Making the polluter pay Environmental Damage Regulations March 2009

Transcription

1 Making the polluter pay Environmental Damage Regulations March 2009 Introduction... 1 When do the Regulations apply?... 2 Type of damage... 2 Cause of damage... 3 When did the incident or damage occur?... 3 What do operators have to do?... 4 Prevent Environmental Damage... 4 Remediate Environmental Damage... 4 Remediation What is required?... 4 Biodiversity and water... 4 Land... 6 Appealing a Remediation Notice... 6 Enforcement... 6 Who is the enforcing authority?... 6 Steps taken by the enforcing authority... 7 Offences... 7 Additional points... 8 What happens if more than one person causes the Environmental Damage?... 8 Requests for action... 8 Where does existing legislation fit in?... 8 Comment... 9 How can Mills & Reeve help? Introduction The Environmental Damage (Prevention and Remediation) Regulations 2009 ( the Regulations ), which implement the provisions of the Environmental Liability Directive in 1

2 England 1, came into force on 1 March, nearly two years after the implementation deadline imposed by the Directive itself. The Regulations establish a framework of environmental liability for future pollution events based on the polluter pays principle. The intention is that damage to the environment be remedied or, better still, prevented. The Regulations impose liability on those who cause damage to the environment and those who cause an imminent threat of damage to the environment. The Regulations sit alongside our existing environmental protection legislation, such as the Contaminated Land Regime, which is aimed primarily at cleaning up historic pollution, and the Water Resources Act 1991, which creates criminal offences relating to water pollution. This note updates our April 2008 briefing on the Environmental Liability Directive and provides an introduction to the key provisions of the Regulations. When do the Regulations apply? Type of damage The Regulations only apply to certain types of damage to the environment, known as Environmental Damage. Environmental Damage is damage to the following. (a) (b) (c) A species or natural habitat protected by European law, or a site of special scientific interest ( SSSI ). The level of damage required is set out in the Regulations and differs according to the type of natural resource concerned. Broadly speaking, there must be a significant adverse effect on the natural resource in question. For example, in the case of a protected species, there is likely to be a significant adverse effect if there is a significant drop in population. Surface or groundwater as defined by the Water Framework Directive (2000/60/C). This includes lakes, rivers, underground water and coastal waters. There must be an adverse effect on the quality of the water for the Regulations to apply. This is judged according to the standards set out in the Water Framework Directive. In essence, there will be Environmental Damage where water is adversely affected so that it would be classified as a lower status than before the damage occurred. Again, the level of damage required is set out in the Regulations. Land. There must be contamination that results in a significant risk of adverse effects on human health. 1 There are separate regulations for Wales. This briefing note concentrates on the position in England. 2

3 Cause of damage The Regulations apply mainly to activities that are regulated by European law. Activities that could lead to liability are listed in the Regulations and include the following. Polluting industrial activities requiring a permit pursuant to the IPPC Directive. Examples include chemical manufacture, power generation and intensive farming. 2 Waste management activities requiring a permit or registration pursuant to the Waste Framework Directive. Examples include the operation of a recycling facility and the spreading of slurry on agricultural land. 3 Discharges to surface and groundwater. Management of mining waste pursuant to the Mining Waste Directive. In these situations, the regulator need only establish that the activity in question caused the required level of damage. However, the Regulations provide additional protection for protected species, natural habitats and SSSIs. Where there is damage to these natural resources, even activities which are not regulated by European law (and therefore not listed in the Regulations) might lead to liability. This will be the case where the person intended to cause damage or behaved negligently. When did the incident or damage occur? The Regulations do not apply to damage caused by an incident, event or emission that finished before 1 March 2009, the date the Regulations came into force, or to damage or threatened damage caused by an incident, event or emission that occurs after 1 March if that damage derives from an activity that took place and finished before that date. 4 The Regulations do not apply to Environmental Damage caused by an emission, event or incident that took place 30 years or more before the damage itself occurs. 2 These activities are regulated by the Environmental Permitting (England and Wales) Regulations 2007 ("the Environmental Permitting Regulations"). 3 These activities are also regulated by the Environmental Permitting Regulations. 4 This is slightly different from the wording of the Environmental Liability Directive itself, which applies to Environmental Damage occurring on or after 30 April It will be interesting to see how the European Commission/interested parties view this discrepancy. 3

