DEFECTS IN THE ENVIRONMENTAL LIABILITY DIRECTIVE: NARROW JURISDICTIONAL PREDICATES COMPLICATE FUTURE ENFORCEMENT
Randy Michael Mott*
@ all rights reserved
After much deliberation, the European Union enacted a directive on Environmental Liability, 2004/35/EC. The April 30, 2007 date for national transposition and the effectiveness of the law has passed. Its requirements are now in force, but how effective will they be? One key element of the Directive is the requirement that operators notify authorities when their actions cause (Article 6) or threaten (Article 5) environmental damage. Another is the ability of the government to recover costs when it has to respond.
The difficulty lies in that the ELD uses the ultimate legal standard for the scope of remedy (“environmental damage”) as a consistent reference point for all operative parts of the Directive. This may seem, at first blush, to be logical, but it actually renders much of the Directive’s provisions highly problematic.
The obligation for early actions by the “operators” covered by the Directive are all keyed back to the “environmental damage” definition. That definition supposes a full factual inquiry has been done to ascertain if the habitat or water classification has been impaired or if there is a significant risk to human health. No such documentation will exist at the early stage of a potential covered incident or situation. The preventive action obligation as well as the obligation to notify authorities are both linked to the ultimate factual test for the remediation. The scope of the Directive and all of these operative provisions use a very narrow set of definitions of “environmental damage” which cannot be readily ascertained at the early stage of a site response.
Enforcing penalties for an operator’s failure to act, given that the government must prove that he reasonably knew that “environmental damage” had occurred or was threatened, will be exceedingly difficult. Absent effective and enforceable notification requirements, much of the effectiveness of the Directive will be diluted. The problem persists in cost recovery actions as well, where the same ambiguous definitions and subjective language is used.
ELD Definitions
The notification obligations in the ELD are keyed to the operator’s discovery of “environmental damage” or its imminent threat. The Directive defines “environment damage” as:
(a) damage to protected species and natural habitats, which is any damage that has significant adverse effects on reaching or maintaining the favourable
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* The author is an American lawyer who lives in Warsaw, Poland and works as an advisor/consultant to several law firms in Central and Southeastern Europe. He has been involved in dozens of contamination cases since 1978.
conservation status of such habitats or species. The significance of such effects is to be assessed with reference to the baseline condition, taking account of the criteria set out in Annex I; Damage to protected species and natural habitats does not include previously identified adverse effects which result from an act by an operator which was expressly authorised by the relevant authorities in accordance with provisions implementing Article 6(3) and (4) or Article 16 of Directive 92/43/EEC or Article 9 of Directive 79/409/EEC or, in the case of habitats and species not covered by Community law, in accordance with equivalent provisions of national law on nature conservation.
(b) water damage, which is any damage that significantly adversely affects the ecological, chemical and/or quantitative status and/or ecological potential, as defined in Directive 2000/60/EC, of the waters concerned, with the exception of adverse effects where Article 4(7) of that Directive applies;
(c) land damage, which is any land contamination that creates a significant risk of human health being adversely affected as a result of the direct or indirect introduction, in, on or under land, of substances, preparations, organisms or micro-organisms….” Article 2(1).
Notification
All of the above definitions involve subjective standards. It is clear from the ELD that not all events or releases of hazardous substances into the environment will cause “environmental damage” under the Directive’s definitions. The status of the habitat or water use must be adversely affected (which can mean a high threshold of changing the classification[1]) or significant human risk must be presented in the case of land contamination. Other situations provide additional exclusions from what is covered “environmental damage” that make its definition more subjective or at least difficult to readily measure. For example, the operator gets a “credit” for “baseline conditions” (i.e. the prior condition of the area before the particular event).[2] Without a study and sampling, how much of the contamination present was already there? “Diffuse” pollution of an historical nature is also not covered by the ELD,[3] creating another basis to exclude background contamination and make assessment of the operator’s contribution difficult.
Thus, while providing that “where environmental damage has occurred the operator shall, without delay, inform the competent authority of all relevant aspects of the situation…” Article 6, the ELD leaves the threshold definition so ambiguous that “without delay” loses all meaning. Indeed, it would seem to be an unusual case where the facts will be so unambiguous that an operator can seriously be charged with violation of this obligation if he simply assesses the situation on a reasonable schedule without notification.
This defect in the ELD is more disturbing when one notes that the European Union Network for the Implementation and Enforcement of Environmental Law in 2003 had already noted that the operator’s reporting requirements under the Seveso II Directive for “major accidents” created problems, since the term in that Directive is defined in a subjective manner.[4] The Seveso II Directive does provide detailed criteria for Member States to report major accidents to the EC and some countries adopted this as the operators’ reporting obligation.[5] Yet no ELD transposition laws seem to have addressed this issue by making the operator’s notification linked to an enforceable standard.
The contrast to how the United State handled the same issues in the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or Superfund), 42 U.S.C. 9601 et seq., is significant. The Superfund definitions are much broader than the ELD,[6] so that the “environmental damage” concept is really irrelevant to the jurisdictional predicates of the law. This substantially removed liable parties threshold arguments about whether the provisions applied to their situation.
