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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 694-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE
Implementation of the Environmental Liability Directive
Wednesday 13 June 2007 MR IAN PEARSON MP, MR NIGEL ATKINSON and MS CAROLINE CONNELL Evidence heard in Public Questions 1 - 135
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee on Wednesday 13 June 2007 Members present Mr Michael Jack, in the Chair Mr David Drew Lynne Jones David Lepper Mrs Madeleine Moon Mr Dan Rogerson Sir Peter Soulsby David Taylor ________________ Witnesses: Ian Pearson MP, Minister of State for Climate Change and the Environment, Mr Nigel Atkinson, Head of Environmental Regulation Policy Division and Ms Caroline Connell, Head of Environmental Liability Team, gave evidence. Q1 Chairman: Welcome, ladies and gentlemen, to this one-off evidence session on the Implementation of the Environmental Liability Directive. This represents the conclusion of a slightly novel approach by the Committee to this particular inquiry. We have taken written evidence from those who have been kind enough to submit it but, unusually, we have not taken oral evidence because we have let the writing speak for itself. But we do want to hear from the Minister, in this case the Minister for Climate Change and the Environment, Ian Pearson, whom we welcome again before the Committee, and who is supported today by Nigel Atkinson, the Head of Environmental Regulation Policy Team and Caroline Connell, the Head of Environmental Liability Team, who is a real glutton for the difficult because I remember that Caroline came and gave evidence and helped us to understand the Draft Animal Welfare Bill, so obviously you have recovered from that and now moved on to another very exacting area. So all three of you thank you very much for coming before the Committee and we will make a start with our questions. One of the interesting things - and perhaps, Minister, you could this particular measure into context for us - is to help us to understand what I have called the before and after effects; in other words, when this Directive is implemented what will be the main difference in the way that environmental legislation will operate prospectively from the way that it does now? Ian Pearson: Let me set out the context and then answer that question directly. The Directive itself is concerned with prevention and remedying of environmental damage and it defines it, as you will know, in the Directive, as damage which has caused significant adverse effects on reaching or maintaining favourable conservation status of species and national habitats protected under the legislation; damage that significantly adversely affects - and I stress those words again - ecological, chemical and/or quantitative status and/or ecological potential of waters falling within the scope of the Water Framework Directive; and 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, or substances, preparations, organisms or micro-organisms. I say that to set out the context and that the underlying principle behind the ELD is the "polluter pays" principle, which is something that we strongly support as a government. Q2 Chairman: The polluter pays has been a key part of the United Kingdom environmental legislation for some time and I was anxious to understand why this particular Directive almost was necessary. I could understand it for Member States who did not have a well-developed body with environmental law, rules and regulations, but for a developed country in that context, such as ours, this has clearly caused a few conflicts, has it not? Ian Pearson: You are absolutely right to say that the UK already has a well developed environmental protection regime, which we believe provides already a high level of protection, and I think the best way to see this Directive is something that actually supplements what is already a good standard overall of environmental protection. We think it will cover a relatively small proportion of any environmental damage; we estimate less than one per cent of cases of environmental damage will be covered by this, and that is why I was stressing the words "significant adverse effects" when you are looking at the Environmental Liability Directive because that is what it is designed to do, and it is pretty high level; and you are right, in countries that already have well-established environmental protection regimes there is an issue about how you ensure legislative consistency. But a large part of what the Directive is trying to achieve is already being achieved by the legislation that we have in the United Kingdom. Q3 Chairman: There are a lot of detailed points that we want to get on to, but I want to explore the process of consultation - it is pretty impenetrable stuff in the consultation document. I can see from the responses we have had that a lot of people have laboured for a long time, bearing in mind the Directive has actually been around since 2004, to come up with the points that they are making. Your consultation document came out in November 2006 and there is always a hiatus for a couple of weeks over Christmas and the New Year, but you only allowed 11 weeks for consultation on what is potentially an immensely complex piece of new law. Why was it so short, taking into account that you probably lost two weeks over Christmas and the New Year? Ian Pearson: In retrospect I think that the consultation period could have been longer, but I do believe that we have had a good level of appropriate responses engaging on all the key questions that we asked as part of the consultation exercise. It is not as if the formal consultation is the only time that we have been talking to stakeholders and other interested parties on this. Since the Directive was actually agreed we have been in quite close contact with a range of parties about how it was going to be implemented. I would also say that this is not the last consultation that we will have as well. Following the consultation exercise we are considering the government's position in the light of all the responses that we have received, and it is our intention to hold a further consultation exercise specifically on the regulations. We anticipate holding that in the autumn. Q4 Chairman: When did the actual process formally close? It would be quite interesting for the Committee to know how much of your time it has taken; how many meetings have you had with stakeholders on it? Ian Pearson: I have not been having direct meetings on this with stakeholders myself; I have had meetings with stakeholders where this has been one of a number of issues that has been mentioned as part of the meetings, but officials have been fully engaged in this for some considerable time. Q5 Chairman: So how many meetings have you had with your officials to go over how progress is going on this? Ian Pearson: I cannot tell you off the top of my head how many meetings we have had but I have certainly had a number of submissions and had meetings in the light of some of those submissions and in some cases it has been quite clear what the policy direction should be. But just to stress that we are still in the process of formulating the government's position in a number of areas in the light of the consultation responses. Q6 Chairman: Just give us a flavour. You have had various meetings arising out of representations and the written submissions, but, for the record, when did the formal process of consultation stop? When was that; when did that grind to a halt? Ian Pearson: The formal consultation process ended at the end of February 2007. Q7 Chairman: So we then had March, April, May and we are now into June, so that is three months. Once you had the digest of what had been submitted what were the things at the top of your priority list to get sorted? What were the things that troubled you as a Minister where you thought, "Yes, we need to get on top of that"? What were the top three things that caused you concern? Ian Pearson: As you will be aware, Chairman, what we do as Ministers is to manage the process, and following the end of the consultation period there is a time period required for officials to analyse all the consultation responses and that, as you can imagine, takes some detailed time, and it is from the analysis of those consultation responses that the key issues that perhaps need to be changed --- Q8 Chairman: You are circumnavigating my question, Minister. The question I asked was, bearing in mind you actually put into the public domain the replies that you had - in other words we have all had a chance to have a look at it. Ian Pearson: Yes, that is right. Q9 Chairman: We have had some submissions of what people are still twitched about and I am just interested to know what you were twitched about, bearing in mind that this consultation exercise closed in February and your officials have kindly published in the public domain a summary of the responses, so you will have a pretty good idea of the things that are causing people continuing concern, and I was interested to know what had caught your eye in that exercise? Ian Pearson: I am happy to answer that question directly. Q10 Chairman: Here you are, this is your chance - a direct answer would be appreciated. Ian Pearson: You asked me firstly on the process, and following the end of the consultation at the end of February the consultation responses were looked at and it was the end of May when the summary was responsive. In direct answer to your question about the things that had come from the consultation that we have been looking at closely, I would highlight a number. There is a division of opinion that is quite clear on the issue of strict or fault-based liability, whether that should be applied. There is an issue about competent authorities, particularly with regard to contaminated land. There have been responses that suggest that we have not said enough when it comes to access to justice issues and there is a wider debate about access to justice. Q11 Chairman: Are you reflecting in this list the things that caught your eye and that you have asked in terms of what you helpfully told us earlier, that there would be a further round of consultation in terms of the actual regulations - those are the things on which you are focusing your extra work, is that right? Ian Pearson: Those are some of the areas where we are focusing our extra work, yes, and most definitely those are issues that caught my eye where I want to consider whether we have the appropriate policy right. When it comes to the issue of strict or fault-based liability my preliminary view is that the views expressed in the consultation are the right ones and that we ought to move forward on that basis. Chairman: We will be probing a lot of those and you will not be surprised to learn that a number of the people who wrote to us have some observations to make about the question of legality in this whole exercise, and so Mr Drew is going to continue our probing. Q12 Mr Drew: Just on that, are you a wee bit concerned, and this is a parody - and I will go on record that I very much welcome the fact that we have had access to civil servants and other interested parties, which has been helpful in what is a complicated matter - that on the one hand you have business being reasonably supportive to your approach but the NGOs being really quite critical, and one of the criticisms is that because it is so complicated that a longer time should have been left for consultation, and they feel in the responses that they have made they have not been listened to. How would you respond to that? Ian Pearson: Firstly, I would respond by saying that we have published the consultation responses and we are still in the process of looking at the policy when it comes to this as a government and we will be producing draft regulations. Q13 Mr Drew: So you are open-minded. Ian Pearson: I always believe in the principle that if you have a consultation exercise you should actually listen to the consultation responses and that is exactly what we are doing. So the responses that came from the business community, the responses that came from NGOs, the responses that came from lawyers are all being considered as part of the work that we have been doing since the consultation ended. Q14 Mr Drew: That could include and maybe should include the fact that at the moment the government has made it clear that you are going for the lightest touch possible, the minimum level of regulation, if there is a balance of evidence which suggests that the protection should be greater, the government is prepared to shift on that? Ian Pearson: The general approach we adopted and was reflected in the consultation document was that we wanted to implement in a proportionate way in accordance with our better regulation principles, and that we did not want to gold plate, and we did not see a case for going beyond implementing the minimum requirements of the Directive unless there was strong evidence that we should do otherwise; and we do not think that there has been strong evidence that we should go beyond the implementation of the Directive that is required. Q15 Mr Drew: In terms of the evidence that has been submitted to us both the UK Environmental Law Association and the City of London Law Society