Civil Liabilitv J
Controversial EC proposal defines environmental damage and who pays
I
t can take a catastrophe to alert lawmakers to shortfalls in environmental regulation. Two new European initiatives that would make polluters pay for their environmental impact can be traced to a fire in 1986 at a Swiss chemicals plant owned by Sandoz. The Sandoz fire focused Europe on the hazards of transfrontier pollution in a crowded continent. The poisoning of the Rhine River caused by the fire had severe effects hundreds of miles downstream in Rotterdam. The Rhine, which flows into the North Sea, also suffers chronic pollution from German and Dutch chemical industries. Responding to the Sandoz fire, the European Community (EC) requested new laws on civil liability for environmental damage-alarming many business leaders and investors, especially following the publication i n March of an EC Green Paper (policy document). The EC proposes a system that parallels the U.S. Superfund in that strict civil liability for environmental damage would be introduced throughout the Community. Enforcement agencies could deal with plant operators in any EC member state, and the burden of proof would be shifted in favor of the environment: it would no longer be necessary to prove that the polluter was negligent. Tackling transfrontier pollution in Europe will require action by more than just the Community. Countries like Switzerland, Austria, the Nordic countries, and the postCommunist states of central and eastern Europe are not under EC law. However, negotiations on an international treaty applicable to all European governments have been completed, and the treaty will open for signature June 1 in Lugano, Switzerland. The Convention on Civil Liability for Damage Resulting from Activities Dangerous to the Environment is the fruit of five years’ negotiation in the 26-member Council of Europe, an institution capable of taking a geographically broader view than the EC. The 784 Environ. Sci. Technol., Vol. 27, No. 5, 1993
BY JULIAN ROSE Council heralds the Convention as the first of its kind, and there are provisions for non-European governments to sign up at a later date. The Convention defines environmental damage and who will have to pay for remediation work. Environmental groups will be entitled to bring action against polluters, and plaintiffs seeking compensation will be able to pursue claims either in the country where the damage was suffered or where the dangerous activity was undertaken. The chemical industry is particularly alarmed by the retroactive application of the Convention. Operators would be liable for 30-year-old pollution events. At the Brussels Office of Imperial Chemical Industries, Dirk Hudig asks: “Given the economic climate, is this the right moment for introducing new insecurities?” He says Europe should learn from the U.S. experience with Superfund, which, in its 13th year, has some 14,000 people currently involved in litigation. “Does this just create a new industry for the lawyers?’’he asks. The European employers’ federation, UNICE, is drafting a response to express its unease. “Industry feels the Convention goes a bit too far,” says UNICE spokeswoman Fiona Marq. “Many companies, including small and medium-sized enterprises, would fall under the obligation to have insurance coverage. But it’s not at all certain such insurance is available,” she says. Without environmental insurance, smaller companies may be bankrupted by a claim, leaving the remediation undone. But the insurance industry appears to lack the resources and technical expertise needed to underwrite many environmental risks. However, the Convention allows for alternatives to insurance. It simply specifies that operators must obtain “some form of insurance or other financial security.” Participating countries will decide how best to implement the policy.
For its part, the EC seems to have abandoned environmental insurance as an option. Instead, the Green Paper draws on Superfund experience, which avoids the need for environmental insurance by levying fees on polluting industries. The fund ensures that cleanup takes place and pays the legal costs incurred in civil liability claims. Normally, such a scheme would be politically impossible in the EC, given the calls to decentralize power. But the Commission proposes an “integrated liability regime.” If damage can be causally linked to the action of a single party, compensation would be sought via new laws on civil liability. However, a number of “joint compensation funds” would be established. The funds would be specific to individual industry sectors (e.g., waste, chemicals, and mining) a n d , in economists’ jargon, would “internalize” pollution costs. Industrial sectors would have to pay for the environmental impact. The Commission has set an October 1 deadline for responses to the Green Paper. It plans to then draft legislation to implement the proposals. But the existence of the Council of Europe’s Convention raises the danger that the more environmentally zealous EC states may sign up to the Convention unilaterally and draft their own laws to implement its provisions. Such a situation arose last year over the Base1 Convention on hazardous waste shipments, which France ratified long before the EC had agreed to harmonized legislation (it now has). But perhaps the greatest diplomatic hurdle will be to persuade eastern and central European states to sign the Convention. Setting a poor example, Germany abstained from the vote that cleared the Convention for signature because of worries about environmental liabilities in the former East Germany.
Julian Rose i s a London-based freelance writer specializing in environmental and technological issues. He was previously editor of Environm en tal News.
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