In one respect, the Superfund approach is identical: the scope of the remedy is generally driven by risk assessment and the specific setting of the site involved. By this structure, broad jurisdiction and “back-loading” of the contested facts, the Superfund approach minimizes jurisdictional disputes and shifts arguments to the scope of the remedy and its cost-effectiveness. The ELD places subjective definitions on the front-end of the process as well as in the final cost recovery stage.
However, the notification requirements of CERCLA are even more distinguishable from the ELD approach. CERCLA uses objective reporting criteria to require all releases above specific quantities (“reportable quantities”) to be reported to the authorities.
“Any person in charge of a vessel or an offshore or an onshore
facility shall, as soon as he has knowledge of any release (other than a
federally permitted release) of a hazardous substance from such vessel
or facility in quantities equal to or greater than those determined
pursuant to section 9602 of this title, immediately notify the National
Response Center established under the Clean Water Act [33 U.S.C. 1251 et
seq.] of such release. The National Response Center shall convey the
notification expeditiously to all appropriate Government agencies,
including the Governor of any affected State.” CERCLA: Sec. 9603(a).
The statute itself has a “default value” for the reportable quantities to eliminate any ambiguity. The reportable quantity is one pound unless it is specified differently in regulations promulgated by the U.S. EPA. Sec. 9602(b). Unlike the ELD, there is very little room for a liable party to argue on his failure to report.[7] The Environmental Appeals Board “…has held that the duty to immediately report a release under EPCRA,[8] as well as CERCLA, arises as soon as the facility personnel have knowledge that a reportable release has occurred, or should know of such a release. In re Mobil Oil Corporation, EPCRA Appeal No. 94-2, 5 EAD 490, 509 (EAB, Sept. 29, 1994); In re Genicom Corp., EPCRA-III-057 (ALJ, July 16, 1992), aff'd In re Genicom Corp., EPCRA Appeal No. 92-2, 4 EAD 426 (EAB, Dec. 15, 1992); 52 Fed. Reg. 13,378, 13,393 (Apr. 22, 1987) (explaining that "knowledge" of a release under EPCRA includes constructive knowledge as well as actual knowledge). [9]
Despite this broad “knowledge” test and the presence of a reportable quantity to measure the obligation, U.S. cases have still not always found the operator had sufficient knowledge to impose penalties for not reporting the release. In one case seeking a summary ruling, the Administrative Law Judge noted:
The evidence presented in the instant case fails to establish facts sufficient to make such findings. Among the outstanding factual questions posed by this case are whether indicators and/ or gauges on the tank could have revealed information sufficient to warrant further investigation by the Respondent into the amount of the release; whether the weather conditions on the evening of February 8, 1996, created an inability to make the appropriate determinations as to the amount of the release; and at what point in time, given all the information available to Respondent, should it have been knowledgeable of the full extent of the release. In addition, the statutory penalty criteria, should Respondent's liability be established, requires further development of these and other facts surrounding the release in order to properly determine the extent and gravity of the violations, the degree of culpability and other penalty factors . In the Matter of Cenex/Land O'Lakes Agronomy Company, Docket No. 5-EPCRA-076-97, Order Denying Cross-Motions For Accelerated Decision, June 29, 1998.
This should create an impression of the difficulties of trying to prove that an operator failed to report “environmental damage” under the ELD definition and exclusions within a reasonable time. While admittedly a more litigious society, the American experience with much more objective reporting requirements suggest that the ELD’s notification rule is destined to be ineffectual. This can be predicted from the IMPEL conclusion about similar language in the Seveso II Directive of reporting of “major accidents,” another subjective term.
Cost recovery
The ELD’s definitions present other issues as well. As noted above, the Directive consistently uses the same jurisdictional definition for all actions. Thus, cost recovery where the government incurs the response costs is also measured by “environmental damage”:
‘costs' means costs which are justified by the need to ensure the proper and effective implementation of this Directive including the costs of assessing environmental damage, an imminent threat of such damage, alternatives
for action as well as the administrative, legal, and enforcement costs, the costs of data collection and other general costs, monitoring and supervision costs. Article 2(16).
The cost is measured by what the “environmental damage” was. An operator can argue that there was no environmental damage and the cost is not recoverable or that the cost went beyond what was necessary to assess the “environmental damage.” The use of “justified,” “proper” and “effective” all open the door for an operator to claim that the costs incurred by a government agency were none of the above.
Again, the CERCLA statute in the U.S. contrast significantly with the ELD. Under CERCLA, the government has a broad authority to respond and recover cost, measured only by consistency with their regulations (“the National Contingency Plan”).[10] It is possible that Member States will use their own regulations to more carefully define what costs are appropriate under the ELD, but the Directive itself does not offer much guidance.