believe that there is at least a case that the government could be deemed to be acting illegally if you were to draft the regulations before you - again, as you mentioned - go back and consult on your proposals for implementing the request for action procedure. Is that something that you are worried about or do you have sufficient legal wriggle room to really be able to argue that they are wrong in that respect? Ian Pearson: I think in one of the submissions they used the words that the consultation was "fatally flawed" and I reject that; I do not believe it was. What I would say on this is that I do not think that we have to have another consultation exercise before we have a consultation on the draft regulations. That would not be my opinion, but if the Committee thinks that that is something that is required we would obviously take consideration of the Committee's reports. Q16 Chairman: Could I just jump in - because Mr Drew is a kind and accommodating man - and let me just ask the lawyer, if I may - and I hope she does not mind me asking - these people have raised a legal point, and I am sure they have raised them with you, and are there any particular points of law which have been drawn to your attention as far as this part of the exercise is concerned, when you have said, as a lawyer, "I think they have a point"? Ms Connell: On the access to justice issue I think UKELA has raised the question of the proposals for implementing the request for action procedure and they have relied on the recent case of Greenpeace v. Secretary of State, arising out of the nuclear power consultation, and they effectively tried, I think, to raise the same kind of point in this context. Q17 Chairman: Absolutely. Ms Connell: I do not think that we feel it is a similar kind of situation. Our position would be that the first consultation raised the main significant policy issues. There are bound to be one or two additional points which are not always going to be in the consultation, and it does not mean that the consultation is completely flawed and has to be thrown in the bin and we have to start again. Furthermore, we are planning to do a second consultation and that will be with the draft regulations, and it is likely that there will be slightly different emphasis in that second consultation - more an emphasis on the mechanisms for enforcement, mechanisms for how NGOs and other interested parties will exercise their rights under Article 12, et cetera, that kind of issue. So I think there will be a slightly different emphasis and there will be another bite of the cherry for interested parties to help us with their comments on that. Q18 Mr Drew: If I could raise a different point, Caroline, but one that is related? The point that the UK Environmental Law Association was making was that the barrier that will no doubt be there about the cost of bringing an action and that, according to them, puts you at risk of failing to comply with Article 13 rather than Article 12, which says that they should have the access to a court or similar body if they believe that an environmental ill has occurred. Does the Minister want to answer that? Ian Pearson: Let me start off by answering it and then Caroline can add some additional comments from a legal perspective. From a political perspective there has been a dispute for some while, as is well known, between the NGOs who think that we are not properly, as a government, implementing the Aarhus Convention. We believe that we are and we have submitted a detailed analysis previously on how we are actually implementing the provisions in the Aarhus Convention. There has been some debate about protective cost orders as well, and that is something for which the Ministry for Justice has direct responsibility. Caroline, if you want to say anything more specifically on this? I just wanted to stress that the consultation document did ask a question about the implementation of Article 12 and we were very clear about that in the consultation document. Chairman: We will come back to Article 12 in due course. Q19 Mr Drew: I would welcome Caroline's view on that from a legal perspective. We have had the political perspective; let us hear the legal view. Ms Connell: The Directive makes two different provisions. First of all, Article 12 gives the right to alert the competent authority and certain things flow from that, for example the duty to consult the operator and then the duty to get back to the complainant and tell them what you are going to do and give reasons for it. That is one thing; I would not really call that access to justice. In addition the provision of Article 13, which requires access to a court or other tribunal to challenge the legality of what the competent authorities are doing, at first sight that would appear to be a Judicial Review type procedure, and I think the difficulty about the costs of Judicial Review proceedings is that with the best will in the world that is a much wider question than just for the Environmental Liability Directive, it is a question across the board for all environmental cases and much wider than that for all public law cases, and that is something that is definitely being, as we understand it, actively considered as to whether there is anything that can be done right across the board to try and protect applicants in that type of case who have legitimate points to bring but where there is a fear of the costs outcome. Q20 Chairman: Do you think Article 13 was drafted for those countries which may not have as well developed a legal approach for redressing challenge as we have at the moment through Judicial Review? In other words, I wonder if there are any Member States who have expressly said, "No, we cannot challenge this in the courts"? You do not know? Ian Pearson: I do not know. Q21 Mr Drew: Perhaps you could write to us when you get a legal opinion on that because that would be quite interesting. Ian Pearson: I want to point out again that pages 46 and 47 of the consultation document specifically refer to Article 12 and question 4.4 is specifically on applying paragraphs 1 and 4 of Article 12 to cases of imminent threat and damage. So it is not as if we have failed to consult in this respect, which is the impression that is given in UKELA's letter of 17 April. Q22 Mr Drew: If we could look at another aspect of this, which is obviously timing. If this Directive is going to be effective there is a belief that of course it has to be capable of preventing environmental damage, but again in terms of the consultation - and we will see this later in terms of what we understand by "strict liability" - the argument could go that in a sense you can take action subsequently or consequently on the basis of what damage has occurred, but there does not seem to be much evidence of how you would prevent environmental damage. What is your response to that assertion, which is made by a number of NGOs? Ian Pearson: My understanding is that the Directive is concerned with both prevention and remedying of environmental damage and that is why there are provisions in when it comes to requests for action, that when we talk about information saying that there is imminent threat that should be investigated by the competent authority concerned. So I think that is important. I think it is also important to think about how this will be implemented in the real world. If we think that there is an imminent threat of a significant adverse environmental impact and damage being caused then I would imagine that the competent authorities will want to take urgent and immediate action. They will do that now in the United Kingdom and they will do it after the Environmental Liability Directive is implemented. Q23 Mr Drew: Let us use a real example here; what about Lyme Bay? Would Lyme Bay have been prevented in terms of some of the damage that has taken place due to the activity of fishing where it led to the considerable deterioration in the bed and the scallop population. Is this something that, if the ELD had been in place, there could have been strong, preventative action? Ian Pearson: I do not have sufficient specific knowledge of the Lyme Bay case to be able to comment on that. Q24 Mr Drew: It has been - I will not say around the shores - something that NGOs have been lobbying on very strongly over the last six months or so. Ian Pearson: The Directive is aimed at imminent threats, it is not aimed at something that has been occurring over a long period of time. Q25 Mr Drew: It has not been occurring over a long period of time - and other colleagues may want to jump in - my understanding is that it is a fairly recent phenomena and it is, in a sense, where there have been weaknesses in our protection of our shoreline. My next question was going to go on to the derogation from the Common Fisheries Policy, where we have almost again got the pre-eminence of European law which says that we would not in any way want to interfere with the Common Fisheries Policy, even though this may have a huge impact on marine diversity, and I use Lyme Bay as a classic example of that. Ian Pearson: As I say, I do not feel able to comment other than to say that my understanding of this Directive is that it is talking about imminent threats, so imminent threats of potentially major environmental damage events. That is what I think the Directive is about and I think you are trying to widen the scope for the Directive beyond that which is my understanding of what it is currently. Q26 Mr Drew: In terms of the derogation, and it may be this will help in terms of the Lyme Bay case, but certainly again it would appear that it has no impact at all on the Common Fisheries Policy where you are between 100 and 200 miles offshore, and we have sought this derogation. Is that not something that the government could have fought a stronger case to say that given that we will want to bring forward the Marine Bill - and again this has an impact on the potential Marine Bill - is this not something on which we actually have some views when the Directive was being progressed with Europe? Ian Pearson: I am not particularly sited on that aspect of the issue, I do not know if my officials are. Ms Connell: Yes, could I ask to which derogation you are referring? Q27 Mr Drew: I am talking about the derogation whereby if we are looking at the Common Fisheries Policy it would seem to have pre-eminence to allow people to fish regardless of whether that has an impact on the biodiversity, and I am questioning that. It may be that I am confusing two things because obviously one would appear to have greater clarification and protection over inshore activity, but of course if we are looking at the marine environment that will go considerably offshore. Ms Connell: I am not sure I can be completely as helpful as you would like. Certainly our interpretation is that this Directive will extend offshore. There have been recent judgments in the context of the Habitats Directive to the effect that that legislation applies offshore. As a result there are imminent - if they have not already been made - regulations to extend the implementation of the Habitats Directive offshore, and in the context of that there has been quite a bit of discussion, I think, at the Community level, the interaction between Common Fisheries and environmental protection. It is not specifically my field but I think the difficulty is that where you have a European regime like the Common Fisheries Policy, which purports to deal with everything to do with fisheries, including the environmental consequences of that, then it is really something that has to be ironed out at Community level as to what the interaction is between that Community regime and this Community regime. So I think that the most I can probably say is that that is certainly an issue that has had to be considered in the context of the Habitats Directive implementation and, to some extent, we are in the hands of Community law on that. Q28 Chairman: How are you going to deal with the implementation issues of that because as you were speaking the issue of the Water Framework Directive came into my mind because there is a debate about how far offshore that will apply. My last memory of it was a mile, but then there is another 199 miles of economic zone to go and if one also takes the aspirations of the Marine White Paper in terms of providing additional perspective in the near shore areas there seem to be a number of potential bits of marine legislation or policy in the case of the Common Fisheries Policy, all of which potentially could conflict with each other. One of the questions that I wanted to know, following on from Mr Drew's argument, was whether over fishing, damaging the marine environment, spawning stock, biomass, these types of issues, the marine bed thing, all of these factors and types of fishing, whether in fact they would become subject to the Environmental Liability Directive? In other words, could somebody bring an action saying, "You are damaging this bit of the marine environment" and somebody else saying, "No, this is covered by other parts of the Common Fisheries Policy and therefore it does not apply." If you are going to be drafting regulations how are you going to give clarity to consultees about the application of this, given that area of conflict? Ms Connell: I think we are going to have to follow the lead that has already been set in the context of habitats and they are the experts on the potential conflict between common fisheries and habitats' protection, and to a very large extent ELD follows the Habitats and Birds Directive, as you know, so whatever resolution they come to we will, I imagine, be following very closely on that. Q29 Chairman: When you say habitats, is that going to be a piece of community clarification that will guide us nationally? Ms Connell: There has already been because with the Habitats Directive there has already been litigation in front of the European Court considering the implementation of the Habitats Directive. As a result of that certain things became clear, for example that the Habitats Directive applies out 200 miles and as a result of that there are going to have to be new regulations, which is imminent, as I understand it. Ian Pearson: I am keen here, chairman, to make sure that we do not get any unnecessary hares - or I should say fish - running on this. This Directive is about favourable conversation status of species and habitats obviously, and the Common Fisheries Policies and the decisions that are taken at Fisheries Council annually on tax and quotas and other things are based on the science and based on wanting to ensure conservation as well, so I do not think there is necessarily any major asymmetry between the objectives and the Common Fisheries Policy, which is a sustainable fishery, and the objectives of this Directive. Q30 Chairman: But it is very important, part of the implementation process is designed to bring clarity so that everybody understands what this thing covers and how it will cover it and because it is a set of words drafted in the usual fairly broad brush European terms there will be plenty of people who will want to probe and test the way it is applied. So we were trying to get a little clarity - not set hares running - to find out what the interaction is between these various policies, all of which have a common protection theme running through them. But in the case of ELD it is a bit more than a theme, it is a series of actions. Ian Pearson: As I think has been clear from what Caroline has said, my officials are aware of this as an issue and this will be an area where we will need clarity, you are absolutely right, and we will need for that to be part of the regulations. Q31 Chairman: So who is going to be the competent authority for the marine environment? Ian Pearson: We are still discussing these issues at the moment. Q32 Chairman: Who are the runners and riders? Who is qualified to do the other 199 miles? There are not too many choices on this. Ian Pearson: I do not necessarily accept that the issue will be up to 200 miles and to be a UK competency; it might well lay elsewhere - I do not have any information to give to you. Q33 Chairman: I am getting a bit confused here. Let us ask a simple question: do we have to have a competent authority to handle the issues which arise from one mile out to 200 miles out? Ian Pearson: Yes, we do. Q34 Chairman: We have to have one; right. Question two: does it have to be a UK-based body? Ian Pearson: I do not know the answer to that. Q35 Chairman: Could somebody supply it because it is quite important? Ian Pearson: We are debating some of these issues, from my understanding, at the moment. Q36 Chairman: If the answer to question two is yes, we do have to have a UK-based body, there are only a limited number of statutory bodies who have the capability of dealing with these issues, and what we are asking is, if you cannot tell us who - and I appreciate you may still be debating who gets it - but who is in the frame? Can you tell us that? You do not want to phone a friend and consult? Ian Pearson: I will be more than happy to write to you about it, if that would be helpful. Ms Connell: There is a dearth of candidates at the moment. Q37 Chairman: Right, I think we are with you there! Ms Connell: We are exploring at the moment who will take it on board because obviously there is a plan for a new marine management organisation in a new Marine Bill, but that timing does not help us very much because we do not have a Bill yet. In the meantime we need to consider and we have not yet been able to fully consider this; we need to consider whether Natural England, Marine Fisheries Authority, Sefas - there are various organisations with responsibility - plainly most of those are fisheries based. It may be a combination of Natural England with the overview of what would qualify as environmental damage using other organisations for the boarding boats, searching, sampling type of on the ground enforcement. I am afraid we just do not quite know yet and I appreciate that that is not very helpful. Chairman: It actually gives us a picture which sketches in a bit more of the background to it. David Lepper. Q38 David Lepper: Chairman, having listened to what has been said so far, I am a bit concerned that we have established - and there is no disagreement about it - that the Directive was signed up to in 2004 and we left it until the last six months of the period leading up to the deadline, which has now passed, for its transposition into UK law, and in all that period of time so little thought seems to have been given to who the competent authorities might be, who would be responsible for different bits of this Directive. Natural England has said that you should have consulted already on competent authority allocations - it sounds as if you have not. Everything has moved up to this last six-month period and beyond the six-month period leading up to 2007. Then we have more consultation to come. Ian Pearson: I do not think you should be that concerned about this as a matter. I think in a significant number of areas it is pretty clear who the competent authority is likely to be. There is an issue on land contamination, as to who the competent authority might be, and that clearly came out of the consultation exercise. There is, as you have just heard, very clearly a dearth of candidates when it comes to the marine environment. But it is not as if in the other areas it is not pretty clear who the competent authority is likely to be. If I may just say something on speed of implementation as well - because as you will be aware we were required to implement the Directive by April 2007 - like other EU Member States we found this a complex piece of legislation, which is difficult to implement according to the timetable envisaged when the Directive was originally passed. It is my understanding that it is claimed that four countries out of the EU 27 have so far either implemented or partially implemented, or claimed to have implemented or partially implemented the ELD, and those are Latvia, Lithuania, Hungary and Italy. It is not as if we are well behind the pack here when it comes to implementation, but there are some very real challenges in getting this legislation in the best possible form. Q39 Mr Drew: If we can get back on land and away from water. We were a bit surprised that in its evidence the CBI said that the Environment Agency had not been present at the stakeholder discussions. Is that because the Environment Agency did not have people or it has misgivings about whether it is going to become one of the competent authorities? What is your view on that? Ian Pearson: I do not know why the Environment Agency was not present, or even whether the CBI is factually correct in stating that. Maybe that is something you will want to take up with the Environment Agency? I do not see any reluctance on the Environment Agency's part when it comes to be a competent authority in the areas where it believes that it has competence. As I say, we are still debating the issue when it comes to land contamination, but you were referring specifically to water and the Environment Agency clearly believes that it is a competent authority and will want to play its full part in that particular element of the Directive. Q40 Mr Drew: If we could move on from that to the issue which, to me, is really again at the kernel of whether this is going to make a real difference to wildlife sites, and that is about enforcement. As I say, it is interesting the allegations made that the Environment Agency was not present at stakeholder discussions. Certainly the Environment Agency has a view, if it becomes one of the competent authorities in terms of enforcement, whether it does that wholly or it does that in partnership with Natural England, and maybe other equivalent bodies. That is presumably something that you are looking to make a decision on following the consultation. What the Environment Agency certainly has said is that this is going to be an expensive occupation. They mentioned that they expect it to be about £700,000 per annum, assuming 15 cases a year, which does not sound like many cases. It is going to be at the front end of what the UK, playing its part within Europe, is actually introducing and that sounds like a very limited number of cases. Notwithstanding that, if those are the sorts of monies we are talking about presumably you are already engaged with the Environment Agency and Natural England to make sure that there is a funding mechanism, and presumably that there is a mechanism whereby those who transgress and cause the environmental damage will be paying for that damage, not only in terms of putting right the damage but also funding the policing of this particular operation. Is that something that you are engaged with in terms of those discussions? Ian Pearson: Firstly on the number of cases, clearly we do not know how many cases there are likely to be in any given year, but our best estimates are that these cases will be relatively few and far between because as I explained we are talking about significant adverse effects. So these will be important cases of environmental damage and it will be right that they are addressed in a sufficiently robust way. That is why £700,000 for 15 cases maybe sounds like it is not a great amount of money, but when you compare that sum with the total Environment Agency budget, which is around about £1 billion a year, I think you can see that we are only talking about a relatively small fraction of EA's budget overall. Q41 Mr Drew: Are you not a wee bit worried that if the allegation is true that they did not attend the stakeholder meetings that they are saying that they anticipate --- Ian Pearson: I have to say I think that is something I think you can take up with the Environment Agency --- Q42 Mr Drew: We certainly will. Ian Pearson: Certainly in all my dealings with the Environment Agency - and I meet them on a very regular basis - the Environment Agency is a very professional, competent body, and I have no doubt that it will want to discharge its responsibilities as a competent authority fully. It does so at the moment when it comes to the issue of environmental damage and it will do so under the ELD as well in the future, I have no doubt about that. Q43 Mr Drew: So they have not expressed any reservations to you at all about the new responsibilities they will get under the ELD? Ian Pearson: I have had no conversations with the Environment Agency where they have raised any significant problems with the role that they will be expected to fulfil as part of the ELD. Clearly they will make representations about the size of their budget as part of the Comprehensive Spending Review settlement; but this is in the general scheme of things, when you look at the size of the EA's budget, a relatively modest amount of expenditure that is going to be required in the future. Q44 Chairman: I am glad that everything is sweetness and light with the Environment Agency and we will explore that a bit further when we come on to asking some questions about the scope in the United Kingdom, the application of this, because some of the evidence submitted by the Environment Agency tells a slightly different story - it goes into the depths of what they are told. Ian Pearson: It is not a different story because we are talking about completely different questions. If you are talking about did the Environment Agency have concerns about their ability to competently carry out their role then the answer is clearly no, they have not - I am sure they are completely confident in their ability to do that role. Do we have some policy disagreements with the Environment Agency from time to time on certain issues, including a few parts of the Environmental Liability Directive, yes, we have, and I am happy to discuss those with you. Q45 Chairman: Excellent. Ian Pearson: Particularly you will want to focus on SSSIs no doubt! Q46 Mr Rogerson: I think we have begun to establish, given that there are some fairly crucial issues, such as who will be responsible for the dealing with areas of enforcement and so on, what the problems are that you are trying to eliminate. Ian Pearson: Some limited areas but in lots of areas there is clear and common agreement. Q47 Mr Rogerson: These no doubt have contributed to the fact that we have passed the April 30 deadline and have not reached implementation - and obviously you said a number of States were in the same position. Have you yet had any formal contact with the Commission about late transposition and what action they might