Directive 2004/35 on Environmental Liability with Regard to the
Prevention and Remedying of Environmental Damage [2004] OJ L 143/56
of 21 April 2004 (the "ELD") establishes a framework of
environmental liability based on the "polluter pays"
principle, under which anyone causing pollution may be held liable
for implementing and paying for any preventive and remediation
actions that may be required to deal with the resultant
environmental damage.
The ELD defines three categories of environmental damage: namely,
damage to protected species and natural habitats, water damage and
land damage. While there is separate European legislation in
relation to the first two categories (in the form of the 1979 Birds
Directive, the 1992 Habitats Directive and the Water Framework
Directive) there is no stand-alone legislation regarding prevention
of land contamination. Even so, the likelihood of liability
acting as a deterrent against infringements of environmental
legislation may increase due to the indirect consolidation of the
legislation referred to above.
Member states of the European Union (EU) must designate a
competent authority to fulfil the duties provided for in the ELD
and ensure that it has the power to require relevant parties to
undertake the necessary preventive or remedial measures. The
competent authority for Cyprus is the Environmental Authority of
the Ministry for Agriculture, Natural Resources and
Environment. At first sight the non-government sector appears
to have limited scope for involvement in environmental monitoring
and sanctions, but in fact the judicial review process may provide
a way for individuals and non-government bodies to keep an eye on
regulatory action. It appears that environmental liability
plans may counter certain environmental damage, for example through
the provision of funds for environmental restoration.
Nonetheless, the ultimate outcome of such liability plans greatly
depends on the effectiveness of national environmental
policies.
The ELD was transposed into Cyprus legislation through the Law on
Environmental Liability with regard to the Prevention and Remedying
of Environmental Damage 189 (I)/2007 (Official Gazette No. 4154 Pt.
I of 31 December 2007) (the "ELL"). Article 3 of
the ELL imposes strict liability on the operator in respect of the
costs of prevention and remediation of environmental damage caused
by any of the 'occupational activities' listed in Annex III
of the ELL. An 'occupational activity' is defined as
including 'any activity carried out in the course of an
economic activity or an undertaking, irrespectively of its private
or public, profit or non-profit character'. By contrast,
damage to protected species and natural habitats caused by unlisted
occupational activities will be subject to fault liability or
negligence. It may be argued that, although contentious,
strict liability would act as a far more effective deterrent
against environmental harm.
Significantly, article 4(2) of the ELD excludes oil pollution at
sea from its scope. However, the ELD was recently amended by
the Council of Europe through the adoption of a directive on the
safety of offshore oil and gas operations (the "Offshore
Directive"). The Offshore Directive will enter into
force 20 days after it is published in the Official Journal of the
European Union and will apply to existing and future installations
and operations.
The objectives of the Offshore Directive are to reduce the number
of major incidents related to offshore oil and gas operations and
to limit the consequences of any that do occur. The Offshore
Directive may therefore enhance the legal protection of the marine
environment and coastal economies against pollution from offshore
exploration and exploitation activities in the EU.
The minimum conditions set by the Offshore Directive will require
operators such as drilling companies to demonstrate their capacity
to cover potential liabilities deriving from their offshore oil and
gas operations and to consider and take steps to mitigate the risk
of environmental damage before the commencement of such
activities. Operators and member states are required to
prepare internal and external emergency response plans with respect
to installations and operations, so as to increase their
effectiveness in dealing with incidents.
In order to prevent conflicts of interest during a licensing
procedure, member states are required to distinguish between
regulatory functions relating to offshore safety on the one hand
and regulatory environmental functions relating to economic
development, including licensing and revenue management on the
other, so as to ensure the independence and objectivity of the
relevant national authorities. The Offshore Directive also
provides rules for transparency and sharing of information, with
the aim of improving the efficacy of environmental policies and
actions by cooperation between member states.
The Offshore Directive covers all EU member states. Member states
with offshore waters will be required to implement its provisions
within two years of its entry into force, whereas landlocked
countries will have to do so only after a relevant company
registers in their respective jurisdiction and conducts operations
outside the EU. As Cyprus has offshore waters it will be
required to implement the provisions of the Offshore Directive
within the two-year timeframe.
It is self-evident that safety and environmental protection are
vital, especially for an upcoming key player of the offshore oil
and gas industry such as Cyprus. For that reason, Cyprus
should welcome this new environmental liability regulatory
framework to ensure that its offshore oil and gas regime conforms
to international best practice and safeguards our precious marine
ecosystem from unwanted oil pollution.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.