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1 Comments on the European Commission White Paper on Environmental Liability WWF European Policy Office, Brussels BirdLife ECO, Brussels

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Comments on the European CommissionWhite Paper on Environmental Liability

WWF European Policy Office, BrusselsBirdLife ECO, Brussels

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WWF and BirdLife gratefully acknowledge the legal opinion, advise and invaluableexpertise provided by the Foundation for International Environmental Law and

Development (FIELD) in the preparation of this WWF and BirdLife joint positionpaper.

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Executive Summary

Recent events such as the Erika and Doñana have again demonstrated the importanceof adopting EU rules to hold polluters liable for the environmental damage they cause.Making polluters pay for the damage caused by their actions through the adoption of arobust EU environmental liability regime will be a strong incentive for preventive andeven precautionary1 action to avoid future environmental damage.

This paper provides comments on the European Commission's White Paper onEnvironmental Liability, adopted on 9 February 2000. The comments focus ondamage to biodiversity, and do not specifically address the proposed regimes fortraditional damage and contaminated sites.

The White Paper is intended as the Commission’s latest step in its efforts to establisha Community-wide regime on liability for environmental damage. The White Paperon Environmental Liability disappoints in its contribution to progress on developingan effective EU environmental liability regime. In comparison with earlier drafts itleaves too many crucial issues undecided and shows very little progress in theselection of concrete policy directions since the adoption of the Green Paper on thesame topic in 1993. The consequence is that much of the substantive debate is nowleft to the next stage, the drafting of the Commission proposal, which risks becominga protracted process.

The main weaknesses in the Commission White Paper on Environmental Liabilityare:

The choice of legal instrumentEarlier drafts of the White Paper indicated that the Commission wanted to includeliability for biodiversity damage in a specific legal instrument, separate from theliability for traditional damage and contaminated sites. Biodiversity damage would becovered by a recommendation whereas a Directive would cover the other types ofdamage. Although the White Paper no longer explicitly refers to this separation, itdoes regularly refer to the necessity to follow a ‘step-by-step’ approach in the designof the regime. Liability for biodiversity damage should be included from the outset ina robust and comprehensive EU environmental liability regime to be adopted in theform of a Directive.

The closed scope of the regimeThe White Paper proposes to limit the coverage of the new liability regime in anumber of ways. First, it introduces a ‘significant damage’ threshold for the liabilityfor contamination of sites and damage to biodiversity. It does not introduce thisthreshold for traditional damage. Second, it contains limits for the specific types ofdamage:

1 The importance of such a precautionary approach has recently been underlined by the publication ofthe Commission’s Communication on the Precautionary Principle (2 February 2000, COM (2000)1).

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- Liability for contaminated sites and traditional damage: only if the damage iscaused by activities that ‘bear an inherent risk of causing damage’ and that arealready regulated under Community law.

- Liability for biodiversity damage: for all significant damage caused within Natura2000 areas as established under the Habitats and Wild Birds Directives.

The White Paper does not define ‘significant damage’. A clear definition of thisthreshold is of utmost importance, as uncertainties as to its interpretation may form animportant loophole in the Liability regime.

The coverage of biodiversity damage is limited to biodiversity in Natura 2000 areas.This limitation is arbitrary and is incompatible with the scope of the Community’shabitats and birds directives, which not only provided for the establishment of Natura2000 network but also for the conservation of habitats and species outside Natura2000. The Birds Directive, for example, is very clear in stating that “The speciesmentioned in Annex I shall be subject of special conservation measures concerningtheir habitat.” Outside these (protected areas) Members States shall also strive toavoid pollution or deterioration of habitats” The regime proposed under theCommission White Paper excludes damage to rare and protected biodiversity outsideNatura 2000 areas as biodiversity protected under other EC legislation or biodiversitynot covered by EC legislation, which may be equally valuable. The liability regimeshould be extended to also cover all significant damage to biodiversity outsideprotected areas, but protected under EC law, caused by dangerous activities. Theregime should retain its coverage of damage to biodiversity caused by any activitywithin protected areas.

In view of the Member states reluctance to actually designate sites, as requested bythe Birds Directive, the Commission has taken legal actions against 13 of them due toinsufficient designation of Special Protection Areas. The Commissioner for RegionalPolicy, and more recently the Commissioner for Agriculture have submitted letters toMember states requiring them to improve the network of areas designated under theBirds and Habitats directives. WWF and BirdLife in a joint initiative with three otherNGOs, have found recently that Member states should increase the number and theprotected areas under the EU legislation at least by 30%. The Community Strategy forthe Conservation of Biodiversity also requires actions to be taken by different sectoralpolicies, which affect land use practices inside but mainly outside protected areas.

Existing environmental liability in Member statesEnvironmental liability regimes exist in varied forms and have varied effectiveness inMember states: it is crucial that the expected Directive builds on and enhances thebest elements of these regimes rather than weakening them. Examples of the WPweakness are the exclusion of past damage, a damage threshold which is too high, nonstrict liability for certain damage, and the liability only for protected areas despite thecommunity approach in the birds and habitats directive, and the EU biodiversitystrategy to conserve all species and habitats.

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The nature of the liability and the role of defencesThe White Paper proposes to base the liability regime on strict liability. An exceptionis liability for damage to biodiversity caused by non-dangerous activities insideNatura 2000 sites, which is only to be included on the basis of fault. Covering non-dangerous activities on the basis of fault-liability importantly weakens the liabilityregime. These activities should be covered on the basis of strict liability.

The White Paper also proposes a number of defences to be available to pollutingoperators. The proposed defences include ‘force majeure’ and ‘state of the art’. The‘force majeure’ defence should only be applied under strictly limited situations. The‘state of the art’ defence should not be included, as it will effectively turn the strictliability regime into a fault-based regime.

Contaminated SitesThe White Paper formulates to clean-up deterioration as follows: "does thecontamination lead to serious threat to man and environment?”. This criterion isdeficient in two main aspects: “serious” threat: the threshold is too high adequately todeter damage to either humans or the environment; a “threat to damage and theenvironment”. A serious damage to the environment might no be considered alwaysas a serious damage to man, depending for example on the location of the damage(marine areas) not close to the coast but important for the maintenance of food chains.

Access to justiceThe White Paper is vague on the criteria for standing for public interest groups andlimits their access to justice by proposing a ‘two tier approach’. This approach entailsthat public interest groups only get the right to act if the State does not act at all ordoes not act properly.

Facilitating the active involvement of public interest groups is vital for a credibleenvironmental liability regime. Three elements are important to facilitate thisinvolvement. First, the criteria for standing should allow public interest groups whosegoals and activities show that they have a genuine interest in the particular subjectmatter to take the polluter to court. The White Paper is not clear on this. Second,public interest groups should be allowed to act immediately, without being dependenton prior government action. The proposed ‘two tier approach’ severely limits thepossibilities for actions of public interest organisations. Third, the prescription periodsshould be sufficiently long. The White Paper does not address this issue at all.

Valuation and restoration of environmental damageDesigning credible methods for the valuation of environmental damage is one of thebackbones of a Community liability regime. This issue is not sufficiently addressed inthe White Paper, while the lack of experience with environmental valuation is onmore than one occasion used as excuse to limit the scope of the regime. It is vital thatthe Commission starts work as soon as possible to flesh out the details of effectivevaluation methods.

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The White Paper proposes to limit the costs of restoration of environmental damageon the basis of a ‘cost-benefit’ or ‘reasonableness’ test. This test would consist of acomparison between the costs of restoration on the one hand and the value of thenatural resource on the other hand. On the basis of this comparison a case-by-caseassessment is to be made of what restoration costs are reasonably to be carried by thepolluter. This approach effectively puts a limit on the liability for environmentaldamage. The introduction of such a limit may significantly reduce the effectiveness ofthe liability regime and needs to be carefully monitored.

Rules relating to the burden of proofEarlier versions of the White Paper included several examples of methods to alleviatethe burden of proof for plaintiffs and explicitly required that an EU regime ‘should’alleviate this burden of proof. The White Paper only states that this burden of proof‘could’ be alleviated and no longer sets out any options. An effective alleviation ofthe burden of proof is an essential component of an environmental liability systemand the Commission should clearly commit to including it in its proposals.