want to take on that? Ian Pearson: I have not as a Minister but I would not be surprised if officials have. Ms Connell: As you probably know the Commission start automatic infraction proceedings when you do not notify your implementing measures on time. Q48 Mr Rogerson: What sort of measures do you think the Commission would be considering? Have they given any indication of how they would react? Ms Connell: Yes, automatic infraction proceedings; that is what they do when you do not notify them on time. Q49 Mr Rogerson: What would be the result of those infraction proceedings? What sort of penalties can they impose? Ms Connell: The way it goes is that first of all they invite you to explain what the state of play is. Then in due course they will take a decision on whether the case ought to be referred to the European Court for a judgment, as to whether you are in breach, and if that happens then ultimately there might be a judgment and then if that happens the Commission could take it further. But we do not anticipate that we will get to that stage. Ian Pearson: That is the standard process, that every Member State that is late in transposing a Directive rule will go through and it does take, in many cases, a number of years, and certainly our anticipation at the moment is that we will have full implementation by May 2008, which will be a year late but I do not anticipate that we are going to have proceedings that will lead to fines or anything like that at all. Q50 Mr Rogerson: The City of London Law Society have raised the issue that we have this interim period now between passing that deadline on 30 April to transposition and the ultimate implementation, which you are saying might be a year. What would happen to those who had been breaking the regulation in that period? The City of London Law Society seemed to be of the opinion that having passed that deadline that we should really be enforcing. So what sort of arrangements will apply in that interim period? Ian Pearson: I am certainly aware of their opinion and I am aware of a number of different legal opinions in this area. I would like to say that my preference is for applying the obligations of the Environmental Liability Directive to incidents which occur after the regulations come into force, not before. I think this is simpler for everyone concerned. In the meantime, I am content that remediation can be delivered through our existing legislation, which is already strong; although I appreciate that it is not an exact fit with the requirements of the Environmental Liability Directive. Q51 Mr Rogerson: There are a number of legal opinions out there and you have just referred to one of them. Will Defra be issuing clarification to all the stakeholders along the lines that you have set out, about how you intend to handle it? Ian Pearson: I have stated my preference, that we should be retrospective and we should not be applying this to incidents that occur before the regulations come into force, and I am happy to make that clear today, and my anticipation is that we would make this clear in the regulations. Q52 Chairman: One of the things that I was not clear about on this particular point was, say a factory had been continuously polluting some area of land through some deposit or other that it was pumping out through a chimney and it was causing damage, and it was not until after the ELD came into force that somebody noticed it and said, "Look, there is a problem," how do you handle the apportionment between what happened after implementation and what happened before? Is there a mechanism for doing that? Ian Pearson: The first thing to say is that if a factory is polluting now then it is likely that it is committing an offence under existing environmental protection laws in the United Kingdom, and I would expect to see that those laws are exercised. When you look at the financial penalty regime and the remediation requirements they are likely to be pretty much the same in the case that you are talking about, with existing law as it stands at the moment, and with the likely requirements of the Environmental Liability Directive. I think it is only in some other more specific cases where other remediation options are required that we are likely to see differences. As I say, overall we expect relatively few cases in a year, and it seems to me to be the simplest to make sure that it is only once the regulations come in place that we will enforce them. Q53 David Lepper: On this question of implementation you made it clear in the consultation document that it is the government's policy not to go beyond the minimum requirements of the Directive unless there are exceptional circumstances justified by cost benefit analysis and following extensive stakeholder engagement. Yet you still consulted on the discretionary elements which would allow you to go beyond that bare minimum. Why did you do that if you had no intention of pursuing any of them? Ian Pearson: What we wanted to do as a government is to be open and transparent about some serious policy choices that we have, and that is why you will find that when you look at the benefit costs assessment there is a case in some instances for actually going beyond the legal minimum implementation requirement. We think that that overall is a marginal case and we do not think that there is strong and compelling evidence to go beyond it, and our policy right across government that we do not believe in gold plating we believe is an important one, and that is why we took the decision that it should stand in this case, but we should give people an opportunity to express an alternative view. Q54 David Lepper: Many of them have expressed alternative views but you will not take any notice of them. Ian Pearson: We are fully assessing all the consultation and responses as part of this. I am not aware that there has come out of the consultation exercise major additional evidence that suggests there are significantly greater benefits than we have suggested as part of our draft regulatory impact assessment, that would make us want to change our mind. As we have said, yes, there is a case in some areas that you might want to go further, but it is not a very strong one. My understanding is that there were not any responses at all to the draft regulatory impact assessment, and so I think that people accept there is a marginal case for going it further. When you set that against government policy overall of being against gold plating I do not think that that case is strong enough for us to say that we should go further and over implement, and that remains our position. Q55 David Lepper: You say there has been no case made in the responses to the consultation, except of a very marginal nature --- Ian Pearson: No, just to be clear, I was saying that they have not disputed the benefit costs calculations of actually implementing on a sort of gold plated basis. Q56 David Lepper: If I am right the regulatory impact assessment did say that if the government went beyond the minimum certainly there would be more cases to deal with and could be additional benefits of some £4 million to £5 million. Ian Pearson: Yes, it is pretty marginal overall, is it not? I do not think it justifies gold plating. Q57 David Lepper: In the light of all that could you give us some idea of what would constitute exceptional circumstances in this case? You say that you do not go beyond the minimum except in exceptional circumstances, so there must be some notion behind that of what exceptional circumstances might be. Ian Pearson: I think the notion would be that there would be very high benefits compared with the costs and that does not seem to be the case. We consulted and we gave people all our best views about benefits and costs and those figures have not been challenged. That is why I am saying that I do not think there is a compelling case for going further than minimum implementation of the Directive as it stands at the moment. I could conceive of other examples where it might make law fit together better, where you would potentially over implement, but we see that the Environmental Liability Directive has very much been supplementary and sitting alongside some very good environmental protection laws that we have in the United Kingdom. Q58 David Lepper: I think others might want to explore whether it might not give rise to some loopholes in the law, but I will leave that to other people. Ian Pearson: Can I be clear on this? We are not changing any of our existing law at the moment, and this is in addition to it. So if there are any loopholes there they exist already. Q59 Lynne Jones: Should you not want to close loopholes and use this opportunity to do so? Ian Pearson: I am very interested if you want to tell me what you think the loopholes are and then I will tell you whether I think they exist. Chairman: We are just the humble questioners; it is other people who tell us about loopholes. Q60 Lynne Jones: You have just said that going beyond the minimum would help the law fit better together, and that is certainly what some of the submissions that --- Ian Pearson: I was saying that I can conceive of a case that you would want to go beyond legal implementation at a minimum level if we thought there was a strong case that the law would wok better together by doing that. We do not believe that that case has been made during the consultation, and we were not persuaded of it prior to issuing the consultation document ourselves, which is why we are where we are today. Q61 David Lepper: One final point on this particular issue. We have talked about consultation and I wonder what view, if any, Defra took, if any, from other departments in government of this question of minimum implementation. Was there a strong view from elsewhere in government as well - the DTI, for instance, the Treasury - that this was the best line to take? Ian Pearson: There is a strong view right across government about better regulation and we have established, as government policy has set up better regulation principles, that our default position is that we do not gold plate unless there is a really compelling case to do so. What I am saying to you is that we looked at those sets of principles and we applied them to this Environmental Liability Directive. We considered the case as to whether we should go further than minimum implementation, but we did not believe that that case was sufficiently persuasive enough for us to justify doing so. That is why during the consultation exercise we explained that we did not want to gold plate and we set out the policy options that we did; but we recognised at the same time that there might have been a marginal case in so many areas for actually implementing beyond the minimum. Q62 Chairman: In your evidence to the Committee in paragraph 9 you comment about the exceptional circumstances that might suggest that you go beyond the implementation terms, the basic requirements, and you say that such a decision would be "justified by cost benefit analysis and following extensive stakeholder engagement". Can you just lift the veil a little bit upon what kind of a return as a result of a cost benefit analysis would lead you to make an exception? How is that judgment to be reached? Ian Pearson: I think I have been pretty clear about this and what I have said is that we looked at the case for going further; we undertake cost benefit analysis on a range of different policy options and those are contained in the draft regulatory impact assessment, and they have not been challenged or disputed or debated in any way. Q63 Chairman: Let me try and assist you, Minister, a little further, because you are quite right, you go on in the same paragraph to say that you estimated in the context of applying the ELD to nationally protected biodiversity within SSSIs as only a small net benefit. So when does small become big? How much in quantum do you have to have in terms of the return on a cost benefit analysis; or, put it this way, what would the number have had to have been in the exercise you did carry out to have convinced you that SSSIs should have been within? What is the cut-off? Ian Pearson: I think you have to look at these things on a case-by-case basis and exercise judgment, and the judgment that we exercised as a government, as part of the consultation exercise, was that we did not believe there was a sufficiently strong place to gold plate and to go beyond the legal point here. Q64 Chairman: You made that very clear and I think we have the principles clearly, but you made a statement in paragraph 9, which says that you estimated only a small net benefit. Most government investment decisions are made on the basis that numerically if the rate of return in a cost benefit analysis goes beyond a certain positive number an event occurs, and you have described in here in words "small net benefit", so I was interested to know, in the example that you have actually done, how big would the return have to have been to convince you that it was worth going beyond the minimum implementation. You may not be able to give me that answer now but perhaps you would like to reflect on it? Ian Pearson: I think you are trying to look for spurious precision in terms of an answer and, as I say, it is a matter of judgment as to what a significant benefit