The European Environmental Responsibility Regulation: Example for Application in Germany concerning Contaminated Site

2. INTERSOL 2008 La réglementation Européenne de la Responsabilité Environmentale: Exemple d‘Application en Allemagne concernant les Sites Pollués The European Environmental Responsibility Regulation: Example for Application in Germany concerning Contaminated Sites Stefanie Beste Hoffmann Liebs Fritsch & Partner

3. European Environmental Responsibility Regulation consisting of European Environmental Liability Directive 2004/34/EC implemented in Germany as Umweltschadensgesetz (Act on Environmental Damages) 14 November 2007

4. German Soil Protection Law Federal Soil Protection Act (Bundesbodenschutzgesetz = BBodSchG) + Statutory Order on Soil Protection (BundesbodenschutzV) + Technical Bylaws

5. Soil Protection Act – Scope of Protection • Soil, § 2 (1) Upper layer of the earth’s crust, in so far as the layer carries out soil functions • Soil functions, § 2 (2) • Natural functions • Functions as an archive of natural and cultural history • Functions useful to man • Protection against: • Harmful soil changes, § 2 C(3) • Residual Pollution, § 2 (5)

6. Case Study: German Soil Protection Law Lessee AGLegal Successor Purchased 1976 Purchase of site 30 January 2001 Lessee GmbH = Lessee until 1970 of industrial site Lease contract 01.01.1950 - 31.12.1970 FO = Former Owner O = Owner Industrial Site CHC-Contamination Parent Company „PC“ of O Administration (Mrs. Clearwater) Mrs. Clearwater asks: Who is liable?

7. Soil Protection Act - Responsible Parties Who can be held liable by the authorities ? • Polluter (“polluter pays”-principle) = „disturber by conduct“ • Legal Successor of polluter (to the extent a legal obligation to avoid pollution already existed at the time of the legal succession) • Owner of the contaminated land = „disturber in fact“ • Party who exercises actual physical control over the land harbouring residual pollution (e.g. the lessee) = „disturber in fact“ • Former owner in case transfer of property took place after 01.03.1999 • Parent company: responsibility on the basis of commercial and company law („lifting the corporate veil“) • Former owner who is responsible for dereliction of contaminated land

8. Soil Protection Act - Scope of Responsibility • Investigation and Examination of potential contamination in case of „initial suspicion“ • Safety Precautions in case pollution has already occurred (prevention of harmful substances from seeping into the soil or the prevention of polluted ground water flowing onwards) • Remediation (removal of the threat posed)Type and scope of the remediation are determined by competent authorities. The authorities have to take into account the permissible use of the land remediation requirements for industrial areas may be lower than those for residential areas

9. Soil Protection Act - Application in time No statute of limitations! In principle, the party responsible can be called to account by the competent authority for an unlimited period of time. The liability scheme of the Soil Protection Act applies retroactively to contaminations generated a long time before the Soil Protection Act became effective if and to the extent contemporary public law provisions prohibiting soil or groundwater pollution already existed at the time the pollution occurred.

10. European Environmental Responsibility Regulation Responsibility for soil damage under the European Environmental Liability Directive and its German act of implementation Umweltschadensgesetz = USchadG (Act on Environmental Damages)

11. Scope of Umweltschadensgesetz The USchadG regulates solely responsibility under public law! It does not provide for: Civil Law claims for damages or indemnification (no compensation for personal damages, damage to property or economic losses). Administrative offences including administrative fines in case of violation (unlike for instance other Environmental Law Acts such as the Water Protection Act (Wasserhaushaltsgesetz), Soil Protection Act (Bundesbodenschutzgesetz) or Federal Immission Control Act (Bundesimmissionsschutzgesetz).

12. Umweltschadensgesetz Scope of Protection • Damage to protected species and natural habits pursuant to (new) §21a Federal Nature Protection Act (Bundesnaturschutzgesetz) • Water damage pursuant to (new) § 22a Water Protection Act (Wasserhaushaltsgesetz) • Soil damage: Adverse effects on the soil‘s functions pursuant to § 2 (2) Soil Protection Act (Bundesbodenschutzgesetz) which additionally creates a significant risk for human health • Notice: USchadG only provides guidelines for liability! • For more detailed provisions it refers to already existing Environmental Law Acts

13. Umweltschadensgesetz - Responsible Person Polluter-Pays-Principle Operator means any natural or legal, private or public person who operates or controls the occupational activity or to whom decisive economic power over the technical functioning of such an activity has been delegated, including the holder of a permit or authorisation for such an activity or the person registering or notifying such an activity. (USchadG § 2 (3)) Every person competent to make important decisions (for instance managing directors can directly be held liable under USchadG – even after having left the liable company

