ENVIRONMENTAL LIABILITY UCL LLM: Environmental Regulation and Governance (November 2010)

1. ENVIRONMENTAL LIABILITYUCL LLM: Environmental Regulation and Governance (November 2010) CHRIS CLARKE 58 Park Avenue North London N8 7RT Tel: +44 (20) 8348 5589 email: acf.clarke@virgin.net

2. ‘Liability’ • who pays when damage occurs? • what kind of repair is required? • how clean is ‘clean’? • what advance precautions are required? • how is this enforced? • mechanisms & incentives for settling disputes? • who bears the risk when regulation fails? • even modern regulation not meant to eliminate all risk • potentially the most powerful weapon in environmental policymaker’s armoury? • costs huge - transformed corp attitudes to environment in US

3. The problem • major pollution damage • contaminated land (+ groundwater) • water pollution (surface waters) • harm to protected habitats & species (biodiversity) • air pollution (?) • damage to health (bodily injury) • how to respond? what happens? • what needs to be cleaned up? compensated? • how far should restoration/remediation go? • who should pay? who shouldn’t have to? • how to make it happen?

4. Degrees of complexity • accident/incident - immediate/quick discovery • single party incident • multiple parties • gradual pollution - delayed discovery • single owner/source • multiple owners/operators • multiple owners/operators & sources • off-site waste disposal • mass site/damage over wide area • unknown/indeterminate source??

5. Key issues • standard of liability - strict or fault-based? • scope - types of harm & activities covered • civil or public law approach? • liable party - causer/knowing permitter, owner, etc? • apportionment in multiple party cases • defences & other protections • exemptions, mitigating factors, appeals, etc • pre-enactment events - historic damage • causation • burden of proof • clean-up standards (triggers & objectives) • financial security & insurance coverage

6. Other issues • sanctions • settlement incentives & procedures • reporting requirements • releases (from liability) & “re-openers” • secondary litigation (contribution, insurance, etc) • government liability (municipal, regulator, defence,etc) • urban redevelopment/brownfields • budget constraints & federal/central v. local divisions • implementation (action lead in the clean up) • long-term oversight & maintenance • data collection

7. Definition of “civil”

8. Main US laws • Federal • National Environmental Protection Act 1969 (NEPA) • Endangered Species Act 1973 (ESA) • Safe Drinking Water Act 1974 (SDWA) • Resource Conservation & Recovery Act 1976 (RCRA) • Toxic Substances Control Act 1976 (TSCA) • Clean Water Act 1977 (CWA) • CERCLA 1980 (“Superfund”) + SARA 1986 • Emergency Planning & Community Right-to-know Act 1986 (EPCRA) • Oil Pollution Act 1990 (OPA) • + State-level equivalents

9. US: Prominent CERCLA cases • Love Canal (1978) • Valley of the Drums (1979) • Stringfellow (1981) • Times Beach (1982) • Rocky Mountain Arsenal (1982) • Silresim (1982/1977) • San Gabriel Valley (1983) • Iron Mountain Mine (1983) • Montrose Chemical Corp (1984) • Hanford & Rocky Flats

10. Love Canal • small community in Niagara Falls, NY • abandoned 19th century canal project (William T Love) • 21,000t chemical wastes dumped 1940s/50s (Hooker) • lindane, DDT, solvents, PCBs, dioxin, heavy metals • closed & covered 1952-53, sold to municipality • school & 200+ homes built • smells/vapours, birth defects reported 1960s/70s • chemicals rising with water table, contaminating land, rivers, sewers, etc • State of Emergency declared 7 August 1978 • allowing Federal funds for relocation of residents • 239 families, then 300 more, finally all 950 • over ½ billion dollars spent on clean up • removed from NPL 30 September 2004

11. US Superfund • CERCLA 1980 + SARA (amendments) 1986 • federal haz substance clean-up programme • abandoned/uncontrolled sites, liability + fund • emergency removal + remedial actions • liability on wide list of responsible parties • present owners/occupiers • past owners/occupiers • waste generators (those who “arranged for disposal…”) • transporters • strict, joint & several, retroactive, unlimited • cost recovery/admin order/settlement agrmnt

12. Superfund 2 • few defences, narrowly construed • no pre-enforcement review (!!) • no personal injury (deleted by Congress) • health data collection by fed agency (ATSDR) • hazardous response trust fund • tax on petroleum/chemicals + corporate environmental tax + recovery from responsible parties + general revenues • $320m/year (1980-86), $1.6bn/year (1986-1990s) • National Contingency Plan (NCP) • Hazard Ranking System (HRS) • National Priorities List (NPL)

13. Superfund 3 • elaborate remedy selection process • remedial investigation, feasibility, remedial design, etc • public participation/consultation • preference for permanent treatment • Applicable or Relevant/Appropriate Requirements (ARARs) • natural resource damages (NRDs) • additional to clean-up • public trustees only, post-December 1980 (?) • PRPs allowed to lead clean-ups • settlement groups/procedures • orphan shares - mixed funding?