would be. Q65 Chairman: Minister, with respect your consultation document contains some numbers and it has a fairly precise number in it, because you have written it down, which gives us the numerical answer to the question what was small. So if you can do it for small all I am saying is, how much bigger does the benefit have to be before it becomes "we will go further'? Ian Pearson: This will apply on a case by case basis and what I am saying is that if as a result of a benefit cost assessment exercise that we undertake, whether it be as part of this or part of any other implementation of the Directive across government generally, we will take a full look at this. Q66 Chairman: I am sure you will do, but I have asked a very simple question. Ian Pearson: Yes, you are asking me a very simple question to which there is no one simple straight answer, as if the answer is 35. Q67 Chairman: You know what the answer is at the small end of the spectrum because you have already made a decision. It is Table F5 of the Regulatory Impact Assessment. Ian Pearson: We produce figures as part of the Regulatory Impact Assessment, yes, and my judgment and the judgment of government when we produced the consultation exercise was that we thought there were, on the basis of the RIA, some benefits but they were relatively small overall. If we thought that the benefits were more substantial, like, for instance --- Q68 Chairman: There is a reason for this approach, it is not just for the sheer entertainment value of asking you --- Ian Pearson: I think it is very entertaining, to be honest! Q69 Chairman: We can always make the entertainment even better. The reason I am asking you is that people will want to probe how the decisions are made about implementation and this particular page in the RIA does give a lot of detail about the basis upon which you made your decision, but it says that the net benefit was less than £1.1 million and therefore that is deemed to be small. That accords with the words. All I am saying is that just to give us some feel of the order of magnitude as to how these decisions are made, if it had been, say, £1.5 or £2 million at what point would you have said that if the benefits had got to that level then it would have been worth going beyond it, just to give us some idea of the order of magnitude? Because what we have here is nought to 1.1 no, but we do not know 1.1 to 1.5 might be, or 1.5 to 2, yes. Ian Pearson: I think I just have to say in response to this that this is a matter of judgment as to what is small and what is significant, and it always will be, and it will vary from policy area to policy area. Q70 Chairman: True, but I am not asking you to speculate and I do not want to bore us any more. As Mr Drew has just whispered in my ear, these are real figures; this is an exercise which you did, and you have listed the costs and the costs here are £0.6 of a million and the benefits are less than a million. So, in other words, you could almost say crudely a two to one ratio in terms of costs versus benefit that is small, and you have said no. There are a lot of people who will come to you in the future and say could you extend this for the following reasons, and they might want to understand how this mechanism works. That is all I am asking. Ian Pearson: And of course the costs and benefits bear down on different groups of people and it is the role of government to make a judgment based on an assessment of those costs and benefits as to whether it is worthwhile to pursue that particular policy benefit. Chairman: For example, with your flood protection policies there is an entirely objective set of criteria, which you know well, which determine whether a project goes ahead, and applicants for projects have a very clear idea how the point scoring, cost benefit, everything else, worked out - it is all down there, you can work it out for yourself. All I am saying is that it perhaps might be interesting to have a bit more clarity in terms of the returns to cost ratio, which is what is down on page 50, to understand how it works. But we will not delay ourselves any more and we will move on to David Drew. Lynne Jones: Just before you do, the Minister was about to give us a "for instance". Some might think that a two to one cost benefit analysis was actually quite good. Chairman: Some might. Q71 Lynne Jones: You said "for instance" and then you were interrupted. Ian Pearson: I just think it is impossible to apply simple metrics to policy decisions and to say that, as a government, we will always do something if the ratio is two to one or better. Q72 Chairman: That is me telling you statistically what this says. I appreciate that is not you. Ian Pearson: I am suggesting to you that, as a guide to policy, that does not work. You cannot just have simple metrics. You have to exercise judgment. Q73 Chairman: You can have order and magnitude. Ian Pearson: My thought that I was wanting to share with you was that, if I could be convinced that as a result of a policy intervention in this area we would have a big impact on achieving some of our biodiversity targets, that would lead me to conclude that this might be significant and we might want to go further and gold plate; but I do not think that that case has been made so far. Q74 Mr Drew: This is all quite abstract but we are not talking about abstract ideas. We are talking about SSSIs and equivalent. We are giving a further layer of protection to some of those SSSIs. Either we are prepared to protect these very important sites or we are not. What we have here is a mechanism by which that could be done. We are using a cost benefit analysis to take us in that direction. I would have thought you would be rather more robust saying, "Of course, if there is clear environmental damage we will be in there like a ton of bricks to make the offender pay." There is an issue about how they will pay. My biggest misgiving is that they may decide they will pay because they have already caused or are about to cause environmental damage. I want to prevent them but if they are prepared to take into account and you are prepared to effectively give them the clearance so they can do that, that is what will happen but something has to happen. Otherwise they will do it anyway. It is a very toothless tiger that is affecting the operator here. Ian Pearson: I want to stress again that we already do protect SSSIs and we do have a strong system of environmental protection in the United Kingdom. Q75 Mr Drew: What is different in the ELD? Ian Pearson: What is going to be different in the Environmental Liability Directive is that in less than one per cent of the environmental damage cases we are probably going to see implementation of the ELD provisions. Where they are different is potentially giving a little bit more protection on the biodiversity side and also in the requirement not just for primary remediation but potentially also in cases where there might be complementary or compensatory remediation. Those provisions are new and different but I do not envisage them being applied in most circumstances. Q76 Mr Drew: Let me give you one. This is in the Regulatory Impact Assessment. It says that the use of DDT may be an example. For this provision however the past may not provide a reasonable guide as to how a defence might be applicable or which sectors it will apply to. In a sense, that is giving you an answer that we cannot look backwards to determine action in the future but we must have lots of examples which could be brought to mind of where the ELD, if it is going to be effective, will be able to be the mechanism by which we can take action against people who cause environmental damage. I would have thought that is something that we have to be talking about. Otherwise, no one is going to think this is worth a candle. Ian Pearson: I do not think we should delude ourselves that the Environmental Liability Directive is going to be a huge, massive, new change. When you look at it, it is in effect a minor addition to the legal environmental protection framework that we already have in the United Kingdom. Specifically on SSSIs, the best estimate we have at the moment is that approximately 90 per cent of SSSIs will contain some European features because of the overlap between Natura 2000 sites and the Birds and Habitats Directive and for other reasons. The additional level of protection and action that might be needed to be taken on remediation that is given by the ELD is, I believe, a useful measure but I do not think we should be pretending that it is a huge answer to all our environmental problems in the United Kingdom because I do not see the Directive in that way at all. Q77 David Taylor: You can be frank with us. Ian Pearson: I already have been. Q78 David Taylor: You are not going to appear in The Daily Mail pillory or Today in Westminster or Radio 4 Tomorrow. To you, ELD means Entry Level Directive, does it not? You are the Stavros of the EFRA team, the Easyjet man. You want an ELD light, a low cost utility model, barely sufficient to comply with the EU publication. That is true, is it not? Ian Pearson: No, it is not true. What I am doing is exactly what it says on the tin. Q79 David Taylor: I feared that. Ian Pearson: I am suggesting we should implement the Directive as the Directive is and where the Directive allows us to exercise discretion we ought to use that in a sensible way. We do not believe that there is a case for gold plating the Directive. Frequently across other areas of government we get criticised for gold plating EU legislation. Q80 David Taylor: That phrase "gold plating" is a substitute for "thought", is it not? Do you not think so, because it is just bandied around as a means of shielding a defence from using the flexibility which was incorporated into the Directive deliberately so that countries like our own could indeed extend it rather further than they would otherwise have done. Ian Pearson: Gold plating is not a substitute for thought. Q81 David Taylor: The phrase "gold plating" is a substitute for thought. It is almost a knee jerk defence. I am looking at the extent of strict liability as opposed to fault based liability where a whole plethora of activities, the so called non-annex three activities, are going to be in the fault based liability camp, are they not, as opposed to a strict, automatic liability. That is correct, is it not? Ian Pearson: I think gold plating is useful as a discipline. Q82 David Taylor: No. Use an alternative phrase, not gold plating. Ian Pearson: What it is essentially about is the government's better regulation principles. We think it is sensible to apply those principles to all EU legislation. We should not over-implement unless there is a compelling case to do so. Q83 David Taylor: You want to minimise the cost of implementation? Ian Pearson: That is what gold plating is about. Where there is a strong case for going further ---- Q84 David Taylor: A compelling case, I think you said. Ian Pearson: ---- in the Directive, that is something we might want to consider as part of implementing a directive; or we might want to do it through normal, UK legislation, but we will at least have the options to be able to do that. Q85 David Taylor: Would you agree with me that one method of implementing effectively would be to have a consistent, transparent regime across the piece in how the ELD is implemented? That would be true, would it not: not to pick and choose, not to make fish of one and fowl of another, not to identify the annex three activities as sheep and everything else as goats, particularly when it is the goats, according to Natural England, the non-annex three operations, that damage biodiversity more frequently than the annex three ones where there is a strict liability? Do you agree with that assessment on that front? Ian Pearson: Firstly, the Directive enables Member States to make choices in certain areas. I think it right that we exercise that right and choice. We have to choose one thing or the other. When it comes to the issue of fault based liability, I happen to believe that that is a sensible way forward. If I am a chemicals company based in Coventry that is fully applying the PPC regulations that have been imposed on it by the Environment Agency at some significant cost to it but it is acting ---- Q86 David Taylor: In the interests of the environment, the people who live in and around Coventry and the workers at that factory? Ian Pearson: Yes, indeed. It is acting in a responsible manner and it should be able to rely on that competent authority. If something goes wrong and it is a result of negligence or the fault of the company, then rightly that company should be liable for prosecution and we need to undertake remediation. If however that company has been fully following the guidance and working within the PPC regulations and something happens that was completely beyond its control, I do not think necessarily we should say that it is the company's failure. I think we should say it is the failure of the competent authority and the failure of the regulation. In those circumstances I think it right to say that the burden of responsibility should fall with the competent authority. Q87 David Taylor: You prefer consistency and transparency to be obtained by levelling down to a fault based