European Commission

Environmental Liability

Introduction

Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage (ELD) establishes a framework based on the polluter pays principle, according to which the polluter pays when environmental damage occurs. This principle is already set out in the Treaty on the Functioning of the European Union (Article 191(2) TFEU). As the ELD deals with the "pure ecological damage", it is based on the powers and duties of public authorities ("administrative approach") as distinct from a civil liability system which is more appropriate for "traditional damage" (damage to property, economic loss, personal injury).

The Environmental Liability Directive entered into force on 30 April 2004. The EU Member States had three years to transpose the Directive in domestic law. The transposition of ELD was completed by the last Member State by July 2010. The Commission had to report by April 2010 on the effectiveness of the Directive in terms of actual remediation of environmental damages and on the availability at reasonable costs and on conditions of insurance and other types of financial security. In view of this reporting obligation, a first exploratory study was carried out by a consultant in 2008 which has been followed-up by a more comprehensive study in 2009. A workshop on "Implementation efficiency of the environmental liability directive (ELD) and related financial security issues" took place on 10 July 2009 within the follow-up study (background documents and presentations). The study was finalised in November 2009.

On 12th October 2010, the Commission adopted a Report on the effectiveness of the EU Environmental Liability Directive in terms of remediation of environmental damage and on the availability of financial security to cover environmental liability.

The long delay in transposing the Directive in several Member States means that little practical experience is available yet on its implementation. Authorities often did not have rules compliant with the ELD in place on time. Operators were often unaware of the specific legal obligations. Insurers and other institutions offering financial security were not sufficiently familiar with the requirements their products had to meet to be ELD-compliant. Thus the available information does not yet allow for concrete conclusions to be drawn about the effectiveness of the Directive in remedying environmental damage.

By the end of 2011, experience is in general still limited to few cases with some exceptions (for instance Poland). However, several Member States are actively engaged in establishing guidelines, tools and methods to enable good functioning of the ELD and in monitoring its functioning. See presentations from Germany, Greece, Poland, Portugal, Spain and the United Kingdom, as well as two presentations from the CEA (Insurers of Europe) and its German branch at the 10th ELD government experts meeting of 7th November 2011 in Brussels.

In order to address the weaknesses of the Directive identified in the abovementioned ELD Report of October 2010 and to boost its implementation through improved information exchange between stakeholder/practitioner groups, awareness raising for operators, insurers and competent authorities, working towards guidelines and establishing ELD case registers, the Commission will carry out studies, launch information campaigns and induce training measures in 2012.
In this context, the Commission organised also a Stakeholder and Practitioner Workshop on the implementation of the ELD on 8 November 2011 in Brussels.

Overview on ELD

The Directive's main objective is to prevent and remedy "environmental damage". Environmental damage is defined as damage to protected species and habitats (nature), damage to water and damage to soil. The liable party is in principle the "operator", i.e. the one (natural or legal person) who carries out an occupational activity. The operator, who carries out certain dangerous activities as listed in the Directive is strictly liable (without fault) for the environmental damage he caused. He might though benefit from certain exceptions and defences allowed by the ELD (for example force majeure, armed conflict, third party intervention) or by transposing legislation of the Member States (for example permit defence, state of the art defence). All operators carrying out occupational activities are liable for fault-based damage they cause to nature as defined by the ELD.

Operators have to take the necessary preventive action in case of immediate threat of environmental damage. They are equally under the obligation to remedy the environmental damage once it has occurred ("polluter pays"). In specific cases where the operators fail to do so or are not identifiable, the competent authority may step in and carry out the necessary preventive or remedial measures. Remediation has to consist basically in the restoration of the damaged natural resources (nature, water, soil) either in kind towards "baseline condition" or by recreation of similar resources if return to baseline condition is not possible any more.

The ELD leaves significant discretion to the Member States which may not only decide on the use of optional defences but also on other optional choices (scope regarding damage to nature, as regards the "operator"-definition, the type of multi-party causation, the forms and measures regarding financial security etc.), and may moreover take or maintain stricter measures than prescribed by the Directive (Article 193 TFEU, Article 16(1) ELD). This characterises the ELD as framework directive.

Civil society plays an important part when it comes to necessary preventive and remedial action: Affected natural or legal persons including environmental NGOs have the right to request the competent authority for action if they deem it necessary. If the entitled persons consider that the competent authority, which has to inform them about the decision to accede or to refuse the request for action, has failed to take the appropriate decision, they even have the right to appeal before a court or other independent public body to review the decision.

The ELD was already amended twice through Directive 2006/21/EC on the management of waste from extractive industries and through Directive 2009/31/EC on the geological storage of carbon dioxide and amending several directives. Directive 2006/21/EC broadened the scope of strict liability by adding one more dangerous activity ("management of extractive waste") to the list of dangerous occupational activities in Annex III of the ELD. Directive 2009/31/EC adds another dangerous activity ("operation of storage sites pursuant to Directive 2009/31/EC") but includes also genuine responsibility and financial security provisions separate from the ELD.

On 27 October 2011 the Commission adopted a Proposal for a Regulation on safety of offshore oil and gas prospections, exploration and production activities. The Proposal contains an amendment to the ELD (Article 37) and other provisions relevant to it (Articles 2(22), 4 and 7).

Questions and Answers on the Environmental Liability Directive