Conclusion
The ELD expressly exempts prior contamination and is prospective in nature. Its impact on changing operators’ conduct to reduce releases into the environment and to cleanup those that do occur will largely depend upon self-enforcement and voluntary compliance. The creation of ambiguous notification provisions and unclear response authority along with weak cost recovery language will greatly impede the utility of the new Directive in practice. While providing no private enforcement mechanisms, other than the ability of groups to file a complaint, the ELD is critically dependent upon direct governmental actions for its enforcement. Many EU Member States have a weak history of governmental enforcement and a fairly tepid approach to penalties and noncompliance. It is unlikely that the ELD will significantly change the regulatory climate except in unusual cases. The greatest liabilities will remain historical contamination which was avoided altogether by the ELD. The Directive will add another layer of regulatory procedures and the corresponding confusion over its relationship to current laws and procedures.
[1] The interpretation is supported by the definition of “conservation status,” for example: (a) in respect of a natural habitat, the sum of the influences acting on a natural habitat and its typical species that may affect its long-term natural distribution, structure and functions as well as the long-term survival of its typical species within, as the case may be, the European territory of the Member States to which the Treaty applies or the territory of a Member State or the natural range of that habitat; The conservation status of a natural habitat will be taken as ‘favourable' when: — its natural range and areas it covers within that range are stable or increasing, — the specific structure and functions which arenecessary for its long-term maintenance exist and are likely to continue to exist for the foreseeable future, and — the conservation status of its typical species is
favourable, as defined in (b)….” Article 2(4)(a)(emphasis added)(meaning that unless the species’ population growth is adversely affected, the habitat is not “damaged”).
[2] Article 2(14): “‘baseline condition' means the condition at the time of the damage of the natural resources and services that would have existed had the environmental damage not occurred, estimated on the basis of the best information available…”
[3] “This Directive shall only apply to environmental damage or to an imminent threat of such damage caused by pollution of a diffuse character, where it is possible to establish a causal link between the damage and the activities of individual operators.” Article 4(5).
[4] IMPEL, “Effective Enforcement Needs a Good Legal Base: Final Report of the IMPEL Better Legislation Project,” 2003, p. 18. The Seveso II Directive [96/82/EC] Article 3(5) provides that: “'major accident' shall mean an occurrence such as a major emission, fire, or explosion resulting from uncontrolled developments in the course of the operation of any establishment covered by this Directive, and leading to serious danger to human health and/or the environment, immediate or delayed, inside or outside the establishment, and involving one or more dangerous substances.” (emphasis added). As to the installations that qualify for coverage under the Directive, Seveso II is more clear, using finite, quantities of particular substances as a jurisdictional parameter. See Annex I.
[5] Annex VI of the Seveso Directive has reporting critieria for Member States to report accidents to the Commission. Some Member States have adopted the same criteria for their operators to report to the relevant agencies. The UK has a multiple part test for reporting accidents under Seveso II which includes objective criteri: COMAH Regulations 1999, Schedule 7, Part1, Regulation 21(1) and (2), “Criteria For Notification Of A Major Accident To The European Commission And Information To Be Notified,” including “[a]ny accident covered in sub-paragraph (a) or having at least one of the consequences described in paragraphs (b), (c), (d) and (e) must be notified to the commission- 1. substances involved: any fire or explosion or accidental discharge of a dangerous substance involving a quantity of at least 5 per cent of the qualifying quantity laid down in column 3 of Parts 2 and 3 of schedule 1…” Germany used a reportable quantity concept, although the quantities are quite large. See Dr. habil. Uwe Lahl, “Methodology Of And Structures For The Prevention Of Hazardous Incidents In Germany And Europe,” German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, Sino-German Symposium on Chemical Management
Beijing, 11 - 12 July 2006.
[6] CERCLA: 42 USC 9601(8): “The term ``environment'' means (A) the navigable waters, the waters of the contiguous zone, and the ocean waters of which the natural resources are under the exclusive management authority of the United States under the Magnuson-Stevens Fishery Conservation and Management Act [16 U.S.C. 1801 et seq.], and (B) any other surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States.” 42 USC 9601(22): The term ``release'' means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant)….” The jurisdictional predicates of CERCLA use no minimum quantities. The author used to drop some coins out of his pocket from the lecturn and announce that it was a release of hazardous substances into the environment under CERCLA. Picking them up was a “removal action” under the law!
[7] In the Matter of Thoro Products, Co. Docket No. EPCRA VIII-90-04, 1992 EPCRA LEXIS 2 (Initial Decision, May 19, 1992), provides that knowledge that a release has occurred is an element essential to the "shall immediately notify" requirement. However, knowledge of the release, by itself, is not sufficient to trigger the reporting requirements under § 304. The release must also be of a "reportable quantity" pursuant to EPCRA § 304(a)(2)(B). Even the reportable quantity rule can be hard to prove in some cases: “A review of the evidence in this case does not clearly establish the point in time that reportable quantities of hazardous materials became known or should have become known to the Respondent.” In the Matter of Cenex/Land O'Lakes Agronomy Company, Docket No. 5-EPCRA-076-97, Order Denying Cross-Motions For Accelerated Decision, June 29, 1998.