liability for all activities. In other words, the annex three operations which are linked to strict liability. The inference I draw from what you say is that you rather regret that they are being categorised as strict liability operations, where no fault needs to be demonstrated. Ian Pearson: There is the ability in Article 8.4 to have what is called a permit defence or a state of the art defence. I think that is a very sensible way to go and that is one of the reasons why we have consulted on that. Q88 David Taylor: Are we not just caving in to pressure from the commercial sector? The British Insurance Brokers' Association, the CBI, the NFU? Are we not just pandering to them pursuing the standard of living and totally ignoring the quality of life which can be associated with some of their harmful operations? That is the reality, is it not? Ian Pearson: No, it is not the reality at all. I think you have it completely wrong. If a company is negligent, if it causes environmental damage, it should be pursued under legislation, whether it be the Environmental Liability Directive or whether it be through our own domestic legislation. Q89 David Taylor: If it is because of neglect, omission or commission but not strict liability? Ian Pearson: I use the example of a chemicals company in Coventry. If it has been completely fulfilling all the requirements that have been imposed on it by a competent authority, it should be able to rely on that. If it has been negligent in any way, it is perfectly legitimate that it would face prosecution. Q90 David Taylor: It will have a strict liability for some activities? Ian Pearson: If it has not been negligent in any way, I do not think it reasonable to blame the company for what is in effect potentially a deficiency in the PPC regulations. In other cases, you can envisage a farmer spreading fertilizer as an example, fertilizer which has been approved and licensed and certified as safe and has gone through all the normal statutory processes. If you envisage a situation in the future where the application of that fertilizer suddenly, unexpectedly caused environmental damage that was significant, I do not think it right to pursue the farmer. Q91 Mr Drew: That is exactly what the Directive says. It is the person who actually applies the action, if you like, rather than the supply chain who knowingly may have supplied that farmer with something which could cause environmental damage. Ian Pearson: The Directive in 8.4 talks about the ability to apply what we call a permit or state of the art defence. I think that is a sensible thing to do. We have to stress here that we are talking about very unlikely events. I am confident that our PPC regime is robust and that it is fit for purpose. I am confident that our product licensing regime that we have in the United Kingdom and throughout Europe is robust. What we are talking about is the very unlikely cases where something might happen. Q92 David Taylor: They are a creature of your department to an extent but they do argue that non-annex three operations, the exempt operations if you like, are the ones which damage biodiversity more frequently. Should we not be focusing on that in a more effective way? Ian Pearson: That is true but they damage it through negligent activity. That is a very different point to the point about whether it would be right or not to have a permit or a state of the art defence. Q93 David Taylor: We are not selling the environmental parts under pressure from commercial interest groups then? Ian Pearson: No, we are not at all. In those cases where environmental damage is caused - again, in the overwhelming number of cases my understanding is this will be as a result of negligence or some other activity - there are legislative remedies there at the moment under UK law. Permit and state of the art defences are quite narrow and technical. Q94 Chairman: We accept the point. Mr Taylor quoted Natural England. In their evidence to us they say they want liability to be identical because non-annex three operations damage biodiversity more frequently. Creating a level playing field, by applying strict liability to all operations, would establish a more consistent and transparent regime. Why does Defra disagree with Natural England on that point? Ian Pearson: For the reasons that I have just outlined. I think it right that, where we have the discretion to exercise a permit or state of the art defence in those circumstances, it is right to do so. There is probably a separate point about how the two regimes fit together and how the Environmental Liability Directive regime would fit with UK domestic legislation. I have to be honest. This is not a perfect fit. Frequently our law in the United Kingdom can be a little bit jumbled and this is one instance where it is not as clear and transparent as it perhaps could be. Chairman, you will be aware of some of the company law project and the massive reforms we undertook there to try and put more company law in one place. Sometimes these things do not fit together as well as they should do. Q95 David Taylor: Your inclination would be to level down rather than level up? Ian Pearson: That is not my inclination at all. What I am explaining to the Committee is why we think, in the very few cases where it is likely to be exercised, a state of the art or a permit defence is appropriate and is in the best interests of everyone. Q96 Mr Drew: Let us use a specific area of concern which is obviously going to be GMOs. I know there is a view that GMOs are protected under a different piece of legislation but it does seem somewhat unclear as to whether GMOs will be a key part of a potential liability offence. Is that something that you welcome or is it something that you are going to serve a pass to and hope that our existing controls for GMOs are sufficient? Ian Pearson: We have one crop trial of a GM product taking place in the UK at the moment and we will probably have two trials next year. No GM crops are being grown commercially in the United Kingdom. It does not seem likely to me that they are going to be for a while. Having said that, it is right that we look very carefully at the issue of crop separation distances which is why we have been consulting on that. We want to move that debate forward. That is why as a government we should judge each application for crop trials on its merits and make decisions about commercial growing based on the scientific evidence. The licensing of GMOs, whether it be for research or for general use, is governed by some very strict European legislation at the moment. Each application for consent to release is judged on its own merits based on potential risks to the environment. In the United Kingdom we would not allow a crop trial to take place and we certainly would not allow commercial growing unless we were confident, based on all the scientific evidence, that there was no threat to human or animal health or to the environment. That remains our position. If we are relating what I have just said to the discussion we have just been having about permit defences, if in the future - and this is speculation - we were in a situation where a farmer was being pursued because a crop did cause environmental damage and it was directly as a result of its genetic modification, we do think that permit defence would be allowed with respect to the farmer. The problem would be with the company providing the product and with the licensing regime. We should not be penalising the farmers for doing things that they have been given explicit approval to do. Q97 Mr Drew: I go back to my original perception of this. Unless I have it wrong, the ELD impacts on the immediate transgressor, even though they may be doing something in good faith. If they have a permit they are exonerated but up the line, the supply chain, there is no way that a company that supplied something that subsequently was prove to be environmentally damaging would ever be liable, come what may. Ian Pearson: In the circumstances you describe, if an individual or company is causing environmental damage, the immediate responsibility is on that individual or company to stop it. Q98 Mr Drew: That is something slightly different. They have caused the damage. Are they liable for the damage they have caused? Ian Pearson: They have caused the damage. They should stop it immediately and that is what we would all want to see, regardless of whatever legislation we are talking about. Q99 Mr Drew: Who makes good the compensation in terms of the damage? Ian Pearson: That is the issue. If for instance a farmer has been using fertilizer that is an approved, licensed product that everybody has been happy with for a number of years or if a farmer is growing a crop where he has been given explicit approval to be allowed to grow that crop, I do not think it should be the responsibility of the farmer to take the remediation activity that is required because it is not the farmer's fault. That principle of fault based liability is an important one. We would obviously need to look at avenues to pursue those whose fault we believe it is. Whether that would be through the Environmental Liability Directive or through other routes that might be available we would have to look at. Q100 Mr Drew: Either the Environmental Liability Directive is applied to the person who causes the offence, maybe innocently, or it is applied to someone who supplies that person with the material or both. It has to be applied to someone, surely? Ian Pearson: It is applied to the individual in the first place but the individual would have the right to use ---- Q101 Mr Drew: How? That is not what the Directive says. Ian Pearson: ---- the permit or state of the art defence. Q102 Mr Drew: Have I got that wrong? The Directive does not say that the farmer can say, "I am sorry. It is not my fault. It is the supplier's fault." He would have to take legal action against the supplier. Ms Connell: The Directive imposes liability on the operator which is the person in control of the occupational activity and it imposes liability on the activity which causes the damage. Take for example pesticide licensing. You might have a factory that is producing a pesticide. If there is a leak from that factory, obviously in the context of that damage the operator might be the factory. If you are marketing the pesticide, that would be under a permit that applies to the pesticide. If it turns out that the pesticide ultimately causes damage in the hands of the end user, it might well be, if the permit defence is applied to that, that the person who produces the pesticide would be able to pray in aid the permit defence. He would say, "I had a permit to market that pesticide." Then you look at the farmer who sprays the pesticide. Can he pray in aid the permit defence? In the case of pesticides, the permit also goes into a lot of detail about conditions of use, how you use them, so it is possible the permit defence would also apply to the farmer in that situation. Alternatively, perhaps more likely, the state of the art defence would apply because the product had been permitted for use and therefore the end user might be able to say that the current state of knowledge witness statement that it was okay for me to use it. Outside that example, the person who is the operator of the activity which causes the damage will probably vary from case to case. It might be the factory that produces it. It might be the person who uses it. Ian Pearson: If you have a pesticides manufacturer producing a product that has gone through all the approvals process and there has been no problem with it for years but they produce a dodgy batch of product and a farmer, not knowing this, spreads it on his premises and causes environmental damage, I do not think we should be pursuing the farmer. I think we should be pursuing the pesticide manufacturer. That seems to me to be the clear and common sense approach. The farmer ought to be able to rely on the state of the art defence in that case. Q103 Chairman: In the real world ---- Ian Pearson: That is the pretty real world. Q104 Chairman: I appreciate that. If the two defences which Caroline outlined are successful and liability is not to either the manufacturer or the farmer but you still have environmental damage, who cleans it up? Who bears the cost for that operation? Ms Connell: In the example of the pesticide which has been licensed for use and then is used in accordance with those conditions, it is very unlikely that environmental damage would occur. The most likely environmental damage arising out of that would be unauthorised use. For example, if you flush some extra pesticide into a river, that would not be covered by the permit defence. That is not an authorised activity. In addition, do not forget that the permit defence and the state of the art defence also require the operator to show that he was not at fault or negligent. Say, for example, someone flushes out extra pesticide. Not only is that not authorised but it is probably negligent as well so no permit defence there. Q105 Chairman: I do not want to get too much into the realms of the hypothetical. It is the unknown consequences of a permitted action where you could have some kind of environmental damage that resulted from a perfectly legitimate manufacture of a product and a