Earlier drafts of the White Paper also proposed that liability should be apportioned onthe basis of mitigated joint and several liability. This means that each party is liablefor the whole of the damage unless he can prove that he caused only part of thedamage, in which case he will only be liable for that part. Not including mitigatedjoint and several liability will significantly increase the burden on the plaintiff andreduce chances for compensation. The concept therefore needs to be re-introduced inthe proposals for legislation.

Insurance and financial securityThe White Paper proposes not to impose an obligation to have financial security, butonly to introduce this on a voluntary basis. The White Paper claims there is still toolittle experience with the operation of environmental liability regimes, mostparticularly in relation to the quantification of the environmental damage. Theomission of compulsory insurance threatens to make the environmental liabilityregime a hollow instrument, with judgements incapable of enforcement againstbankrupt companies or insolvent individuals. If a meaningful liability regime is to beestablished, compulsory insurance is a key component. In addition to compulsoryinsurance, liability funds may need to be set up.

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Comments on the European CommissionWhite Paper on Environmental Liability

ContentsEXECUTIVE SUMMARY............................................................................................................... 1

INTRODUCTION............................................................................................................................ 8

PART I: BASIC LEGAL CONCEPTS AND SUMMARY.......................................................... 9

A. ENVIRONMENTAL LIABILITY: BASIC LEGAL CONCEPTS ........................................................... 9B. SUMMARY OF THE WHITE PAPER ........................................................................................ 10

1. No retroactivity................................................................................................................. 102. Types of damage covered .................................................................................................. 103. Summary of the key elements of the proposed regime ......................................................... 12

PART II: COMMENTS ON THE PROPOSED REGIME................................ ..................... 14

A. THE CHOICE OF LEGAL INSTRUMENT................................................................................... 14B. THE CLOSED SCOPE OF THE REGIME .................................................................................... 14

1. The damage threshold: ‘significant damage’..................................................................... 152. The Limitation to Natura 2000 sites ................................................................................... 16

C. THE NATURE OF THE LIABILITY AND THE ROLE OF DEFENCES ............................................... 171. Fault-based v. strict liability .............................................................................................. 172. Force majeure or ‘Act of God’ defence .............................................................................. 183. ‘State of the art’ defence.................................................................................................... 18

D. ACCESS TO JUSTICE............................................................................................................ 191. Criteria for Access to Justice for Interest Groups ............................................................... 192. Two-tier system for public interest group access ................................................................ 213. Prescription Periods ......................................................................................................... 21

E. VALUATION AND RESTORATION OF ENVIRONMENTAL DAMAGE............................................ 231. Methods for valuating damage .......................................................................................... 232. Cost-Benefit Analysis and Reasonableness......................................................................... 25

F. RULES RELATING TO THE BURDEN OF PROOF....................................................................... 261. Alleviating the burden of proof .......................................................................................... 262. Mitigated joint and several liability ................................................................................... 27

G. INSURANCE AND FINANCIAL SECURITY................................................................................ 28

PART III: SUMMARY OF THE WWF-BIRDLIFE RECOMMENDATIONS...................... 30

ANNEX I: ENVIRONMENTAL VALUATION: THE REGIONAL SYSTEM IN HESSEN...... 33

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Introduction This paper provides comments on the European Commission's White Paper onEnvironmental Liability, adopted on 9 February 2000 2 (hereinafter referred to as WP).The WP is intended as the Commission’s latest step in its efforts to establish aCommunity-wide regime on liability for environmental damage. There have beenthree major initiatives on this issue, two of which have emanated from the EuropeanCommission.• First, in 1989, came an unsuccessful proposal for a separate regime for Civil

Liability for Damage caused by Waste. 3

• Next, in 1993, was the adoption of the Convention on Civil Liability for DamageResulting from Activities Dangerous to the Environment, signed in Lugano (‘theLugano Convention’) and negotiated under the auspices of the Council ofEurope.4 Eight countries signed the Convention: Cyprus, Finland, Greece, Iceland,Italy, Liechtenstein, Luxembourg and the Netherlands. It has yet to be ratified by asingle state.

• Third, a Commission Green Paper on Remedying Environmental Damage 5 waspublished in parallel, also in 1993. It was issued in response to requests by theEuropean Parliament 6 and the Economic and Social Committee 7 to issue ‘aproposal for a Directive on civil liability in respect of (future) environmentaldamage.’

The WP is the follow-up to the 1993 Green Paper. The Commission has invitedcomments to the WP to be submitted before 1 July 2000. The Commission’s next stepis very likely to be the preparation of a proposal for a Directive on environmentalliability. A number of drafts of the WP were leaked during the drafting process. Whencomparing these drafts with the WP, it is striking how the proposals for the regimehave been weakened, mainly resulting in important concessions to industry andinsurers, as well as in no longer addressing key issues. These comments are divided in two parts. Part I gives an overview of the basic legalconcepts relating to liability for readers not familiar with these concepts. Part I alsosummarises the WP. Part II of these comments is intended to serve as a draft WWFand BirdLife position on the WP, addressing specific lacunae and recommendingimprovements. The comments in Part II focus on damage to biodiversity, and do notspecifically address the proposed regimes for traditional damage and contaminatedsites. Part III summarises the WWF and BirdLife positions. 2 COM(2000) 66 final 3 COM(89)282 of 15 September 1989, OJ C251/3 modified by COM(91)219 of 27 June 1991, OJC192/6 and COM(93)570 of 10 November 1993 4 Convention on Civil Liability for Damage Resulting from Activities Dangerous to the Environment,signed at Lugano in 1993. Council of Europe, European Treaty Service, No. 150. 5 COM (93)47 of 14 May 1993 6 Resolution of 20 April 1994, OJ C128/165 7 Opinion of 23 February 1994, CES 226/94

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Part I: Basic Legal Concepts and Summary

A. Environmental liability: basic legal concepts

In order to assist readers unfamiliar with legal concepts, it is worth explaining certainterminology at the outset. • The WP defines environmental liability by saying that it ‘aims at making the

cause of environmental damage (the polluter) pay for remedying the damage thathe has caused)’ (WP, section 2.1). Environmental liability is thus aimed atoperationalising the European Community’s polluter pays principle (WP, section3.1).

• A plaintiff is a person or company who brings an action to court (in this case for

compensation). • A defendant is the person or company against whom the action is brought. • In most cases, it is for a plaintiff to demonstrate that his or her allegations are

correct: the plaintiff bears the burden of proof. In particular, a plaintiff must showthat the defendant’s action caused the harm. This causal burden of proof isparticularly difficult to dislodge in cases concerned with pollution given thedegree of factual and scientific uncertainty, which sometimes exists.

• Very occasionally, this burden of proof is reversed. That is, it is for the defendant

to show that he or she did not cause the damage complained of. The WP notes thatthe ‘Community regime could also contain one or other form of alleviation of thetraditional burden of proof’ though it does not define what this might entail (WP,section 4.3).

• Liability may be either strict or fault-based. If strict liability applies, the defendant

is liable even if he could have done nothing to avert the damage. Fault-basedliability means that the plaintiff must demonstrate that the defendant’s actionswere wrongful in some way, for example, that he has been negligent.

• Defences to liability may apply in either case. For example, damage caused by a

bush fire might be attributed to an ‘Act of God’ if it was started by lightening.Alternatively if the plaintiff contributed to the activity which caused the harm, thedefendant might be exempt from liability.

• Earlier drafts of the WP had proposed that if more than one operator contributed

to the harm, liability should be apportioned on the basis of mitigated joint andseveral liability. This means that each party is liable for the whole of the damageunless he can prove that he caused only part of the damage, in which case he willonly be liable for that part. The WP does not address the issue.

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• Under earlier drafts of the WP liability was also subject to prescription or

limitation periods - these limit the time within which a claim can be brought.Under the scheme proposed in these drafts, a claim could only be brought withinthree years of the plaintiff discovering that the damage had occurred (or withinthree years of the date when he could reasonably have been expected to discoverthat the damage had occurred). There was also a thirty-year long-stop period afterwhich a claim cannot be brought, regardless of when the damage was discoveredor discoverable. The WP does not contain specific proposals for limitation orprescription periods.

• Finally, the WP makes a distinction between traditional and environmentaldamage. Traditional damage is defined as personal injury (for example, an illnessor disease caused by pollution) or damage to property. Environmental damage isto include harm to biodiversity, such as plants, wildlife, or habitat and damage inthe form of contaminated sites. As noted in the next section, the distinctionbetween these different types of damage, including between environmentaldamage and damage to biodiversity remains unclear in the WP.

