Environmental Liability Directive 2004/35/EC- UK report to the European Commission on the experience gained in the application of the Directive

Transcription

1 Environmental Liability Directive 2004/35/EC- UK report to the European Commission on the experience gained in the application of the Directive Background 1. As required by Article 18 of the Environmental Liability Directive (ELD), this paper comprises the UK report to the European Commission on the experience gained in the application of the ELD. Environmental issues are a devolved matter in the UK resulting in a number of transposing regulations 1, namely: England: Environmental Damage (Prevention and Remediation) Regulations 2009, SI 2009/153, as amended; Wales: Environmental Damage (Prevention and Remediation Regulations) (Wales) Regulations 2009, SI 2009/995; Scotland: Environmental Liability (Scotland) Regulations 2009, SSI 2009/266, as amended; Northern Ireland: Environmental Liability (Prevention and Remediation) Regulations (Northern Ireland) 2009, SI 2009/252, as amended; and Gibraltar: Environmental Liability Regulations 2008, Legal Notice No. 100 of 2008, Gibraltar Gazette, No. 3689, December 11, 2008, as amended. 2. Regulatory responsibilities reflect the devolved nature of the framework for implementing the ELD. The following provides a breakdown of competent authorities: England: o Environment Agency: Damage from Environment Agency regulated activities; all water damage; and biodiversity damage 2 in inland waters; o Natural England: biodiversity damage on land; o Local authorities: land damage plus damage from local authority regulated activities (prevention); o Marine Management Organisation: biodiversity damage in marine waters. Wales: o Natural Resources Wales (from 1 st April 2013): Damage from Natural Resources Wales regulated activities; all biodiversity damage, but not in marine waters unless Natural Resources Wales authorised activity; o Local authorities: land damage plus damage from local authority regulated activities (prevention); o Welsh Ministers: biodiversity damage in marine waters but not Natural Resources Wales regulated activities. 1 The Bio IS report on Member States' implementation of the ELD provides a detailed commentary on the UK transposing regulations 2 Biodiversity damage means damage to protected species or natural habitats or a Site of Special Scientific Interest (SSSI)

2 Northern Ireland: o The Department of the Environment is the competent authority. Scotland: o Scottish Environment Protection Agency: land damage and water damage; o Scottish Natural Heritage: biodiversity damage other than marine biodiversity; o Scottish Ministers (Marine Scotland): below high water and out to the limits of the renewable energy zone for biodiversity. 3. This report draws on contributions from the Devolved Administrations, UK regulators and other stakeholders who were invited to comment on a questionnaire directed at them. The structure of the report follows that set down in Annex VI to the ELD and the additional Commission guidance circulated to Member States in September Mandatory reporting requirements Instances of environmental damage/date of closure of proceedings 4. The attached spreadsheets provide details of the incidents where the transposing regulations have been applied, broken down into the four calendar years Overall, the following picture emerges: 19 cases have been reported: eight in England, eight in Wales, two in Scotland and one in Northern Ireland; 12 of these are confirmed cases of environmental damage: nine cases of damage to land, two cases of damage to biodiversity and one case of damage to water; Seven of these cases were of imminent threat to environmental damage: five cases of imminent threat to biodiversity and two cases of imminent threat of land damage; 12 are closed cases; seven remain open. 5. It is worth recording that action under the transposing ELD regulations has also been considered in a number of incidents but discounted, because: water pollution had been caused but the pollution was not serious enough to trigger the definition of 'environmental damage to water'. This was often due to the shortterm/transient nature of the pollution, which had no lasting damaging effects; in some cases, the status of the water was already poor, as a result of historic pollution/harm, and it was not possible to establish that the new pollution incident had caused a sufficient change in the status of the water to amount to environmental damage. These incidents were addressed using other legislation on water pollution; the relevant test for damage to an SSSI or European protected species or habitat has not been met; the damage was historic, or it was not possible to establish that it had occurred after the transposition date, so the Regulations did not apply. no liable operator could be established;

3 the activity fell outside of those listed in Annex III to ELD; damage was done to species not considered to be an EU protected species, and the habitat was not within an English SSSI, so failing to meet the definition of 'environmental damage to protected species, natural habitats or a SSSI'; where there was evidence of some contamination of land but it did not result in a significant risk of harm to human health. Activity classification code 6. The attached spreadsheets provide information on activity classifications. Resort to judicial review 7. No case was referred to judicial review. Outcome of remediation 8. See incident 4 of the 2009 spreadsheet (water damage investigated by the Environment Agency to deal with interim loss of fish stocks); and incident 3 of the 2011 spreadsheet (damage to an SSSI being investigated by Natural England where the regulator's proposals are being considered by the operator). Voluntary reporting requirements Information about costs relating to incidents of damage 9. The attached spreadsheets provide information on costs relating to incidents of damage. Few cases have required remediation to be carried out and there is no obligation on operators to provide information to the regulator about costs in respect of land damage. In two current cases, information about costs is pending. Promoting and implementing financial security instruments 10. The UK position continues to argue against the imposition of mandatory financial security by operators, not least until a clear cost benefit assessment has been undertaken. In any case, our preferred approach is to allow the insurance and other financial security markets to develop and respond by offering voluntary cover. It should be noted that the English and Welsh Environmental Permitting legislation imposes a requirement on an operator of an environmental permit to be technically competent to operate the facility. Part of this assessment is a requirement for the operator to make and maintain financial provision to meet the financial obligations of a permit. The Environment Agency and Natural Resources Wales have the power to refuse an application for a grant or transfer of an environmental permit if the operator fails to meet the standards required. 11. Insurance industry representative organisations report that there is an emerging Environmental Impairment Liability (EIL) market in the UK offering a wide and competitive range of insurance products, with a number of major new market entrants in the last 12-24