totally in accordance with rules use of it. There are rules and regulations, for example, about spray drift and wind speed and all those factors. If all of those have been complied with but unwittingly your next door neighbour had a crop in a field that was destroyed by that particular material floating over the hedge, so you have some environmental damage or maybe not even that - maybe there is a biodiversity issue - I am interested in the theory. If the two defences are sustained but you still have some example of environmental damage, whose job is it to remediate the situation? Does somebody have a liability to go in and clean up, sort out, compensate? Who does that? Is it the competent authority? Is it the government? Ian Pearson: It is a grey area if you are talking about farmer A as opposed to farmer B. The farmer has done absolutely nothing wrong. I do not think it fair to penalise as a matter of law people who have done absolutely nothing wrong. Q106 Chairman: As I have understood these defences, if an event occurs that is in accordance with procedures, rules, regulations and the law but an unplanned for consequence results which is environmental damage ---- Ian Pearson: It would have to be significant, adverse damage. Q107 Chairman: There is a problem and somebody has to clear it up. If the defences do not work and somebody was prosecuted for that damage, there would be consequences. They would have to pay the bill: polluter pays, but in a way the defences knock out polluter pays. In other words, you have two ways of saying, "Not me, guv" but you still have pollution. Under those circumstances, who would be expected to deal with the consequences, in financial terms, of such outcomes. The defences work but there is still a problem so who pays? Ian Pearson: We are getting into quite hypothetical areas here so it is difficult to respond to some of these. Can we be clear that we are not talking about an instance of somebody having their crop damaged as a result of wind spray. That is not something that would count, in terms of my understanding, when it comes to an environmental impact. Q108 Chairman: It can have an emission that is allowed. It has a consequence that was not anticipated when the rules for that emission were agreed. In other words, it might have complied with the then best environmental practice and somebody would say, "Yes, you can emit that to the atmosphere" but then a consequence occurs. Some pollution occurs. Somebody says, "Oh, I did not know about that when we said you could do it." I am asking the simple question: if that situation occurs, who is the body that says, "Okay, we have to deal with the financial consequences of it"? Is it the competent authority? Is it the government? Who? Ian Pearson: Depending on the circumstances, if nobody was at fault it is very difficult to apportion blame. If there is an environmental damage caused but nobody was at fault, it is incumbent on government to look at the potential liability. Q109 Chairman: The government would be the first point of recourse. Ian Pearson: Yes. Mr Drew: The Welsh Assembly have said that they want to disapply the permit defence in the case of GMO related activities. Are you supporting them in that or are you disagreeing with them? Q110 Chairman: Can they do it? Ian Pearson: This is a devolved matter. Q111 Mr Drew: They can do it? Ian Pearson: They have the ability to take different decisions in these areas. You have heard my views about why I think a permit defence is appropriate. They are perfectly entitled to make their own decisions. Q112 Mrs Moon: When this was raised when we met earlier with some of your officials, it was suggested that the Welsh Assembly Government did not have the power to do that. You are quite clear that the Welsh Assembly Government does have the powers to take this different step? Ian Pearson: My understanding and the advice I have from officials is that it certainly has. The advice I have had all along is that they have the ability to take different decisions in this area. Ms Connell: It is a devolved matter. If they want to take a different approach on implementation they can. I am not quite sure on what basis the Welsh Assembly Government would not be entitled to do this particular thing. I cannot really help on that. Q113 Chairman: God help the farmer who has half a field in England and half in Wales. Ms Connell: That is one of the joys of devolution, I suppose, in lots of different contexts. Q114 Mr Drew: In terms of the idea of the two defences being invoked before any remediation, I go back to this original perception. If someone knows that they have transgressed - you said a minute or two ago, Ian, that you would want to stop them but the event has happened - as the event has happened, a lot of people will feel, "We are going to get away with it and we are not going to stop until someone makes us." What real powers - we have talked about who the enforcers are - are there to stop someone from transgressing and more particularly to really make sure that they do remediate the damage they have done? Ian Pearson: My understanding of this is that the powers are there under Articles 5 and 6 of the Directive, Article 5 about preventative action and Article 6 about remedial action. The responsibility is on the operator in the first instance. The expectation is that the operator will take all practical steps to immediately control, contain, remove or otherwise manage any contaminates and deal with the environmental damage. Also, a competent authority may at any time take or require the operator and give him operator instructions in terms of taking steps so there are powers there. The powers will be there as we transpose the legislation that will give the competent authority the means to be able to step in and deal with the issue. Clearly, that will be an important part of the implementing regime. Q115 Mrs Moon: You have talked about this legislation being to supplement what is already in place in terms of environmental protection legislation in this country. You are very keen to listen. You have had the consultation. What I do not understand is why did the consultation on the tests for significant biodiversity damage restricted itself to Natura 2000 sites. Why did you limit yourself so much? What was the reasoning behind that? Ian Pearson: The reasoning behind that goes back to the earlier discussion that we have been having about the minimum level of implementation, so that we should implement what the Directive requires us to implement. It requires us to implement with regard to species and habitats covered under the EC Birds and Habitats Directive. It does not require us to implement with regard to SSSIs. I think there are some practical difficulties if we were to try and implement with regard to SSSIs and pretty small benefits if we were to extend the scope, given that something like 90 per cent of SSSIs at the moment will have some sort of European element and be covered in some way already. Specifically on SSSIs, if I think of some of the sites I have in my own constituency, there is a site with a lot of great crested newts. I can see how somebody could damage the integrity of that site but not alter the favourable conservation status of the great crested newts because they are pretty prevalent in lots of other areas. That would be an instance where you can cause significant environmental damage and not have a remedy under the Environmental Liability Directive because you would not be having a significant, adverse effect on the favourable conservation status of the species. Q116 Mrs Moon: What if that was a biodiversity action plan species for your area and the great crested newt was in fact an endangered species within your area? They may well be prevalent in other parts of the country but that might be the one place they existed in your part of the country. Ian Pearson: That is why we have SSSIs but the Environmental Liability Directive does not help them on that. Q117 Mrs Moon: You have got yourself into a position where Natural England, the Environment Agency, the RSPB, the Institute of Ecology and Environmental Management - I would like to put on the record that my husband is a member of the Institute - the Institute of Biology, all NGOs who responded to the consultation, private individuals and all but one local authority opposed your stance on this and urged extension of the Environmental Liability Directive to cover SSSIs, including species habitats and species. They also wanted strict liability imposed. You have ignored all of that evidence, so you are ignoring the environmental lobby in favour of supporting the CBI and the NFU who support your position. Can you explain to me why, given the volume of people who say, "No, we think you are taking the wrong stance on this", you are taking the least protective measure that you can in law, when others within the EU are going to take the higher level? I still do not understand why you are taking the line of least resistance. Ian Pearson: Firstly, we are not ignoring the environment lobby. We have been listening very carefully to what they have been saying to us about this and other issues with regard to the Environmental Liability Directive. We have been considering carefully their responses. We are still considering the responses. The main difficulty when it comes to this issue is that the main protection for SSSIs is through management agreements with owners and occupiers. The Environmental Liability Directive is probably going to apply to only a few instances in practice. With the real life example I have just given you about great crested newts, it does not really help at all either there. It is difficult to know what test of damage to apply, whether it should be based on site integrity or on conservation status across the range. The Directive says that we ought to be looking at conservation status across the range. When you look at it from a site integrity perspective, I like my great crested newts in Pensnet and I want to see them protected. Q118 Chairman: They probably have a fond affection for you too. Ian Pearson: The ELD does nothing to protect them on that particular site. Q119 Chairman: Help me to understand because I start to get into a slightly theoretical world here. Could you explain to me what practical things beyond the current protections for Sites of Special Scientific Interest would you have to do if you were to implement the terms of the Directive in those areas which are not currently covered? What would be the difference in practical terms? Ian Pearson: My understanding of this is that the potential difference in practical terms is not to do with fines that would be imposed on the transgressor. It is not about penalties. It is not about primary remediation because whatever piece of legislation, whether you are talking about the ELD, the Environmental Protection Act, the Water Resources Act or the Wildlife and Countryside Acts, primary remediation would take place if a transgressor was convicted and found guilty. The differences potentially, as I understand it, are to do with compensatory remediation and complementary remediation. There might be examples, for instance, where it is not possible to remediate an existing site because the damage has been so severe, in which case under the ELD you could be required to ensure that a complementary site was brought into being so that there was not that sort of habitat loss. That is different from what we have at the moment. In terms of primary remediation - in most instances we would be talking about primary remediation - I do not think there is any substantial difference between what the ELD would deliver and what would be delivered through our legislation under SSSIs. There is a far higher level when it comes to the ELD because here we are talking about favourable conservation status of a species; whereas, when it comes to an SSSI, we are talking about that particular site. To go back to my example of the great crested newts, that site would definitely be protected and there would be legal remedies under existing legislation but if the favourable conservation status is not threatened - and that is a high level thing that needs to be achieved - then the ELD would not necessarily be triggered. Ms Connell: It is sometimes easy to think that all the ELD requires you to protect is Natura 2000 designated sites, but that is not the position. The ELD requires you to protect all the species and habitat that are listed in the Birds and Habitats Directives in the relevant annexes. That is wherever they are found, whether they happen to find themselves on a designated Natura 2000 site or whether they find themselves on an SSSI or whether they find themselves somewhere completely different. As I understand it, you can have habitat and species and resting places for species, everything that has to be protected under Article 2.3 of the ELD. Only a small proportion of that finds itself on Natura 2000 sites. Therefore, a very large proportion of what is now SSSI will contain species and habitat that are within the scope of the ELD already. It is important to remember that because the mismatch does not look quite so stark as if you just assume that the ELD covers only Natura 2000 sites, because it is not a site based test. It is a species and