B. Summary of the White Paper

1. No retroactivity

The liability regime proposed by the WP only covers future damage, i.e. damage ‘thatbecomes known after the entry into force of the EC regime’ of which ‘the act oromission that resulted in the damage has taken place after the entry into force’ of theEU liability regime (WP, section. 4.1).

In practice, this will mean that the environmental liability regime will have anextremely long lead-time and that none of the contaminated sites identified at the timethe Directive or other instrument comes into force will be covered. The regime willalso not cover any harm caused by activities or omissions taking place before thescheme is implemented even if they are not discovered, or discoverable, for manyyears to come.

2. Types of damage covered

The liability regime proposed in the WP covers three types of damage. These aredamage to biodiversity and contamination of sites (taken together to constitute‘environmental damage’) and, thirdly, traditional damage (WP, section 4.2.1).Biodiversity damage is further defined in section 4.5.1 of the WP as ‘damage tobiodiversity which is protected in Natura 2000 areas’. In the same paragraph theCommission proposes that ‘such damage could take the form of damage to habitats,wildlife, or species of plants, as defined in the annexes of the directives concerned’.Contaminated sites damage is defined as including the pollution of ‘soil, surface waterand groundwater’ (WP, section 4.5.2.). The definition of traditional damage, in

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principle left to the Member States, is referred to as including personal and propertydamage and possibly economic loss (WP, section 4.5.3.).

The liability regime for biodiversity damage under the WP is different from that forcontaminated sites and traditional damage in a number of ways (see table 1):

(i) Whereas the WP proposes to limit liability for contaminated sites andtraditional damage to damage caused by selected dangerous and potentiallydangerous activities and substances regulated under Community law, thislimitation would not apply in cases of biodiversity damage. Instead, liabilityfor biodiversity damage would be geographically limited, in the sense thatbiodiversity damage would only be covered if it takes place within an areacovered by Community legislation for the protection of biodiversity, currentlylimited to the Natura 2000 sites to be established under the Habitats and BirdsDirectives.8

(ii) The WP also proposes a ‘significant damage’ threshold for damage tobiodiversity (WP, section 4.5.1). Although the WP also proposes this thresholdfor contaminated land, it does not apply to traditional damage (WP, section.4.5.2).

(iii) The restoration of biodiversity will be subject to a cost-benefit analysis andwill only be undertaken to the extent that the costs are ‘reasonable’ (WP,section 4.5.1). This limitation does not apply to traditional damage.

(iv) Liability for traditional damage and environmental damage is proposed to bestrict (WP, section 4.3). This includes liability for damage to biodiversity ifthis has been caused by a dangerous activity (the precise definition of whatconstitutes a dangerous activity still needs to be defined, WP, section 4.2).

(v) The WP supports the view that ‘damage to biodiversity should be covered byliability, whether it is caused by a dangerous activity or not’. However, in caseof damage to biodiversity caused by a non-dangerous activity, the operatorneeds to be found to have been at fault (WP, section. 4.3).

The liability rules differ substantially, depending under which of the three categories aparticular damage is classified. The current categories are not clearly defined andallow damages to be classified under more than one category.

8 Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds, OJ L 103 25.04.79p.1, as amended; and Council Directive 92/43/EEC of 21 May 1992 on the conservation of naturalhabitats and of wild fauna and flora, OJ L 206 22.07.92 p.7, as amended.

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Table 1: Liability for different types of damage under the WP

Biodiversity damage Contaminatedsites

Traditional damage

Caused by: All activities Only selectedactivities andsubstances coveredby Community law

Only selectedactivities andsubstances covered byCommunity law

Damageoccurring:

Only in Natura 2000sites

Anywhere Anywhere

Nature ofLiability:

Strict if caused by adangerous activity.

Fault-based if caused bya non-dangerousactivity

Strict Strict

Damagethreshold:

Significant damage only Significant damageonly

All damage (subjectto national limitationrules)

3. Summary of the key elements of the proposed regime

The key elements reflected in the WP can be summarised as follows (see especially,WP, section 4):

(i) The liability regime will cover damage to biodiversity within Natura 2000sites, the contamination of sites and traditional damage, caused by selecteddangerous activities regulated under Community law (WP, section. 4.2.2).Liability in these cases will be strict.

(ii) The liability regime will also cover damage to biodiversity in Natura 2000sites caused by non-dangerous activities. In these situations liability can onlybe established on the basis of fault.

(iii) Damage to biodiversity and the contamination of site will only be covered inas far as this damage is ‘significant’ (WP, section 4.5.1).

(iv) The liability regime would only cover situations of identifiable and concretedamage caused by an identifiable polluter. It would not cover widespread,diffuse pollution (WP, section 2.2).

(v) The system will not be retroactive. Only damage occurring after the regimehas entered into force will be capable of being compensated (WP, section. 4.1)

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(vi) The person who exercises control of an activity by which the damage iscaused (i.e. the operator) will be the liable party (WP, section 4.4).

(vii) The burden of proof with respect to causation could be mitigated (WP, section4.3). The adopted White Paper leaves this question open ‘to be more preciselydefined at a later stage’ (WP, section 4.3.).

(viii) There is no suggestion that where more than one operator has contributed tothe damage, that liability should be apportioned on the basis of mitigated jointand several liability.

(ix) Certain defences will be available, including ‘Act of God’. A ‘state-of-the-art’defence as well as the application of equity in the apportioning of the damagemay also be introduced (WP, section 4.3).

(x) Public interest groups may be able to bring an action to clean-up sites relevantto biodiversity, but only if public authorities have not acted. In urgent cases,interest groups would have the right to ask a court for an injunction. Interestgroups would also be able to bring claims for reasonable costs of urgentpreventative measures (WP, section 4.7.2).

(xi) The WP does not propose prescription periods, which had been explicitlyincluded in earlier drafts.

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Part II: Comments on the Proposed Regime

WWF and BirdLife welcome the publication of the WP and sees it as an importantnext step in the development of a Community environmental liability regime. Wehowever strongly feel that the liability regime as proposed in the WP is too weak. Wewishe to comment on a number of aspects of the proposed regime for which theregime would be unduly limited in its coverage. These comments mainly relate to theapplication of the WP to biodiversity damage. The application of the WP tocontaminated sites and traditional damage is not further discussed here.

The following issues are further explored below:A. The choice of legal instrument;B. The closed scope of the regime;C. The nature of the liability and the role of defences;D. Access to justice;E. Valuation and restoration of environmental damage;F. Rules relating to the burden of proof;G. Insurance and financial security.

A. The choice of legal instrument

Previous drafts of the White Paper have suggested that while an environmentalliability regime for traditional damage and contaminated land might take the form of aDirective, biodiversity should be covered by a non-binding Recommendation. In thisrespect, the adopted WP is an improvement on earlier drafts. In the WP theCommission’s choice is to have the whole regime encapsulated in a Directive. TheWP does, however, introduce the idea of legislating ‘step-by-step’ (WP, section 7).This approach could take the form of ‘a framework regime containing essentialminimum requirements, to be completed over time with other elements which mightappear necessary on the basis of the experience gathered with its application duringthe initial period’ (WP, section 6).

WWF and BirdLife welcome the Commission’s choice to have the environmentalliability regime encapsulated in a single framework Directive. We wishes to stressthat liability for biodiversity damage should form an integral part of a singleCommunity liability instrument and should be included from the outset.

B. The closed scope of the regime

Under the scheme envisaged in the WP, compensation for damage to biodiversity willonly be granted if two requirements are met. The first is that the damage is‘significant’. The second is that the damage has taken place within a Natura 2000 site:the areas designated under the Wild Birds and Habitats Directives (WP, section 4.5.1).

The geographical limitation to Natura 2000 sites both expands and reduces thecoverage of the liability regime. It reduces the coverage of the regime because the WPdoes not appear to cover biodiversity damage outside Natura 2000 sites. It increases

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the coverage of the regime because the WP proposes not to limit biodiversity damagewithin these sites to damage caused by selected activities and substances only, as itdoes with contaminated sites and traditional damage, but extends it to damage causedby any activity. If damage is caused by a non-dangerous activity, however, theplaintiff must demonstrate that the defendant has been at fault before liability can beimposed (WP, section. 4.3)(the fault liability requirement is discussed separately inthe next paragraph).

