Briefings

The EU Environmental Liability Directive was adopted in 2002 and must be transposed into national law by 30 April 2007. It applies the polluter pays principle to hold polluters whose activities have caused significant environmental damage financially liable for remedying this damage. The Commission hopes that the Directive will result in an increased level of prevention and precaution.

Scope of the Directive
The regime makes operators liable for significant environmental damage, defined as a measurable adverse change in water, land and biodiversity quality.  It is expected that less than 100 incidents reported each year to the Environment Agency in England and Wales will fall within this threshold.

The Directive does not apply to diffuse pollution, such as air pollution, or to “traditional damage” – personal injury and damage to goods and property. If environmental damage creates harm to members of the public or affects their goods and property, national civil liability laws would be invoked.

The Directive is not retrospective and does not therefore apply to damage caused by an emission, event, incident or activity that took place before 30 April 2007. In addition, it does not apply to damage where 30 years have passed since the emission, event or incident took place.

Activities
The Directive applies to damage caused to land, water or biodiversity by a range of specified activities, including waste management operations and industrial activities requiring permits under the 1996 IPPC Directive. Operators of these activities will be held liable for the environmental damage caused, even if they have not committed any fault. All operators, including those not listed in the Directive, will be held liable for damage to biodiversity where they were at fault or negligent.

Exemptions
The Directive exempts operators from liability for environmental damage caused by force majeure (such as storms and armed conflicts). In addition, the Directive allows Member States to relieve or exempt operators from liability (wholly or in part) if the operator was fully compliant with a permit (permit defence) or if the activity was not considered likely to cause damage according to the state of scientific or technical knowledge (state of knowledge defence).

Remediation and Prevention
Remediation
Where environmental damage has been caused the polluter must a) take necessary steps to control and contain the damage b) restore the damaged environment directly or indirectly as agreed with the competent authorities (like the Environment Agency) and c) reimburse competent authorities who either restore damage or take action to prevent damage in default. Operators or the competent authority can recovery the costs from the third party where it can be shown that it caused the significant environmental damage.

The Directive envisages different remedial measures depending on the type of damage: for instance, it recognises that damage to protected species and natural habitats and to water might be more complex to restore than soil. When a damaged site itself cannot be restored, another site nearby, which is of equivalent environmental value, may be enhanced. Similarly, a site located even further away from the damaged site, but which fulfils the same environmental role, could be improved.

Prevention
Central to the thrust of the Directive is the principle of encouraging operators to take adequate precautions. Operators are required to take preventive measures in the event of an imminent threat of environmental damage, and the competent authority (which could be responding to a request from a NGO) can require the operator to take preventative measures where it is deemed to be necessary. NGOs can challenge the actions or inactions of the competent authorities but cannot sue the polluter directly.

Financial Insurance
The Directive does not require operators to purchase financial insurance. Instead, Member States are required to take measures to encourage the development of financial security instruments. The Commission will report on the effectiveness of the Directive in 2010 and a mandatory system of financial security may be considered at that stage.

Next Steps
DEFRA intends to issue three consultations as part of its implementation of the Directive. The first of these is expected in January 2005. 

September 2004