4 What do operators have to do? Prevent Environmental Damage The Regulations place a duty on operators to take all practicable steps to prevent Environmental Damage where there is: an imminent threat of such damage; or an imminent threat of damage which (there are reasonable grounds to believe) will become Environmental Damage. The enforcing authority has the power to serve a notice on the operator requiring that person to take measures to prevent the Environmental Damage. These provisions also apply where Environmental Damage has been caused and there is a threat that further Environmental Damage will occur as a result. Remediate Environmental Damage One of the criticisms that has been levelled at the Regulations is that they overlap too much with our existing legislative regime. After all, we already have wildlife protection, water pollution and land contamination legislation. However, there is one very important respect in which the Regulations depart quite substantially from our existing legislative regime and that is the way in which they deal with the remediation of damage to biodiversity and water. Where Environmental Damage has been caused, the enforcing authority must identify the operator (known as the responsible operator ) who caused the damage and tell that operator that they intend to serve a remediation notice on them. It is only if the operator does not appeal against this notification or, if there is an appeal, that that appeal is unsuccessful, that the enforcing authority can then go ahead and serve a remediation notice. Remediation What is required? Biodiversity and water The basic principle when deciding upon remediation measures is that the natural resource must be restored to its baseline condition, that is the condition it was in before the damage occurred. Remediation to, or towards, this level is called primary remediation and is the type of remediation that we are used to under, for example, the contaminated land regime at Part 2A of the Environmental Protection Act 1990 ( Contaminated Land Regime ). Examples of primary remediation measures referred to in the Guidance include removal or treatment of contaminants, re-stocking or re-introduction of damaged species, implementing 4

5 restrictions and/or improvements to access, engineering works to provide habitats and even natural recovery. However, there will be some situations where it is not possible or desirable to restore the natural resource to its baseline condition. In these situations, regulators will require additional improvement of natural resources, either at the same, damaged, site or at a different, nearby, site to compensate for this shortfall. This is called complementary remediation. 5 In addition, the Regulators recognise that in many situations where there is environmental damage, it will be some time before the natural resource recovers to, or towards, the baseline condition and for complementary measures to take effect. Therefore, there will be a period when the natural resource will be out of action a period when the public and other natural resources will not be able to benefit from the damaged resource. The Regulations aim to compensate for this interim loss of natural resources. This is called compensatory remediation and is a new and, arguably, radical concept in English environmental law. The Guidance explains that complementary and compensatory measures will be similar to primary remediation measures, although natural recovery is unlikely to count as complementary or compensatory remediation and that such remediation could include providing resources and services that did not previously exist at the site. Therefore, the examples of primary remediation measures referred to above might also be required as complementary or compensatory remediation. The Guidance envisages that the process of identifying appropriate remedial measures where Environmental Damage has occurred will be collaborative, with input from the enforcing authority and interested parties (see paragraph 6.1). Having said that, it will be up to operators to put forward what they believe to be appropriate remedial measures, although the Guidance makes it clear (at paragraph 6.1) that the final decision on what measures should be undertaken will rest with the enforcing authority. Remediation options must be evaluated using best available methods. Schedule 4 to the Regulations sets out a number of guiding principles to assist the enforcing authority in this respect. These include the effect of each option on public health and safety, the likelihood of success of each option, the length of time it will take for the restoration of the Environmental Damage to be effective and the cost. Further information on the remediation of biodiversity and water damage is set out in Annexes 2 and 3 of the Guidance. 5 This is not an alien concept in English law. Under the Conservation (Natural Habitats etc) Regulations 1994, which transpose the requirements of the Habitats Directive (92/43/EEC), the Secretary of State can require what the 1994 Regulations call compensatory measures when, taking account of overriding public interest, a plan or project is agreed to despite the fact that it will have a negative impact on a European site or European offshore marine site. 5