1. The damage threshold: ‘significant damage’

It is not feasible for a liability regime to cover all environmental damage by allactivities. Covering minimal or negligible effects on the environment would make aliability regime extremely difficult and expensive to apply. One way to avoid this isby applying the liability regime only for damage, which surpasses a certain minimumthreshold. The threshold proposed by the WP for biodiversity is significant damage.

The WP does not define ‘significant damage’. However, the term ‘significant’suggests a relatively high threshold. A lower cut-off point may be desirable. Oneoption would be to require compensation for all damage to biodiversity that is not deminimis or negligible. Another would be to have a financial threshold (as under the1985 Product Liability Directive, discussed below).

WWF and BirdLife urge to replace the wording ‘significant damage’ by ‘damagethreshold’ or ‘not minimal or negligible’, thus avoiding the setting of an unduly highthreshold for the application of the liability regime.

Introducing a threshold for the application of the liability regime raises the question ofwho should determine whether the damage passes the threshold. Inevitablyassessments will be a matter of judgement and assessors or judges will make them incontext. A decision on whether damage passes the threshold could be made in anumber of ways:• Admissibility criteria could be set for courts, with the question left for them;• Specialist chambers or judges could decide the matter;• A committee could be established comprised of regulators, NGO representatives,

academics and/or industry;• Lists or guidelines could be prepared in advance determining what would

constitute damage for each (or specified) species.

Earlier versions of the WP had stated that for ‘significant damage, restoration andevaluation of the damage and the minimum level of restoration of natural resources,further criteria need to be set in the form of European guidelines’. The WP no longerdiscusses this issue in depth. Instead, it states that criteria to determine whatconstitutes significant damage ‘should be derived, in the first place, from theinterpretation of this notion in the context of the Habitats Directive’ (WP, section4.5.1.). In the footnote, the WP adds that ‘a Commission services document on theinterpretation of this and other notions in the context of article 6 of the Habitats

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Directive will be published shortly’ (WP, section 4.5.1. and footnote 14). TheCommission published these guidelines in April 2000.9 These guidelines do not givespecific guidance on how to interpret ‘significant’ but only state that this notion‘needs to be interpreted objectively’ and that at the same time ‘the significance ofeffects should be determined in relation to the specific features and environmentalconditions of the protected site… .taking particular account of the site’s conservationobjectives’ (p. 30).

WWF and BirdLife urge the Commission to propose clear and transparent guidelinesand/or mechanisms for determining whether the damage threshold is crossed in aspecific case. We ask the Commission to include in the Directive the establishment ofappropriate structures to apply these guidelines on a case by case basis. Thesestructures could include: admissibility criteria set for courts, with the question left forthem; specialist chambers or judges deciding the matter; a committee comprised ofregulators, NGO representatives, academics and/or industry; lists or guidelinesdetermining what would constitute damage for each (or specified) species.

2. The Limitation to Natura 2000 sites

The WP suggests that biodiversity damage is only to be covered if it occurs withinsites protected under Community biodiversity law, i.e. in the Natura 2000 sites, thusexcluding biodiversity damage outside these areas (WP, section 4.5.1). The mainreason for this limitation given in the WP is that restoration of significant damage iscurrently a requirement of the Natura 2000 regime (WP, section 4.2).

Biodiversity in Natura 2000 sites requires a stricter liability system because of thespecial nature of these sites. This cannot, however, imply that biodiversity damageoutside these areas should not be covered. Community legislation for the protection ofbiodiversity is not restricted to Natura 2000 sites. The Habitats Directive for instancealso requires Member States to establish a system of strict protection to prohibit the‘deterioration or destruction of breeding sites or resting places’ of the animal specieslisted in its Annex IV (a), irrespective of whether these places are within a Natura2000 site or not. The Wild Birds Directive similarly requires the protection of wildbirds outside the special protection areas. In addition to the Wild Birds and HabitatsDirectives the Community has also ratified a number of international treaties andconventions on the protection of specific species or areas, including the 1979 BonnConvention on the conservation of migratory species of wild animals10 and the 1979Bern Convention on the Conservation of European Wildlife and Natural Habitats11.The liability regime should thus, as an absolute minimum, apply to damage caused tohabitats and species, inside our outside the Natura 2000 sites, whenever they areprotected under EC law or under any of the Conventions ratified by the EC.

9 Managing Natura 2000 sites; The provisions of Article 6 of the ‘Habitats’ Directive 92/43/EEC,European Commission, DG Environment, April 2000.10 Council Decision of 24 June 1982, 82/461/EEC, OJ L 210, 19/07/1982, p.11-22.11 Council Decision of 3 December 1981, 82/72/EEC, OJ L38, 10/2/1982, p. 1-32.

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WWF and BirdLife consider the current proposal to cover only damage tobiodiversity within Natura 2000 sites insufficient. We strongly request the expansionof the proposed liability regime to cover also biodiversity damage caused outsideNatura 2000 sites, encompassing at least all damage to biodiversity protected underCommunity law, including international treaties and conventions to which theCommunity is a party.

C. The nature of the liability and the role of defences

1. Fault-based v. strict liability

The WP proposes that liability under the Directive should be strict for all damagecaused by inherently dangerous activities regulated under Community law. In thesecases, the fault of the operator will not need to be established, only the fact that the act(or omission) caused the damage (WP, section 4.3). The WP also proposes to coverdamage to biodiversity within Natura 2000 caused by activities not themselvesinherently dangerous. For these cases the WP proposes a fault-based liability system(WP, section 4.3).

The WP itself finds that ‘recent national and international environmental liabilityregimes tend to be based on the principle of strict liability, because of the assumptionthat environmental objectives are better reached that way’ (WP, section 4.3). Strictliability principles have been adopted in a number of domestic environmental liabilityregimes in Member States including Germany12, Denmark13 and Sweden.14 The WPitself also gives two reasons why strict liability is to be preferred over fault basedliability:

• it is very difficult for plaintiffs to establish fault of the defendant in environmentalliability cases

• the view that someone who is carrying out an inherently hazardous activity shouldbear the risk if damage is caused by it, rather than the victim or society at large

Strict liability can furthermore be supported by the argument that it has a strongerpreventive effect. Operators will take more care if they know that they will be liablefor the consequences even in absence of fault. In addition, it should be stressed thatthe importance of protecting Europe’s biodiversity is so great that questions of faultshould be considered irrelevant so that the liability regime may have a maximumpreventive effect.

12 Günter Hager, ‘Umwelthaftungsgesetz: The New German Environmental Liability Law’, [1993]Environmental Liability, 41 and Horst Schlemminger and Holger Wissel eds. German EnvironmentalLaw for Practitioners, Kluwer International, The Hague, 199613 Peter Pagh, ‘The New Danish Act on Strict Liability for Environmental Damage’, [1993]Environmental Liability14 Rose-Marie Lundström, ‘Environmental Liability in Sweden: Context and Main Features’, [1993]Environmental Liability, 117 and Marie-Louise Larsson, The Law of Environmental Damage, Liabilityand Reparation, Kluwer International, The Hague, 1999 at pp. 247-355.

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WWF and BirdLife support the widening of the scope of the liability regime, byincluding damage caused by non-dangerous activities on the basis of strict liability. Itstrongly argues against the Commission’s proposal to include liability for damagescaused by these activities on the basis of fault.

2. Force majeure or ‘Act of God’ defence

The scope and effectiveness of a strict liability regime very much depend on thenature and extent of the defences allowed.15 At present, the WP proposes thefollowing defences in relation to damage to biodiversity (WP, section 4.3):

(i) Act of God or force majeure(ii) Intervention by a third party, including a local authority if it ordered the

defendant to carry out a specific activity that resulted in damage16

The conventional example of an ‘Act of God’ or ‘force majeure’ is a bolt oflightening or tidal waves. It might however also be applied to a forest fire, earthquakeor hurricane. In these situations natural and man-made causes might be intertwined.An industrial installation might, for instance, not be designed to resist a minorearthquake. The design of a basin containing toxic wastewater may be such that itcannot prevent flooding after excessive rainfall. In these latter examples a ‘forcemajeure’ defence is not acceptable.

WWF and Birdlife believe that the ‘force majeure’ defence should be applicable onlyin its strictest interpretation, that is, where human intervention, or the absence of it,has had absolutely no role to play and maximum preventive and remedial measureswere in place.

