House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Sixth Report

2 BACKGROUND

The purpose of the Environmental Liability Directive

4. The principal aim of the Environmental Liability Directive (ELD)[1] is to establish a mechanism to prevent and remedy significant environmental damage, based upon the "polluter pays" principle. Certain 'operators' who cause a risk of significant damage to land, water or biodiversity will have a duty to avert such damage occurring or, where damage does occur, a duty to reinstate the environment. An operator will have to notify the appropriate 'competent authority' of any imminent threat of such damage or of actual damage to the environment caused by it while carrying out its business and of its plans to avert or repair the damage.

5. The Directive's preamble explains its fundamental objective thus:

6. The Directive was adopted on 30 April 2004. Member States were obliged to transpose this into domestic law by 30 April 2007. However, the Government has not met this deadline. The Government consultation document (covering England, Wales and Northern Ireland and published by Defra, the Welsh Assembly Government and the Northern Ireland Department of the Environment—Scotland is implementing separately) was published in November 2006. Consultation closed in February 2007. At the moment the Government is finalising its policy. There will then follow a further consultation in the second half of this year on the precise form of the regulations required to implement whatever policy is chosen.

7. The 'competent authorities' are likely to be existing public authorities with responsibility for the environment such as the Environment Agency or Natural England. The 'operator' is the person who operates or controls the occupational activity which poses a threat of damage or causes actual damage. Occupational activity is defined quite widely, extending to any activity carried out in the course of economic activity, a business or undertaking, irrespective of its private or public, profit or not-for-profit character.

What is covered by the Environmental Liability Directive

8. Environmental damage is defined in Article 2 of the Directive as:

damage to protected species and natural habitats: "any damage that has significant adverse effects on reaching or maintaining the favourable conservation status of such habitats or species". The species and habitats covered are those in the Wild Birds Directive and in the Habitats Directive and the effect on their status will often need to take account of the impact of damage on their status across the EU as a whole. It is important to note that the ELD does not protect particular sites as such, only damage to the species and their habitats wherever they may occur, unlike the current protection offered to SSSIs. But the ELD is most likely to be relevant in cases of damage to 'Natura 2000' sites[3], as these were designated in order to protect the species and habitats covered by those Directives. These differences give the potential for considerable legal action to determine the effectiveness of forms of protection.
Water damage: "any damage that significantly adversely affects the ecological, chemical and/or quantitative status and/or ecological potential, as defined in Directive 2000/60/EEC, of the waters concerned".
Land damage: "any land contamination that creates a significant risk of human health being adversely affected as a result of the direct or indirect introduction, in, on or under land, of substances, preparations, organisms or micro-organisms".
Damage is defined as: "a measurable adverse change in a natural resource or measurable impairment of a natural resource service which may occur directly or indirectly".

9. Certain types of environmental damage are excluded from the scope of the Directive. These include damage arising from diffuse pollution which cannot be attributed to one or more specific operators, and damage falling within the scope of international Conventions relating to oil pollution and nuclear radiation, where those Conventions are in force in the Member State where the damage occurs. The Directive also provides for "defences" against liability such that operators would not bear the cost of remediation in certain circumstances, such as where a third party was responsible, or where environmental damage occurred despite the operator complying with the conditions of a permit.

Obligations of the 'operator'

10. The operator must:

take action to prevent imminent threat of damage;

notify the competent authority if preventive measures fail;

notify the competent authority in the event of significant environmental damage;

take immediate action to control, contain, remove or manage any potential causes of damage;

make proposals for taking the necessary remedial measures; and

undertake remedial measures as agreed by the competent authority (the principles for which are set out in Annex II to the Directive).

Responsibilities of the 'competent authority'

11. In cases of imminent threats the competent authority may:

require the operator to provide information on any imminent threat of environmental damage or in suspected cases of such a threat;

require the operator to take, and give the operator instructions on, the necessary preventive measures; and

take the necessary measures itself.[4]

12. In respect of environmental damage the competent authority:

may require the operator to provide supplementary information on any damage;
must decide which remedial measures, from among the options presented by the operator, are to be taken;
can decide the priority for remedial measures where several instances of environmental damage have occurred which cannot all be addressed simultaneously;
may take, require the operator to take, or give instructions to the operator in regard to immediate control, containment, removal, or management of the relevant potential causes of damage;
must require the operator to take the necessary remedial measures; and
may take the remedial measures itself, as a means of last resort.

13. For both imminent threats and environmental damage, the competent authority must recover its costs from the operator, although it may decide not to do so if the costs of such action would exceed the amount to be recovered or the operator cannot be identified.[5]

14. It is still not clear how the Environment Agency and Natural England will be funded to carry out their responsibilities properly, especially with regard to the monitoring of difficulties and whether they will be able to respond to disclosures of cases of environmental damage by the public.

Who is liable and how?

15. The ELD covers two types of liability: strict and fault-based. "Strict liability" applies to land and water damage and to biodiversity damage caused by the occupational activities listed in Annex III of the ELD. These occupational activities are those regulated by Community legislation which are potentially particularly damaging to the environment, for example waste or genetically-modified organisms (GMOs).[6] "Fault-based liability" applies to biodiversity damage (to protected species and natural habitats) from all other occupational activities.[7] Strict liability means that it is sufficient that there is a causal link between the occupational activity and the environmental damage; it is not necessary for there to have been fault or negligence on behalf of the operator of the occupational activity. Fault-based liability means that the operator of the occupational activity, through a deliberate action or omission, or negligence, has caused the environmental damage.