4 months. Indemnity for ELD driven exposures such as biodiversity damage is widely available. For the purposes of insurance, there is no shortfall in the financial security instruments available to operators. Take up of insurance has been increasing slowly but remains relatively small. One insurer in the agricultural is offering automatic inclusion of ELD coverage in its general insurance policy to operators. 12. In terms of promotional activities, in late 2010, two organisations representing the insurance and brokerage sector published 'Environmental Risks: insured or not?' a report which sought to clearly identify the capabilities of different classes of liability insurance to provide environmental cover. It was aimed primarily at regional brokers and operators and sought to provide a straightforward guide to the environmental liabilities, emphasising that the gap between traditional liability cover and the range of environmental liability that operators are exposed to is becoming increasingly wide. The sector worked together to ensure that the publication was suitable for their constituents and operators and that it was disseminated widely. 13. The brokerage sector has also produced a range of literature for UK and the EU, including ELD specific information sheets, references in environmental newsletters and hosting of client forums. 14. One insurance stakeholder is in the final stages of developing a series of claims scenarios identifying the potential liability (including estimated quantum) in relation to a number of fairly common environmental incidents. It is designed to accompany the 2010 publication and provide some practical examples. 15. A stakeholder in the shipping industry reports that ship-owners do not need additional liability cover as a result of the implementation of the ELD as the existing arrangements provide extensive cover and includes pollution damage and related costs and expenses. In their view, the ELD quite rightly does not provide for a system of mandatory financial security. The scope of international liability and compensation requirements under the EU Insurance Directive provides sufficient cover. 16. Much promotional work was conducted by certain sectors around the time of transposition, for example in the agricultural and engineering sectors. Administrative costs incurred in setting up and operating systems 17. In addition to the preparation of the various sets of transposing Regulations and associated documentation, the principal administrative costs incurred in establishing and operating systems to accommodate the transposition of the ELD included: regulators developing and updating operational processes, to highlight specific novel tasks and allocate responsibilities, including integration of ELD considerations into their incident response arrangements; preparing both a short guide and more detailed guidance for external audiences and for regulatory officials, to raise awareness of the Directive's requirements; conducting a series of training seminars for regulators;

5 developing partnership working amongst enforcing authorities, including a new Memorandum Of Understanding; holding workshops for external stakeholders; uploading dedicated web pages. 18. It is difficult to provide an overall figure for costs relating to transposition. An educated guess would be in the region of 15 full time equivalent staff years in relation to the preparation of transposing regulations, supporting guidance, staff training and communication activities across the UK. In addition, small grants were made to local authorities in England to help with set up costs. 19. The on-going costs of operating the overarching administrative structures to implement and enforce the Directive are relatively modest following transposition. However, the costs of regulators' involvement in assessing and taking action under the transposing regulations vary according to the circumstances of individual cases of damage. Additional voluntary reporting Matters arising from the Commission's ELD report of October The Commission's report of October 2010 assessed the effectiveness of the ELD, examining how the Directive had been transposed and implemented across EU Member States. In particular, it noted the divergence in approach towards the provision of mandatory v voluntary financial security arrangements and the application of optional permit and state-of-the-art defences and the uneven extension of the scope to cover damage to species and natural habitats under domestic legislation. 21. The UK approach to financial security arrangements is covered in paragraph 10 above. In relation to the permit and state-of-the-art defences, all jurisdictions within the UK have adopted these (apart from the permit defence not applying to GMOs in Wales). The application of the permit defence has been activated in one case - see the incident return spreadsheet for The state-of-the-art defence has not been invoked. Information on actions to promote the application of the Directive 22. In addition to establishing a regulators and Government group to discuss ELD developments, we have engaged industry and NGOs through meetings of our stakeholder network. This provides us with a forum for an exchange of views on implementation issues at a more strategic level while regulators conduct more operationally based engagement activities. We continue to raise awareness of the ELD/EDR internally, through training and practitioner groups. The Environment Agency has been actively engaging in external events on their role in the implementation of the ELD; and continues to respond to requests for information as and when they arise. Similarly, SEPA has undertaken awareness raising activities in response to need and requests. In addition, there has been participation in industry forums, liaising with industry and emergency services and supporting awareness of SMEs through contributing to central government web-based advice.

