Impact Assessment — would be politically
inexpedient, and might well prolong negotiations beyond enlargement
with all the uncertainties that would present.
11.9 We accordingly received a further letter
of 17 June from the Minister, in which he said that an agreement
was reached in the Council on a number of core issues (set out
in paragraph 4.10 of our Report of 18 June 2003), including the
introduction of a voluntary financial security, with the
Commission carrying out a non-prejudicial review within five years.
He added that the need for further work remained, particularly
on a number of outstanding technical issues within the Directive,
including the nature of activities falling within the measure
and the remediation guidelines, and that the Council was expected
to adopt a common position following agreement on these. He said
that he would write to us again in advance of this.
11.10 In our conclusion, we said that, having
specifically asked nearly a year ago to receive any further information
in good time before any agreement was reached in the Council,
we found it unacceptable — even allowing for the way in
which the negotiations had since proceeded — that we should
have heard nothing further from the Government until the supplementary
Explanatory Memorandum of 2 June, barely ten days before the Council
at which a decision might well be taken. As the Minister had
recognised, this effectively presented us with a fait accompli.
We also said that, in view of the main elements of the agreement
reached by the Council, we inferred that the major additional
cost anticipated, should operators be obliged to take out insurance,
would no longer arise. However, we asked the Minister to confirm
this, and to indicate the extent to which the other cost figures
in his Regulatory Impact Assessment might have been affected by
what was eventually agreed.
Minister's letters of 5 and 11 July and fourth
supplementary Explanatory Memorandum of 11 July 2003
11.11 We have now received two further letters
from the Minister, together with a fourth supplementary Explanatory
Memorandum. The first letter, dated 5 July 2003, and the supplementary
Explanatory Memorandum confirm the nature of the agreement reached
by the Council, and that the potential cost of a compulsory financial
security no longer arises. They also make clear that the other
cost figures in the Regulatory Impact Assessment provided on 2
June remain largely unaffected by what has been agreed. The Minister's
letter also suggested that it might be helpful if he were to meet
our Chairman before our current meeting, but, as it seemed to
us preferable to have information on the record, he has now written
a further letter of 11 July, setting out at greater length the
events leading up to the Council on 13 June.
11.12 He recalls that, following the Council
in June 2002, little progress was made under the Danish Presidency,
and that his Department had meanwhile launched a programme of
research which had formed the basis of the third supplementary
Explanatory Memorandum. He says that the Greek Presidency had
made clear at the outset its intention to seek political agreement,
but that, for most of the subsequent negotiations, there had been
little confidence that an agreement could be reached, due to
the wide differences between Member States on a number of major
issues, including a compulsory financial security. This lay behind
the suggestion in his letter of 11 June that political agreement
during the Presidency seemed unlikely. However, despite this,
the Commission's readiness to compromise in areas such as compulsory
insurance, where it had previously defended its proposals, combined
with a wish by most Member States to conclude the negotiations
before next year's enlargement and European Parliament elections,
produced a result "almost unthinkable" before the Council.
11.13 The Minister also addresses in this
letter the extent to which his Department kept us informed on
progress on this proposal between the Council in June 2002 and
June 2003. He suggests that the criticisms in our Report of 18
June were unfounded, pointing to the written parliamentary answers
provided in response to questions tabled about the outcome of
a number of the intervening Councils, and to the updated states
of play and prospects submitted to us prior to each of these.
Conclusion
11.14 We have noted from the Minister's
comments in his two letters and latest supplementary Explanatory
Memorandum that the outcome agreed in the Council was satisfactory
from a policy point of view, and in particular that the cost implications
do not include compulsory insurance, and are thus of the order
previously indicated. In view of this, we are now content to
clear the document.
11.15 We are,
however, concerned by the Minister's suggestion that a series
of written parliamentary answers and annotated agendas represents
an adequate way of keeping us informed of the progress of individual
proposals, particularly in cases where we have specifically asked
to be told of this in good time so as to allow a debate to be
held if necessary. In the first place, written parliamentary
answers are for the benefit of the House as a whole and usually
deal with a large number of different topics. They are therefore
an unsatisfactory means of keeping track over time of the detailed
position on individual items. Likewise, although annotated agendas
are specific to us, they also cover a large number of items, provide
only very summary information, and are usually produced too close
to the meeting in question to enable us to report to the House
in good time, still less to enable a particular proposal to be
debated before the Council reaches agreement. In short, we do
not regard either of these routes as a proper substitute for a
Ministerial letter or supplementary Explanatory Memorandum providing
specific information on the likelihood of agreement being reached
on a document which has yet to be cleared.
34 (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
35
According to the RIA, the lower estimate is based on very optimistic
assumptions about the development of the environmental liability
insurance market, whereas the upper figure assumes that there
are some economies of scale, but that the way in which environmental
risks are underwritten does not change. Back
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