3. ‘State of the art’ defence

A ‘state-of-the-art’ defence would essentially allow operators to escape liability ifthey were acting in accordance with accepted practices at the time. Allowing such adefence will remove an important motive for operators introducing new technology orproducts to take optimal care when introducing them. Allowing this defencefurthermore undermines the application of the precautionary principle in practice. Inpractical terms, if this defence is allowed, the environmental liability regime willrevert to being one based on fault. It is evident that there has been significant lobbyingby industry on this point. UNICE, the European employers’ organisation, forexample, have long argued that if any Community-wide liability system is not to befault-based, then it should permit compliance and state-of-the-art defences.17 While

15 See, for example, European Environmental Law Association, Report of the Working Party:Submission to the Commission of the European Communities, ‘Repairing Damage to the Environment– A Community System of Civil Liability’, [1994] Environmental Liability 116 It is worth noting that intervention by a third party will not always be a defence to liability in Englishlaw at least. In 1998, the House of Lords (the highest court in the land), an operator was found liablefor water pollution caused by a vandal (1998 1 All ER 481).17 ENDS Report 282, pp. 47-48

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earlier drafts did not refer to this defence, the Commission now seems to have cavedin. The WP now discusses this concept as follows:

‘Several interested parties, in particular economic operators, have expressed theview that a defence in relation to damage caused by releases authorised throughEC regulations, for state of the art and/or for development risk should also beallowed. For economic reasons they need predictability regarding theirliabilities to third parties, but the occurrence and extent of these liabilities aresubject to ongoing developments in any event (e.g. changes in legislation andcase law, medical progress etc.). Defences like the ones mentioned here arenormally not allowed by existing national environmental liability regimes of EUMember States. When deciding on these defences, all relevant impacts shouldbe considered, among others possible effects on SMEs’ (WP, section 4.3).

If liability is to remain de facto strict, the ‘state-of-the-art’ defence should not beincluded in the liability regime. As explained above, strict liability is imposedregardless of the operator’s conduct, whereas fault-based liability depends on theclaimant showing that the operator is at fault. If a ‘state of the art’ defence is allowed,the operator is liable unless he can prove his care in avoiding the pollution was inaccordance with the ‘state of the art’. This approach will in practice turn the strictliability system into a fault-based liability system with a reversed burden of proof.

WWF and BirdLife strongly believe that state-of-the-art defences should not beallowed, as this will essentially turn strict liability into fault-based liability.

D. Access to justice 1. Criteria for Access to Justice for Interest Groups

The Commission has on various occasions stressed the importance of increased accessto justice for public interest groups to national courts in environmental matters. In1996 the Commission stated in its Communication on Implementing CommunityEnvironmental Law that ‘the public and public interest groups do not as a general rulehave sufficient access to the national courts of the Member States in environmentalmatters’.18

Earlier unpublished drafts of the WP had found that Member States rules on access tojustice for interest groups in cases of environmental damage ‘differ widely throughoutthe Community and are at present mostly inadequate with respect to the objective ofensuring effective restoration and decontamination’. These drafts suggested aharmonisation of rules for access to justice for public interest groups to apply toenvironmental damage, consisting of biodiversity damage and contamination of sites. The WP no longer explicitly refers to the aim of harmonising these rules, yet it stillsets on consistent views on which public interest groups should have standing beforenational courts when they should have access to justice. The European Community 18 Com (96)500 of 22 October 1996, in para. 39.

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has signed the 1998 Århus Convention (see box below) and is currently preparing itsratification. Accordingly, the Commission proposes in the WP to use the access rulesin the Århus Convention as the basis for access to justice under the liability rules. TheWP explicitly uses the language of the Århus Convention in stating that ‘publicinterest groups promoting environmental protection (and meeting relevantrequirements under national law) shall be deemed to have an interest in environmentaldecision-making’ (WP, section 4.7.1). The provisions of the Århus Convention on access to justice for interest groups are,however, formulated ambiguously and require these groups to meet additional‘criteria’ or ‘requirements’ under national law. The Århus Convention is not clear onthe contents of these additional national ‘criteria’ or ‘requirements’. The Communityshould further specify these vague criteria. This can be achieved either throughspecific legislation on access to justice, implementing the Århus Convention in theCommunity, or through specific provisions on access to justice in the Communityenvironmental liability instrument. One approach, which is in line with developmentsin a number of Member States, could be to include in the Community liabilityinstrument a provision giving standing to public interest organisations whose goalsand activities show that they have a genuine interest in the particular subject matter,subject to national legal requirements for registration of organisations. We argue that the environmental liability instrument should contain clear harmonisedrules on standing for public interest groups, further specifying those laid down in theÅrhus Convention. These rules should give standing to all public interestorganisations whose goals and activities show that they have a genuine interest in theparticular subject matter. Convention on Access to Information, Public Participation in Decision-Making and Access toJustice in Environmental Matters 1998 (the Århus Convention). The Convention is expectedto be ratified by the European Union. This UN-ECE Convention aims to guarantee the rights of access to information, publicparticipation in decision-making and access to justice in environmental matters. It providesthat public authorities, in response to a request for environmental information, should makesuch information available to the public, unless for example, the information is confidential,to either the public authority itself or to an industrial operator (Article 4). The key point of this Convention for environmental liability purposes is that Article 9(3) ofthe Århus Convention provides that States are to ensure that “where they meet the criteria, ifany, laid down in its national law, members of the public have access to administrative orjudicial procedures to challenge acts and omissions by private persons and public authoritieswhich contravene provisions of its national law relating to the environment”. The “public concerned” are defined in Article 2(5) as “the public affected by, or having aninterest in, the environmental decision-making, for the purposes of this definition, non-governmental organisations promoting environmental protection and meeting anyrequirements under national law shall be deemed to have an interest”.

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2. Two-tier system for public interest group access

On the question of when public interest groups should have access to justice, the WPproposes a ‘two tier approach’. Following this approach, the first step in ensuringrestoration of biodiversity damage or decontamination of a site should be taken by theState (first tier). If a Member State fails to do so, public interest groups get the right toact (the second tier), by means of administrative or judicial review of the State’sdecision not to act or by means of bringing an action against the polluter. By way ofexception to the two tier approach, the WP proposes to allow public interest groups todirectly go to court, without needing to wait for the public authority’s response, ifemergency action (for example an injunction) is required, or in order to recover thecosts of action to prevent damage (WP, section 4.7.2). The two-tier approach is a serious impediment to access to justice for interest groups.Firstly, it could result in significant delays for public interest groups in taking theirliability actions to court. Member States may take a long time to decide whether ornot to bring a liability action against the polluter. During this time the public interestgroups would have to sit back and wait for a government decision before they couldgo ahead. These long delays could give the polluter the opportunity to shift his assetsor even close down the company, both of which will significantly reduce theopportunity for the plaintiffs to obtain compensation. Long delays in combinationwith short prescription periods will also reduce the time available to bring a liabilitycase to court (see next para.). Secondly, there is also a chance that the State may starta liability action, which is more limited (in the damage covered and compensationclaimed) than a public interest group would request. Although in the latter case thepublic interest group could challenge the scope of the State’s liability claim, such achallenge would amount to an extra barrier on its access to justice. In environmental liability cases immediate action by public interest groups is oftenrequired given the nature of the damage at stake. WWF and Birdlife strongly opposethe introduction of a ‘two-tier’ system for access to justice for public interest groupsas this will unnecessarily delay action and jeopardize the opportunity to obtaincompensation. It believes that public interest groups should be allowed to directlybring a liability action to the courts.

3. Prescription Periods

Prescription periods or rules of limitation are designed to ensure that claims forcompensation cannot be brought after a certain amount of time has lapsed. Thejustification for this rule is that barring actions after a specified period avoids both theadministrative expense of examining ‘stale claims’ and potential injustice todefendants of reviving old wrongs. Limitation rules are also said to help promotecertainty when it comes to allocating liability, particularly for insurers. The WPmakes no reference to prescription periods although this will undoubtedly be animportant aspect of any environmental liability regime.

