UK: BLG Pollution and Environmental Risk Digest

Last Updated: 16 December 2002

UK Developments

CASES

  • The House of Lords has given the reasons for its decision in Fairchild v. Glenhaven Funeral Services & Ors; Matthews v. Associated Portland Cement and Fox v. Spousal & Ors on 20 June (see the Summer 2002 Digest). The case involved workers who had contracted mesothelioma from exposure to asbestos. Each worker had been exposed to asbestos during a series of different employments over 40 years.
    As a general rule, a claimant must prove that the defendant’s action caused the damage concerned. Mesothelioma can be triggered by a single exposure to one or more asbestos fibres. In the present cases, although a number of the employers had failed to provide adequate protection against exposure to asbestos, the claimants could not prove when they had been exposed to the fibres that caused their mesothelioma.
    The House of Lords decided that any injustice to the employers who had not caused the claimants’ exposure to the fatal fibres was outweighed by the injustice to the claimants by application of the general rules. Where employers were under a duty to prevent their employees from becoming exposed to the risk of disease from asbestos, it was inconsistent with the policy of the law imposing the duty, and morally wrong, to impose causation requirements which excluded liability.
    In deciding in favour of the claimants, the Law Lords stated that their approach does not apply to all cases of exposure to substances where there are difficulties in proving cause and effect. Future cases seeking to develop and build on the judgment will, therefore, have to be decided as and when they arise.
  • In R. v. London Borough of Hammersmith and Fulham ex parte Burkett, the House of Lords determined that the time limit for commencing judicial review proceedings to challenge a grant of planning permission runs from the date on which planning permission was granted rather than from the date of any earlier resolution or decision in the planning process.
  • In RJ Tilbury and Sons (Devon) Ltd v. International Oil Pollution Fund 1971 & Ors. (Admlty), the High Court, on 29 May, held that indirect economic losses arising from marine oil pollution are not recoverable under the International Oil Pollution Fund 1971 ("IOPF 1971").
    The case arose from oil pollution caused by the grounding of the Sea Empress off Milford Haven in 1996 (see the Spring 1996 Digest). When fishing was banned in the polluted area, fishermen were unable to supply whelks to the claimant for processing, resulting in the claimant losing business.
    Under the Merchant Shipping Act 1995, the owner of the vessel that causes "damage" is strictly liable subject to a cap. Any claims for "damage" in excess of the cap are paid by the IOPF 1971.
    The court held that the term "damage" includes physical and economic loss. It had no difficulty accepting that the whelk fishermen who had suffered immediate interference with their work from the spill could recover economic loss under the scheme in principle. However, the court decided that the secondary economic loss suffered by the claimant (as a result of the failure of the claimant’s suppliers to deliver, rather than as a direct result of interference by the oil) was not sufficiently proximate to fall within the scheme, even if foreseeable.
  • On 25 July, the Southampton Magistrates Court fined a director of J&W Aggregates (in liquidation) £4,000 with £1,000 costs in relation to two waste-related offences committed by the company. The company had conducted waste management activities on one unlicensed site and had dumped waste at another unlicensed site in breach of section 33(1) of the Environmental Protection Act 1990 ("EPA 1990"). The offences had been committed with the director’s consent, connivance or neglect, in breach of section 157(1) of the EPA 1990.