6 Land Separate provisions exist in relation to the remediation of Environmental Damage to land. In these situations, remediation must ensure, as a minimum, that the relevant contaminants are removed, controlled, contained or diminished so that the land, taking account of its lawful current use or any planning permission in existence at the time of the damage, no longer poses any significant risk to human health. Appealing a Remediation Notice The Regulations specify the grounds of appeal that an operator who is notified that a remediation notice is imminent can use to challenge that notification. The grounds of appeal are as follows. The activity did not cause the Environmental Damage. The enforcing authority acted unreasonably in deciding that the damage is not Environmental Damage. The Environmental Damage resulted from compliance with an instruction from a public authority. The responsible operator was not at fault or negligent and the Environmental Damage was caused by an emission or event expressly authorised by and fully in accordance with the conditions of an authorisation listed in Schedule 3 to the Regulations. 6 The responsible operator was not at fault or negligent and the activity was not considered likely to cause Environmental Damage according to the state of scientific and technical knowledge at the time of the emission or activity. The Environmental Damage was the result of an act of a third party and occurred despite the fact that the responsible operator took all appropriate safety measures. Once a remediation notice is served, a person can appeal to the Secretary of State on the ground that the requirements set out in the notice are unreasonable. Enforcement Who is the enforcing authority? Generally speaking, responsibility for enforcing the Regulations is placed on either the Environment Agency or local authorities. Where damage is caused by an activity requiring a permit or registration from/with the Environment Agency under the Environmental Permitting Regulations, responsibility for enforcement rests with the Agency. Where the activity requires a permit from a local authority, that authority will be the enforcing authority in respect of issues relating to the duty 6 The authorisations listed in Schedule 3 include Environmental Permits, water discharge consents, water abstraction licences, groundwater authorisations and licences under Part II of the Food and Environment Protection Act

7 to prevent environmental damage and in respect of remediation of actual environmental damage to land. The remediation of actual environmental damage to water will be enforced by the Agency and the remediation of damage to biodiversity will be enforced by Natural England. However, where the damage is caused by an activity that does not require a permit or registration under the Environmental Permitting Regulations, the following enforcement rules apply. Damage to water Environment Agency Damage to protected species, natural habitats or SSSIs on land Natural England Damage to protected species, natural habitats or SSSIs in water (not the sea) Environment Agency Damage to protected species, natural habitats or SSSIs on the continental shelf or in the sea where damage is due to an activity authorised by the Environment Agency Environment Agency Damage to protected species, natural habitats or SSSIs on the continental shelf or in the sea where damage is due to any other activity Secretary of State Damage to land Local authority If there is more than one type of damage, so that there is more that one enforcing authority, the Regulations can be enforced by all or any of those authorities. Steps taken by the enforcing authority In line with existing environmental protection legislation, the Regulations allow enforcing authorities to take steps to prevent, contain or remedy Environmental Damage if those with responsibilities under the Regulations fail to act. In these situations, the enforcing authority can recover its costs from those who have not fulfilled their legal obligations. The enforcing authority can also carry out any necessary work itself if the responsible operator cannot be found or is not required to carry out the works. Offences The key offences under the Regulations are as follows. Failure to take all practicable steps to prevent Environmental Damage where there is an imminent threat. Failure to notify the regulator of an imminent threat of Environmental Damage. Failure to comply with a notice requiring certain steps to be taken in respect of an imminent threat of Environmental Damage. Failure to comply with a remediation notice. 7

8 Additional points What happens if more than one person causes the Environmental Damage? Where one incident which leads to Environmental Damage has been caused by more than one operator or where more than one incident, including different operators, has caused Environmental Damage, the enforcing authority will be able to target just one of those operators to remediate all of the damage. This means that the enforcing authority will not have to apportion responsibility. The effect of this is that those with the deepest pockets are likely to be targeted. The reason behind this approach is a desire to avoid the problems that have arisen under the Contaminated Land Regime in respect of the apportionment of liability. Those who are targeted will be able to claim a contribution from the others who are to blame for the damage. Requests for action The Regulations give power to those who are affected or likely to be affected by Environmental Damage and to those who otherwise have a sufficient interest to notify the enforcing authority of any Environmental Damage or imminent threats of Environmental Damage. The enforcing authority must then consider the notification and inform the notifier if it intends to take action and what that action will be. The Guidance advises that those affected or likely to be affected could include birdwatchers, walkers, recreational fishermen and residents, and those with sufficient interest could include registered charities whose objects include conservation of the environment (see paragraph 12.2). Where does existing legislation fit in? The Regulations have not amended any existing UK environmental protection legislation. Therefore, the Regulations sit alongside legislation such as section 85 of the Water Resources Act 1991, dealing with the pollution of controlled waters and the Contaminated Land Regime. The Guidance (at Annex 4) sets out a number of principles which will offer enforcement authorities and operators some assistance in situations where more than one piece of legislation, including the Regulations, applies. The Guidance is clear (see paragraph A4.2) that when damage or imminent threats fall within the Regulations, the Regulations must be applied. Existing legislation remains in respect of damage that falls outside the scope of the Regulations. If existing legislation goes further than the requirements of the Regulations, those additional requirements may also be 8