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The reason for this is that long-lasting and continuing damage does occur in thepollution sphere. For example, an oil spill may be immediately noticeable but the fullextent of its ecological effects may take some time to discern. A chemical spill mayalso have long-lasting effects. Here, however, there is a further concern since the veryexistence of the exposure may not be known about for some time. Housing, recreationareas or even school playgrounds may be built on land where hazardous wastes havebeen improperly disposed of. Prescription rules ensure that plaintiffs are not preventedfrom bringing a claim for damage even if it takes a long time to emerge. This issue was set out fairly clearly in earlier drafts of the WP. These drafts proposedthat a claim should not be capable of being brought more than 3 years from the datewhen the plaintiff discovered (or could reasonably have discovered) the damage. Theyalso provided for a 30 year ‘long-stop’ period from the date of exposure (DWP,section 7.7) after which no claim could be brought. This means that if a spill occurredin 2001 and if damage was first ‘reasonably discoverable’ by 2006, then claims wouldhave to be brought by 2009. If damage was discoverable only in 2029 then a claimcould only be brought until 2031, as thirty years would by then have expired from thedate of the initial exposure. The prescription periods proposed in the earlier drafts reflect those in the LuganoConvention and are similar to those used in many Member States. The 30 years long-stop for cases of environmental damage is, however, often criticised, as particularkinds of environmental damage may take well over 30 years before they arediscovered. We argue for the establishment of clear prescription periods. A long-stop period ofsubstantially more than 30 years should be included, given that environmentaldamage has a continuing/long lasting character and may not become apparent untilmany years after the causative event. Finally, it is important to note that prescription rules may be affected by the ‘two tier’approach, where it is first the responsibility of Member States to remedy the damageand interest groups can only intervene if public authorities fail to proceed. In manycases litigation is also seen as a last-resort, and parties try to reach an out-of-courtsolution for compensation of the damage caused. In both situations it is conceivablethat delays caused by awaiting state action or by pre-litigation negotiations might cutinto or even take longer than the prescription period. WWF and BirdLife believe that whichever limitation period is proposed, it shouldstop running in the event of pre-litigation negotiations between the operators and theinterested parties and that it should not run when government regulators areconsidering whether or not to intervene.

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E. Valuation and restoration of environmental damage

1. Methods for valuating damage

The valuation of environmental damage and damage to biodiversity is an extremelycomplex area. The WP does not deal separately or in detail with valuation. It onlyaddresses it in the context of biodiversity damage (WP, section 4.5.1). By contrast, inrelation to contaminated sites, the WP appears to consider the issue of appropriatecompensation solely in terms of clean-up. This distinction in treatment seems to glossover the fact that difficult issues of valuation arise generally in relation to allenvironmental damage, not just in relation to biodiversity damage (WP, section 4.5.2).

We believe that the Community liability instrument should contain a comprehensivesystem for the valuation of all environmental damage, not just limited to biodiversitydamage, but also including contaminated sites and traditional damage.

The WP takes the restoration costs, including the costs of assessing the damage, as thestarting point for compensation (WP, section 4.5.1.). If restoration is technically notor only partially possible, ‘the valuation of the natural resource has to be based on thecosts of alternative solutions, aiming at the establishment of natural resourcesequivalent to the destroyed natural resources, in order to re-establish the level ofnature conservation and biological diversity embodied in the Natura 2000 network’(WP, section 4.5.1). The WP notes that ‘a system’ for valuation ‘will need to beelaborated’ (WP, section 4.5.1) presumably through further development work led bythe Commission.

However, as the WP itself notes, there are some systems either existing or underdevelopment which might offer models or inspiration for the Community regime.Given that some models are available, there does not appear to be a strong argumentfor excluding the valuation of environmental damage from the broader consultationson the WP as a whole. During the consultation period, further models may come tolight, and the arguments pro and contra of existing models debated. In this regard, theinevitable time lag between the initiation of the consultation period on the WhitePaper and the adoption of specific secondary legislation on liability should be used toelaborate these models. Indeed, it could be argued that the WP dismisses too quickly the fact that there issome national level experience, which could provide a basis for consultation on theseissues alongside the other elements of the WP. Notwithstanding the practicaldifficulties, a number of States have attempted to address issues of valuation ofcompensation for damage to the environment, including biodiversity, based on, interalia, reasonable measures of restoration, introduction of equivalents, and, wherenecessary, monetary compensation for unrestored and interim damage. In some cases,including the USA (see box below), these attempts have matured into legislation.

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Valuation of environmental damage: The U.S. Experience Compensation for “natural resource damage” is addressed in two US federal statutes: the1980 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA,the ‘Superfund’ system) concerned with compensation for damage caused by hazardouswaste, and the Oil Pollution Act (OPA). These have required regulators to formulatestrategies for undertaking these valuations. The Department of the Interior issued revised regulations in 1995. They state that the measureof damage is to be ‘the cost of restoration, rehabilitation, replacement, and or acquisition ofthe equivalent of the injured natural resources and the services those resources provide.Damages may also include, at the discretion of the authorised official, the compensable valueof all or a portion of the services lost to the public for the time period from the discharge orrelease until the attainment of the restoration, rehabilitation, replacement, and/or acquisitionof the resources and their services to the baseline.’( s.11.80(b) 59 FR 14263.) The currentposition is consequently that ‘restoration or replacement costs must be estimated and/or anumber placed on interim lost use and non-use values connected with an environmentalinjury.’ Given the difficulties in coming up with dollar figures and the disputes overmethodology, especially contingent valuation, recent cases concerning natural resourcesharmed by hazardous wastes have settled rather than proceeded to court. In an analysis of compensation for unrestored or interim environmental damage, suchas that carried out under the US system, a distinction is usually drawn between useand non-use values. Use values (e.g. fishing, bird watching) can be ascertained on thebasis of economic tools. Some basic methodologies are market price analyses,hedonic pricing or travel cost surveys. Market price analyses attempt to identify howmuch people are prepared to pay to preserve or improve their environment.19 Theymay also assess how much people are prepared to accept to have their environmentimpaired. Hedonic pricing uses statistical methods to ‘(a) identify how much of aproperty differential is due to a particular environmental difference betweenproperties and (b) interpret how much people are willing pay for an improvement inthe environmental quality that they face and what the social value of the environmentis’.20 Travel cost surveys attempt to discern the value of the environment byestimating how much it costs people to visit certain environmental resources and howthey could be paid for using their time differently.21

In relation to non-use values (e.g. option and existence values), the principal availablemethodology is contingent valuation methodology (CVM) (see box below).22 Thisessentially seeks to ascertain the value of a resource by asking a sample of thepopulation what they would be willing to pay to preserve it and adjusting the resultsby reference to the size of the total relevant population. However, CVM is costly toperform and its use has been controversial.

19 David Pearce et al, Blueprint for a Green Economy, Earthscan, London, 1989, p. 5520 Ibid., at p. 6821 Ibid., at p. 71 22 See UNEP, Report of the Working Group of Experts on Liability for Environmental Damage arisingfrom Military Activities, May 1996. Also, Sands and Stewart, “Valuation of Environmental Damage –US and International Law Approaches”, 5(4) RECIEL 1996, 290, 294.

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Contingent Valuation Methodology (CVM) Montesinos23: describes the way in which CVM is generally conducted as follows: ‘Contingent valuation methodology determines people’s preferences by asking arepresentative cross-section of the public familiar with the resource the amount they would bewilling to pay (WTP) for specified improvements to the public good. Typically, the surveyconsists of three parts. First, the surveyor provides a brief description of the resource beingvalued, creates a hypothetical market, and then describes the method of payment to be usedfor buying improvements – such as a tax or an increase in prices. The second part of thesurvey includes questions aimed at determining the survey respondent’s WTP. Finally thesurveyor asks question on the respondent’s demographic characteristics. After all the surveyshave been conducted WTP responses are extrapolated to the public at large and an amount iscalculated which determines total damages – the cost to the public of destroying the resource.This estimate is then presented to the potentially responsible party (PRP)’. When searching for methodologies, a basic distinction can be made between a case-by-case approach and a generic list, ‘conversion’ table or calculation. As noted above,the United States approach is to consider valuation on a case-by-case basis, thoughthis has been an extremely costly and contentious experience. European proposals,including the point system in Hessen, mentioned in the Draft White Paper haveadopted a more generic approach. A tabulated response also mirrors the approachtaken in several jurisdictions in the context of personal injuries. The advantage of ageneric approach is that the answers will be far easier to obtain and consequently theprocess is quicker, the disadvantage is that the values attached may be lower, thoughthis is clearly a matter of negotiation. An overview of the functioning of the pointsystem in Hessen in given in Annex I to these comments. The WP indicates that in relation to all elements relating to valuation and restoration,including restoration and evaluation of the damage and the minimum level ofrestoration of natural resources, further criteria need to be set in the form of Europeanguidelines. WWF and BirdLife believe that concrete consultations on valuation criteria shouldbegin as soon as possible, possibly as part of the consultation on the White Paperitself. Postponing the discussion on valuation of environmental damage will onlydelay the adoption of a Community liability regime. 2. Cost-Benefit Analysis and Reasonableness

The WP suggests that liability for irreparable but also reparable damage tobiodiversity is to be limited according to what is reasonable on the basis of a cost-benefit calculation. Wholly or partially irreparable damage is limited according tohow these resources are valued. The WP states that if restoration of damage is 23 Miriam Montesinos, ‘It May Be Silly But It’s an Answer: The Need to Accept Contingent ValuationMethodology in Natural Resource Damage Assessments’, 1999 Ecology Law Quarterly, Vol. 26(1),48-79 at 51-52. See also, Louis L. Wilde, ‘Natural Resource Damage Assessment under the RevisedUnited States DOI Regulations’, [1995] Env. Liability 87-98 at p. 94

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feasible, ‘disproportionate costs of restoration’ should be avoided. It also proposesthat a ‘cost-benefit or reasonableness test will have to be undertaken in each separatecase’ (WP, section 4.5.1).