LEGISLATION

  • The Chemicals (Hazard Information and Packaging for Supply) Regulations 2002 (SI 2002/1689) came into force in the UK on 24 July. The regulations overhaul UK law relating to the classification and labelling of dangerous substances and preparations and require the classification and labelling of dangerous preparations for certain environmental risks. Existing hazard classification for some 500 substances has also been revised and there are new rules on safety data sheets.
    Due to chemical suppliers having had very little notice of the regulations coming into force, the Health and Safety Commission has indicated that it will not take action against firms whose labels and safety data sheets do not comply with the new rules for an unspecified transitional period.
  • The Landfill (England and Wales) Regulations 2002 (SI 2002/1559), which came into force on 15 June, required operators of landfills to submit site conditioning plans by 16 July (see the Summer 2002 Digest). The plans explain how operators will upgrade their sites to meet requirements of the EC Landfill Directive (1999/31/EC).
    Operators of 896 landfills submitted plans by the deadline; operators of 149 sites failed to do so. Closure notices will be served by the Environment Agency on the latter. It is now an offence for such sites to continue to accept waste.
  • Draft regulations aimed at tightening the regulation of asbestos have been laid before Parliament. The regulations, which have not yet been published, will require employers and some landlords to identify and manage any asbestos-containing material in their premises and to make a record of it so that anyone who may disturb the asbestos, such as contractors, is made aware of it.
    At the consultation stage, it was proposed that employers and owners should presume that materials contain asbestos unless there is strong evidence to suppose they do not. If the proposals are followed, the regulations will require a risk assessment to be carried out on any asbestos that has been identified and a plan of action formulated to deal with any identified risks.
    The regulations will take effect as an amendment to the Control of Asbestos at Work Regulations 1987 (SI 1987/2115). The new requirements are likely to be effective from late 2003/early 2004.
  • Legislation to implement the Water Framework Directive (2000/60/EC) has been introduced into the Scottish Parliament. The rest of the UK must also introduce legislation to transpose the Directive into law by the end of 2003 (see the Autumn 2000 Digest).
    The Water Services (Scotland) Bill contains extensive powers enabling ministers to make regulations on the water environment. The regulation-making powers cover the "characterisation" of river basin districts by 2004, the drawing up of plans (including any environmental objectives) for those river basins, and any subsequent river basin remedial and restoration measures.
  • The Offshore Installations (Emergency Pollution Control) Regulations 2002 (SI 2002/1861) came into force on 18 July. The regulations authorise the UK government (in the form of a Secretary of State’s Representative, or "Sosrep") to take control of a marine pollution event when an accident which will or may cause significant pollution in UK waters has occurred and the need for action is urgent.
    The Sosrep will be authorised to issue directions to offshore operators, take control of installations and, in extreme circumstances, order their destruction. Non-compliance with the Sosrep’s instructions is an offence punishable on summary conviction by a fine of up to £50,000 or on indictment by an unlimited fine. The regulations provide that persons suffering damage or incurring expense as a result of an unreasonable exercise of the Sosrep’s powers are entitled to compensation from the UK government.

