Environmental Liability Directive

Seiont, Gwyrfai and Llyfni Anglers’ Society v Natural Resources Wales [2014]

The Environmental Liability Directive 2004/35/CE (the “Directive”) establishes a framework with the objective of preventing and remedying environmental damage caused by economic operators.

The preamble to the directive explains, “The prevention and remedying of environmental damage should be implemented through the furtherance of the “polluter pays” principle, as indicated in the Treaty and in line with the principle of sustainable development. The fundamental principle of this Directive should therefore be that an operator whose activity has caused the environmental damage or the imminent threat of such damage is to be held financially liable, in order to induce operators to adopt measures and develop practices to minimise the risks of environmental damage so that their exposure to financial liabilities is reduced.”

Environmental damage includes damage to protected species and natural habitats, damage to water and damage to soil. It can even include airborne pollution which affects soil and water. The kinds of operations covered by the Directive are broad and include everything from the operation of installations subject to pollution prevention and control, waste management, discharges into water, abstraction and impoundment, manufacture and storage of dangerous substances and the use/ release of genetically modified organisms. The unique aspect of the Directive is that it can be invoked by members of the public with an interest who otherwise would need to launch expensive actions themselves.

Under the Directive, an interested person can “notify” the “competent authority” or regulator where he or she perceives that environmental damage has occurred as a result of one of the listed economic activities, and then the regulator will investigate. The regulator – if confirming that environmental damage has occurred - then notifies the economic operator requiring that the necessary preventative and/or remediation activities should be undertaken. 

Implementation in England and Wales

The Directive was implemented through the Environmental Damage (Prevention and Remediation) Regulations 2009 and the (Prevention and Remediation) (Wales) Regulations 2009 – which came into force on 9 th May 2009 - over two years from the point at which the Directive came into effect.

The late implementation did not go unnoticed from Europe and in 2009, the ECJ ruled that “… by failing to adopt the laws, regulations and administrative provisions necessary to comply with 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, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 19 of that directive.” (Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland C-417/08, 18 June 2009).

However, it is not just the time when the directive was implemented which is problematic. The Regulations only require the assessment of damage from the point when the Regulations came into effect (Regulation 8 (1)).

The Decision - Seiont, Gwyrfai and Llyfni Anglers’ Society v Natural Resources Wales [2014]

In this case, the anglers were concerned at the decline in arctic charr numbers in the glacial lake, Llyn Padarn – a Site of Special Scientific Interest (SSSI) in North Wales which they believed was linked to the operation of the sewage treatment works at Llyn Padarn – operated by Welsh Water/Dwr Cymru. The activities of sewage treatment had been on-going for many years and well before the date by which the Directive came into effect. It was alleged that phosphates in sewage had settled in the sediments of the lake and were being released later causing algal blooms and seasonal damaging effects on the charr habitat, by reducing the oxygen in the water. 

In 2012, the Anglers notified the regulator – Environment Agency Wales (now Natural Resources Wales or “NRW”) that damage had occurred to the lake including deterioration of the water body for the purposes of the Water Framework Directive and the unfavourable condition of the lake as a Site of Special Scientific Interest (SSSI) and as a habitat for Arctic charr.

In 2013, the operator Dwr Cymru was served by NRW with a “Notification of Liability” which included a requirement that DCWW takes various “remedial steps” (i.e. steps to deal with some past environmental damage). Even so, the anglers were not content that the regulator had given enough consideration to the breadth of the damage caused by operations which had been on-going for years before 2009 and that the scope of the remediation required would be limited to correcting only damage originally notified since 2009.

For instance, no consideration had been given in the decision document to the phosphates which were alleged to have been deposited in the sediments of the lake prior to 2007 and which continued to be released into the waterbody causing eutrophication. Dwr Cymru appealed against the notification to the Welsh Government and the Anglers then issued parallel proceedings against the competent authority, NRW, by way of an application for permission for judicial review.

The grounds of challenge centred for the main part on the temporal aspect of the directive and the cut-off date from which damage could be assessed. They argued that in assessing the matters arising from the Anglers’ notification and in its Decision Document, NRW unlawfully considered only environmental damage arising after 9 May 2009 (when the regulations came into effect) and that they did not take into account pre-2007 but continuing activities which may result in damage to the lake.

Temporal mistake

The case therefore turned on the meaning of Articles 17 and 19.
1. Article 17 provides that:
“This Directive shall not apply to:
   — damage caused by an emission, event or incident that took place before the date referred to in Article 19(1),
   — damage caused by an emission, event or incident which takes place subsequent to the date referred to in Article 19(1) when it derives from a specific activity that took place and finished before the said date,
   — damage, if more than 30 years have passed since the emission, event or incident, resulting in the damage, occurred.…”
2. Article 19(1) deals with “implementation”:
“Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 30 April 2007. …”

On the face of it, the Directive seems to be saying that any damage which is caused before the 2007 watershed does not count. However, the ECJ in Raffinerie Mediterranee (ERG) SpA and Others v Ministero dello Sviluppo economico and Others (Case 378-08) 9 March 2010 had already ruled on this point –

“The EU legislature expressly set out, in Article 17 of Directive 2004/35, the types of situation in which the directive is not applicable. Since the situations which fall outside the scope ratione temporis of the directive were thus determined in negative terms, it must be concluded that any other temporal situation is, in principle, covered by the environmental liability mechanism established by that directive.”

In other words, the Directive may not apply to circumstances where an activity causing damage occurs and is completed before 2007 (even if the damage happens after 2007), but can apply to other situations – where for instance the post 2007 implementation damage derives from activities which were carried out before 2007 but had not finished by that date.

Quashed

In the case at hand, the decision of NRW was quashed by consent on the basis of several major points: that the directive has “direct effect”, it trumps the regulations and the regulator would need would take into account all environmental damage arising after April 2007 (not 2009).

However, NRW went further in agreeing with the anglers, that, “in its fresh decision NRW would take into account all environmental damage caused by an emission, event or incident taking place after the 30th April 2007 if it derives from an activity which started before that date but which was not finished by that date.”

Although there was no judgment as such in this case, given that the regulations in Wales are identical to the English version and that the regulator for Wales had conceded an important point on the scope of the Directive and the implementation through the Regulations, it remains the case that the Environment Agency in England is likely to follow suit in its approach to the assessment of environmental damage and that the Regulations will need to be amended.

What does this mean for operators?

Activities which began before 2007 and continue after that date and that cause damage from 30 April 2007 could be caught under this interpretation of the Directive, and certainly as far as Wales is concerned the regulator has confirmed this is how it will apply the Directive. This can in principle cover latent damage from longstanding ongoing activities in many situations. For example, there are an array of industries – not just the water and sewage – where there are legacy issues which could come back to haunt the operator and where the 2007 cut-off date may not necessarily apply.

Further cases are likely to follow with challenges from operators based on the interpretation of the Directive and Regulations where a hard line has been taken by the regulator.

This article was written by Justin Neal, one of our environmental law experts. It was originally published in Environmental Law Monthly and is reproduced here with their permission.

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