14. Umweltschadensgesetz - Responsible Person Polluter-Pays-Principle Occupational Activities which may trigger a liability (in the event they cause a soil damage) are enumerated in Annex 1 of Umweltschadensgesetz: • Operational activities requiring a permit under Federal Immission Control Act (ICPC- Installations) • Waste handling and disposal • Discharge of hazardous substances into water bodies • Handling of hazardous substances

15. Umweltschadensgesetz- Scope of Responsibility • Information, § 4 In case of imminent threat of soil damage, the responsible operator is obliged to inform the authorities without delay!Information should contain all relevant facts and circumstances so that the competent authority is in a position to take the appropriate action. Duty to inform Right to remain silent ?

16. Umweltschadensgesetz - Scope of Liability • Obligation to ward off imminent threats of damage, § 5 • Remediation, § 6 • If environmental damage has been caused, the responsible party must take the necessary steps of limit + remediate damage • The principle of proportionality must be applied when determining the necessary remediation measures • The necessary measures are taken pursuant to the relevant legislator/regulatory provisions (soil remediation – Soil Protection Act + Ordinance on Soil Protection

17. Umweltschadensgesetz - Scope of Responsibility Remediation of land damage: The necessary remediation measures shall be taken to ensure, as a minimum, that the relevant contaminants are removed, controlled, contained or diminished so that the contaminated land, taken account of its current use or approved future use at the time of the damage, no longer poses any significant risk of adversely affecting human health. (Annex 2, no 2 Environmental Liability Directive) USchadG simply refers to already existing soil protection provisions

18. Umweltschadensgesetz - Repartition of Costs • Costs relating to measures for mitigation + remediation, § 9 • Main principle: • Costs must be born by the responsible party • The States must fix rules for reimbursement of costs by administrative authorities • Repartition of costs under civil law when several responsible parties are involved, § 9 (2)(comparable to § 24 (2) Soil Protection Act)Advice for contract drafting: • Exclusion of claims under § 24 (2) Soil Protection Act and § 9 (2) USchadG

19. Umweltschadensgesetz – Repartition of costs • Costs for mitigation + remediation measures, § 9 • Optional regulations concerning cost exemptions (to be implemented by the States): • The responsible party does not have to bear the costs in case of: • Operations compliant with operating licence (so called „permit defence“) • Operations compliant with state of the art • Particular allowance for use of plant protection agents in agriculture

20. Umweltschadensgesetz - Participation of Third Parties • Request for action by third parties, § 10 Right to request that the authorities take action to enforce obligations to remediate Precondition: To credibly demonstrate that environmental damage or an imminent risk of such has occurred • Beneficiary: Concerned third parties or environmental interest groups pursuant to § 3 Act on Environmental Legal Actions • Legal Protection: Right to file an action against authorities in case of failure or faultive enforcement of requirements under USchadG

21. Umweltschadensgesetz - Application in Time • Limitation of liability, § 14 • USchadG neither applies to damage caused by emissions, events or incidents that took place before the date of enforcement (14.11.2007), nor to damage caused by emissions, events or incidents occurring after 14.11.2007 when such damages arises from a specific activity that took place and finished before 14.11.2007 • Liability claims under USchadG become time-barred in 30 years since the emission, event or incident resulting in the damage occurred

22. Case Study Lessee AGLegal Successor Purchased 1976 Purchase of site 30 January 2001 Lessee GmbH = Lessee until 1970 of industrial site Lease contract 01.01.1950 - 31.12.1970 FO = Former Owner O = Owner Industrial Site CHC-Contamination Parent Company „PC“ of O Administration (Mrs. Clearwater) Mrs. Clearwater asks: Who is liable?

23. Umweltschadensgesetz – Soil Protection Act Comparison: Scope of Protection and Responsible Parties

24. New Impulses by European Environmental Liability Law • New rules for contaminated sites via the Umweltschadensgesetz: • Obligation to inform authorities in case of pollution or risk of such • “Polluter-pays”-principle (in spite of the fact that the authorities tend to oblige the „disturber in fact“ (owner) of the contaminated site) • Further civil law claims for compensation are possible if several liable parties§ 9 (2) USchadG • Legally compliant action is no excuse ( some regional laws may exonerate from payment) • Extension of participation by the public • Environmental interest groups have the right to bring action, in order that the authorities be forced to act by the courts