habitat based test. That is going to be quite difficult to apply in practice because you are not just looking at the sites; you are looking at what has happened to the species and habitat wherever they are and then you are going on to look at what the Directive requires. You then have to analyse what the effects are on reaching or maintaining favourable conservation status of that species or habitat across whatever the range should be. The range might be just a field, it might be the south east of England or it might be the whole of the UK or more. That is quite a difficult exercise. The upshot of that is that the remaining species and habitat on SSSIs which are purely domestic and which do not already come within ELD protection potentially are probably not as great as may originally have been thought. Q120 Chairman: Those examples of habitats or species in the areas not covered: if a catastrophic event were to occur, the message I am getting if I have understood it correctly is that there is no requirement for some kind of remedial action to take place. In other words, the event occurs. There is a loss of biodiversity in a location unprotected by the ELD, so that is a consequence and we just sit back and say ---- Ian Pearson: Who caused the event to occur? Q121 Chairman: It would be the same argument that a polluter would cause an event to occur. I am trying to be clear in my mind. You made it clear in your exposition - I apologise if I am cutting across your thinking - and you said that in the event of an SSSI for example being part of a Natura 2000 site there would be a liability on remedial activity if environmental damage took place. I adduced from that - tell me if I have it wrong because it is quite complicated - that if the damage occurred outwith an area protected by the Environmental Liability Directive there was no liability for anybody to do anything about it. In other words, the event occurred; the damage occurs and that is it. Ian Pearson: Are you talking specifically with reference to the ELD now? Q122 Chairman: With reference to areas that are not protected by the ELD. You gave me the impression that the plus point for the ELD was the obligation for remedial activity if there had been environmental damage. It appeared, in the way you explained it to me, that that was different from the consequences of something that was simply protected by existing UK law. Ian Pearson: The plus points for the ELD are that there is protection if there are significant, adverse effects on the conservation status of species that are outside Natura 2000 sites or outside SSSIs. The other plus points are with regard to complementary and compensatory remediation. Q123 Mrs Moon: Can I come back to the response I had to my question about why did you consult on the test for biodiversity damage restricting itself to Natura 2000 sites? The response was, "It was not a site based test." If it was not a site based test, why did you consult on it? Ian Pearson: The consultation has been about implementation according to sites and species. The sites are those that are in the Birds and Habitats Directive, which are principally if not exclusively Natura 2000 sites. There was consultation on that because we are required to do that under the Directive. As part of the consultation exercise, there has been this debate that we have been having about whether it should be extended to SSSIs that are not Natura 2000 sites. Obviously there is quite a strong degree of debate at the moment. Our best estimate is that about 90 per cent of SSSIs will have some sort of environmental component anyway because they will have a species probably that is covered by the Directive's requirements. What happens in those other cases where they might be governed, the debate is around: should you go beyond minimum transposition and put these SSSIs into the same regime as the Environmental Liability Directive or not? Our argument has been that we did not think there was a strong enough case to go beyond our normal better regulation principles. I admit it is very much a matter of debate and other people can and have come to other conclusions on this. Q124 Mrs Moon: I still struggle to see why you reached that decision. You say that 98 per cent of SSSIs would be covered. If you are talking about those figures and you are saying that in less than one per cent of cases the ELD would be implemented, why would you not want to seek to give the best protection possible to the widest range of sites of habitats and species that we possibly could? We have a good record in this country of protection. Why are we not maintaining that? Why are we creating a field day for lawyers to argue that that is covered but that is not? It seems to me that what we are going to do is create a huge potential to spend large sums of money for lawyers - and in particular lawyers who are going to have to be employed by Natural England and the Environment Agencies - to argue, where there are cases covered by the Environmental Liability Directive, as to who is responsible for what. Why are we doing this? Why are we not protecting and giving the highest, simplest level of protection for our enforcement agencies to enforce? I still do not understand the reasons for this. Ian Pearson: We are giving a high level of protection now and have been for a considerable period of time. The regime that we have through our own domestic legislation is very strong indeed. We then face the situation where the Environmental Liability Directive comes along and cuts across in a little way some of what we do in the United Kingdom already. When it comes down to it, you look at the requirements of the ELD and, in a lot of cases, they are no different to the regime that we have at the moment. There are potentially some additional biodiversity benefits and there are issues about complementary and compensatory remediation. We welcome the Directive and what it does on that. When, for instance, you look at the penalties under the ELD regulations, they are talking about a £5,000 fine and/or three months' imprisonment in the magistrates' court. Under the Water Resources Act, it is £20,000 in the magistrates' court or three months' imprisonment. The Wildlife and Countryside Act as well has a similar sort of regime when it comes to penalties. We should not get ourselves into a position of saying that there is a great deal of extra benefit here when it comes to implementing the Environmental Liability Directive. As we have shown in Regulatory Impact Assessment, there are some additional benefits but I do not think we should over egg the pudding here. My assessment of this is that, because this is at such a high level, we have yet to see how lawyers - you are right to raise the point about lawyers; that concerns me as well - will interpret significant, adverse effects and favourable conservation status. I would imagine that the burden of proof here is going to be quite high. In those circumstances, the situation is that we have potentially a directive that could be neater. We could try and rewrite all our existing environmental protection legislation so it is completely consistent with the ELD. We do not really think that that is worth the effort at the moment. We do not think that going beyond the minimum implementation really offers a significant benefit. That goes back to a definition of what is "significant". Q125 Chairman: What is the definition of the word "significant" in all this? Ian Pearson: I do not have my dictionary in front of me. Q126 Chairman: I know what the dictionary definition is. All of the terminology is about significant levels of damage. I was interested as to how the judgment was made between damage and significant damage. In other words, is it a statistical assessment of a loss of species in biodiversity on a piece of land that is damaged, or what? How do you determine the meaning, within ELD terms, of "significant"? Ian Pearson: I would defer to the lawyers as to how they are going to interpret this. You are right to say that when it comes to the Directive itself it is talking about significant effects on maintaining conservation status, on ecological or chemical status of water bodies and it is talking about land contamination that has a significant effect on human health. Q127 Chairman: In your consultation you asked about this significant issue. How do we define "significant" in this? Ms Connell: I do not think it is a legal question. I think it is a scientific question. The question of significance of damage arises in the context of contaminated land already under the Environmental Protection Act. It is already something that local authorities have to grapple with and it is not easy. Somebody is going to have to take a value judgment in an individual case. At the end of the day, you can write all the guidance you want but some individual is going to have to take a view whether the impacts that they have found, compared with the background information that they have, are significant in their opinion. I do not think that is going to be an easy thing to do. Once that judgment has been made, it seems entirely possible that people will then want to challenge that judgment, but it is the kind of judgment that we have already. Q128 Mrs Moon: Are you going to include the RAMSAR wetland sites within the ELD? Ian Pearson: 74 out of 77 in England and Wales are already Natura 2000 sites. For those that are not ---- Q129 Chairman: That is three, is it? Ian Pearson: Yes. They are Rosburnmere, Esthwaite Water and the Pevensey Levels. I am told that they will host either habitats or species of community interest so therefore they will be covered by the ELD. Q130 Mrs Moon: You said that the Habitats Directive is to be implemented offshore, up to 200 miles. Is there therefore going to be ELD protection for nationally protected marine biodiversity? Ian Pearson: This is an area that I am not familiar with. I am happy to write to the Committee. Ms Connell: At the moment, if one takes a minimum implementation stance, the biodiversity which is protected is the biodiversity that is listed in the Directive, whether that finds itself on land or out to sea. To the extent that it is not listed in the Habitats or Birds Directives, on the minimum implementation stance, it would fall outside ELD protection. The same goes for marine habitat and species as for land based. It is the same issue. Q131 Mrs Moon: There will be no protection under the ELD for our marine nature reserves? Ms Connell: Not unless they are European listed or unless a decision is made to extend protection. Q132 Chairman: You have made it clear that the government is not proposing to require operators to hold financial securities in order to meet liabilities that may arise. They may want to cover those risks by other instruments but you are not going to specify how they do that. Have you identified any potential unfunded liabilities - in other words, things that are not covered by anybody - that could occur in this field as a result of this legislation for which the government would be liable? Ian Pearson: I am not sure there is anything else that has not been considered as part of Regulatory Impact Assessment. Mr Atkinson: There is nothing in the Directive that places subsidiary liability on the state in cases of default. If there was damage which arose for which somebody could not be held responsible there is no absolute requirement on the state to remedy it. Having said that, the competent authorities at the moment, the regulators at the moment, make decisions every day in those situations about where they think it is important to take action themselves to remedy damage and they would take those decisions also no doubt in the case of the Environmental Liability Directive. Q133 Lynne Jones: One of your public service agreement targets is to have 95 per cent of your SSSI sites in favourable or recovering condition by 2010. Would you expect the ELD to assist in this? If you do not improve on your current performance, which I think is 23 per cent that are not recovering or are in decline, would you consider whether your no gold plating attitude should be reconsidered? Ian Pearson: Obviously we looked at extending the Directive to SSSIs that will not be covered anyway. Our conclusion would be that this would have only a very small benefit indeed in terms of meeting our 95 per cent target. I think the figure was one percentage point. Based on that, I do not think extending the ELD produces a significant benefit. We have to look to other measures that we might want to take as government and through our agencies and regulators to help meet our PSA target. Q134 Chairman: Thank you very much indeed Minister, Ms Connell and Mr Atkinson, for being here for quite a long time, but it is a detailed area. The Committee are interested to learn that there will be further consultation before the regulations are drawn up. Ian Pearson: Can I correct you, Chairman? My current intention is that there will be consultation on the regulations themselves rather than consultation before the regulations are drawn up. Q135 Chairman: There is another bite at the cherry for those who want to have their two penn'orth and a chance for you to reflect on this. Ian Pearson: There certainly is. Chairman: Thank you very much indeed for your contribution. |