6 23. We hosted a delegation from the Icelandic Environment Agency to discuss UK implementation, in the context of Iceland's development of similar regulations. We have also shared our experiences with a number of other countries through the TAIEX knowledge transfer scheme. 24. We conducted a two-day workshop to test the application of the English transposing Regulations in a scenario that replicated a real-life environmental incident in a marine environment, bringing together all the many regulatory and other stakeholders with an interest. The exercise helped to improve understanding of the Regulations and provided an opportunity for everyone to understand their respective roles and responsibilities in dealing with such an incident in the context of applying the Regulations. 25. We participate in the ad hoc Natural Resources Group. Application of a severity threshold in determining significant damage 26. It is widely accepted that the ELD is intended only to capture the most serious cases of damage. In reality the thresholds for water and biodiversity are high and the threshold for land damage is much lower, potentially capturing more cases. We consider this is appropriate and works well on the basis that, for water and biodiversity damage, the assessment required is relatively onerous and should only be necessary for large-scale cases. In a UK context, domestic law can be applied more quickly, effectively and efficiently for smaller scale cases. 27. A questionnaire exercise elicited 78 responses from the local authority network in England and from six local authorities in Wales (usually the enforcing authority for land damage) which suggested that while there was awareness of the ELD transposing regulations, they had not been widely applied. In Scotland, SEPA reports that there can be challenges in identifying the polluter and other legislation exists that can be applied more readily to secure the desired environmental outcome without the need for detailed and costly investigation. The overall view is that the threshold for land damage is considered appropriate in ensuring that human health is adequately protected, noting that in practice it can sometimes be difficult to establish whether there is a 'significant risk' of harm to human health. In some cases it may be simple and straightforward to demonstrate that the trigger has been met, in other cases detailed investigation and assessment would be warranted. 28. UK countries have issued guidance to give practical effect to the thresholds and evidence suggests that this has given regulators confidence in taking decisions. One stakeholder in the insurance sector commented that while guidance at national, rather than EU level, provides flexibility for national authorities, it makes it harder to establish data on trends. Relgtionship between the ELD transposing legislgtion gnd pre-existing legislation 29. It was agreed at the time of transposition that to integrate the requirements of the ELD into the existing legal framework would have been a difficult and complex exercise. This is because it is so cross-cutting, prescriptive on process rather than being outcome

7 based and because the scope of the existing legislation, and the thresholds and standards within that legislation, varied. Therefore the transposing regulations sit alongside existing legislation which must be considered in cases where there are reasonable grounds to believe that environmental damage, or a threat of such damage, has been caused. 30. Government guidance on the English and Welsh transposing regulations clarifies that other legislation can be used instead of the regulations if the same outcomes can be achieved through that other legislation. For environmental damage to water, protected species, natural habitats or a SSSI, the outcomes that must be achieved in terms of remediation (in particular, compensatory remediation) are generally more stringent than in existing legislation so the EDR would have to be used. However, for land damage, there is more scope to use other legislation (e.g. environmental permitting) to achieve the remediation objectives. 31. In Scotland, the transposing regulations generally fit alongside the existing permitting regimes. The thresholds in the existing regimes are generally lower because they are triggered by entries, releases, discharges etc rather than "significance". In practice this means that two sets of investigations (with different objectives) need to run alongside one another up until the point at which either action is taken under existing legislation or environmental damage is established. Strengths and weaknesses of the ELD 32. Two strengths of the ELD are the implementation of the polluter pays principle and the ecosystem services approach to remediation. The main benefit of the ELD, when compared with our existing regimes, is that it has introduced a requirement for compensatory remediation where environmental damage to water, protected species or natural habitats has been caused. In one reported incident, for example, this has resulted in additional environmental improvements being made to a waterway, paid for by the operator, which could not have been required under existing legislation. 33. It has also provided a mechanism for remedying harmful land contamination, which can be quicker and simpler to use than the existing regulatory regime in certain circumstances (although other mechanisms can be used where applicable). 34. The ELD has also given enforcing authorities wider powers to recover costs from responsible operators, which is also to be welcomed. However, costs are only recoverable where 'environmental damage' (or an imminent threat) is established and the operator is liable. In practice additional costs may be incurred by the enforcing authority, particularly in assessing whether environmental damage has been caused, which are then non-recoverable if this threshold cannot be established. 35. One stakeholder in the shipping industry believes a strength of the ELD is the way it complements international conventions, acting as a fall back regime for incidents not covered by the conventions.

8 36. Establishing whether the threshold of 'environmental damage' has been met can be challenging, particularly where there is a lack of reliable data on which to base the assessment, or other practical difficulties in gathering the necessary information. Even where the available data is good, the assessment of damage can take time. Nevertheless, these practicalities can be overcome. Furthermore the implications of having caused 'environmental damage' of the scale covered by the Directive are potentially very considerable for the operator, so decisions must be based on thorough assessment and robust evidence. 37. Raising awareness of the ELD, both internally and externally, remains a challenge, but as more cases are dealt with under the Regulations this awareness is growing. Incidents are thankfully few in number and affect only a small number of businesses. While we have made good information available, in practice it is unrealistic to expect the majority of businesses to spend time on understanding these regulatory requirements amongst all the other compliance rules, environmental or otherwise, necessary to run a business.