14. Superfund 4 • attempts to focus liability on most responsible: • de minimis & de micromis protections • innocent landowner defence • secured creditor exemption • Asset Conservation, Lender Liability, and Deposit Protection Act 1996 • contribution actions/settler protection • releases from liability - with “re-openers” • reporting requirements & severe penalties • $25,000 per day per violation (rising with inflation) • insurance coverage war • 50 separate jurisdictions (state & federal courts)

15. Superfund 5 - criticisms • slow & disproportionately expensive • average 12 years, $30 million + per site • $50bn - $300bn+ for 2-3,000 sites • excessive/unrealistic standards • diverting money from more urgent problems • high transaction costs? • unfair? • activities legal at time/“deep pockets” victimised? • major obstacle to economic/property development

16. Superfund 6 - reality • programme management poor/unpredictable • strategy inconsistent • clean-up standards ill-considered • non-insurance transaction costs average • most apportionment settled • removal programme relatively successful • most sites technically difficult

17. Europe/OECD trends • all new national/international laws since mid-1980s - strict liability • mostly joint & several, but future only • some strict liability much older • initial driver: contaminated land/water • personal injury/natural resources catching up • tighter enforcement, higher penalties • more realistic clean-up standards • future use, not multifunctionality

18. Europe/OECD trends 2 • increasing access to justice + information • nervousness in insurance markets • also new initiatives (EIL, claims made, etc) • concern among lenders (esp common law) • public & media spotlight on health issues • deep suspicion of industry, etc • willingness to see connections/seek damages • emergence of plaintiffs’ bar • judicial climate/access to courts - restrictive

19. Public v private law 1 • major confusion about “civil liability” • in US (& UK) includes administrative orders • in civil code countries, means private actions • governments divided on strict liability in private law • less predictable than public law • potential anomalies v (other) tort liabilities • so far, public law has achieved most results • depends heavily on commitment of public authorities • commitment increased by private law pressure?

20. Public v private law 2 • causation a major obstacle to private claims • science immature, epidemiology ambiguous • results depend heavily on judicial rulings • non-US courts conservative on science • less application of jury trials • but judiciary not expert on pollution issues & may be sensitive to public concern - danger of “junk science”? • private law risks more difficult to quantify • but not necessarily impossible • underwriting depends on loss experience & analysis

21. Public v private law 3 • private law = greater public involvement? • private law likely to increase NGO leverage, widen protection of environment? • official agencies need external pressure to keep up? • private law removes key obstacle to compensation for pollution damage? • tightening duty of care removes need for strict liability?

22. Key features of the EC Directive • public law system - enforcement by authorities • no civil liability for personal injury/property damage • prevention/remediation of damage to protec-ted species/habitats, water, land (+ costs) • potentially high thresholds for damage • species/habitats protected under Birds & Habitats Directives + MS discretion on national equivalents • future events only • strict liability on operator of Annex III activities • fault liability (species/habs only) for other activities • duty on authorities to enforce • but not to remedy or prevent at own expense

23. EC Directive II • MS discretion on multi-party apportionment • MS option of broad defences/exemptions • compliance & state-of-the-art knowledge • plus act of God, act of war, compulsory order, third party intervention despite appropriate measures • international marine/nuclear regimes excluded • also national defence, international security, etc • return to baseline, interim losses, health • primary/complementary/compensatory remediation • limitation: 5 yrs (costs) & 30 yrs (enforcement) • right to request action  reasoned response

24. EC Directive III • MSs to encourage insurance/financial security • no compulsion, but accelerated review (2010): • availability at reasonable cost + conditions, gradual approach, ceiling for guarantee, low-risk exclusion & extended impact assessment • 3 years for MSs to transpose + reviews • financial security (2010), MS experience (2013), general review & amendments (2014) • a directive - substantial overlap with MS law • MS right to “more stringent provisions” (Art.16 & Treaty) • numerous areas of MS discretion • the regime will not be limited to the Directive

25. EC Directive - implementation • deadline for MS transposition: 30 April 2007 • Member State options: • nationally designated habitats/species • apportionment in multi-party cases • relief for compliance/state of the art • requests for action in cases of imminent threat • sewage sludge spreading, more stringent provisions • ambiguities to resolve: • scope of environmental damage (esp. specs/habs) • significance thresholds (esp. specs/habs) • return to baseline condition, interim losses, etc • definition of liable party/operator • encouragement of financial security • Art.16 more stringent provisions