16. The liability on the operator is to avert an imminent threat of significant damage, and to remediate significant damage where this does occur. Where significant damage occurs, an operator must take all practicable steps immediately to control, contain, remove, or otherwise manage the potential causes of damage, to minimise the effects.[8] This is not part of the longer-term remediation, which is the requirement to return the damaged biodiversity or water to its condition immediately before the damage occurred and to remove any significant risk of adverse effect on human health. In the case of land damage, the requirement is to remove the threat of adverse effects on human health.

17. The ELD provides that, in respect of biodiversity and water, remedying the environmental damage will be principally through restoration of the environment to (or towards) its baseline condition, known as 'primary remediation'. If primary remediation does not result in fully restoring the damage, then 'complementary remediation' will be required, on the damaged site or elsewhere, to make good the deficit. In addition, the ELD provides, again in respect of biodiversity and water, that 'compensatory remediation' is required, on the damaged site or elsewhere, to compensate for interim losses of service or amenity in the period between the damage and full primary remediation.[9]

18. Liability is not retrospective: it applies only to damage done after April 2007; and will not apply to any damage where more than 30 years has passed since the cause of the damage.[10]

Areas of Member State discretion in implementation

19. The Directive allows several circumstances in which Member States may decide to adopt slightly different provisions to the basic requirements of the Directive.

20. Article 2.3 allows a Member State to extend the scope of 'protected species and habitats' to include any that are protected by national law. In effect, that could include UK Biodiversity Action Plan (BAP) species and habitats and Sites of Special Scientific Interest (SSSIs) designated by English authorities and not already protected under EU Natura 2000.

21. Article 8.4(a) of the Directive allows Member States the option of allowing operators not to bear the cost of remediation where damage arose despite compliance with a permit where the operator is not at fault or negligent (the 'permit defence'), or damage arose from an emission, use of a product, or an activity which according to the state of scientific and technical knowledge at the time was not considered likely to give rise to such damage (the 'state of knowledge defence').

22. Member States may decide not to apply the requirement in Article 12 paragraphs 1 and 4 to respond to observations or a request for action received by a competent authority from a person affected, or likely to be affected, by an immediate threat of damage, or from an environmental NGO. Under Article 16 more stringent measures in relation to prevention and remedying environmental damage may be adopted. Under Annex III, paragraph 2, Member States may decide to exclude from the list of 'dangerous activities' the activity of spreading appropriately-treated sewage sludge from urban waste water treatment plants for agricultural purposes. There is also general scope for Member States to implement Directives in a way that takes account of the interaction between the terms of the Directive and existing national rules, which gives a further element of flexibility.

Defra's consultation

23. Defra identified the following discretions and choices on which it consulted as having potentially the largest impact:

Whether to bring SSSIs (and equivalents) within the scope of the Directive.

Whether and to what extent to adopt the 'permit' and 'state of knowledge' defences (see above).

Whether to extend the application of strict liability for remediation of environmental damage to a wider range of activities in line with existing domestic environmental protection legislation.[11]

24. The Government's stated general policy when implementing Directives is "not to go beyond the minimum requirements unless there are exceptional circumstances justified by a cost benefit analysis and following extensive stakeholder engagement".[12] In the three cases listed above, the Government says that it wishes to:

limit the scope of the Directive to EU-protected biodiversity[13]
adopt the permit and state of knowledge defences in respect of those elements of the Directive's requirements that are additional to those addressed by existing environmental protection legislation[14]
limit the application of strict liability in line with the provisions of the Directive[15]

25. The Consultation document notes that the Welsh Assembly Government has said that it intends not to apply the permit defence for GMO-related operational activities.[16]

26. The Partial Regulatory Impact Assessment (RIA) is included in the Consultation document and assesses the costs and benefits of going beyond the strict terms of the Directive in certain cases against the 'minimum transposition' option. Its assumption is that the Directive (assuming the minimum transposition option) might apply to 2 biodiversity damage cases per year, 10 water damage cases a year and perhaps 30 land damage cases per year. It would cost about £13m per year in policy and administration costs and produce annual benefits of more than £16m. The RIA estimates that if the Government went well beyond the minimum (including imposing strict liability for all activities, extending protection to SSSIs and not allowing the permit defence), then a further 38 incidents might fall within the scope of the ELD every year, at an additional cost of £2.8m and with additional benefits of more than £4.8m.[17] Given this, we find it disappointing that Defra was not more robust in seeking to extend environmental protection by means of the ELD.

1 Directive 2004/35/CE of the European Parliament and of the Council, 21 April 2004. Back

2 Recitation 2 Back

3 A European Union network of sites designated by Member States under the Wild Birds Directive and under the Habitats Directive. Back

4 Article 5 Back

5 Articles 6-8 Back

6 Article 3 (1) (a) Back

7 Article 3 (1) (b) Back

8 Article 6 (1) (a) Back

9 Annex II Back

10 Article 17 Back

11 Consultation on options for implementing the Environmental Liability Directive, Defra/ WAG/DOENI, November 2006 ('Consultation document'), p 7 Back

12 Ibid Back