Any limit on the compensation to be paid will reduce the effectiveness of the liabilityregime in both its main tasks: preventing the damage from occurring and remedyingthe damage once it has occurred. Especially in cases where the damage is reparablefull compensation of the damage should be the norm. We oppose limiting the amount of compensation to be paid on the basis of a cost-benefit or reasonableness test. Full compensation of the damage caused should be thenorm. F. Rules relating to the burden of proof

1. Alleviating the burden of proof

The WP correctly notes that proving causation will be difficult. Nevertheless, theplaintiff must show that the operator’s act or omission caused the damage. In order tohelp the claimant with this task, earlier drafts of the WP had proposed alleviating theburden of proof.

The adopted WP includes only one paragraph on causation and the burden of proof,stating that ‘[t]he Community regime could also contain one or other form ofalleviation of the traditional burden of proof, to be more precisely defined at a laterstage’ (WP, section 4.3).

The way in which causation must be proven is immensely important. Whendefendants control large amounts of relevant information and either factual orscientific uncertainty exists, the requirement to prove cause can stifle provisionswhich in theory allow for compensation.

Conceptually, a number of options exist. A first possibility would be to opt forreversing the burden of proof. That is, the operator could be required to show that theactivity alleged to be harmful did not cause the damage complained of. If a chemicalspill harmed a protected area, reversing the burden of proof would require thechemical company to prove that they did not cause the harm, rather than requiring theplaintiffs to prove that the company did. The recent Spanish draft bill contains aweakened version of this approach. It reverses, in principle, the burden of proof,unless the activity has all the necessary permits and complies with these permits.24

Another solution may be to reverse the burden of proof after an initial indication of acausal link. For example, where standards have been breached or where there is

24 Anteproyecto de Ley de Responsabilidad Civil Derivada de Actividades con Incidencia Ambiental,officially presented on 24 November 1999.

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evidence of non-compliance (as in Germany).25 Reversing the burden of proof after aninitial (prima facie) indication of a causal link would mean that if the company had(for example) breached conditions in their operating permit, then this fact would besufficient to indicate (prima facie) that they had caused the spill and that they wouldthen be required to demonstrate that they did not in fact cause this harm. A third option is that ‘cause’ itself need not be shown ‘on a balance of probabilities’,the conventional test. For example, plaintiffs could be required to demonstrate only apredominant probability of harm, as in Sweden.26 Requiring cause to be shown on apredominant probability of harm test rather than on the conventional balance ofprobabilities would mean that the plaintiffs would still bear the burden of proof, thatis, they would still have to demonstrate that it was the company who caused the harm,but they would have to meet a lower standard. Rather than show that taking all factorsinto account the probable cause was the company, they could show that they were aprobable cause.

The WP has appeared to weaken the Commission’s commitment to finding a wayforward on ameliorating the causal burden. Any one of these three options wouldappear to offer an improvement over the existing situation from the point of view ofthe plaintiff. If no alteration is made, the environmental liability regime will be ofextremely limited applicability.

WWF and BirdLife argue that a substantial modification of causal rules, putting atleast a large part of the burden of proof on the polluter is a crucial part of an effectiveCommunity liability regime. This can be done through reversing the burden of proof,possibly after an initial indication of a causal link, or through requiring the causallink to be shown through a predominant probability of harm test.

2. Mitigated joint and several liability

In many cases environmental damage can be caused by more than one operator. Insuch cases it is very hard for the plaintiff to prove that a single operator wasresponsible for part of the damage and indicate exactly how much of the damage wascaused by this operator. In order to overcome this problem, earlier drafts of the WhitePaper proposed that liability should be apportioned on the basis of mitigated joint andseveral liability. This means that each party is liable for the whole of the damageunless he can prove that he caused only part of the damage, in which case he will only 25 Section 6(10) of the 1990 Environmental Liability Act: ‘[i]f in view of the circumstances of thegiven case, an installation is likely to have caused the respective damage, causation will be assumed.’However, this is only done when the installation has not ‘operated with its intended purpose and withinthe relevant provisions.’ Horst Schlemminger and Holger Wissel eds. German Environmental Law forPractitioners, Kluwer International, The Hague, 1996, p. 603.26 The Swedish Environmental Damage Act of 1986 requires only ‘predominant probability ofcausation’ to link the cause with the damage, though full proof of the link between the defendant andthe cause of the damage suffered is needed. See generally, Marie-Louise Larsson, The Law ofEnvironmental Damage, Liability and Reparation, supra, p.310 and Alexandre Kiss and Dinah Shelton,Manual of European Environmental Law, supra, p. 141. Norwegian, Finnish and Danish law containsimilar provisions.

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be liable for that part. Not including mitigated joint and several liability willsignificantly increase the burden on the plaintiff and reduce chances forcompensation.

We urge the Commission to re-introduce the concept of mitigated joint and severalliability as an essential component of the liability regime.

G. Insurance and financial security

The WP indicates that financial security (compulsory insurance) will not be requiredof operators who might cause traditional or environmental damage, at least at theoutset (WP, section 4.9).

The WP argues that the availability of insurance is crucial in promoting a viableliability regime, but does not propose compulsory insurance. Instead it proposes agradual approach:

‘Insurance availability for environmental risks, and in particular for naturalresource damage, is likely to develop gradually. As long as there are not morewidely accepted measurement techniques to quantify environmental damage,the amount of the liability will be difficult to predict. However, the calculationof risk-related tariffs is important for the fulfilment of liabilities under insurancecontracts and insurance companies are required to establish adequate technicalprovisions at all times. Developing qualitative and reliable quantitative criteriafor recognition and measurement of environmental damage will improve thefinancial security available for the liability regime and contribute to its viability,but this will not occur overnight and is likely to remain expensive. This justifiesa cautious approach in setting up the liability regime’ (WP, section 4.9).

The omission of compulsory insurance threatens to make the environmental liabilityregime a hollow instrument, with judgements incapable of enforcement againstbankrupt companies or insolvent individuals. If a meaningful liability regime is to beestablished, compulsory insurance is a key element. Teething difficulties of aninsurance regime will be inevitable, yet these difficulties can be overcome and havenot been a reason for other environmental liability regimes not to include compulsoryinsurance. As noted also in earlier drafts of the WP, the German experience is a clearexample. More recently, the Spanish draft bill for an environmental liability law alsospecifically includes compulsory insurance or financial security, as well as penaltiesfor those who fail to comply with this obligation27

WWF and BirdLife believe that compulsory insurance or an alternative form offinancial security is a crucial part of the environmental liability regime and shouldtherefore be included in the Commission’s proposals.

27 Anteproyecto de Ley de Responsabilidad Civil Derivada de Actividades con Incidencia Ambiental,officially presented on 24 November 1999.

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Central in overcoming problems with compulsory insurance or security is thedevelopment of a system for the valuation for ecological damage (discussed above),as this will provide certainty for regulators, operators and insurers alike. This furtherunderscores WWF and Birdlife’s position set out above, underlining the necessity tostart work on defining criteria for valuation as soon as possible.

