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The Environment v X

14 July 08

Regulations are pending that will introduce new duties to avoid, or remedy, damage to the environment - and it can sue

by Fiona Gordon

Climate change may remain the main focus of the environmental agenda, but quietly coming up on the rails is the implementation of the 2004 European Directive on Environmental Liability. This introduces a unique form of liability with the environment as the wronged party. Consultation has opened on draft regulations, the Environmental Liability (Prevention and Remediation) (Scotland) Regulations 2008. Also available are a quick guide and detailed technical guidance notes: http://www.scotland. gov.uk/Publications/2008/05/ 14161737/0 .

The regulations target the most significant cases of environmental damage. They will likely apply to around 10 cases per year in Scotland. Similar regulations will be implemented in all EU jurisdictions. For companies operating across the EU this is a significant increase in potential liability. In Scotland, the regulations will supplement and dovetail with our already strict environmental protection regime. The other UK jurisdictions are currently consulting on broadly similar proposals.

What is covered?

The regulations cover significant damage to biodiversity, land and water. Those who cause a risk of significant damage to the environment will have a duty to avert such damage or, where damage occurs, a duty to reinstate the environment to its former condition. Damage to biodiversity (which covers protected species and habitats at a European level) is based upon maintaining favourable conservation status; for water it is damage significant enough to cause a deterioration in status; and for land it is contamination which creates a significant risk of human health being adversely affected.

The desired standard of remediation is to return the environment to its baseline condition in the case of biodiversity and water damage, and to remove any significant risk of adverse effects on human health in the case of land damage. In line with the “polluter pays” principle, the costs of remediation fall entirely on the responsible party. This will include any costs incurred by a public authority that steps in and takes action.

Remediation types

1. Primary remediation comprises actions to directly restore the damaged environment to its pre-damage condition. The required actions will vary depending on the circumstances and the specific damage to be remediated.

2. Should primary remediation be impossible or prove ineffective, complementary remediation must be used to make up the shortfall. This can consist of extra measures at the damaged site itself, or providing a similar level of natural resource at an alternative site.

3. Over and above these measures, compensatory remediation is required for the time the damaged resource is unable to function. This is not financial compensation but the provision of an additional environmental resource during the time remediation is undertaken. This is a new approach to assessing compensation, as even where natural recovery is the best remediation option, the party responsible for the damage must cover the interim loss while the damaged resource repairs itself.

The process of assessing remediation requirements is likely to be complex. The interlinking remediation types will involve not just a valuation exercise but an assessment of the quality and quantity of the remediation needed, as well as a thorough understanding of the baseline condition being reinstated. A multidisciplinary approach will be required, involving technical, legal, economic and scientific analysis. One can easily imagine the scope for dispute!

Who is involved?

Significant responsibilities and obligations are placed not only on those to blame for the environmental damage (the “operator”) but also on the public bodies who will police the remediation (the “competent authority/ies”).

The operator is the person who operates or controls the occupational activity which poses the threat or causes the damage. “Occupational activity” covers businesses and undertakings irrespective of private, public, profit or non-profit character.

The competent authority differs depending upon the resource suffering damage:

land, terrestrial waters and marine waters up to three nautical miles – SEPA

v biodiversity – Scottish

Natural Heritage

marine (outwith three mile mark) – Scottish Ministers.

It should also be noted that anyone affected, or likely to be affected, by environmental damage can make observations

to a competent authority. The authority can then direct the operator to take action. The persons entitled to make such observations include organisations involved in conservation activities.

Potential impacts

Despite only 10 projected cases a year, the practical effect of the regulations on business is likely to be far greater. Strict reporting and procedural requirements will put more emphasis on environmental and operational management systems to allow operators to manage their responsibilities and avoid liability. Businesses operating near protected habitats will have to consider additional monitoring and pollution prevention measures. In a transactional sense, environmental due diligence is likely to be vital with more disputes over indemnities a distinct possibility.

It remains to be seen how the regulations will appear in their final form, but this is one area of environmental law that practitioners would be well advised to keep an eye on.

Fiona Gordon, Solicitor, Planning & Environment, Anderson Strathernt