The European Parliament and the Council of the European Union have recently adopted Directive 2004/35/EC on environmental liability, which aims to prevent and remedy environmental damage and is based on the "polluter pays" principle.

Harmonized EU legislation was considered necessary in order to prevent companies from taking advantage of the lack of legislation in some EU Member States.

The Directive implements a (public law) system, which does not provide direct compensation to private parties, but is aimed at preventing damages from occurring and at restoring natural resources. The Directive does not however prevent civil liability from being raised by private parties in parallel to proceedings under the Directive.

Finally, the Directive introduces minimum requirements only and allows Member States to adopt or maintain more stringent national legislation.

Member States must implement the Directive within three years of its publication (which is an unusually long implementation period), i.e., until April 30, 2007.

Scope

The Directive covers future damages and imminent threats of damages and it does not apply retrospectively. Specifically, according to Article 17, it does not apply to (1) damages caused before April 30, 2007; (2) damages which occurred after April 2007 but are caused by an activity which ceased before this date, and (3) damages for which more than 30 years have passed since the incident took place.

The Directive applies to damages to biodiversity, waters, land or human health and damages are defined as a "measurable adverse change in a natural resource". All pollution is covered, with the exception of diffuse pollution, nuclear risks or pollution caused by national defence activities.

Activities Covered

The Directive implements a system of strict liability for all kind of environmental damage relating to occupational activities presenting higher risks and which are specifically listed in Annex III. These include activities that require emission permits or waste management, handling of chemicals or GMOs.

For other activities, only damages to protected species and natural habitats are covered by the Directive, and the operators are liable only in case they have been at fault or negligent.

The operators who can be found liable under the Directive are defined as "any natural or legal, private or public person who operates or controls the occupational activity or, where this is provided for in national legislation, to whom decisive economic power over the technical functioning of such an activity has been delegated, including the holder of a permit or authorisation for such and activity or the person registering or notifying such an activity".

Limitations / Exemptions

After long discussions between the European Parliament and the Council, the final text maintains the limitation of responsibility in the framework of the International Conventions on Limitation of Liability for Maritime Claims and Strasbourg Convention on Limitation of Liability in Inland Navigation.

Further, the operator is not liable if the damage is caused by an act of armed conflict, a natural disaster, a third person or from compliance with a compulsory order from a public authority.

Member States may provide further defenses in cases where operators are not at fault or negligent and act within the framework of a permit granted from the competent authorities (the "permit" exemption) or when the state of scientific and technical knowledge could not foresee such a damage (the "state of the art" exemption).

Operators’ Direct Obligations

The operator has to take all necessary preventive measures to avoid environmental damage. If the damage occurred, the operator must inform the authorities and take the necessary measures in order to control/contain/manage/remove the contaminants. The operator must not wait for the competent authority reaction and cannot invoke the authority’s inaction to justify its own inaction. The operator must also make proposals on the best remedial/prevention action to be handled and submit them to the competent authority for approval.

The competent authority at any time can require the operator to submit information on any alleged/recognized damage or imminent threat, it may also require the operator to take all necessary measures to prevent or remedy the environmental damage. If the company fails to act or the author is not known at the time the damage is discovered, the authority can organize the necessary measures and get reimbursed by the operator(s) found liable.

In direct implementation of the polluter pays principle, the costs for assessing the significance of the damage and for prevention or remediation are at the charge of the liable operator.

Member States will encourage the development of financial security instruments (insurances) (the Conciliation Committee has finally decided against the imposition of mandatory insurance schemes). The Directive requires the Commission to report, within six years of its entry into force, on the national situations and whether to propose a mandatory insurance system.

Who Can Initiate an Action?

Natural or legal persons likely to be affected by the damage or environmental NGOs may request the national competent authority to act in case of damages or imminent threat (Member States may restrain this right to cases of damages that have already occurred). They are also allowed to challenge the competent authority’s decision/inaction before national courts. The request for action must be accompanied by relevant supportive data, but no proof of the actual causal link between the damage and an operator’s activities must be brought. The burden of proof actually relies upon the competent authority, which must establish which operator has caused the damage and assess the significance of the damage.

The text of the Directive can be found at the following web page:
http://europa.eu.int/eurlex/pri/en/oj/dat/2004/l_143/l_14320040430en00560075.

This article is for informational purposes only and does not constitute specific legal advice or opinions. Such advice and opinions are provided by the firm only upon engagement with respect to specific factual situations.

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This article is for informational purposes only and does not constitute specific legal advice or opinions. Such advice and opinions are provided by the firm only upon engagement with respect to specific factual situations.