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Part III: Summary of the WWF-BirdLife Recommendations

• WWF and BirdLife welcome the Commission’s choice to have the environmentalliability regime encapsulated in a single framework Directive. WWF and BirdLifewish to stress that liability for biodiversity damage should form an integral part ofa single Community liability instrument and should be included from the outset.

• WWF and BirdLife urge to replace the wording ‘significant damage’ by ‘damagethreshold’ or ‘not minimal or negligible’, thus avoiding the setting of an undulyhigh threshold for the application of the liability regime.

• WWF and BirdLife urge the Commission to propose clear and transparentguidelines and/or mechanisms for determining whether the damage threshold iscrossed in a specific case. We ask the Commission to include in the Directive theestablishment of appropriate structures to apply these guidelines on a case by casebasis. These structures could include: admissibility criteria set for courts, with thequestion left for them; specialist chambers or judges deciding the matter; acommittee comprised of regulators, NGO representatives, academics and/orindustry; lists or guidelines determining what would constitute damage for each(or specified) species.

• WWF and BirdLife consider the current proposal to cover only damage tobiodiversity within Natura 2000 sites insufficient. We strongly request theexpansion of the proposed liability regime to cover also biodiversity damagecaused outside Natura 2000 sites, encompassing at least all damage to biodiversityprotected under Community law, including international treaties and conventionsto which the Community is a party.

• WWF and BirdLife support the widening of the scope of the liability regime, byincluding damage caused by non-dangerous activities on the basis of strictliability. It strongly argues against the Commission’s proposal to include liabilityfor damages caused by these activities on the basis of fault.

• WWF and BirdLife believe that the ‘force majeure’ defence should be applicableonly in its strictest interpretation, that is, where human intervention, or theabsence of it, has had absolutely no role to play and maximum preventive andremedial measures were in place.

• WWF and BirdLife strongly believe that state-of-the-art defences should not beallowed, as this will essentially turn strict liability into fault-based liability.

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• WWF and BirdLife argue that the environmental liability instrument shouldcontain clear harmonised rules on standing for public interest groups, furtherspecifying those laid down in the Århus Convention. These rules should givestanding to all public interest organisations whose goals and activities show thatthey have a genuine interest in the particular subject matter.

• In environmental liability cases immediate action by public interest groups isoften required given the nature of the damage at stake. WWF and BirdLifestrongly oppose the introduction of a ‘two-tier’ system for access to justice forpublic interest groups as this will unnecessarily delay action and may seriouslyjeopardize the opportunity to obtain compensation. It believes that public interestgroups should be allowed to directly bring a liability action to the courts.

• WWF and BirdLife argue for the establishment of a clear prescription period. Along-stop period of substantially more than 30 years should be included, giventhat environmental damage has a continuing/long lasting character and may notbecome apparent until many years after the causative event.

• WWF and BirdLife believe that whichever limitation period is proposed, it shouldstop running in the event of pre-litigation negotiations between the operators andthe environmental groups and that it should not run when government regulatorsare considering whether or not to intervene.

• WWF and BirdLife believe that the Community liability instrument shouldcontain a comprehensive system for the valuation of all environmental damage,not just limited to biodiversity damage, but also including contaminated sites andtraditional damage.

• WWF and BirdLife believe that concrete consultations on valuation criteria shouldbegin as soon as possible, possibly as part of the consultation on the White Paperitself. Postponing the discussion on valuation of environmental damage will onlydelay the adoption of a Community liability regime.

• WWF and BirdLife oppose limiting the amount of compensation to be paid on thebasis of a cost-benefit or reasonableness test. Full compensation of the damagecaused should be the norm.

• WWF and BirdLife argue that a substantial modification of causal rules, putting atleast a large part of the burden of proof on the polluter is a crucial part of aneffective Community liability regime. This can be done through reversing theburden of proof, possibly after an initial indication of a causal link, or throughrequiring the causal link to be shown through a predominant probability of harmtest.

• WWF and BirdLife urge the Commission to re-introduce the concept of mitigatedjoint and several liability as an essential component of the liability regime.

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• WWF and BirdLife believe that compulsory insurance or an alternative form offinancial security is a crucial part of the environmental liability regime and shouldtherefore be included in the Commission’s proposals.

• Finally, it is important to stress that there has clearly been a great deal of lobbyingon the White Paper. Significant changes have been made throughout the draftingprocess. Analysts faced real difficulties in getting hold of draft documents makingNGOs' input during the drafting extremely difficult. It is clear from the text(especially WP, section 4.3) that these were not difficulties faced by industrylobbyists. Clear changes have been made, particularly relating to defences basedon state-of-the-art and compliance and the viability of financial security inresponse to outside input. WWF and BirdLife stress that this drafting process hasbeen neither open nor transparent and believes that they have been severelydisadvantaged in contributing to this debate.

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Annex I: Environmental Valuation: The Regional System in Hessen

Since 1992, the Land of Hessen has put into place a point system (‘Punktesystem’) forthe valuation of the environmental value of biotopes and use types particularlyrelevant to that region. It is applied for the determination of the specific monetarycompensation payable for the decline in the environmental value of sites resultingfrom human intervention28, as well as for the evaluation of possible deficits inrestoration or compensatory arrangements.

The point system is not based on the restoration costs in absolute terms, but rather ona relative environmental value derived from the parameters hereinafter. The first fourparameters determine the conservation value (‘Schutzwürdigkeit’), whereas the lastfour parameters determine the objective level of threat or conservation need(‘Schutzbedürftigkeit’) of the biotope or use type in question:

1. Grade of development of the biotope/use type (in age and maturity etc.) [GD]2. Naturalness of the biotope/use type (degree of human influence) [N]3. Structural diversity of the biotope/use type (horizontal and vertical diversification,

e.g. trees and bushes) [SD]4. Diversity of the biotope/use type (specific biodiversity) [DB]

5. Rareness of the biotope/use type (in relation to occurrences in absolute figures)[RB]

6. Rareness of species occurring in the biotope/use type (plant and animal species)[RS]

7. Sensitivity of the biotope/use type to impairment[SB]8. Adverse development tendency (frequency of the biotope/use type decreases,

impairment to the biotope/use type increases) [ADT]

The points attributed to a specific type of biotope or use type are calculated asfollows: Each parameter is valued in a range of 1 to 6 points, 6 being the highestpossible value. The addition of the points resulting for parameter 1. - 4. is multipliedby the total of the points resulting for parameter 5. - 8. The percentage of the highestpossible result (576) achieved in the actual calculation represents the points per squaremeter attributed to that biotope/use type.

From the final number of points for each type a monetary valuation is attained bymultiplication with the average revitalisation costs (0.62 DM per point)29.Consequently, the minimum amount payable per square meter is 1,86 DM30, whereasthe maximum amount is 62 DM. The monetary compensation payable in a specific 28 Interventions thereby are defined as modifications of the shape or the use of surface areassubstantially or lastingly impairing the ecosystem or the landscape.29 The average revitalisation costs are the result of the comparison of the value added by existingrevitalisation measures (evaluated under application of the above-mentioned point system) to the costsof the measure in question.30 The lowest possible percentage is 3% (rounded up), as the lowest value for each parameter is 1.

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case results from the environmental value of the site in question (in points per squaremeter) before the intervention minus the environmental value of the site in question(in points per square meter) after the intervention, multiplied by the averagerevitalisation costs.

If 100 square meters of moorland are replaced by a road, sealed with bitumen, thefollowing calculations apply:

Biotype/use type

Parameters

1.(GD)

2.(N)

3.(SD)

4.(DB)

5.(RB)

6.(RS)

7.(SB)

8.(ADT)

(1-4) *(5-8)

% ofmaxvalue(576)

Moorland 6 6 4 5 6 6 6 4 462 80Sealedsurfaces

1 1 1 1 1 1 1 1 16 3

The devaluation of the 100 square meters is equal to (80-3=73 x 100)=7300 points.This (negative) value can be expressed in monetary value as (7300 x 0.62 DM)=4562DM. So the person responsible for the building of the road is, if no restoration orcompensatory arrangements take place, obliged to pay 4562 DM in compensation.

The point system has to be seen as a model that is – due to its generalisation -not ableto entirely express the value of nature. One also has to keep in mind that theindividual valuation under the system is rather limited to a regional application, as theoccurrences and vulnerability of biotopes and the determining parameters forvaluation vary from region to region. But the point system is a valuable example of atool to standardise the assessment of environmental impairment and can be adapted tochanging conditions.