GENERAL

  • The Environment Agency has published regulated companies’ scores under its operator and pollution risk appraisal ("OPRA") scheme for the first time. Individual scores for 1600 integrated pollution control ("IPC") industrial processes, conducted by approximately 1,000 companies, were released in July. Scores for sites operating under waste management licences will be released soon.
    The OPRA scheme involves a snapshot assessment by the Environment Agency of the environmental risks posed by an industrial site and the systems which an operator has in place to manage them. There are two elements - the Pollution. Hazard Appraisal (which reflects the inherent hazard of the industrial process) and the Operator Performance Appraisal (which reflects the operator’s ability to manage the process).
  • The Environment Agency has released its Annual Spotlight on Business Environmental Performance for 2001. The Agency announced that regulated gaseous emissions had generally decreased, continuing the current trend. Emissions did not, however, decrease across the board and there was little change in emissions of greenhouse gases, nitrogen oxides and carbon monoxide. Water quality had improved as a result of significant industry investment.
    There were 118 Category 1 (major) water pollution incidents in 2001 compared to 77 in 2000, with the water industry and agriculture causing most incidents. The Agency brought 1,517 successful prosecutions in 2001 (up from 1,408 in 2000), although the average fine decreased from £8,532 to £6,410. The Agency served 478 enforcement notices (up from 411 in 2000).
  • On 27 June, following pressure from the European Commission, the UK government announced the designation of 33 new "sensitive areas" under the EC Urban Waste Water Treatment Directive 1991 (91/271/EC). The total number of sensitive areas in England and Wales is now 297. The Directive requires sensitive areas to be designated in areas that are eutrophic or at risk of becoming so or where advanced sewage treatment is needed to meet water quality targets in other EC Directives.
    The designations will require significant investment from water companies. Further designations could be required by the Commission. It is unclear as yet how the investment costs will affect the water industry’s 2005 price review.
  • In 2001, the Environment Agency designated two landfill sites at Helpston near St Albans as "Special Sites" under Part IIA of the EPA 1990 (see Digests from 2000 for bulletins on Part IIA). Last July, the Agency declared the sites to be "orphan" sites because the former operator, Hunts Refuse Disposals, could not pay the necessary remediation costs and there were no other potentially liable parties. The cost of the remediation is estimated at £8 million and will have to be met by the UK taxpayer.
  • In July, a housing development built on the site of an old chemical plant in Sandridge, Hertfordshire, was declared a "special site" under Part IIA of the EPA 1990. This was despite the housing developer having carried out remedial works in the mid 1980s to satisfy a condition to the granting of planning permission. With hindsight, the remedial measures had failed to address the possibility of groundwater contamination which was subsequently found to be occurring.
  • The Environment Agency’s draft five year corporate strategy, which is currently out for consultation, states that the Agency is aiming, under Part IIA of the EPA, to designate 80 "special sites" by the year 2007.
  • The government’s White Paper on Modernising Company Law (Cm 5553), published in July, may impose additional environmental reporting requirements on companies. Corporate environmental reporting in the UK is not mandatory, although some companies voluntarily produce a stand-alone environmental report.
    The White Paper proposes that public companies with a turnover of over £50 million and 500 employees and private companies with a turnover of over £500 million and over 5,000 employees should prepare an "Operating and Financial Review" ("OFR").
    Directors will be required to disclose information in the OFR to enable shareholders to make an informed assessment of the company’s operations, its financial position and its future business strategies and prospects. They will also be required. to consider a wide range of matters where they are relevant to the company’s business, including the company’s environmental and social policies, its performance in carrying out these policies and any other matters which may affect the company’s reputation.
    The White Paper specifies that directors’ duties should include consideration of both the short and long term consequences of their actions and take into account, where relevant, such matters as their relationships with employees and customers, the impact on the community and the environment and the need to maintain a reputation for high standards of business conduct.
  • In July, the Royal Commission on Environmental Pollution started a limited study of the environmental effects of air transport.
    The study will concentrate on the problems associated with aircraft in flight, in particular in relation to climate change. Other aviation-related environmental issues (such as take off and landing noise) will not be covered in any detail. The study will consider the potential for technical solutions (for example, improving engine efficiency) and economic measures (for example, emissions trading) to reduce environmental impacts. The findings are anticipated to be published in advance of the White Paper on air transport, due at the end of 2002.

EC DEVELOPMENTS

  • There is unlikely to be a common position on the proposed EC Directive on environmental liability until February 2003 at the earliest. Issues that are contentious include the permit defence, proposals for mandatory financial assurance and the proposal for Member States to be responsible where the liable party cannot be identified or is unable to pay (see the Spring 2002 Digest).

INTERNATIONAL DEVELOPMENTS

  • The World Summit on Sustainable Development took place in Johannesburg between 26 August and 4 September. The key commitments were as follows:
  • halve the number of people without access to basic sanitation by 2015;
  • minimise harmful effects on human health and the environment from the production and use of chemicals by 2020;
  • halt the decline of fish stocks and restore them to sustainable levels no later than 2015;
  • to increase access to modern energy services, increase energy efficiency and increase the use of renewable energy;
  • and to reduce biodiversity loss by 2010.