9 applied. However, enforcing authorities will be expected to exercise their judgement to ensure that there is no duplication of requirements under the Regulations and existing legislation. As far as overlap with Contaminated Land Regime is concerned, the Guidance advises (at paragraph A4.4) that the Regulations should be the first regime to be considered when dealing with land contamination issues. Paragraph A4.6 says that most of the incidents which the Regulations will cover will be reported by operators or it will be obvious who has caused the Environmental Damage. In those situations, it will be appropriate to deal with remediation in accordance with the Regulations. However, paragraph A4.7 says that where the cause, date or potential receptors of contamination are less certain, sites will need to be investigated on the basis that the appropriate regime for fixing liability may be either the Regulations or Contaminated Land Regime of the Environmental Protection Act, or if there are proposals for development, it may be possible to require action through the planning system. The provisions of the two regimes do not sit happily together, so it is unlikely that they will be applied simultaneously it will be for the enforcing authority to decide which regime should apply in each individual case. Comment The Regulations will have implications not only for businesses but also for the Environment Agency and local authorities who will be the main enforcers. Businesses which have the potential to cause Environmental Damage must think carefully about whether their environmental liability insurance is sufficient to cover the types of damage and remedial measures envisaged by the Regulations. This is particularly important in the light of recent case law 7 which indicates that insurance policies referring to damages in respect of accidental loss of or damage to property will not extend to the costs of cleanup required by the regulator. Those without environmental liability insurance might want to use the introduction of the Regulations as an opportunity to speak to their insurance broker about the possibility of cover. In the coming months, we are likely to see changes to commercial property enquiries and corporate due diligence questionnaires to deal with the issues raised by the introduction of the Regulations. Contractual wording seeking to divide environmental liabilities will also change to deal with the increased risk which the Regulations present. Enforcing authorities will also have to get to grips with determining what complementary and compensatory remediation is appropriate in a particular situation authorities will, for the first time, be required to think about the environment as claimant. Whilst the Guidance offers some assistance on this issue, including some useful examples, the onus will be on the enforcing authority to make a judgement. 7 Bartoline Limited v Royal & SunAlliance Insurance Plc and Heath Lambert Limited ([2006] EWHC 3598) 9

10 How can Mills & Reeve help? We can help by advising private and public sector organisations on potential liabilities under the Regulations and what they can do now to protect themselves. We can also help local authorities on the implications of their new regulatory duties under the Regulations. For further information, please contact Rebecca Carriage or Oliver Ennis in the Firm s Environmental Law Team or, alternatively, your usual Mills & Reeve contact. Rebecca Carriage Associate for Mills & Reeve LLP +44(0) rebecca.carriage@mills-reeve.com Oliver Ennis Solicitor for Mills & Reeve LLP +44(0) oliver.ennis@mills-reeve.com The contents of this document are copyright Mills & Reeve LLP. All rights reserved. This document contains general advice and comments only and therefore specific legal advice should be taken before reliance is placed upon it in any particular circumstances. Where hyperlinks are provided to third party websites, Mills & Reeve LLP is not responsible for the content of such sites. Mills & Reeve LLP is a limited liability partnership regulated by the Solicitors Regulation Authority and registered in England and Wales with registered number OC Its registered office is at Fountain House, 130 Fenchurch Street, London, EC3M 5DJ, which is the London office of Mills & Reeve LLP. A list of members may be inspected at any of the LLP's offices. The term "partner" is used to refer to a member of Mills & Reeve LLP. 10