US DEVELOPMENTS

CASES

  • On 26 June, the Ohio Supreme Court, in Goodyear Tire & Rubber Company v. Aetna Casualty & Surety Company, held that the appropriate approach to allocating costs between multiple policies on risk during a continuous occurrence is joint and several liability up to the limits of triggered policies. The coverage clause interpreted by the court provided that insurers agreed to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of … property damage to which this policy applies caused by an occurrence". "Property damage" was defined to mean "injury to or destruction of tangible property which occurs during the policy period".
    The court concluded that the plain language of the clause covered the insured for all costs arising from property damage if some of the damage had occurred during the policy period. The court commented that the clause did not contain any language to reduce insurers’ liability if damage occurred only partially during the policy period. Accordingly, the court held that the insured could select a single triggered primary policy for each site at issue in the action. If the limits of that policy were insufficient to cover the claim, the insured could select another triggered primary or excess policy and so on. Insurers whose policies were selected could seek contribution from other insurers whose policies were on the risk during the occurrence.
  • On 25 June, the New Jersey Supreme Court, in Quincy Mutual Fire Insurance v. Borough of Bellmawr, adopted a bright-line rule that an "occurrence" under the continuous trigger of coverage begins when hazardous waste is first placed into a landfill or other containment area that was considered to be secure. The court reasoned that such a rule should be adopted due to the impossibility in some situations of determining when leachate from waste first begins to pollute groundwater.
    In addition, the court refined its pro rata formula for allocating costs. It held that an insurer whose general liability policy was on risk for 45 days of an 880-day "occurrence" is only liable for approximately 0.05 per cent of the clean-up costs subject to its policy limit. In reaching its conclusion, the court held that in such a case, the proportion of costs for which an insurer is liable should be determined by days rather than years on the risk.
  • On 23 April, the California Court of Appeal, in People ex rel. City of Willits v. Certain Underwriters at Lloyd’s of London, held that the State of California has a direct action against the London market insurers of a manufacturing company’s successors. Insurers had issued six excess umbrella policies between 1966 and 1973 to the company, which had caused contamination at its facility. The state subsequently prevailed in an action for clean-up costs against the company’s successors and, thus, became a judgment creditor of the insured.
    The parties entered into a consent decree that established a trust fund into which the companies paid $9,350,000. The companies agreed to pay further sums if necessary and if demanded by the trust. The state agreed not to execute on the judgment or any order for additional amounts on the companies’ assets with the exception of their rights to proceeds from specified insurance policies including the six excess umbrella policies.
    The California Court of Appeals reversed the lower court’s ruling that the California Insurance Code does not include excess policies in the types of policies which are required to provide for a direct action by a person who has obtained a judgment for property damage. Because the requisite language was not in the policies, the court read it into them by default.
  • On 6 August, the federal Court of Appeals for the Ninth Circuit, in Fireman’s Fund Insurance Company v. City of Lodi, held that the California Insurance Code pre-empts an ordinance enacted by a California municipality that enabled the municipality to bring a direct action against potentially responsible parties ("PRPs") under Superfund before the municipality had obtained a final order or judgment against an insured PRP. The court stated that if the municipality was a PRP, it could not legislate itself out of liability for clean-up costs. Thus, the court held that provisions of the ordinance which provided, amongst other things, protection from contribution actions by other PRPs and recovery of the municipality’s attorney fees were pre-empted. The action concerned contamination of groundwater, which was the municipality’s only source of drinking water, by tetrachloroethylene from four dry cleaning facilities
  • On 28 August, the Indiana Supreme Court, in Freidline v. Shelby Insurance, affirmed the Indiana Court of Appeals’ ruling that the absolute pollution exclusion is ambiguous and that the word "pollutants" does not obviously include carpet glue (see the Spring/Summer 2001 Digest). The exclusion defines "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste". The case arose when employees who worked in an office building brought an action for bodily injuries against the building’s owners and carpet installation contractors. The employees argued that toxic fumes from the carpet glue had caused them to become sick.
    The Indiana Supreme Court reversed the lower court’s ruling that insurers had acted in bad faith by denying the claim. The court stated that the insured had failed to establish by clear and convincing evidence that insurers had breached their duty to act in good faith. The court noted that the absolute pollution exclusion is "one of the most frequently litigated exceptions found in a staple insurance industry product – the comprehensive general liability policy". The court also commented that the exclusion’s interpretation is an evolving area of law.

News from Hong Kong

News from our Hong Kong office covering the Far East.

  • Hong Kong will host Better Air Quality in Asia and Pacific Rim Cities 2002 from 16 to 18 December, the largest event on air quality management in Asia in 2002. The third in a series of air pollution workshops convened in Hong Kong, the main theme of the workshop is the sharing of technological and control experience and information on air quality management in the region.
  • As part of an ongoing study, the Hong Kong government sought views in June and July from different sectors, particularly from academic institutions, green groups and professional bodies, on a set of proposed water quality criteria for evaluation in terms of the environmental acceptability of discharging treated effluent into Hong Kong harbour waters.
  • A seminar organised by the Hong Kong Environmental Protection Department and the Hong Kong Construction Association to introduce training tools for environmental protection was held on 12 July. The tools include a pocket handbook for frontline construction workers, "Train-the- Trainer" compliance assistance, a CD-ROM package for construction companies, a tailor-made course for site foremen on environmental legislation requirements, and a video on good construction and dust minimisation practices.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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